Jet Advisors Blog

Understanding the Health of Your Fractional Program

Posted on Fri, Nov 01,2013


describe the image Participation in a fractional aircraft program is a good way to fly privately without buying a whole aircraft and covering the costs of such ownership if you do not fly more than 200/250 flight hours a year. Fractional ownership is not inexpensive but compared to the cost of owning and operating a whole aircraft for just 50/100 flight hours per year makes fractional programs somewhat of a bargain.

In the past almost all fractional programs were wholly owned subsidiaries of the manufacturer of the aircraft provided by the specific fractional provider. That has changed, today only one fractional provider is still owned by the aircraft manufacturer of the aircraft they use and this company is being sold to another fractional program not supported or owned by an aircraft manufacturer.

Does it matter if the fractional program is or is not owned by the aircraft manufacturer or other substantial corporation? Even if it is owned by the aircraft manufacturer or other corporate entity is that any guarantee of economic stability? Remember Lehman Brothers, who would have foresaw their demise? However, if it is a well-run and profitable fractional program I would say having a substantial parent is not necessary to insure stability. How can you tell if the fractional program is well run and profitable? On the financial side if it is a public company that reports its own financial condition then it is simple, but what if its results are combined with the parents reports? There are several signs that would provide indications that all may not be well at your fractional provider.

Some of the signs are appearance of the aircraft supplied (are they clean, in good repair with cabin convenience items functioning properly), is the aircraft supplied when and where requested, have flights been delayed or canceled without the offer of a backup aircraft, and are crews supplied professional and appear satisfied with their employment (pilots are usually pretty candid about their employer and how things are going with their company). Another sign that could indicate potential problems are the level of the fees charged for your participation in the fractional program and for flights taken. This will take a little homework but all fractional programs have web sites that usually contain their product pricing and there are other aviation related sites that provide costs of operation for specific aircraft types. Are your fees higher, about the same or lower as compared to other programs or as compared to published operational costs? It is OK to have lower costs and fees but are they so low that your fractional program is unsustainable. If your program is unsustainable at the costs and fees charged you should have concerns on safety of the aircraft and its operation and the return on your investment.

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Topics: fractional, fractional ownership, fractional share, private jets, fractional program, fractional jet program, fractional co-owner, fractional light jets