Fractional vs. owned aircraft, pros and cons

[G4G5]

I have been asked by my boss to come up with the pros and cons of each. I would GREATLY appreciate any input from anyone with experience in the matter.

Thanks in advance

 

[G4G5]

I have been asked by my boss to come up with the pros and cons of each. I would GREATLY appreciate any input from anyone with experience in the matter.

Thanks in advance

 

[cjdriver]

I suppose you can't use the fact that you'd be out of a job with frac? Other than that, having flown frac, they're not going to get the treatment from a frac they're used to. They are much more likely to get delayed or dropped. We're putting our bird on a 135 certificate to offset costs, you might consider that as an alternative. Good luck.

 

[CALRepublic]

Pros of fracs:

* if the aircraft brakes on the taxi out, pilots contact the company and they'll send a replacement. If you're in VNY, SMO, SJC, PBI, TEB, HPN, won't be much of a wait, if any at all.

* pay your fees, and forget about it. Let the company deal with the FAA, MX issues, landing slots, landing fees, pilot hiring, recurrent, OPS SPECS, FOM and all that stuff.

*If you're going from LAX-SJC, no need to take the Global and burn all that fuel, take an Xcel and save a couple of bucks..

* A flt. department is extremely expensive to keep.

I'll let a corporate guy give you the pros of owning, don't know much about it.

ps (I have a feeling this thread is going to get ugly, frac guys vs flt. depts/charters)

 

[semperfido]

Sorry to hear that L'il P - loss of control=loss of flexibility, higher cost, won't know their pilots, decrease in service, they will promise the moon and not deliver, ...... but you know all this already

 

[ditchpilot]

Been there done that.
Get some fraq quotes for 1/4 share on like aircraft.
You know how much you budget per year an per hour on your airplane and compair the fraq. quotes to your numbers.
We fly a westwind 2 and the nearest quote to our numbers was in citation ultra with citation shares but since we had outgrwn our citation 2 he was not interested.
You know your boss and his sched. does he mind waiting on you when you are running late to pick him up.
on the service side the fraq pilots wont have the time or inclination to run over to the house to pick-up the baggs, get the car detailed while they are out of town, run all the erands we all do when we are on the road.
passengers wont be able to leave work boxes and baggs on the plane for the return flight in 3 days.
And after they are done with thier own plane they still have a asset that has some resale value.

 

[hyflyin]

I have been asked by my boss to come up with the pros and cons of each. I would GREATLY appreciate any input from anyone with experience in the matter.

Thanks in advance

CON: YOU LOSE YOUR JOB!


Of course, being a frac guy, I would like to see your boss come our way, but not at the expense of your job.

Many good points listed in the above post. I think it depends upon how much your boss flies. Does he want to tie up capital with a frac or would a jet card suffice? How about having your airplane managed by say, EJM?? A/c works, your boss gets some relief from charter revenue and most importantly, you still have a job.



:beer:

 

[BEfly]

How many hours per year does he plan on flying?

 

[fischman]

The BIG pros are 1) it's cheaper 2) flexibility and more options.

When you become an owner at NetJets, you will get access to our entire fleet. Going to Hong Kong? Gulfstreams and BBJ are an option. Going from Kansas City to St. Louis, get an Encore.

Honestly, I can't think of a con to fractional ownership.

 

[o2bflyn]

Depending on your boss, one con could be the fact that he/she will probably not have the same crew twice.

My boss uses NJA for supplemental lift. Although they do a fine job, he prefers his own crew/own plane because "you guys just know me so I don't have to explain myself.)

That is not a dig at Fracs. Lord know they try, and with the numbers they deal with there is no way they can match that kind of personalized knowledge.

Advantages to Fracs: A bunch. Fleet diversity and utlization/ AOG maint/ trip and maint planning/etc...

 

[jtf]

It costs a lot for your own flight department, but if your airplanes fly enough- I believe they say over 300 hours a year per air frame (could be wrong on this number)- the costs of flying your own aircraft become cheaper than fractional. As posted above there are definitely advantages for both fractionals and ownership. I'd suggest putting the aircraft into charter with a management company (probably you keep your job, but work more) and at the same time buy a small fractional share or jetcard for the benefits that come with it. It would allow the boss to fly his G-V when he needs it, make money on the side with it when he doesn't, and give the flexibility that the fractionals provide all at the same time. This choice may or may not be the best one for your company since you haven't given all the details of your flight department and the needs of those who travel aboard your aircraft. I'd also suggest talking to some of the sales people at the various fractionals to get more info on the benefits. I wouldn't necessarily trust everything they say, but you could definitely ask further questions here when you find some things the sales people say aren't quite believable. The biggest thing the sales people get wrong or even sometimes intentionally lie about is specific airframe performance numbers- they will tell you the best case numbers and omit the fact that the airplane can only do that with one passenger at sea level and 15 degrees C. Good luck.

