Fractional vs. owned aircraft, pros and cons

[pilotviolin]

Maybe someone can correct me, but NetJets adds .2 to every leg. Our typical day is 4 legs. And on days when we have short legs with a total time of around 2 hours.
NetJets would charge .8 on top of the everything. At around 3k per hour for a light jet. Do this a couple times a week.
.8 X 2 X 52 = 83 hrs @ $3000 IS $249,000

 

[wtrav8r]

Maybe someone can correct me, but NetJets adds .2 to every leg. Our typical day is 4 legs. And on days when we have short legs with a total time of around 2 hours.
NetJets would charge .8 on top of the everything. At around 3k per hour for a light jet. Do this a couple times a week.
.8 X 2 X 52 = 83 hrs @ $3000 IS $249,000

You are correct with the .2 for every Leg (Charters as well). I have been explaining this to my Superiors for nearly 2 years now, as we a have a Fractional in addition to the Company Plane.

Our Management Fee, Operating Charge, and Fuel Charge is about 4400 hr for a light jet. (4800 in October, as the Fuel was higher).

We Operate the Company owned Plane at 400hrs a year, and the Fractional at 250hrs. Guess which one costs more? Fractional by almost 100K.

 

[jtf]

As far as individual preferences go, at least at NJA, there is an individual profile on most of our briefs that can get quite detailed- I've seen profiles that include things like "customer prefers eggs to be cooked only in iron skillets" or "customer prefers a pillow placed on seat before arrival", or even notes to have certain products removed from the aircraft for allergies or if from competing companies and even music and movie preferences. These notes are easy to add to for following crews and do allow for a bit more "personal" feel for the customers even though they may never fly with the same crew more than once. We definitely have some passengers who are higher maintenance than others, but when things have gotten too unreasonable owners have been asked to leave the program (luckily I haven't had to deal with any of them). I haven't seen a note that requested 6 ice cubes, but if I find one that does I wouldn't have a problem fullfilling that wish as long as it was before the aircraft was moving- the customers are paying a lot of money to be there and I think they should expect a little more than the airlines offer for the money they are paying.

 

[brokeflyer]

flew a rock star that wanted us to remove our uniform and wear shorts and his bands t-shirt.....which was really cool.

wish he woulda threw in groupies with that order....

 

[F/O]

NJ marketing is pretty good about finding out who owns airplanes operated in Part 91 flight departments and trying to get them to switch over to NJ. When I flew 91 the flt dept. address was different from the boss's business address. NJ hadn't figured that out though, so we got stuff in our office about once a month from them that was addressed to him. Funny thing, though---it always seemed to "accidently" get dropped in the shredder. :laugh:

 

[johnsonrod]

One big difference between owning outright and buying a fractional share: the amount of depreciation expense. Of course, it depends on the share amount, the aircraft type and the age of the aircraft. If your boss wants to shield more of his income and he has a "relatively" new airplane, he might do better with an owned airplane - the depreciation expense reduces taxable income and it could be used to pay for the entire airplane operation.

Here's my understanding of depreciation (I am not an accountant). If you own a new GV valued at $50 million and you depreciate the aircraft over 5 years you get roughly $10 million in depreciation expense per year during the 5 year period to apply toward net income. After the 5 year period the aircraft becomes less useful if it fully depreciated - at that point owners look to buy new airplanes (don't have to be brand new). Owning a quarter share of an NJI GV would only provide 1/4 of that amount per year in depreciation expense. So, the owner can shield less of his income. That is a big consideration for high net worth individuals with a lot of income...

 

[NJAowner]

Johnsonrod -- actually, generally, if you sell a plane for more than you have it on your books for (i.e., taken a lot a depreciation -- a jet is worth something after 5 years), you need to pick up the difference in ordinary income -- which is a big problem. SO at that point you can keep rolling the plane into a "tax free exchange" but you have limits on future depreciation.

JTF: my point was that most preferences are or should be told to NJA (or other fractional providers) and are known by your crew and taken care of before you get on the plane. I interpreted the comment about "my crew knows me" as meaning that owner has things that can not just be put on paper to be able to accommodate him.

Fractional is not for everyone/every company. It is one of those "it depends" issues.

Fly safe.

 

[labbutt]

CitationShares JetForth

Whole ownership of an aircraft, managed and crewed by CS. CS uses aircraft for supplemental lift instead of charter. Win-win

 

[jonjuan]

You are correct with the .2 for every Leg (Charters as well). I have been explaining this to my Superiors for nearly 2 years now, as we a have a Fractional in addition to the Company Plane.

