Corporate vs Fractional Ownership

seattle

Well-known member
Joined
Nov 29, 2001
Posts
70
Total Time
400
Forgive me if these are stupid questions.

Will the fractional ownership programs drive away corporate flying? Is cost really justified for companies that operate their own aircraft? A corporate flight department just seems like too much money. Is it an ego thing or is there a good case for full ownership?

Thanks in advance for your comments.


Seattle
 

con-pilot

Well-known member
Joined
Jan 7, 2002
Posts
13,296
Total Time
21,000
Actually I feel that in many cases the opposite is true. Fractional ownership leads into a corporate flight department. Fractional ownership is a good way for a company or wealthy individuals to be introduced to the biz-jet.

However when one considers all of the drawbacks of fractional ownership a corporate flight department is much better. If they fly 200 to 300hrs a year.

Drawbacks;
1. Different flight crews nearly every trip.
2. Different airplanes nearly every trip, sometime not even the same type aircraft.
3. No personal items can be left on the airplane.
4. High cost. If one flies over 250hrs a year it is cheaper to own a biz-jet.
5. No maintenance control.
6. No dispatch control.
7. No security control. (After 9-11 many companies are increasing their security and it is much easier to insure security with company employees versus contract.)

Those are just some of the drawbacks of fractional ownership. There is also a safety consideration. The major fractional companies have an excellent training and safety programs. Unfortunately there are some shady fly-by-night operators out there with poorly maintained aircraft, low time and badly trained pilots.

Anyway I hope this answers some of your question.
 

hawkerjet

Well-known member
Joined
Nov 27, 2001
Posts
606
Total Time
8200
Also, one of the main marketing points used to sell fractional ownership is the tax relief. But if you compare it to a single owner's aircraft it becomes evident that there is greater savings tax wise to own your own plane. Because a fractional plane flies so many more hours in a year the depreciated costs that are taxed are less. If you look at a 5 year old citation V operated by a fractional company,it could easily have over 10,000hrs on the airframe. Most single owned aircraft would be hard pressed to accomplish those numbers. Bear in mind that this comparison is looked at from a tax side only and didn't get into other specific areas of tax advantages, I was bringing a broad generalization to the table. My boss owns a GIV and allows it to be used as a charter aircraft on someone elses certificate.Since there were already other GIV's on the ticket we didn't have to pay for proving runs. just a simple conformity check. (although the feds do these for free there are some items we must change to get the plane from part 91 to 135 standards. My boss also likes the idea of having the same crew with him all the time.That being said we also bolster our flight departments needs with a 1/4 share of a citation X to handle all of our needs should the owners plane be indisposed.
 

EJA Capt

Well-known member
Joined
Dec 1, 2001
Posts
57
Total Time
5200+
Boy, is this reply going to take a while or what? But this is a great discussion.

Con-pilot, you are right, fractionals have started several flight departments, and something like 70% of EJA’s customers are new to aviation. A person flying less that 50 hrs/yr is better off chartering, and people over 300+/- are better off owning. However, a few of the items you listed as drawbacks can actually be positive.

2. If a corporate aircraft breaks down on the road, Game Over. The fractionals just bring in another. In EJA’s case, an equal size or larger. We have substituted Falcons for Ultras. Also, the other aircraft you are swapped with may not necessarily be older. it may be NEWER.

4. High cost, yes. Not many things in aviation are cheap.

5 and 6. Owners with no aviation background may not know, or care, about this ability. They want to pick up the phone, set things up, and show up at the airport.

7. EJA is partnered with a professional security agency which provides complete threat assessments of ALL international flights or on request. The agency arranges continuous passenger, crew, and aircraft security and protection for the duration of the stay. Each pilot is presented with a comprehensive packet of information on the trip and destination. This also is above and beyond most corporate operators.

Regards,
EJA Capt
 

EJA Capt

Well-known member
Joined
Dec 1, 2001
Posts
57
Total Time
5200+
Continued…

hawkerjet,
I won’t speculate on any of our owner’s tax strategies. I can barely figure my own.
As far as the old aircraft concept, at least in EJA’s case, I know of none of our current aircraft that are anywhere near 10,000 hours at the five year mark. As I mentioned in the post above, there will be cases of a person with a five year old contract, who is flying in a brand new airplane also. There is a phase-out plan in place for each fleet at a prescribe age/hour. In addition, all of EJA’s aircraft are repainted and the interior is replaced EVERY 2-3 years. The reason for that is not wanting a new owner to feel like he is in a decrepit old airplane. These planes are very well maintained, to an obsessive point.

You are right about the different crew, different day, scenario, but we do get familiar with people who fly often. This is a reason for such high standards for pilot hiring/retention at EJA. Every pilot is typed in the aircraft he is flying whether Capt or FO. We also are only allowed to fly one aircraft type at a time. Standardization is very high. So when an owner gets onboard, although he may not have flown with that crew before, he knows exactly what to expect.

Regards,
EJA Capt
 

seattle

Well-known member
Joined
Nov 29, 2001
Posts
70
Total Time
400
So it sounds like the cutoff is around 250 to 300 hours per year. More than that and it actually makes more sence for a company to operate their own aircraft. Thanks.

Seattle
 

tdvalve

Well-known member
Joined
Nov 25, 2001
Posts
104
Total Time
14,200
Fractional Ownership

To expand slightly on EJA Capt's excellent post......As a fractional owner you have an airplane and crew available 24/7/365. Never have to worry about scheduled maintenance, crew illness or crew on vacation. Additionally, the fractional owner pays nothing for deadhead flights, can have the use of two or more airplanes at the same time, and can upgrade or downgrade from his/her airplane type on a per-flight basis. This flexibility and guaranteed availability can be provided by most large corporate flight departments. But, small and medium flight departments simply don't have the airplanes and crews to provide this service.
 

stork

Member
Joined
Nov 28, 2001
Posts
17
Total Time
forgot
Seattle why dont you change your avitar? It really offends us true natives.
 
Top