 

[GSXR600]

Very important points mentioned above. If you fly more than 300 to 400 hours a year is better to have your own airplane, but anything less than that, I think (I could be wrong) is much cheaper to go with the fracs. My I advise to you is call the sales people of all the fracs (NJ, FLX, CS, OPS) and compare numbers, is best way to get the most reliable information NOT on FI.

Good luck

 

[XTW]

We fly a westwind 2 and the nearest quote to our numbers was in citation ultra with citation shares but since we had outgrwn our citation 2 he was not interested.

CitationShares does not operate the Ultra. Maybe NJ?


X

 

[YOMERO_FLY]

My boss went to the fractionals and bought shares in a GIV for a few years. He gave up when he and his wife were waiting to be picked-up in the GIV and here comes a Citation that the previous passenger had thrown-up in, and they were running two hours late, the F/O started throwing the bags into the cargo compartment. I had to find some fabrezee and the boss and I ended up re-loading the bags. After this we received a brand new Challenger, Thanks’ to fractionals I still have a job.

 

[Jack Schitt]

Owned aircraft pro: his pilots will NEVER go on strike. Ever.

 

[NJAowner]

Like everything else, it "depends". With my partner, we fly about 125-150 hours per year. He previously owned a jet when he needed to fly much more. I also have several friends with their own jet/jets. However, fractionals are expensive; however, they are very, very, very low headache. Other than a quick call here or there to set up a flight (most my catering is the same), I spend a few minutes per year on aviation issues and can spend the rest on business or with my family. Friends with a/c worry about hiring, firing, vacation schedules, costs, maintenance, upgrades, crews on the road, etc. Problem with the plane - not my issue (NJA brings another one); plane in for maintenance (not my problem); pilot is sick (not my problem). Do I always have the same pilots I trust - no; do I always have well qualified, well trained pilots I can trust - yes (and who will still show me pictures of their kids on their blackberry, or if no kids, their dog) Even if you are out on a 135 and charter you still need to weigh your flexibility vs. having the plane out to maximize charter revenue. Need a smaller jet (just my wife flying to see her mom) - no problem. Need a bigger jet and longer range (flying the extended family coast to coast for a holiday) - no problem. Do I have a plane on 6 hours (or less) notice when I need it even if my pilots are on vacation - yes. Can I budget for my air travel (other than a fuel variance) per year and know for sure - yes.

Do I have the ego trip of owning my own jet - no. Can I leave my favorite clothes on the plane- no. Is it decorated in my favorite color scheme - no.

Just my opinion. Please feel free to PM me.

Fly safe.

 

[NJAowner]

Owned aircraft pro: his pilots will NEVER go on strike. Ever.

But this website is littered with posts of (unprofessional pilots) who got pi$$ed at their boss or company and left them stranded somewhere and flew home. I am not taking sides or saying what their justification or rational may have been, but many of you admit (with glee) to doing it.

Fly safe.

 

[NJAowner]

See my post under "Corporate". I read it first so I posted there first.

My boss uses NJA for supplemental lift. Although they do a fine job, he prefers his own crew/own plane because "you guys just know me so I don't have to explain myself.)

Coming from an owner, not a pilot, I see "explaining myself" as the code words for "I am high maintenance". Does explaining mean I like my drink with 6 ice cubes? I serve myself. Or I like my fruit platter before my vegetable crudite -- again I serve myself. My opinion is that almost anything an owner has to tell the crew is about being waited upon, since owner services handled my catering and ground transportation requests which is the real "explaining". I generally like to leave the pilots with just flying.

Fly safe.

 

[Jack Schitt]

Owned aircraft pro: his pilots will NEVER go on strike. Ever.

But this website is littered with posts of (unprofessional pilots) who got pi$$ed at their boss or company and left them stranded somewhere and flew home. I am not taking sides or saying what their justification or rational may have been, but many of you admit (with glee) to doing it.

Fly safe.

I must have missed most of those posts, but my intent was more specific to G4G5's job. Netjets has a good product, but it's not for everyone.

 

[Rick James]

Owned aircraft pro: his pilots will NEVER go on strike. Ever.

But this website is littered with posts of (unprofessional pilots) who got pi$$ed at their boss or company and left them stranded somewhere and flew home. I am not taking sides or saying what their justification or rational may have been, but many of you admit (with glee) to doing it.

Fly safe.

I've never read of that issue, can you dig up an example?

 

[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...