Why Should You Get a Fractional Ownership?

by Richard Zaher / Feb 02, 2012

Fractional Ownership

There are many options for private jet fliers both in the US and internationally, from direct on-demand charter to aircraft ownership. One popular option is Fractional Ownership. Companies like NetJets can be found with advertising all over the place, and with great ads, and a huge industry presence, this option can be very attractive. What is Fractional Ownership, and why should you consider it?

The first fractional ownership company to come on the scene was NetJets. According to their history, they were formed because while the convenience and flexibility of owning an aircraft made sense, the finances did not. Aircraft ownership is a very expensive option. Beyond the multi-million dollar cost of purchasing a jet, comes the multi-million dollar cost of owning a private jet. From crew and maintenance staff salaries to hangar costs, and maintenance bills, not to mention the high hourly rate of flying your jet for hours a week, it adds up to be a very high-cost option. NetJets was created for people who are considering aircraft ownership, giving them an option to pay many of these costs on an annual basis instead of locking themselves into aircraft ownership long term.

However, many charter customers have found that chartering aircraft on a case by case basis is actually more convenient, and more cost-effective than aircraft ownership, or fractional ownership. Here is how it works. NetJets clients buy a share of an actual existing aircraft. You can start out with 1/16th of an aircraft, and work your way up from there. You have to start out with a 5-year commitment but could get more if you want. There is a large upfront fee that you pay for this ownership, starting at about $200,000, based on the age and size of the aircraft you are buying. Therefore, the $200,000 would buy a 1/16th share of an older Citation Ultra. There is a monthly fee that covers maintenance and crew costs, and then there is an hourly charge that is applied to each trip. So while the hourly occupied rate of the aircraft sounds good, you must breakdown the entire cost to get the true hourly rate. When all this is added up, it comes to a cost about double the hourly rate of a standard charter.

While you do own a portion of an aircraft, you will probably never see or fly on that aircraft. You will be flying on an aircraft of the same make, or similar make in the same class. You will be guaranteed an aircraft if you give 10 hours advanced notice. The flight crew and aircraft will be high quality and will provide great, reliable customer service.

In contrast, charter customers that come to Paramount Business Jets pay only one price, the cost of a trip on a pay as you go basis. For 50 hours of flying, our clients would pay around $150,000 on a light jet with Paramount. And that is it, all in! Our clients receive top-notch, Wyvern reviewed aircraft at an hourly rate discounted lower than the standard retail price. They will receive one-way and empty leg savings on trips when they apply and solutions for all trips no matter what the need. The aircraft are reviewed and selected per the client’s needs and desires.

Whether on a budget for this trip or looking to fly in the highest luxury on a premium jet, you will have thousands of aircraft to choose from. Every operator we work with must provide the utmost professional and high-quality flying experience because they don’t have you (or us!) locked in for the next 5 years!! And instead of 10 hours, you only need 4 hours to get an aircraft booked with us.

Fractional Ownership was created for customers that are strongly considering buying their own jet. It is at that point that someone would consider the high cost of fractional ownership. If you speak to jet charter customers, you will find that many of them have owned jets before. In the end, booking a jet on a trip by trip basis turns out to be a much more financially practical option for almost any situation. You will receive the same sort of outstanding customer service and aircraft availability but with outstanding savings and more choices. In the end, if you have read this article and you are still considering fractional ownership, please call us and speak with one of our aviation consultants about fractional ownership leverage, or stay tuned to later postings, where we will address this up and coming option for private jet flight solutions!

About Richard Zaher

Richard Zaher Richard Zaher is the founder and CEO of Paramount Business Jets. He is a pilot and the President of Air Charter Association of North America (ACANA). Richard is a graduate of Embry Riddle Aeronautical University (ERAU) with a Bachelor of Science in Aerospace Studies. A seasoned international jet charter expert, entrepreneur, humanitarian, and the recipient of the Embry Riddle Eagle Excellence Award at the 2012 National Business Aviation Association (NBAA) convention. He is also an active member of the Aircraft Owners and Pilots Association (AOPA) as well as several safety and air charter organizations.

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