Fractional ownership of aircraft

Fractional Aircraft is a common term for fractional ownership of aircraft where multiple owners share the costs of purchasing, leasing and operating the aircraft. Commercial programs for large aircraft include NetJets, Flexjet, Flight Options, PlaneSense, Executive AirShare, AirSprint and Autumn Air.

With fractional jets, customers (referred to as "owners") buy a “share” of an aircraft, rather than an entire aircraft. The price is pro-rated from the market price of a full aircraft. Owners then have guaranteed access (for 50–400 hours annually or a certain number of days of the year, depending on share size) to that plane, or a similar plane in the operators fleet, with as little as four hours’ notice. Fractional owners pay a monthly maintenance fee and an “occupied” hourly operating fee. Usually the latter is charged only when an owner or guest is on board, not when the plane is flying to a pick up point, or returning to its home base after completing a flight.

Owners have access to the full fleet of planes and may upgrade or downgrade for specific flights. At the end of the contract the owner can sell their share either back to the company or to another owner waiting for a position, though most companies charge a re-marketing fee to do this.

In addition, similar agreements are made for individual light, general aviation aircraft, where several individuals will purchase and operate their chosen aircraft as an independent group, without going through a commercial operator. If one individual decides sell their share, their shares may then be purchased by the remaining owners or sold outside the group to another individual. As it is subject to whatever terms were in the original contract, the details will vary from group to group.

In the commercial system, customers purchase (or lease) a fraction of an aircraft, alongside numerous, anonymous other individuals. Depending on the company, the aircraft 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 typically equating to 800 annual hours of usage. Most shares are sold at the 1/16 (50 hours) or 1/8 (100 hours) level.

Although the aircraft are shared, owners are guaranteed access with 4–48 hours notice, depending on the provider and plan. Providers can offer such short call-out periods by having a fleet of similar aircraft, which are interchanged amongst the owners.

In addition to purchase costs, owners pay a monthly management fee to cover the cost of maintenance, upgrades, hangaring, pilot salaries and training. When using the aircraft, owners are also billed for the actual hours in flight, and a nominal amount for taxiing. The final cost component is fuel, which has a surcharge above the hourly fee to compensate for price volatility.

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Wikipedia