Fractional Aircraft Ownership

With fractional aircraft ownership, you purchase a share of a specific aircraft type to be utilized for a defined number of annual allotted flight hours.

No. Fractional jet ownership does not meet the provisions outlined in FAR Part 91.501(c)(1). Instead, fractional jet ownership falls under FAR 91 Sub Part K.

Fractional owners are not responsible for employing pilots, cabin crew and flight operations coordinators or administering maintenance. The program provider also handles the day-to-day responsibility of paying airport and hangar fees and insurance, although fractional owners contribute an agreed-to monthly and hourly fees toward these costs. Annual increases are based on Consumer Price Index increases, thereby eliminating any large expenses that a dedicated aircraft owner might face. Fractional owners also do not have to pay a “deadhead cost” — that is, any costs incurred from positioning the aircraft to their departure point.

As an added benefit, some fractional plane ownership programs offer owners the option to upgrade or downgrade the size of the aircraft depending on their trip requirements.

Essex Aviation recommends that prospective fractional jet ownership clients consider the following before making a decision:

• The number of hours they fly per year
• Whether a specific aircraft type meets the majority of their travel requirements
• How frequently their travel needs change
• The length of their trips
• Whether they fly for business or personal reasons
• How many people they typical travel with
• What their budget is

There are two options when purchasing fractional shares: an hours-per-year model and a days-per-year model.

Most fractional share contracts have a minimum ownership period, in which the first purchase of a share is three to five years.

Most fractional jet ownership programs require a minimum share size of 50 hours of flight time per year.

The maximum fractional jet ownership share size is 800 hours of flight time per year, which is roughly equivalent to ownership of the entire aircraft.

Maybe. Although it is possible to exceed your yearly allocation by borrowing against the next year’s allotted hours, each fractional plane ownership company has different restrictions concerning this practice.

Fractional jet ownership costs include the initial acquisition cost, monthly management fees and an hourly operating fee.

Not necessarily. Although fractional aircraft ownership companies will always try to have you fly on the specific aircraft model you own, on some occasions it may be necessary to utilize a different model, one that either meets or exceeds the aircraft model type you currently own. If the program provider utilizes a larger aircraft due to fleet availability or scheduling requirements, you will not be billed any additional costs for the upgraded aircraft.

No, it is unlikely that you will have the same crew for each flight. Most providers rotate their large fleet of aircraft and aircraft crews to meet the travel requirements of each fractional owner.

There is a significant amount of paperwork involved when purchasing a fractional jet ownership share but the primary documents you’ll sign are a purchase agreement, a management agreement, an ownership agreement and a dry lease exchange agreement.

Yes, however, fractional shares tend to depreciate more due to their high level of annual utilization, resulting in lower residual values.

Yes, as a fractional owner, you are considered an aircraft owner for tax purposes. Essex Aviation recommends that all prospective clients consult an aviation tax advisor and tax attorney prior to purchase.

Potentially. Again, Essex Aviation encourages all prospective clients to seek tax counsel for more information.

No, your direct operating cost per hour will remain the same even if you increase your size of share purchased.

Yes, your management fee will increase if you increase your size of share purchased.