25. Page 4-3
4. Key Attributes
Private Jet Travel: Understanding the Options
The commitment attribute captures the degree to which you must commit to a
business aviation service offering. This includes issues such as whether or not
you have to sign a contract. What is the length of the term? How easy is it to
terminate, and what are the associated penalties? How easy is it to renew?
Some business aviation users are prepared for a long-term commitment while
others prefer the flexibility to pay as they go.
Charter. Charter falls at the low end of the commitment scale, as there are no
requirements beyond what you agree to with each individual trip.
Block Charter and Block-Frax. Block Charter and Block-Frax both require a
somewhat higher level of commitment, as you will normally be asked to sign a
one-year contract. Some programs offer prorated refunds for unused hours if
you leave the program.
Fractional. The term of Fractional contracts vary by program; they are typically
multi-year arrangements with penalties for early termination (e.g., after one, two
or three years - depending on the program). On the other hand, Fractional
programs do provide you with a guaranteed buyback at the end of your term.
This assurance provides many with peace-of-mind that there is someone
standing ready to buy back their share at termination.
Ownership. With Whole Aircraft Ownership, you do not have a specified contract,
unless you hire an aircraft management firm. These agreements typically span a
single year, with termination on 30 or 60 days notice. But you do have to acquire
the asset, with the associated costs and risks. If you build an internal flight
department (i.e., pilots, mechanics, etc.), you have made a fairly significant
commitment to your aviation operations. You have the flexibility to determine at
any moment to dispose of your aircraft, but you will need to find a buyer, will
likely incur brokerage fees, related sales expenses, and transaction costs.
Charter is trip by
usually one year
usually multi year
Ownership is at
will, but . . .
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.