Could this be yet another method for accessing private air travel?
Amidst the surge in demand for private jet travel following the pandemic, the array of options for luxurious and private travel has expanded. Exploring these choices, let's assess how private jet sharing can impact the market landscape.
The options for private jet travel
Traveling by private jet presents a plethora of options, ranging from purchasing a private jet for those with substantial financial means to other alternatives. However, acquiring a long-range aircraft, which can cost upwards of $60 million, remains a luxury reserved for a select few. Moreover, the ongoing expenses associated with maintaining and managing the aircraft, including insurance, maintenance, hangar fees, and staffing, further contribute to the considerable financial commitment beyond the initial purchase.
Private jet charter stands out as a favored choice for ad hoc travel due to its exceptional convenience. Travelers enjoy the simplicity of paying solely for booked flights without additional membership fees. This option offers the flexibility to arrange flights at short notice, accompanied by crew, meals, and personalized amenities. Nevertheless, it comes with a substantial price tag. Alternatively, fractional ownership and jet card schemes present more affordable options for some individuals.
Fractional ownership
Fractional ownership, also referred to as 'jet card' programs, involves travelers sharing ownership of an aircraft with a guaranteed allocation of flying hours. Operators offer shares in the aircraft, which can be as small as 1/16th, entitling the owner to 50 hours of flying within a year. Larger shares provide access to the full 800 hours of annual flying available on the jet. Owners have the flexibility to acquire multiple shares without limitation.
How does it work?
In shared ownership arrangements, the aircraft typically has a maximum annual allocation of 800 flight hours. Owners have the flexibility to purchase a fraction of the aircraft's shares or acquire the entirety to guarantee availability. For instance, an owner with a 1/8th share would have access to approximately 100 flying hours annually, equivalent to approximately 50,000 miles (80,000 km) of travel. Contract terms typically span from 30 to 60 months.
Extra costs
Additional fees associated with shared ownership typically encompass a monthly flight services fee, which covers expenses such as pilot training, insurance, hangar storage, and administrative costs. Moreover, during flights, travelers incur an hourly transportation fee to account for maintenance, crew expenses, and catering, although ferry flights are exempt from this charge. Operators may also impose a fuel adjustment fee to accommodate fluctuations in fuel prices.
The advantages
Sharing ownership of a private jet affords the same tax advantages as sole ownership. Utilizing a private jet for business purposes can result in tax benefits, including deductions for depreciation. Additionally, owners of shared aircraft benefit from not having to arrange crew hiring or maintenance or storage hangars. The company selling the shares assumes responsibility for operational and maintenance logistics, simplifying the ownership experience for shareholders.
The disadvantages
During peak periods, the aircraft in which one has invested may not be readily available, although certain operators may provide alternative options. This lack of availability contrasts with the flexibility of chartering a private jet, as the aircraft may already be chartered by another owner. Furthermore, drawbacks of shared ownership include being constrained by fixed hourly rates, navigating complex contracts with undisclosed fees, and the potential limitation to a single aircraft.
Aircraft also undergo depreciation in value over time, meaning that if an owner decides to sell their share, they may not recoup their initial investment. While shared ownership offers greater convenience compared to full private ownership, the associated costs remain relatively high.
Alternatives to sharing a private jet
Alternatives to fractional or shared ownership encompass standard private jet charter services, which offer ad hoc and on-demand solutions. This option caters to individuals who utilize private jets for less than 50 hours per year or for occasional travel needs. Membership programs, requiring an annual fee, facilitate booking on-demand charter flights and often include perks such as deposit refunds, best price guarantees, tailored travel plans, and personalized services.
Another alternative is shared flights, where passengers split the cost of a flight when traveling from the same city to the same destination. Some operators now offer individual seat sales on private jets with set schedules and specific routes, providing access to private jet travel without the full privacy or flexibility. Empty leg flights present another option, advantageous for those with flexible schedules. These flights occur when an aircraft repositions or travels empty to pick up or drop off passengers in another city.
Operators frequently offer empty leg flights at discounted rates of up to 75% off the normal price, allowing passengers to book a private charter flight at a reduced cost. The entire aircraft is reserved for the empty leg passenger, making it particularly cost-effective for group travel.
The conclusion
Fractional ownership presents an attractive option for frequent travelers who can commit upfront to a set number of flying hours, making it ideal for those who utilize private jets for over 50 hours per year. However, if fractional ownership proves too costly and ad hoc private jet chartering is not feasible, membership programs can help reduce expenses while providing additional benefits.
The popularity of shared flights and booking individual seats on flights is on the rise, offering alternatives for those seeking more cost-effective private jet travel options. Additionally, booking empty legs can be a viable choice for travelers with flexible itineraries, providing access to private charter flights at discounted rates.
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