In exploring the fractional jet ownership model, we spoke with a number of clients and consultants, as well as the companies themselves. Our conclusions were guided by two dominant themes:

1. No company has demonstrated a sustainably profitable business model
2. All companies face similar cost dynamics

Helium Report saw that while some companies’ plans appeared more economical at buy-in, there was less certainty in the residual value when reselling your share five years later. Other plans compensated for low buy-in by opaque fuel surcharge fees or aggressive pricing of interchange (switching to a larger or smaller jet) or extended service areas. Since no provider is enjoying windfall profits, you’re fairly safe from wholesale fleecing. The bigger question is fit: do the company’s pricing structure and incentive programs align with your travel patterns?

If your travel pattern is round-trip or especially long flights, does your provider offer a discount for those hours and fees? If you often travel outside your primary service area, what is your provider’s pricing philosophy? Do they seek competitive parity, or view those fees as a low-profile opportunity to recoup losses elsewhere?

So Where’s the Deal?

We were told several times that “there are no deals;” that there’s no jet equivalent to the rustcoating and undercoating scams in auto sales. In fact, a few consultants cautioned against overly aggressive buy-in pricing or deal incentives, citing correspondingly suspicious buyback terms at the end of those too-good-to-be-true deals.

There is one exception: buying a used share with unflown hours. If you can find a fractional owner who’s willing to sell and hasn’t used their current allocated hours, take a close look. For the seller, there’s a chance to avoid the 7% remarketing fee. More to the point, fractional companies typically provide no credit for unflown hours at buyback, but they’re highly valuable to a third-party buyer. Finally, as a second-hand buyer, you will inherit the monthly and hourly fees of the original deal. It’s likely that these rates will be more attractive than what you could achieve with a new fractional purchase.

There are some pitfalls to avoid, and Helium Report encourages all fractional prospects to retain a consultant or aviation attorney to assist in your transaction. In fact, these professionals tend to be the best source of these second-hand deals.

Know What We Know

See Helium Report’s indispensable resources for private jet travel:

• Decision Guide to Private Jet Travel (PDF)
• Private Aviation Explained
• Justifying Private Jet Travel