Jet Advisors Blog

Fractional Ownership, Who Owns the Parts on Your Aircraft

Posted on Tue, Oct 01,2013

fractional programThis may seem a strange topic but aircraft fractional ownership programs usually operate like commercial airlines when it comes to aircraft maintenance and rotable parts (the term the industry uses for parts that can be repaired or overhauled for repeated use). Rotable parts can range from minor parts to major components such as engines, landing gear and, in the case of a turbo prop, propellers. When I say fractional programs operate like commercial airlines when it comes to maintenance I mean they maintain pools of rotable parts so when a part is needed it is pulled out of the pool, placed on the aircraft and the unserviceable or out of time part sent for repair or overhaul. Then, when that part is returned following repair or overhaul it is placed into the pool for use later on another aircraft.

In small flight departments, most times when a part is returned following repair or overhaul it is put back on the aircraft it originally come from, especially if it is a major component. Not so in the fractional program since demand for and use of the aircraft is at a premium and it is time consuming to put original parts and components back where they came from. So the fractional programs pool all parts, minor to major, and after a few years none of the original parts and components are where they started life.

So why should you care? If you are an owner (as the fractional programs refer to their customers) and you are in one of the larger and financially solvent programs you shouldn’t, your main concern is that the program provider is maintaining the aircraft as required by the Federal Aviation Administration (FAA) and the aircraft manufacturer’s recommendations. However, if you are in a smaller program with less than spectacular financials you may have some concerns. What if the company goes bankrupt or otherwise goes out of business? You own an asset (or part of one) but what do you do with it? I see only two real options, one is to try to sell your fractional interest for the best price and the other is to try to purchase the whole aircraft from the other fractional interest owners.

If you elect to try and sell your interest to the highest bidder then it is fairly straight forward for you but probably not for the buyer. If you elect to try and purchase all the other interests so you own 100% of the aircraft and succeed what do you get? The airframe side of it is easy but what about the minor to major rotable parts and components (an airframe becomes an aircraft when all the components great and small are added). I would not worry about the small parts as long as you have documentation as to their serviceability but the major items like the engines and if a turbo prop the propellers can become a big and expensive issue. Most of the fractional programs used to identify specific serialized engines (and propellers for turbo props) with each airframe but now are moving to identifying a specific make and model engine (and propellers) but not by serial numbers. Why would this be an issue? If the specific serial numbers were identified or there is a bankruptcy then you would need to get your engines back (propellers too if turbo prop). Where are they? Best case they are in good serviceable condition but sitting in stock or on another aircraft. Worst case they were sent out for repair or overhaul and there is a bill to be paid before the repair facility will release them or they are on another aircraft in the fractional fleet. If they are on another aircraft you have to pay to have the engines on your aircraft removed, the ones that are yours removed from the aircraft they are on and then to have them installed on yours. If they were out for repair or sitting in stock, you will still have to pay to remove the engines on your aircraft and install your engines.

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