Ever since the downturn in the economy, fractional aircraft ownership is looking more and more like an attractive option to some when compared to the outright owning of a plane.
After all, why pay for keeping an airplane in a hangar and all the other associated costs when it is not being used all the time?
Fractional Jet Ownership provides the same advantages of outright ownership – private aviation, convenience of when and where the plane is available – but with less hands-on management by the owner.
How Does It Work?
The Fractional Jet Ownership model, which has been around since the 1980s, is based on a time share-like approach. Clients purchase ownership in a jet by buying an undivided interest in a plane that is based on the value of the plane. The clients are guaranteed a certain amount of flying hours on the plane depending on the particular deal that is negotiated.
The company offering the Fractional Jet Ownership Model has an entire fleet of planes and can provide an aircraft for a client with anywhere from 4 to 48 hours’ notice. Clients often pay a management fee for the service that covers maintenance and other matters, and are assessed a usage fee for the hours that they are actually utilizing the airplane.
For businesses that need a private jet and that do not have the need for several hundred hours of usage or the headache of maintaining their own flight department, the fractional model can save time and management headaches. No longer do they have to worry about storage and maintenance, employee issues or the purchasing of an entire plane.
The number of interests in any particular aircraft can vary but can be as small as 1/16. Purchasers may be committed to retaining these shares for two to 5 years. Once that period is over, the purchaser may even be able to lease or sell the share, including back to the company for the fair market value at that particular point in time.
Again, the lack of overhead has made Fractional Jet Ownership a popular option for businesses who have the need to fly in a business aircraft but without the associated headaches.
If considering The Fractional Jet Ownership Model, it is prudent to contact several different providers and find out what arrangement is best for one’s particular situation.
Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.