Our Management Fee, Operating Charge, and Fuel Charge is about 4400 hr for a light jet. (4800 in October, as the Fuel was higher).

We Operate the Company owned Plane at 400hrs a year, and the Fractional at 250hrs. Guess which one costs more? Fractional by almost 100K.

What about the note on a whole aircraft versus 5/16 of a note? You have to add in ALL costs. Need 4 planes of the exact same type at the exact same time? Can't do with whole ownership. What if you absolutely need to be somewhere and your whole aircraft breaks hard out in the middle of nowhere? What if your whole aircraft F/O for the day breaks hard? What if your whole aircraft is in scheduled maint. and a must do trip pops up?

 

[T-1GUY]

Recovered a trip for a broken airplane yesterday. Crew was sitting at hotel on standby. Original airplane hard breaks, we get a call to recover. Clients leave as scheduled... Hard to beat the recovery time of a fractional with hundreds of airplanes and nearly 3,000 professionally trained pilots...

 

[satpak77]

NJA you appear to have (well you did, disregard "appear to") done something which allowed you to switch seats from driving the plane to riding in the back of your own plane.

Care to share your story with us? Granted, this is public internet but it might be a great tale in a time where all we hear is gloom and doom.

Thanks

 

[jonjuan]

Hard to beat the recovery time of a fractional with hundreds of airplanes and nearly 3,000 professionally trained pilots...

Especially when flying's down 40% with the same # of pilots.

 

[gutshotdraw]

I don't think NJAOwner is (or was) a pilot. He is one of those people that I wish I could emulate: when he boards a business aircraft, he turns right, not left.

And thank you again NJAOwner for your business. YOU (and others like you) are why we are here.

 

[gutshotdraw]

And it's about 3300 pilots......

 

[satpak77]

I don't think NJAOwner is (or was) a pilot. He is one of those people that I wish I could emulate: when he boards a business aircraft, he turns right, not left.

And thank you again NJAOwner for your business. YOU (and others like you) are why we are here.

I agree...pilot or not, he appears to understand this crazy aviation business, maybe he can shed some advice down on us...

(future frax owner wanna-be myself)

 

[gutshotdraw]

Me too....except some bastage insurance agency employees had the temerity to win MY $216 million jackpot last week

 

[FurloughedAgain]

10% rule. The extra 300 weren't particularly well trained.

 

[NJAowner]

I am not a pilot but have loved flying since I was a little kid and we actually needed to dress up to fly to Florida. One day I may learn to fly (I thnk one or more of my sons may want to learn), but I would never, never go up with out a well experienced professional pilot next to me. I have no desire to fly solo. (My description is more like "Aircraft Flown In" not "Aircraft I've Been Pilot Of".

That said, I do understand the business (but not everything about it). I have had a share for many years and have friends who own their own aircraft (most of which fly more than I do). The ones who don't fly much have many, many headaches with owning a aircraft. My biggest headache with NJA is when ther isn't a movie we like on the plane or the local caterer decides to put something unusually on a dish. Not much for the headache department -- thankfully.

Pure number of flight hours is not the only criteria of whether to own or go frax. You need to look at the missions. If I were to fly alot but go out and back in the same day (or next day), ownership could be justified with fewer hours. If I need a large range of aircraft of spend alot of time out on the road in one place, frax may be better than ownership at more hours. If I go from NY to Wichita for a week and then Arizona for a week and then Colorado for 4 days it may not make sense to tie up a plane and crew on the road or keep flying them back to the base.

Be wary of charter management. Charter is way down (most businesses and families I know who charter have cut way back and will stay down for a while). The people who want/need to keep flying through this environment own or go fractional. If you think fractional sales people strech performance numbers they are just beginnings in the "asusmption" categories compared with charter management salesmen. I have never seen a management proposal where I don't fly for free or make money.

Fly safe.

 

[johnsonrod]

My point in mentioning that research article was that it provided some counter points against fractional flying that might be relevant. I wouldn't advocate one way or the other. He should look for the article regardless.

Updated:

I just found the article through a search. Again, I am not advocating one way or the other - I just think you should consider points on both sides. This article provides a pretty good look at the economics of the frac business:

http://www.aia-aerospace.org/assets/smc_wp-fractionalaviation.pdf

 

[johnsonrod]

Here's a good article about the background of fractional flying and the challenges of operating a profitable frac company - I just found it by searching this forum:

http://www.aia-aerospace.org/assets/smc_wp-fractionalaviation.pdf

I think some of the info might be relevant to you. Good luck.