Understanding Fractional Jet Ownership and its Costs

Fractional jet ownership started in the 1980s as an alternative to full aircraft ownership. Companies like NetJets led the way, offering individuals and businesses a chance to buy shares in a jet. This allowed multiple owners to share a fleet of aircraft based on their ownership stake, giving access to private aviation without the high costs of buying an entire plane.

How Fractional Ownership Works

Typically, fractional ownership comes with a five-year contract. Owners purchase shares (e.g., 1/16, 1/8, 1/4) that correspond to the number of flight hours they’ll get annually. For example, a 1/16 share might give you 50 hours of flight time each year.

Non-Refundable Commitment

Once you buy a share, you’re responsible for the associated costs, even if your flight needs change. This engagement is non-refundable.

Breaking down the costs gives a clearer picture of what you’ll pay:

1. Acquisition Cost: The upfront cost of buying your share. For a 1/16 share, this could range from $900,000 to $8,000,000, depending on the aircraft. Fractional companies often charge a 20-40% premium above and beyond the actual pro-rata cost of the plane MSRP.

2. Monthly Fees: These cover maintenance, insurance, and administration. Expect to pay anywhere from $14,000 to $50,000 each month. These fees can be a significant profit source for the fractional company.

3. Hourly Flight Costs: For each hour you fly, you’ll pay additional fees covering crew, maintenance, and operations. Rates can range from $5,000 to $20,000 per hour, depending on the aircraft.

4. Fuel Costs: Fuel is usually billed separately, often between $1,000 and $3,000 per hour.

5. Remarketing Fees: If you sell your share, you may need to pay remarketing fees—typically around 5% of the share’s value. Selling is usually restricted to the fractional company itself, not the open market.

6. Loss in residual value: Your share will lose value over time, especially since fractional jets fly more frequently than privately-owned ones, leading to higher depreciation. This loss can be significant. An average private jet may fly 200-400 hours per year, however, fractional aircraft, such as those in the NetJets program, can fly more than 1,200 hours per year, leading to higher depreciation.

Calculating Effective Hourly Rate

Calculating your real hourly cost with fractional ownership can be tricky. You have to consider acquisition costs, ongoing fees, and depreciation. This complexity contrasts with the simplicity of jet cards, which offer clear, fixed hourly rates without additional fees.