The History of Fractional Private Jet Ownership

For decades, private jet travel has been synonymous with luxury, exclusivity, and efficiency. However, owning a full private jet has long been associated with high prices, maintenance duties, and operational complications, making it an unfeasible option for many individuals and corporations.

Enter fractional private jet ownership, a concept that has transformed the way consumers access private aviation by providing a shared ownership structure.

Fractional ownership has democratized private jet travel while also optimizing resources, making it a more sustainable alternative for the aviation sector. This article delves into the history of fractional private jet ownership, from its inception to its growth into a multibillion-dollar industry.

The origins of fractional jet ownership

The concept of shared ownership dates back to the 1980s, when private flying was gaining popularity but remained a niche industry due to high prices. Aircraft were usually owned outright by wealthy individuals, corporations, or government bodies.

However, private jet manufacturers and aviation businesses understood that many owners were not making full use of their aircraft. According to early research, private jets were typically flown for only 200 to 300 flight hours per year, leaving them inactive for the bulk of the time.

This inefficiency revealed a possibility for a new business model: shared ownership. FlexJet defines private jet fractional ownership as assured access to a private aircraft based on the amount of flying hours purchased.

The birth of NetJets in 1986

According to Robb Report, the concept of fractional jet ownership was first developed in 1986 by Richard Santulli, a mathematician and entrepreneur who launched NetJets. Santulli’s idea was simple: give individuals and corporations the benefits of private jet flying without the costs of full ownership.

NetJets allows consumers to purchase a fractional share in an aircraft, granting them access to a set number of flight hours each year, depending on the size of their share. For example:

• A 1/16 share of 800 hours provides 50 flight hours per year.
• A 1/4 share offers 200 flight hours annually.

NetJets also manages the operational aspects of ownership, including as maintenance, crew employment, and scheduling, to provide a seamless experience for its customers. NetJets describes the model:

“… is a win-win, providing the immediacy and luxury of whole aircraft ownership, with none of the operational complexities and hidden overhead.”

How fractional ownership works

Fractional private jet ownership is based on a co-ownership model in which numerous investors split the costs and use of a single aircraft. Participants receive a proportionate share of ownership, as well as access to the aircraft or an equivalent model in a fleet.

• Initial Purchase: Buyers buy a fractional portion of a private jet, often ranging from 1/16 to 1/2 ownership.
• Monthly Management cost: Owners pay a monthly cost for maintenance, storage, insurance, and personnel salaries.
• Flight Hour Costs: Owners are charged for the hours they fly, which includes fuel and other variable costs.
• Guaranteed Access: Owners have access to their aircraft or a similar jet from the operator’s fleet, typically within a specified duration.

Fractional ownership offers flexibility, cost-sharing, and convenience, allowing more people to enjoy private aviation.

The rise of the fractional ownership industry in the 1990s

While NetJets pioneered fractional ownership in the late 1980s, the model did not become widely popular until the 1990s. This growth was driven by:

Factor	Impact
Economic Boom	The 1990s economic expansion created more high-net-worth individuals and businesses willing to invest in private aviation.
Technological Advancements	Improved avionics, fuel efficiency, and aircraft designs made private jets more appealing.
Globalization	The growing need for flexible, point-to-point travel in an increasingly globalized world highlighted the inefficiency of commercial air travel for certain sectors.

During this time, NetJets established itself as a prominent competitor in the fractional ownership industry before being acquired by Berkshire Hathaway in 1998, led by Warren Buffett.

This transaction solidified fractional ownership as a viable and lucrative business model. Around this time, additional companies entered the market, including Flexjet and Flight Options, providing competitive services and broadening the industry’s reach.

Advantages of fractional ownership

Fractional jet ownership offered a number of advantages that appealed to both individuals and businesses:

1. Cost Efficiency

Owners pay only a portion of the costs associated with owning and maintaining a private jet. This considerably minimizes the financial burden while retaining the benefits of private aviation.

2. Guaranteed Availability

Fractional programs often ensure aircraft availability within hours of a booking request, providing flexibility for last-minute travel plans.

3. No Maintenance Hassles

Operators handle all maintenance, regulatory compliance, and crew, allowing owners to reap the benefits of private jet flying while avoiding operating burdens.

4. Fleet Variety

Many fractional programs provide access to a fleet of jets, allowing owners to select the aircraft that best meets their trip’s needs, whether it’s a short domestic flight or a long-haul international travel.

5. Increased Sustainability

Fractional ownership minimizes the number of unused private planes in operation, resulting in more efficient resource usage.

