In determining what type of ownership is right for you, first consider your flight time during the year prior to COVID-19. Did you fly a typical amount? Would you have traveled more if you had access to a private aircraft? Was your travel mostly for business or for pleasure? Does your current role require you to be in the same city most days, or are you able to work remotely much more than you were able to pre-COVID-19? The idea is to take stock of how often, to where and with whom you travel most.
Full ownership usually makes sense for those who fly more than 300 hours a year or for those who simply want the guarantee of flexibility with a specific aircraft and crew. There are also some tax benefits associated with purchasing a plane under current law, discussed later in this article.
Although you will have maximum control as an owner, you will also have more responsibility, including liability for the aircraft, hiring and managing the crew, maintaining the aircraft and covering all costs associated with operating the plane and moving it to its next destination.
Fractional ownership, an arrangement similar to a timeshare in a house or condo, may be appropriate for those who fly approximately 150 to 300 hours a year, but is commonly owned in 50-hour increments. Here, you own a share or a portion of a private jet, rather than the whole aircraft. Fractional ownership allows you to be in control of your trip and the things that matter to you, like the itinerary and type of aircraft, without having to handle any operational details.
Your fractional ownership interest correlates to the number of hours you are permitted to fly in an aircraft. For example, a one-sixteenth ownership interest typically works out to about 50 hours of annual flight time, and a one-eighth ownership interest equates to about 100 hours.
Fractional ownership comes with professional management, maintenance and guaranteed availability of a plane when you need it, but it can also mean hefty per-hour charges on more heavily used planes, unanticipated changes to your scheduled departure time and restrictions on selling your share of the plane.
There is also significant liability risk if you, as the owner or operator, are in “operational control” of the aircraft. Operational control is defined by the Federal Aviation Regulations to mean “the exercise of authority over initiating, conducting or terminating a flight.” Many of the companies selling fractional ownership interests in private airplanes offer liability insurance coverage as part of the package or act as the operator under Part 135 (discussed in more detail later in this article) so that the fractional owner is not treated as having “operational control” and thus has less liability exposure.
Seven companies currently offer fractional ownership programs, namely NetJets, Flight Options (currently transitioning to a charter company), Flexjet, Nicholas Air, Airshare, PlaneSense and Northern Jet Management (also known as The Company Jet).1 The purchase price of a fractional ownership interest varies significantly, as it is dependent upon the type of aircraft selected. While this article does not provide a full in-depth analysis of each company, some relevant highlights are as follows.
NetJets, a Berkshire Hathaway-owned company, is the dominant player in the fractional ownership market. This program features a global fleet, minimum investment of upfront capital, guarantee of selected aircraft or better, no repositioning fees, a prearranged crew, a dedicated maintenance staff and hangar, as well as prearranged fuel costs.2
Flexjet offers benefits like the ability to upgrade or downgrade your aircraft based on your needs, “short-leg waivers” that enable flyers to waive the minimum charge for flights under one hour and enrollment in the Flexjet Versatility Plus program, which allows flyers to buy and sell up to 25% of their purchased flight hours to other owners within the program, thereby helping align estimated costs with actual flight time.3
PlaneSense, a U.S.-based company, has a fleet designed for shorter trips. While NetJets and Flexjet fleets contain many large jets, PlaneSense focuses on smaller planes that cost less to operate and can use shorter runways, providing customers with additional options for their travel needs.4
Alternatives to Ownership
Private ownership, a luxurious yet expensive way to travel, is not the only way to fly private. A charter arrangement or a jet card may be a better alternative for those who fly less than 150 hours a year or prefer a pay-as-you-go approach.
Through a charter arrangement, you contract for services on a trip-by-trip basis or use the services of a charter broker, a specialist who acts as a representative for the leasing of an aircraft. While this arrangement enables you to enjoy the flexibility of private travel in a cost-effective manner, it may also lead to inconsistency in service, competition for peak usage periods and top aircraft and strict refund policies for traveler cancellations. Wheels Up, the second-largest private aircraft operator in the United States, is a private jet charter company that allows members to book flights at all-inclusive hourly rates. Wheels Up currently offers three membership types (Connect, Core and Business), each intended for a different type of traveler. Connect memberships are designed with the occasional flyer in mind, one who does not require guaranteed aircraft availability. Core members are those who fly more frequently and want guaranteed availability on short notice. Business memberships are suitable for companies that are looking for private travel options without the responsibility of owning a plane.5
Members of all types can request and book private flights from a real-time inventory list, join shared flights with other Wheels Up members, book empty-leg flights at marked-down rates, enjoy discounts at partner-linked vacation properties and gain access to other exclusive lifestyle experiences. Both Core and Business members also have access to a 24/7 member services team and dedicated account managers. Costs include a one-time initiation fee ranging from about $3,000 for a Connect membership to about $30,000 for a Business membership, as well as annual dues ranging from $2,495 to $14,500.
In December 2019, Wheels Up partnered with Delta Private Jets to offer customers access to a fleet of more than 190 private aircraft and other exclusive benefits, including the opportunity to earn Delta Medallion Status through Wheels Up flights and the option to earn and use Wheels Up “flexible funds” to pay for both private flights and Delta commercial flights.6
An even simpler form of access to private travel is through a jet card, which is a prepaid card that enables travelers to use planes at rates that are often cheaper than charter arrangements. Jet cards are usually structured in one of two ways: plane-specific or deposit-based. A plane-specific card allows you to buy a fixed number of hours on a certain aircraft, whereas a deposit-based card allows you to purchase a specific dollar amount of travel, which is then debited each time you book a flight. Both plane-specific and deposit-based jet cards allow you to arrange travel without negotiating a contract or exchanging payment for every trip, and family members can share the membership and travel to different destinations simultaneously. However, jet cards typically impose expiration dates for prepaid flight hours, so if you do not use them, you may lose them.
To date, there are over 50 different jet card providers offering more than 250 programs. Some of these programs offer set prices, while others search the market for the best daily rates. Programs can vary in their designation of peak days, and some require daily minimums for shorter travel.
NetJets offers a jet card option, the Marquis program, targeted at individuals who fly less than 50 hours a year and prefer a shorter-term commitment. Clients have access to a variety of aircraft and can arrange travel within as little as 10 hours’ notice for domestic flights on off-peak days. Marquis jet cards begin at approximately $165,000 for 25 hours and must be used within 24 months of purchase. This upfront fee covers the total cost associated with the flight hours purchased. Additional fees may include charges for ancillary service requests (e.g., transfer services), international fees or handling charges.7
Flexjet also offers a jet card option called the Flexjet 25, which begins at $160,000 and allows flyers to choose between multiple aircraft with inclusive pricing and a 25-hour minimum purchase increment. This program has been paused due to increased demand and is set to return in mid-2022.
Sentient Jet offers all-inclusive fixed rates, guaranteed availability and jet card hours that never expire. The company currently offers two programs: The SJ25+ designed for access to light aircraft (starting at $187,450 for 25 hours) and the SJ25 designed for access to mid, super-mid and large cabin jets (starting at $241,475 for 25 hours).8