How much do fractionals cost the owners?

[chuychanga]

My wife's boss used to take charter flights at the flight school I worked at. They were short flights around Texas in a Baron and the charters didn't cost much more that an airline. In their firm, he was the only one who didn't mind flying in small planes. The other 5 or 6 guys fly the airlines and rent cars.

Now that I don't work there anymore, he doesn't use their services as often. But today he was asking what other charter options are out there. I was thinking that maybe he should look at a fractional deal. There are 5 or 6 people that travel once or twice a month. That means that, within the whole office, in any given week they might have one or two trips. Most of the trips are within Texas, but some elsewhere. They would probably add in some personal trips if they had the option.

I have no idea what they spend per year in airline tickets and charter flights. I looked at the webisites for a few fracs, but they all require you to call a salesperson for prices. What would be an entry level cost for the smallest ownership in the smallest jet?

Can someone throw out a ballpark figure?

 

[fracflyer]

www.citationshares.com

They've got prices on there.

 

[fracslave]

Flight Options has pricing also.

www.flightoptions.com

 

[SATCFI]

Ran some numbers, just for fun:

Citation Shares
Citation Jet
50 hours/year (1/16): $6758/hour
400 hours/year (1/2): $7958/hour


Flight Options
Citation Jet
50 hours/year (1/16): $6547/hour
400 hours/year (1/2): $6346/Hour

Don't forget, this year a business can deduct up to 50% of acquisition cost in the first year of ownership.

 

[banned username 2]

Ran some numbers, just for fun:

Citation Shares
Citation Jet
50 hours/year (1/16): $6758/hour
400 hours/year (1/2): $7958/hour


Flight Options
Citation Jet
50 hours/year (1/16): $6547/hour
400 hours/year (1/2): $6346/Hour

Don't forget, this year a business can deduct up to 50% of acquisition cost in the first year of ownership.

HOLY CRAP! You just made my day! And these prices are for a CitationJet??? We are operating our Falcon 900EX's a LOT cheaper than that!

 

[fracflyer]

Ran some numbers, just for fun:

Citation Shares
Citation Jet
50 hours/year (1/16): $6758/hour
400 hours/year (1/2): $7958/hour


Flight Options
Citation Jet
50 hours/year (1/16): $6547/hour
400 hours/year (1/2): $6346/Hour

Don't forget, this year a business can deduct up to 50% of acquisition cost in the first year of ownership.

Um, I'm not sure how you came up with these numbers, but looking at the numbers at www.citationshares.com/pricing here's what I came up with. I'll let a Flight Options person speak for them.

For a 1/16 Share for a CJ (50hours) from CitationShares the website shows the following costs:

Purchase Price: $280,000
Monthly Mgmt Fee: $4250
Hourly Rate: $1200
Fuel Surcharge: $138/hour

First, you can't figure the purchase price into the hourly rate because you still own the aircraft (1/16 share) at the end of the year. If you used all 50 hours the math should go like this:

Monthly Fee $4250 x 12 Months = $51000

Hourly Rate + Fuel Surcharge = $1338/hour x 50 hours = $66,912.50

$66,912.50 + $51,000 = $117,912.50

If you divide that by 50/hours it comes out to $2358/hour

This is, of course before taking all the tax deductions. The numbers that I've seen show the CJ costing less than $1500/hour over a 5 year contract. If you sell the share at the end.

Good luck

 

[fracslave]

Flight Options would be 2297 per hour using the same method. Plus saving 67500 over the purchase price.
1/16 shares pay a much higher monthly management price.
Its 5009 per month for 50 hours a year.
And only 8348 per month for 100 hours per year.
It would cost 2096 per hour if you owned a 1/8 share.
More than I can afford either way.

 

[SATCFI]

Fracflyer,

you're absolutely correct. I did add the acquisition cost. Since that cost can be recovered (maybe at a profit) it shouldn't have been entered into the equation. Just curious, what would a CJ cost to charter?

 

[WileE]

remember.

With frax, you are only paying for the occupied leg. For a charter you usually pay the dead legs as well to get the plane to the airport you are leaving from and back to it's home base. Depending on the charter you may be paying for 4 dead legs for each 2 live.

 

[GREAT LAKES]

Frac V charter

Our company charters about 150 hrs per year. Most of the legs are full of passengers. The price of a fractional was not attractive to our financial people ( we have some of the best out there). It seems many of the trips you speak of are drop offs, so it may work out using a fractional.