Challenges and criticism

Despite its numerous advantages, fractional aircraft ownership has faced obstacles over the years, including as a high starting cost. While fractional ownership is less expensive than 100% ownership, it still needs a large initial expenditure, keeping it out of reach for many people. Other difficulties include:

1. Limited Availability During Peak Times

During peak travel seasons or large events, fractional owners may encounter scheduling issues as demand for aircraft outstrips availability.

2. Depreciation

Aircraft depreciate with time, and fractional owners’ investments may lose value when they sell their shares.

3. Rising Competition

The introduction of jet card programs, on-demand charters, and shared charter services has provided alternatives that may be more acceptable for occasional passengers.

Fractional ownership in the 21st century

As we entered the 2000s and beyond, fractional jet ownership continued to evolve. Here’s a quick glance at the main trends and developments.

• Technological Innovations: Advances in aircraft design, such as the advent of very light jets (VLJs) like the Embraer Phenom 300 and Cessna Citation Mustang, have made private flying more accessible to small enterprises and individuals.
• Enhanced Customer Experience: To attract high-value customers, operators began providing more personalized services such as in-flight meals, specialized account managers, and customized cabin layouts.
• Focus on Sustainability: With growing concern about the environmental impact of private aviation, fractional ownership organizations have begun to investigate carbon offset programs and invest in sustainable aviation fuel (SAF) to reduce emissions.

Alternatives to fractional private jet ownership

For some buyers, fractional aircraft ownership may not meet their individual travel requirements, preferences, or budget. Fortunately, the private aviation sector provides various alternative choices that are flexible, cost-effective, and convenient, according to Latitude 33 Aviation.

For example, purchasing a private jet provides complete control and unrestricted access. For regular passengers who value complete control and unlimited access to a private jet, absolute ownership is the best solution. Owning a private jet allows you to:

• Fly as much as you like, with no constraints on scheduling or usage.
• Customize the aircraft’s interior to fit your preferences or operating needs.
• Leverage ownership as an investment opportunity, with the option to sell the jet later.

Additionally, private jet owners can create cash by renting out their aircraft to other flyers when it is not in use. However, ownership entails large initial expenditures, maintenance duties, and depreciation over time.

On the other hand, if you are hesitant to commit to complete ownership, leasing a private aircraft offers an appealing alternative. A private jet lease allows you to effectively “rent” the aircraft for a set length of time, which might range from months to several years.

Jet leasing is great for people who want to sample the private aviation experience before deciding whether to buy a jet. Benefits include:

• Getting firsthand experience with aircraft ownership without a long-term commitment.
• The option to move to another jet model when your lease expires.
• You will not have to incur depreciation fees, which reduces financial risk when compared to full ownership.

Similarly, jet cards are a popular solution for travelers looking for a balance of flexibility and cost savings. By purchasing a jet card, you prepay for a set number of flight hours, giving you access to private jets on demand without the need for long-term ownership. Key benefits of jet cards include:

• Guaranteed availability of an aircraft within a specified timeframe (e.g., 12–24 hours’ notice).
• Fixed hourly rates, which simplify budgeting.
• A lower upfront cost compared to fractional ownership (but hourly rates are often higher)

Finally, for occasional flyers who do not want long-term financial obligations, chartering an airplane is the most straightforward alternative. With aircraft charters, you just pay for the flights you require, with no upfront capital investment or ongoing expenses. Additional advantages of charters include:

• The chance to choose the jet size and type that is most appropriate for your trip.
• There are no long-term contracts, providing for maximum flexibility.
• Access to an extensive network of aircraft operators.

Chartering is ideal for people who travel seldom or whose flight needs change greatly from trip to trip. However, it may become less cost-effective for regular flyers than fractional ownership or jet cards.

Final thoughts

As private aviation grows, fractional ownership remains a popular option for those looking for a combination of convenience and cost savings.

Emerging technologies, such as electric and hybrid aircraft, could further reduce costs and environmental impact, attracting a new wave of customers to fractional programs. Furthermore, the rise of digital platforms and apps has streamlined the booking process, making fractional ownership even more accessible.

The history of fractional private jet ownership demonstrates the aviation industry’s ability to develop and respond to shifting market demands. Fractional ownership has altered private aviation by making it more accessible, efficient, and sustainable, beginning with Richard Santulli’s NetJets in the 1980s and growing to become a multibillion-dollar sector today.

Whether for business or pleasure, fractional ownership is an appealing option for those who value time, privacy, and flexibility. As the industry evolves, it is apparent that fractional ownership will remain a cornerstone of private aviation, influencing how we travel for decades to come.

SOURCE