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F ractional ownership of an aircraft is a consideration for those who fly between 50 and 400 hours per year in private jets. It is essentially the purchase of a "fraction" of the aircraft itself via a company which manages and operates the aircraft...

Let's take a look at what a fraction looks like in terms of flying hours:

1/16 share = 50 hours (250 hours over 5 years)
1/8 share = 100 hours (500 hours over 5 years)
1/4 share = 200 hours (1,000 hours over 5 years)
1/2 share = 400 hours (2,000 hours over 5 years)
Full share = 800 hours (4,000 hours over 5 years)

A "full share" is considered to be 800 hours per year and equal in cost to the full retail price of the plane.

For a fraction you will pay the up-front acquisition fee at the start of the term - which will vary by fraction size and aircraft type. On top of this will be a monthly management fee and an hourly occupancy fee when you actually use the plane. It is standard that termination of the contract is allowed after a set period - usually 2 to 3 years in. However, it may also be possible to sell your fractional share at any time on the open market (but check your contract first).

At the end of the 5 year period you can either retain ownership by agreeing to the current management and hourly fees or you can sell the fraction back to the management company at a "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.

The benefits of fractional ownership are:

• cheaper than purchasing an aircraft outright
• management and operational issues handled by the fractional company
• fixed costs means you can accurately budget for travel costs
• companies with large fleets provide good availability, flexibility and added value services
• no empty leg fees/positioning fees for one-way flights

Some downsides of fractional ownership:

• large upfront fee, unlike ad-hoc charter where you pay-as-you-go
• heavier depreciation costs
• "remarketing" fee of around 7% charged on selling back the fraction
• conflict of schedules possible for smaller fleet fractional companies
• cannot personalise aircraft interior

The biggest fractional ownership company in the industry is Ohio-based Netjets - owned by Warren Buffet's Berkshire Hathaway - with over 800 aircraft and a 70% market share.

Netjets fractional ownership costs* - For an entry level Raytheon Hawker 400XP (7 seats and a range of ~1,470 miles) a 1/16 share will cost $425,625. However on top of that you will have to pay a monthly management fee (approximately $7,800) + an hourly occupancy rate ($1,800) + hourly fuel surcharge ($550). The hourly occupancy rate is wheels up to wheels down plus 6 minutes taxi time at each end. Additional airport taxes also apply.

So on top of the upfront investment, annual running costs will be in the region of $220,000 for 50 hours flying.

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. Note, designated peak period days (10 days across the whole year) must be booked with 48 hours notice.

Other North American companies offering fractional ownership: Bombardier's FlexJet ; Flight Options (offers 1/16, 3/32, 1/8 shares).

Fractional aircraft programs in Europe are not as common as found in the US, particularly due to the way depreciation of part-owned assets is handled in the US tax system.

Netjets has a European subsidiary company Netjets Europe which offers similar fractional ownership programs, with a fleet of 165 aircraft.

Blink is a very light jet operator in UK/Europe which has its Blink Club fractional program. It offers either a 1/4 share (150 hours), 1/2 share (300 hours) or full share (600 hours). A 1/4 share in a Mustang costs $606,250 (circa £385,000) with a monthly management fee of £6,667 and hourly rate of £850, giving an effective rate of £1,382 per hour.

For those needing less flying hours then a block hours jet card programs or ad-hoc jet charter should be considered.

Note: Always undertake a full financial analysis with a qualified professional before purchasing any form of private jet. * Price accuracy cannot be guaranteed and can change. Some company names/programs mentioned are registered trademarks.

Air Travel Articles > Private Jets > Fractional Aircraft Ownership