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3. Program Characteristics
Private Jet Travel: Understanding the Options
In this Chapter, we will point out some crucial aspects of the programs, with an
emphasis on the less-traditional Fractional, Block-Frax and Block Charter
offerings. We have chosen these aspects based on our observation of issues
that tend to drive purchase decisions. We also point out some key financial and
operational considerations of each offering.
Fractional Ownership offers customers the ability to enjoy many aircraft
ownership benefits at an overall cost lower than Whole Aircraft Ownership. This
is made possible by dividing the aircraft into smaller shares (fractions), giving
customers the option to buy the portion (i.e., number of flight hours) of an aircraft
that best fits their needs. New U.S. Federal Aviation Regulations prohibit
Fractional shares to be sold in increments less than 1/16th, typically equating to
50 hours per year. Above that threshold, programs often offer customized
solutions based on your travel needs.
Typical Annual Hours
Some Fractional programs offer both new and used aircraft. The programs range
from small, regional programs to nation-wide networks employing hundreds of
aircraft, sophisticated operations centers and thousands of staff. Network
economies afforded by a large fleet of similar (or even identical) aircraft, always
available to all the owners, make the "anytime, from anywhere to anywhere"
Three key agreements form the core of the Fractional arrangement. The aircraft
share purchase agreement governs share acquisition (this might also take the
form of a lease). In the aircraft management agreement, you "hire" the
Fractional program to manage your share of your aircraft. Services provided by
the management company include providing pilots, arranging for maintenance,
catering, weather reporting, reservations, and scheduling.
The third key document, the exchange agreement, allows for aircraft sharing,
and has traditionally been known as the "master interchange agreement" (though
under the new Fractional regulations it will likely be called a "dry lease exchange"
agreement). This document serves as a contract: 1) between all owners of an
individual serial-numbered aircraft (i.e., so that combined, their share ownership
equals 100%); and 2) between all owners of one aircraft and all owners of the
The big picture of
Independent Source: Deloitte Private Wealth, Private aircraft: Flying private makes sense for those with the right information (page 20)
*This website has no affiliation with Deloitte.