You might have been approached with the idea of fractional ownership for your business aviation, and the idea of having access to your charter whenever you need it is tempting.
However, the demands of a fractional agreement and the constraints for your company could leave you with less-than-ideal travel times.
The purpose of fractional ownership is to help meet the demand for business aircraft while allowing corporations to share the financial burden. After all, purchasing a private jet for business aviation needs is by no means affordable. So, sharing the cost is a welcomed concept for most.
That said, sharing cost is one thing, but when you share utilisation, you invite a whole host of issues that you might not realise right away.
So, before you agree to a fractional contract, you must familiarise yourself with the restrictions and ask yourself if sharing the burden is worth the hassle.
The Basics of Fractional Ownership
Fractional ownership is relatively new. It was originally introduced in 1986 by NetJets. Per the Aircraft Owners and Pilots Association, fractional ownership was made to fulfil aviation needs unmet through private jet charters and private ownership programs.
With a fractional arrangement, you are entering a co-ownership agreement with multiple aircraft owners. You sign a multi-year contract, pay your fee, and then the contract terms dictate your operational hours and services.
Instead of purchasing a jet outright for your corporate aviation, you are essentially buying shares of a private jet. You can buy as many shares as you would like, based on your needs. For example, you might be able to buy one-sixteenth of a private charter or half if you intend to consume most of the jet’s time.
The biggest draw-in for fractional arrangements is that you are guaranteed to have access to a luxury charter jet whenever you want — 24 hours per day, 365 days a year.
While it all sounds perfect, there are some hidden disadvantages to fractional ownership that can turn a great business deal into a disaster.
5 Reasons to Avoid Fractional Ownership Programs
1. Notice Requirements Limit the “Flexibility” You are Promised
You are promised flexibility with a fractional ownership agreement, but there are strict limitations on when you can take your jet out. Last-minute flights are almost impossible because your contract will explicitly state the notification requirements.
Therefore, you may be required to notify the management firm 24 hours ahead of time, while others have a minimum of a few hours. Also, if your flight plans change unexpectedly, your management company may not be able to accommodate those changes.
2. Peak Travel Seasons Limit Flexibility and Availability
You are guaranteed access to a private jet charter operator in your fractional ownership, but that does not mean you will have unlimited ability to call on an aircraft at any given time. Peak travel seasons, holidays, and major events will limit how many hours a plane is available. If another owner has already requested the jet, you must change your itinerary to a time that is free.
3. You Are Signed into a Lengthy Contract Term
Fractional ownership requires a long-term commitment. While it is shorter than the lease or loan program for a private jet, you are still engaging in a five-year contract period. So, if your corporate aviation needs change, you might have a difficult time leaving the contract without a significant penalty.
4. You are Allotted Specific Flight Hours Per Year
Typically, fractional contracts are based on a specific amount of flight hours per year that are divided among shareowners. Usually, the number is 800 working hours per year, sold in fractional amounts. So, the number of hours you purchase in the fractional arrangement are fixed and cannot be altered.
If you buy 200 hours, you only have 200 hours per year, regardless if your business aviation needs increase or decrease. So, you might have fractional ownership of an aircraft for more hours than you need or must pay additional charter fees when you exceed your fractional time limit.
5. You Purchased Shares of a Fleet, Not a Specific Craft
Per the National Business Aviation Association, you might have bought shares of a new aircraft through fractional agreement, but the age of each aircraft in the entire fleet will vary. You will be provided with an aircraft that has a similar exterior and interior, but fleet availability might mean having an older aircraft substituted when your newer aircraft is unavailable.
Avoid Being Constrained with Your Business Aviation Needs – Use a Private Jet Charter Marketplace Instead
Business travel is not always predictable, and to enjoy the benefits of fractional ownership, you must be travelling on a strict schedule and be ready to commit to a lengthy contract.
With private jet charter services through Jettly, you book when you need and nothing more. Even better, you can use the Jettly app to find a plane that suits your travel needs. Need a large jet to head to another country? Perhaps you need a smaller plane just to take you to the other side of the state?
The only way to unlock maximum savings and real flexibility is through a private jet charter marketplace like Jettly.
See the infinite possibilities of Jettly by reviewing our list of aircraft or requesting a quote to book your private jet charter today.
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