What Is Fractional Ownership In Private Aviation?

Guaranteed hours for a business jet without fully owning one.

We recently published a short guide on some of the different options for chartering a private jet or finding fares on regularly scheduled flights through one of many newer "airlines," facilitating the experience at a much more approachable cost. But, besides simply purchasing an aircraft (whether as an individual or business), another popular method will land you a guaranteed seat on such a plane, called "fractional ownership."

As the name suggests, this means splitting the cost of owning a business jet between multiple people. This is a great middle-ground option for those in the market for a private plane but either don't quite have the capital to outright purchase their own or wouldn't need it on a daily basis. Not that it's inexpensive, but it's a sensible option for some people.

Get the latest aviation news straight to your inbox. Sign up for our newsletters today.

Touting much of the same tax benefits as those who buy an aircraft for themselves or their business, fractional ownership incorporates buying "shares" of use with a firm that owns or rents private jets. Not only does this allow for lower overall costs and a tailored amount of time to fit an individual's needs, but it comes without the responsibilities owners face.

By being a fractional owner rather than outright purchasing an aircraft, you don't need to worry about finding a flight crew, storage, a maintenance team, and other burdens. Most operators offer 1/16, 1/8, 1/4, or 1/2 shares, typically equivalent to 50, 100, 200, and 400 hours per year. Fractional ownership programs typically span a length of five years, and at the end of the term, you can sell back your ownership of the jet at market value.

According to JetFinder, a major air charter operator for business, leisure, and medical flights, on the lower end of the spectrum, fractional ownership can cost around $275,000 and can go into the millions. Considering that a small, mid-size jet can cost $10 million, while a super mid-size can run you $30 million (before additional care and storage costs), guaranteeing some amount of use per year for a much lower price might be a good idea.

On top of this cost, you have additional fees like fuel surcharges which can be around $1,000 per hour, monthly management fees of $9,000, and an "occupied" hourly cost of about $1,500. If this all sounds good, you’ll need to sign a purchase agreement, a potentially-negotiable management agreement (with essential terms of use for hours and shares), a binder/deposit agreement (identifies the specific aircraft and cost-lock for the duration of ownership), and a master dry lease exchange agreement (governs the relationship between all owners).

Some of the big players offering these programs include:

Company

Aircraft Types Offered

Locations Offered

Net Jets

Light, Mid, Super-Mid, Heavy

Global

FlightOptions

Light, Mid, Heavy

North America

Flexjet

Light, Mid, Super-Mid, Heavy

North America

Nicholas Air

Light, Mid

North America

AirShare

Light

Mid-US

PlaneSense

Light

Eastern US

The Company Jet

Light

Mid-US

As seen in the above chart, those living outside North America or the United States are at a disadvantage as options are limited. However, one fundamental problem affecting any owner is that a fractional agreement is typically specific to an aircraft type. Being limited to one particular jet model can be troublesome for planning trips with a wide range of lengths or destinations; for example, Aspen's high altitude can be challenging for some aircraft.

On a related note, if you’re locked into a small light jet, there are likely passenger limitations; if you only use your hours for yourself or just one flight companion at a time, this may be a non-issue, but to occasionally bring the family onboard might be problematic. Rarely some operators will allow you to use an aircraft not a part of the agreement; others may permit this for an extra cost. Lastly, though this is very expected, even if you don't use any hours in a given month, you still have to pay the standard monthly dues and maintenance costs.

Sources: JetFinder, Flying, Elite Traveler

With a background in Chinese language and marketing, Justin merged his passions for air travel and communication to become a writer for the Simple Flying team. He closely monitors industry changes on a global scale, with particular interest in the East Asian and North American markets.