I've often heard it said that if you fly between 50 and 400 hours per year, fractional ownership is the best way to go. As with most rules of thumb, there is some truth to this maxim, but your analysis should go much deeper.
Usage. Generally, if you fly less than 50 hours per year, the benefits of fractional flying may be outweighed by the capital commitment, the variable cost exposure and the long term nature of this investment. If you fly more than 400 hours per year, you may consider purchasing an aircraft. However, just because you're flying between 50 hours and 400 hours per year doesn't mean that fractional is your best bet.
If, for example, you fly a lot of short hops-say 30 minute flights-you will lose almost half your flight hours because, under standard operating procedures, each fractional flight is charged at a minimum of one hour. Thus, your 50 hour investment may provide you only 25 hours of actual flight time. Providers sometimes will waive the one-hour minimum on a couple of occasions each year, but not enough to make a significant difference to you.
If you plan to fly primarily on high usage or "peak" travel days, e.g., dates around New Years, the Super Bowl, Presidents' Day, Thanksgiving, etc., your fractional provider may not guarantee to fly you within the normal call-in time; nor will it guarantee to upgrade or downgrade you to a particular aircraft that best suits your needs.
Conversely, for trips on non-peak travel days, if you know well in advance when you're going to fly, the guaranteed call-in time is of little benefit to you; yet, the provider must factor the cost of maintaining that capability into its operational model-so you're paying for a program feature that you're not using.
Similarly, if your home base is in or near a big city, it's likely that you are well served by capable charter operators. Thus, the advantage of not paying directly for repositioning aircraft to service your flights that comes with fractional ownership may be of relatively little benefit to you inasmuch as a charter operator also likely will not need to reposition aircraft for you. The same analysis may apply if you travel to popular and well served destinations.
If your flights are short, deadheading flights by charter operators (that return the aircraft to its home base) will be relatively inexpensive, again limiting the fractional benefit of not paying directly for deadheading. Indeed, if you fly a lot of same-day round trips, you may avoid deadheading charges altogether on charter flights.
Finally, fractional may not be right for you if your usage is likely to vary substantially over time. Most commitments are five years and it can be costly to get out early. If, for example, you have business in another city that requires you to fly frequently this year, you may budget for a fairly large fractional share; but if you sell the business in a year or two and so won't be taking those flights, you may end up paying for a lot of flight time that you can't use. Or if you have a second home in a remote location, you may enjoy flying directly into and out of the small nearby airport; however, if you sell that home next year and buy a new home that's well served by reputable, safe charter operators, you may not need that fractional share at all.
Aircraft Models. Fractional providers are moving increasingly to limit the models of aircraft they hold in their fleets. If their aircraft don't suit your needs, fractional may not be right for you. Far too few fractional owners consider whether they are well served by the capabilities of their aircraft. While you may focus on seating capacity, you also should consider range, speed, luggage capacity, fuel usage, wi-fi capability, etc. If your fractional aircraft can't make your favorite trip without a fuel stop, if it won't hold all your luggage for that golf or ski vacation, or if it can't land at or take off from the closest airports, you're probably not going to be happy with your investment. If the aircraft models offered by your provider either are too small or too big, unlike Goldilocks, you may not find fractional to be "just right." Indeed, if the provider has the perfect aircraft, but there are so few in the fleet that much of the time you're likely to find yourself flying on another model or even worse, a charter, you're not going to be a happy fractional owner.
Cost Certainty. If you require cost certainty, fractional may not be the way to go. Unlike jet cards, for which generally you pay a purchase price and are guaranteed a certain number of flight hours, with fractional you bear much of the risk of operational cost increases and, more importantly, you bear the risk that the value of your aircraft (and thus your share) may change significantly over time, so that it's impossible to project with any certainty what your actual cost will be over the life of your investment.
Miscellaneous. A few other reasons why fractional may not be right for you:
- Purchasing a fractional share requires a substantial capital outlay. Thus, in comparing the cost of various options, you should consider the opportunity cost of committing to such a capital investment.
- If you purchase a share through your business, you likely will have to show it on your books as an asset, which sometimes raises the hackles of shareholders. However, charter flights, jet cards and the like may be reflected as part of your company's overall travel expenses.
- If you purchase a fractional share for personal use, the benefit of depreciating the share as an asset likely will not be available to you (but consult your tax advisor).
The goal of any private air travel investment should be to purchase maximum flight time on appropriate aircraft with a reputable and safe operator at minimum cost. Making the wrong choice can cost you hundreds of thousands, even millions of dollars in unnecessary expense. A fractional share can be the perfect investment, but as you can see, there's a lot more to consider than just the number of hours you fly each year.
James D. Butler is an attorney and CEO of Shaircraft Solutions (www.shaircraft.com) – a Maryland based consulting firm that advises individuals and businesses with respect to the full range of private air travel investments, including fractional ownership, jet card programs and charter, and specializes in fractional share valuation disputes. Mr. Butler also authors "Inside Private Air Travel," a blog offering an unvarnished and timely look at the private jet industry as a whole as well as the latest developments with specific jet companies. Mr. Butler can be reached directly at This email address is being protected from spambots. You need JavaScript enabled to view it. or (301) 652-9885.