By Lee Sherman
Have you ever dreamed of owning your own airplane? It’s not as far out of reach as you may have thought. Fractional private jet ownership allows you to purchase equity in a specific aircraft that you can then access with almost the same level of convenience as you could if you owned it outright (not unlike owning a timeshare). Amid the downturn in air travel that occurred as a result of the pandemic, private jets are quickly becoming an even more popular alternative to flying commercial, making them a potentially good investment as travel patterns shift.
Due to the size of the aircraft, the fleets operated by these carriers are appropriate for short haul travel, let’s say travel from one end of your state to the other but aren’t the best choice for you if you need to travel coast-to-coast or internationally on a regular basis.
In addition to convenience, an additional advantage, especially now, is the high level of safety that private jets provide. You won’t encounter crowded airports or lines and it’s easy to maintain social distancing on a plane which has just six seats.
If you’re petrified of taking a commercial flight while COVID-19 is still raging across the country but need to travel for business, fractional aircraft operators can offer a safer way to travel that goes even further than the CDC guidelines or what commercial airlines can reasonably do. These carriers have been quick to implement a number of extra health and cleaning protocols. They are more flexible for people that need to travel at a moment’s notice and be able to return home just as quickly.
Before we get into the specifics of fractional ownership, a word about the experience. If you’ve never traveled this way before, you’ll be pleasantly surprised. Grabbing a flight on one of these carriers is similar to hailing an Uber. You’ll use an app on your phone and can schedule your flight within hours or days. When you get to the airport, you’ll walk straight from the tarmac to the plane without having to go through security. Amenities are limited but that won’t matter much for the short hops covered by these airlines.
How it works
Fractional ownership involves purchasing a share, typically a multiple of 1/16th, that equates to an allotment of occupied hours of fractional aircraft use per year plus a bit of taxi time. In the case of NetJets, you’ll get 50 hours of flight time a year. You will also be required to sign a multi-year aircraft management agreement.
As an investment class, you can gain some reassurance knowing that these are not fly-by-night operations and in fact are backed by established institutional investors. The largest fractional aircraft operator and the one largely credited with the concept is NetJets first established in 1964 as Executive Jet Aviation and bought by Goldman Sachs executive Richard Santulli in 1984. The company is now a subsidiary of Warren Buffet’s Berkshire Hathaway. The second largest, aptly named Flexjet, began in 1995 and was acquired in 2013 by entrepreneur Kenn Ricci of Directional Aviation Capital. Other names to look out for include PlaneSense and Airshare.
With fractional ownership you also avoid the operational and managerial aspects of aircraft ownership. It may be overstating things to say you get all of the benefits without any of the hassle but just as sales of automobiles have risen while public transit ridership has plummeted, it’s clear that private planes will be an increasing part of the new normal.
Lee Sherman is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Lee is an experienced journalist and editor with over 30 years of expertise with a significant history of writing in the personal finance and technology arenas.
