Fractional Aircraft Ownership Overview

What is fractional jet ownership?

Fractional jet ownership is shared ownership of a personal airplane that is staffed and maintained by a fractional company.  Fractional ownership allows you to purchase or lease-purchase a fractional interest (also known as a share) in a single airplane, while offering you access to an entire fleet of aircraft.  Although you are technically buying a part of a specific aircraft for tax and depreciation purposes, you are really buying into a jet service in which your fractional company runs a large fleet and can send your jet or a jet of the same model whenever and wherever you need it.

Fractional owners can use their own aircraft or another similar or identical aircraft a certain number of hours per year, based upon the size of the share they purchase.  Share sizes are broken down as follows:

                        1/16th share = 50 flight hours
                        1/8th share = 100 flight hours
                        1/4th share = 200 flight hours
                        ½ share = 400 flight hours

Most fractional ownership agreements are for a term of five years.  At the end of the term, you have several options.  For example, you typically can renew your management agreement with no additional capital outlay, sell your fractional share for its residual value and exit the program, and/or upgrade to a new jet and enter into a new management agreement.

What are the costs associated with fractional jet ownership?

Typically, the cost components of fractional ownership include (1) the acquisition cost (upfront purchase price) of the share (this amount is a one-time payment that  varies based on the type of aircraft and the size of the share purchased); (2) the fixed monthly management fee (to cover items such as administration, training, refurbishment, hangar fees, and insurance); and (3) the hourly occupied flight rate (to cover the operation of the plane when you are in the air, including items such as catering, landing fees, and fuel).  Flight hours usually are based on your actual flight time beginning at the point from which you depart, plus twelve minutes: six minutes for take-off and six minutes for landing.  You do not pay deadhead or unoccupied flight time.

Acquisition costs, monthly management fees, and hourly rates vary based on the aircraft type and provider.  The least expensive fractional ownership interest currently available is a 1/16th share in a Cessna Citation CJ1 (a five passenger light jet), with an acquisition cost of $280,000, monthly management fees of approximately $5,000, and an hourly flight rate of approximately $1,300.

Who should consider fractional jet ownership?

If you fly 50-250 hours per year and don’t mind paying the up-front cost to purchase the share or the five-year commitment of the share, fractional jet ownership may be a good option for you.   Fractional ownership is attractive to some individuals, business executives, and companies because each fractional owner has a depreciable asset on the books for tax and financial reporting purposes.   Fractional ownership also provides guaranteed 24/7 availability of your jet or an identical on just a few hours notice, consistent pilot training and top-notch customer service handled by the fractional company without all the hassles of owning and managing an entire aircraft.

Interested in fractional Aircraft Ownership?

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