Fractional Ownership
Once a client or corporation has determined the need for a higher level of consistent annual utilization and gained familiarity with the different aircraft types aligned with their mission profile, fractional ownership options should be evaluated.
What is Fractional Aircraft Ownership?
With fractional ownership, you purchase a share of a specific aircraft type, which provides you with an annual amount of allotted flight hours. Typically, fractional programs require a minimum share size of 50 hours of flight time per year to acquire a share. Fractional shares can especially be cost effective if you plan to stay at your destination for a long period of time, since you only pay for your occupied flight time, not the positioning flights.
Fractional ownership involves acquiring a portion of a particular aircraft type, granting you an annual allocation of flight hours. Generally, fractional programs necessitate a minimum share size of 50 hours (1/16th interest) of flight time per year. This modeling can be particularly cost-effective if you anticipate an extended stay at your destination, as you only incur charges for the actual flight time flown and exclude the positioning flight costs.
The Cost of Fractional Ownership
Acquisition Cost
The initial cost to purchase a share. This varies depending on the aircraft type and size of the share.
Monthly Management Fees
These fees cover your ownership’s portion of the fixed costs, including maintenance, pilot’s salary, crew salaries, insurance, hangar fees and other administrative costs.
Hourly Operating Fee
This fee covers your hourly operational costs for each hour flown.
Fractional Share Options
There are, at present, two options when purchasing a fractional share. Traditional share sizes are based on annual flight hours per contract, per year. Other programs offer share sizes based on annual days of utilization per contract year.
The hours-per-year model is based on shares totaling 800 occupied hours per year sold for each aircraft. The newer days-per-year model enables owners to fly as many hours as they need per day with the only limitation being standard crew duty times. Understanding the pros and cons of each model and how it fits into your travel needs is an essential part of any fractional program analysis.
The Path to Fractional Aircraft Ownership
There are several key considerations that factor into fractional jet ownership. We assist clients through the entire fractional share purchase or lease process, starting with an initial evaluation and review of the available options. We represent our clients with the selected fractional provider during the analysis, negotiations, final contracting with the selected fractional provider and delivery of the share.
Perform Initial Evaluation
Clients considering fractional aircraft ownership often have different expectations and have varying needs. For those new to private aviation, or those simply looking to make a change, the initial evaluation of the various private aircraft programs is an important step made easier by working with Rare Air Aviation.
Oversee the Proposal
Once the client has selected an aircraft type and assessments are complete, we assist them with understanding the differences between the various proposals from the identified providers to determine which will most effectively meet their defined needs and requirements.
Oversee Negotiations and Contracting
Once the client has selected a provider, Rare Air will provide ongoing representation during the review, including the negotiation of terms, final contracting and closing on the share.
Ongoing Financial Monitoring
While the billing process for fractional providers is well-defined, with fixed monthly management fees, along with invoices for variable costs based on hours flown during the prior month, we often provide routine statement monitoring and review on an as-requested basis.