You might have tried a private jet charter and become enamoured with the comfort and convenience of travelling in style. You might now be considering the guaranteed availability that can be achieved by owning your own plane. Full aircraft ownership offers full freedom and control but comes with many responsibilities. Making the right move into aircraft ownership is a daunting and sometimes overwhelming task.
Owning and managing an aircraft is a complicated process and requires significant safety compliance. Usually this is done by hiring an aircraft management company that will take care of ownership responsibilities such as aircraft maintenance, insurance, parking, employing pilots, arranging flights, cleaning, or even catering.
With these challenges in mind, full ownership may not be an option for you especially if the number of hours in the air does not justify the high cost; however, there are some practical alternatives.
There are a few questions to ask yourself before deciding:
- Do you know how many hours a year you will spend flying?
- What geographic coverage are you interested in?
- Do you prefer flexibility over committed flying hours?
- Are you interested in making a short-term or a long-term commitment?
- Are you OK locking capital into a depreciating asset?
Based on your needs you can decide whether to invest into owning a fraction of a private jet or enrol in a jet card program. If you are not sure how many hours you will use and would rather not make a costly investment, the jet card would be your choice.
Jet cards give you access to selected category of private jet aircraft at a fixed hourly rate with no additional costs. There is an upfront commitment to an agreed number of hours, but they don’t need to be used in a specified period and some providers offer no expiry date or even a fully refundable account balance. The jet card provider will make sure to consistently provide an available aircraft from the size category of your choice, be it light jets, midsize jets, or large cabin aircraft.
The level of service, hourly rates and terms vary between different jet card providers. You may want to look at comparison of what extras are included, how many peak days are offered, geographical coverage, cancellation policy, upgrade and downgrade options, and what flexibility you have with your card, for example, sharing it with your family members.
Jet card advantages:
- Short-term commitment.
- Pay only for hours you use no matter how much or how little you fly.
- Hourly rates are guaranteed.
- The initial membership fee is much lower compared to a fractional ownership.
- None of the ongoing expenses that come with a fractional ownership.
- No need to pay for repositioning flights.
Things to consider before opting for a jet card:
- Choosing the right provider with no hidden fees is important.
- Sometimes during peak hours your aircraft may not be available or will come at a premium.
- You may end up using a different plane each time you fly.
In case you value more consistency and spend 150 – 200 hours a year in the air getting from one place to another, it might be a good time to consider an aircraft ownership of some sort. Obviously, you can own your plane fully, but a fractional ownership might be a more cost-efficient way to enjoy flying with your own aircraft.
As a fractional owner you partially own the aircraft. You invest in a share of a private jet. Generally, the shares are based on the aircraft flying 800 hours per year and you can choose whether to go with a full share, half share, quarter share, or even less. The size of your share or fraction then gives you access to dedicated flying hours on a specific aircraft.
Advantages of a fractional ownership:
- All the benefits of owning your own private jet.
- Less capital expenditure since you are buying only a share.
- Your fractional partners share running and maintenance costs.
- No need to worry about the responsibilities attached to aircraft ownership.
- Buying a share in one aircraft may give you access to other planes within the fleet, depending on the company and the size of their aircraft fleet.
- Aircraft tail number cannot be traced to you, offering more privacy.
- Consistent level of service – getting your aircraft when you want it and with short notice.
Things to consider before committing:
- Consulting a specialist lawyer with proven experience because fractional ownership contracts can be very complicated.
- While fractional ownership can save a lot of money in the long run, it is a big financial obligation and only a long-term commitment of at least five years will pay off. Breaking off earlier will most definitely result in losing money.
- Initial investment is not small. A 1/16 share will come to a few hundred thousand dollars.
- Starting small and considering the number of miles and frequency of trips. It is easier to add on or upgrade if needed but almost impossible to walk away from the agreed contract.
- Ongoing management costs whether you’re using your hours or not.
- The aircraft becomes your asset, and you must account for its depreciation.
- Some companies may want you to pay a remarketing fee to sell your share of the aircraft after your contract expires.
The bottom line:
There are many ways to enjoy the luxury, freedom, convenience, and privacy afforded by travelling by executive aircraft. Fractional ownership is ideal for frequent flyers, people who prefer high level of consistency, and familiarity with their surroundings and processes. Jet cards make flying easier and more flexible but a bit of warning here – comparing all providers takes a bit of effort. Looking only at published hourly rates can be very misleading because some programs can turn out to be very expensive for short flights and more cost effective for longer trips. According to Forbes “70% of jet card users have additional private aviation solutions, including on-demand charter, aircraft they own or use from their companies and even fractional shares, so jet cards don’t necessarily have to be an exclusive solution.”
It must be said that ultimate flexibility and service comes by working with a trusted partner such as an air charter broker. The following chart should make it easier to compare mentioned options.
If your preference is to leave all the hard work to someone else, then please contact Pristine Jet Charter here.
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Author: Elie Nehme