Frax ?

[gunfyter]

Back of an envelope calculations:

QuarterShare $20 million Jet. 200 hrs per year.

$5 million vs $20 million. Aquisistion cost.


Monthly management fees $400, 000 per yr

Hourly usage charges $2000/hr.
==========================================================

What does the cost of each hour flown cost?

Prorate management Fees per hour
$400,000 / 200 hrs = $2000/ hr


hourly charges + MMF/hr $2000 + $2000 = $4000/hr

But cash laid out in aquisition is $15M less in Fractional than outright ownership

Cost of capital... lets say 6%. on $15M is

$900,000 per yr.

Prorated per hr flown is $900,000 / 200 hrs = $4500 per hr.

Cost per hr to fly is $4000 minus the savings of cost of capital


$4000 - $4500 = minus $500 relative cost

Fractional ownership

It doesn't cost IT PAYS! Compared to full ownership
===================================================
This is before the FULL Owner pays one dollar in Pilot slaries, training costs, maintenance, etc..

This is just the savings on theCost Of Capital. Not to mention he still has $15M in an offshore account somewhere instead of in Raytheon, Cessna, Gulfstream, or Dassault's balance sheets.

 

[psysicx]

So gunfyter your saying that Netjets is cheaper then owning your own plane? Does anybody know how much it cost to have your plane managed?

 

[gutshotdraw]

Gunfyter,

Like most folks, you forgot about the back end of the deal. At the end of five years, you don't get that $5 million back. If you're very lucky, you might get back $3 million. You have to add in that $2 million before you divide by the 1000 hours the quarter share got you.

A full ownership operator may have had to front the whole $20 million. But he also got to depreciate the whole $20 million and at the end of five years, he still owns an airplane with only 1000 hours on it (assuming same flight needs) instead of a quarter of a worn out jalopy with 6000 hours on it (1200 hrs per year x 5 years using frax industry assumption of 20% ferry time per year).

Then throw in fuel surcharges, international handling surcharges, remarketing fees, yada yada yada. Whole ownership or block charter is ALWAYS a better FINANCIAL move than fractional ownership.

The sales pitch should be convenience and flexibility, not money.

 

[psysicx]

There has to be some reputable Pt 135 operators. And they are way cheaper.

 

[gunfyter]

Gutshot,

I did not forget about the back end of the deal. The Whole airplane owner will take 100% of the reduced value of the airplane instead of 1/4 the reduction in value. He'll lose at least $2M on his whole airplane... diveded by the same hours ... that is a wash at best.

And the example I gave did not include the costs of hiring and maintaining pilots etc for the whole airplane owner. The savings was just on the cost of capital.

There is simply no way based on economics that whole airplane ownership is better than fractional ownership for a certain range of usage.

+++as long as you get the service desired.+++

Listen: WB said " We've had dumb competitors in the past and they bleed. We've got more blood than they have."

Our competitors believe they are in the aviation business. they are run by Aircraft manufacturers...

We are not in that business.

We are a BANK. We are run by Wall Street bankers... MONEY SCIENTISTS. The currency is flight time. The ATM's are produced by the OEM's aircraft manufacturers.

The MONEY SCIENTISTS calculate the cashflow in the same way using the same mathematical tools as an Electrical Engineer does current and impedance using Complex Variables and Differential Equations.

 

[Ultra Grump]

There has to be some reputable Pt 135 operators. And they are way cheaper.

Why do you post so many stupid questions on every forum on flightinfo? Don't you have P.E. or study hall or something you should be doing?

 

[psysicx]

There is no such thing as PE or study hall in college.

 

[kilroy]

There are alot of reputable charter companies out there that will save you about 1000$ an hour for an Bravo. But at the same time there are alot of sh!tty companies too. if you had good 135 operator and built a good ongoing relationship with them you could save about 50 grand a year on 50 hours on a bravo.

There has to be some reputable Pt 135 operators. And they are way cheaper.

 

[gunfyter]

What about the cost of dead head repo time?

 

[miles otoole]

And a 12 hour call out time,

And use of 2,3,4 planes in a day,

And much more in insurance coverage,

And having BOTH pilots Typed (not to mention, no pilot who's a CFI trying to build time,

And a fixed, predictable fees over 5 years.