Fractional Ownership

Fractional ownership is targeted specifically at businesses for which it would not be viable to buy or lease an aircraft 100% of the time, but need an aircraft at their disposal for certain times. I doubt it would work in the leisure sector, except for very wealthy persons who fly very regularly as the percentage of time that you would actually spend on board the aircraft would be minisclue. PM me if you want more info – I know quite a bit about the economics of how fractional ownership works.

Your talking about £2m for 50 hours in a Falcon 2000.

Well with what I got, I’m booking out my 7.5 minutes tomorrow 🙁

Once you include all the costs, 50 hours flying time is going to cost you in the region of £300,000-£350,000. 25 hours will be about £150,000 – £175,000.

This is based on the smallest type, the Hawker 400XP. The price increases quite a bit for larger aircraft. Your talking about £2m for 50 hours in a Falcon 2000.

Can any one tell me what sort of price you would expect to pay for your 25 hour and 50 hour slots – give me an amount in the bank account for an aspiration. Wouldn’t that give you some high status being able to call up a biz jet – nobody need know it isn’t yours!

Yup I think theres definitly a gap there. Like I side IMHO its going to be filled by the VLJs in the next few years, I have seen one business proposal involving the new Eclipse aircraft which looks like it might be able to muscle in on Netjets territory slightly.

Definitly worth writing about whilst its still pretty much unique!

The operators are going to make much more money selling hundreds or thousands of hours to large companies, and clearly not as much if they are only selling 25 hour slots. Whilst people are still buying the 25 hour slots it is in their interests to focus on getting the 100s or thousands of hours slots and that seems to be where their marketing is focusing. I guess in the next 5 to 10 years the targeting may move to the leisure market, and it certainly is going to with the impact of the VLJs within the same period.

Cool. Thanks for your help – much appreciated.

The reason I am asking about this topic is because I am entering a business idea compeition at my university and I am going to submit a fractional aircraft ownership company that will be open to both the business and lesiure markets as I think there is real potential. I would like to think I could focus on the lesiure market, but not too sure if there would be enough demand on its own due to LCC’s.

What do you think?

You will see reference to the leisure market in some of the sales literature, but there is still a huge untapped market in the business sector that is just waiting to be converted Fractional. The operators are going to make much more money selling hundreds or thousands of hours to large companies, and clearly not as much if they are only selling 25 hour slots.

Whilst people are still buying the 25 hour slots it is in their interests to focus on getting the 100s or thousands of hours slots and that seems to be where their marketing is focusing. I guess in the next 5 to 10 years the targeting may move to the leisure market, and it certainly is going to with the impact of the VLJs within the same period.

Basically because it sells most to the business sector. There is however a significant take up from the leisure sector, but of course you cant advertise it in conventional ways. The marketing is nearly entirely word of mouth, usually spreading from a positive experience of the service through the busiess sector.

Why couldn’t you market it conventionally? (rhetoric question!)

Surely those people that have got a fractional ownership in a house (e.g summer property in Spain!) found out about a company that deals with such thing from books, exhibitions and the internet and have chosen the property of their choice to invest in, so why couldn’t you do the same with an aircraft?

What is fractional ownership?

This is taken from the Cessna website (Citationshares), hope it helps:

UNDERSTANDING FRACTIONAL OWNERSHIP

A Plane, When and Where You Need It

With the purchase of a fractional share of an aircraft (as little as a one-sixteenth share, or 50 hours per year), you gain access to an entire fleet. You may even have simultaneous access to more than one aircraft–an impossibility if you own a whole aircraft.

Our program is simple. You purchase the fraction of ownership you need of a Citation CJ3, Citation XLS or Citation Sovereign. The model you purchase depends on how far, and with how many people, you travel. With your share, you receive asset ownership, and rights to a specified number of flight hours to use as you see fit.

Fractional ownership offers the same flexibility and privacy as having your own plane. The only passengers that are on the aircraft for your scheduled trip are designated by you. You are guaranteed availability (with 8-hours notice for trips within the 48 contiguous states and 24-hours notice for international trips) of your aircraft or a comparable or larger aircraft. You simply put in your request for an aircraft when you need to fly and the fractional program takes care of the rest.

Fractional ownership provides greater convenience if your trips originate from multiple destinations and eliminates the problem of grounded aircraft. And fractional ownership is a turnkey model, so you have no management concerns as a fractional owner.

Fractional ownership provides individuals and companies all the benefits of whole aircraft ownership at a fraction of the cost and without the management responsibilities. Unlike time-share, you are not restricted if another shareowner of your specific aircraft is using it. As an owner, you gain access to the entire program fleet, so that when your specific aircraft is unavailable you are provided with a comparable or larger aircraft.

Typically, the three cost components of fractional ownership include the upfront purchase price of the share, the monthly management fee and the flight hourly rate.
One-sixteenth share is the minimum share size, providing 50 annual occupied flight hours. At CitationShares, you can purchase shares in additional increments of 25 hours.

Flight hours include only occupied flight time. The flight time is calculated by the actual flight time plus six minutes for landing and six minutes for takeoff.
Management of your ownership interest by your fractional provider includes crew management and training, scheduling and dispatch, aircraft maintenance, insurance, ground support, standard catering and administration.

What is fractional ownership?

Basically because it sells most to the business sector. There is however a significant take up from the leisure sector, but of course you cant advertise it in conventional ways. The marketing is nearly entirely word of mouth, usually spreading from a positive experience of the service through the busiess sector.