Comparison study of buying an airplane, fractional share, jet cardrivate jet charter
UNDERSTANDING THE OPTIONS
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10. Page 3-1

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3. Program Characteristics 

 

 

 

Private Jet Travel: Understanding the Options  

October 2003 

 

3-1

3. PROGRAM 

CHARACTERISTICS 

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 

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. 

 

Share 

Typical Annual Hours 

1/16

th

 

50

 

1/8

th

 

100

 

1/4

th

 

200

 

Half

 

400

 

 

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" 
concept achievable. 
 
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 
Fractional 

 

 

 

 

 

 

 

 

Defining  
Fractional 
contracts 

 

 

"Chartering a plane, either directly from a charter company or through a charter broker, is often the most cost effective way to fly private."

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.