Fractional Jet Ownership vs. Whole Aircraft Ownership
Owning a private jet is a big investment, and buyers often look at details such as depreciation, tax benefits, and return on investment when deciding the right option. An important factor that private aircraft buyers should also pay careful attention to is the cost-to-benefit ratio. Whole craft ownership will offer convenience, save time, and some tax benefits, but it also requires a significant investment in time and money beyond the cost of the plane. When examining fractional jet ownership as an investment, owners often see a much better cost-to-benefit ratio.
The Money-Making Myth
A common misconception in the private jet market is you can make money owning a whole private jet. As Worth magazine points out, you will not make money on an airplane. Annual depreciation of aircraft is high and while owners can offset the cost of aircraft ownership by operating it as a charter through a service, buyers should not expect the return on investment to cover all private jet costs.
A share in the PlaneSense® fractional program, on the other hand, allows you to buy only what you need, based on the number of hours you fly, whether for business or personal use. Instead of spending millions of dollars on a whole aircraft, fractional share owners can reap the benefits of private jet ownership without spending more than they need to. In addition, the 2017 Tax Cuts and Jobs Act allows owners who use their aircraft for business purposes to fully write off the cost of a share in a new aircraft in its first year.
Whole Craft Ownership Can Mean Unexpected Headaches
Companies and high net worth individuals who seek private jet ownership for its convenience may be surprised by the overall cost of ownership. Not only are buyers outlaying millions of dollars for the aircraft, there is the cost of maintenance and management. Many business jet owners will hire a management company to oversee hiring pilots, maintenance, inspections, and FAA compliance, but these companies may outsource these roles or not provide all the needed services.
Even with this assistance in managing operations, there can be unexpected problems that arise with whole craft ownership. For instance, if your pilot becomes ill or the aircraft is down for maintenance, you cannot fly.
The PlaneSense® fractional program, on the other hand, gives you access to a fleet of planes. If your airplane is grounded for repairs, another is available to fulfill your flight. Pilots are trained and managed by PlaneSense® to ensure the highest of quality operations. When an aircraft or pilot isn’t available, there is an entire crew and fleet available. With fractional ownership, you avoid most of the headaches that come with whole craft ownership.
Watch Hidden Costs of Whole Craft Ownership
The Sherpa Report, an aircraft industry trade publication, estimates that the annual cost of operating and maintaining a private aircraft can range from $700,000 to up to $4 million, excluding depreciation, depending on the type of aircraft you own. Those unexpected headaches, like engine repairs or replacement tires, are an expensive cost many private jet buyers don’t anticipate before they begin their aircraft search.
This is one area where fractional jet ownership with PlaneSense® has the clear advantage. Owners pay a monthly management fee that covers the cost of maintenance, inspections, crew hiring, and training, as well as the fully dedicated flight operations center that assists in arranging flights. Everything from staffing flights to purchasing fuel is done in-house by the company. This allows PlaneSense® to better control the quality of services and is not something you will always find with whole craft ownership management groups, charter planes, or jet card services.
Fractional Makes More Sense for Business
Another benefit is that corporations buy only what they need, offering a better cost-to-benefit ratio. Instead of spending millions of dollars on a whole jet that may sit idle for weeks at a time, a company can invest in a fractional share that best fits the annual flight hours needed. A 1/16 share in the PlaneSense® fractional program provides 50 hours of flight time each year. Larger shares are also available for companies that require more travel.
Fractional Jet Ownership Has the Highest Cost-to-Benefit Ratio
For companies that plan to fly 30-300 hours a year, the cost of fractional is far less than whole aircraft ownership. Frequent consumers of private flights are often considering ownership when ready to graduate from charter or jet cards. Anyone looking to purchase should remember, when it comes to up-front costs for purchasing the share to the cost of maintenance and management, fractional has the advantage over whole craft ownership in a number of ways.
For more information on the PlaneSense® fractional program, download our guide.