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Is A Fractionally Owned Private Jet Right for You?
Vanessa DellaPasqua, Helium Report
The development of fractional-ownership plans accelerated the adoption and broadened the reach of private aviation. Previously, the only way to consistently enjoy private aviation was to buy a jet, which then spent a substantial portion of its life in a hangar collecting dust and maintenance bills. In 1986, Richard Santulli scratched this itch and launched what is now NetJets. By offering a timeshare model with guaranteed availability, he lowered the cost and increased the utilization, creating a more valid and viable path to ownership for thousands. Suddenly, the benefits of plane ownership could be attained with less than the full cost—or commitment—of full ownership.
In the fractional model, you purchase (or lease) a fraction of an aircraft, alongside numerous, anonymous others. Depending on the company, the plane may be split into 16ths or even 32nds of a fractional share. These fractions translate to a number of hours per year, with a full 100% share equating to 800 annual hours. Most shares are sold at the 1/16 (50 hours) or 1/8 (100 hours) level.
Although the plane is shared, you are guaranteed access from any airport with just 4- to 48-hours notice, depending on your provider and plan. This is referred to as the “call-out” period.
Check out the fractional-ownership cost graph for private jets.
In addition to your purchase costs, you pay a monthly maintenance fee to cover the cost of upkeep, upgrades, hangaring, pilot salaries and training. When you use the plane, you are also billed for the actual hours in flight, with 12 minutes tacked on for taxiing. The final cost component is fuel, which is often a surcharge above the hourly fee to account for price volatility.
Joining a fractional ownership group grants you access to other planes in the fleet. When desired, you may switch to larger or smaller planes on a set “interchange” formula. Access to a smaller plane is typically guaranteed, but larger plane guarantees may be conditional on the size of your share. There may also be limits to the percentage of your total annual hours that can be flown with exchanged hours.
Fractional terms are typically five years, after which, you sell your share back to the company for the then-current fair market value, less a 7% “remarketing fee,” which may be waived for renewals. You may also lease your share in a variety of configurations, depending on your tax and financial profile.
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