Corporate Jets - Fractional Aircraft Ownership
| Fractional ownership of aircraft became particularly popular in North America over the last decade although more recently it has taken a hit from the credit crisis. Those flying between 50 and 200 hours per year in private jets could consider a fractional ownership program. |
The biggest company in the industry is Netjets - owned by Warren Buffet's Berkshire Hathaway - with over 800 aircraft and 70% market share, endorsed by the likes of Roger Federer and Bill Gates. Netjets offers fractional ownership programs starting at a 1/16 share of an aircraft which is the equivalent of 50 hours flying time. A "full share" is considered to be 800 hours per year and equal in cost to the full retail price of the plane.
The fractional ownership contract lasts for 5 years, although cancellation is possible after 2 to 3 years. You pay an acquisition fee up front which depends on the aircraft type and the fraction size.
Netjets will either fly you on your own registered aircraft or you will be given a similar (or larger) plane from the Netjets fleet depending on logistics. Response times for booking an aircraft vary between 4 and 10 hours in advance and designated peak period days (10 days across the whole year) must be booked with 48 hours notice.
Netjets costs / prices*
For an entry level Raytheon Hawker 400XP (7 passengers, range approx. 1,450 miles) a 1/16 share will cost $425,625.
However on top of that you will have to pay a monthly management fee - this is approximately $12,000 / month or annually $144,000.
An hourly occupancy fee of around $1,400 (so your 50 hours will cost $70,000). This is wheels-up to wheels down plus 6 minutes taxi time. Additional airport taxes also apply.
So the total annual cost will amount to around $640,000+. At full capacity we are talking about $1,828 per passenger per hour.
After the 5 year period you can either continue the contract or you can sell your share back to NetJets at "fair market value". Note, depreciation of aircraft can be a major cost consideration and fractionally owned aircraft are heavily used - meaning they have greater depreciation than a standard owned corporate plane.
Another drawback with shared planes in smaller programs is that the more owners the plane has, the more likely schedule conflicts arise - however with the size of Netjets' fleet they can guarantee an available aircraft.
Other US companies offering fractional ownership: Bombardier's FlexJet (100 aircraft with circa 900 owners); CitationShares Citelines; Flight Options Fractional First.
Netjets has a European company Netjets Europe which offers similar fractional ownership programs. They have 165 aircraft and have also recently bought a controlling stake in the small Frankfurt Egelsbach airport to develop as a private jet hub.
After the credit crisis which reduced demand across the whole industry, Netjets has also got involved with block hours programs for lighter users.
Always undertake a full financial analysis with a qualified professional before purchasing any form of private jet. *Prices are indications only and can easily change.
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