Fractional Aircraft

A few programmes are small, with only a few aircraft flying from some airport to serve a local market. Other are major domestic or foreign programmes, with large fleet of aircraft consisting of a wide range of aircraft models. Please do not hesitate to get in touch with us if you know of a group company you would like to see added.

Factional Ownership can be useful if you are flying more than 50 hrs a year. Browse the fractions of aircraft property survey and get an insight into the structure and cost. Describes the contracts and documentation you will be signing as a fractional shareholder. To see how fractional aircraft choices blend into the overall blend of commercial air travel, please click here to dowload our guide to commercial air travel - this free, detailed review will cover all choices, plus pricing and major issues.

Choice between co-ownership of an aircraft or lease

Some of the major fractional aircraft suppliers also provide a lease facility. A lot of privately owned airlines provide a variety of options including fractional property, lease or air ticket, and these often duplicate each other in respect of the advantages each has. NetJets, for example, allow fractional share and lease of the same aircraft, from lightweight to long-haul aircraft, both of which only need to be operated 4 to 6 hour in advance and are suitable for anyone wishing to operate more than 50hrs a year.

The rental contract periods begin with a min. duration of 24 month and partial agreements have a min. obligation of 36 month. Similarly, Flexjet operators and renters have equal rights to aircraft with a 10-hour call. Either program is suitable for those who travel more than 50hrs per year, and fractional numbers or rental agreements are available in 50hr steps.

Partial possession and rental agreements can have a term of at least 30 to at most 60 month. Matt Doyle, Executive Vice President of Sales at Flexjet, says it is important to consider each aircraft's needs in order to find the right flying options for them.

For example, if you are planning to spend 300 to 400 flying hrs per year, most people would say that full possession would be the best option. Often there is very little, if any, distinction between possessing a small part of an aircraft and letting it out.

It is important to weigh the impact of a purchasing or leasing transaction closely. A lot of individuals consider fractional holdings to be a lower up-front cost and less continuous engagement than full holdings. Nevertheless, some would still rather not commit funds, in which case they may favour a leasing facility.

Howeverler says there are some points to consider from a pecuniary point of view when weighing the benefit of fraction of the property or letting. "There is no preinvestment with a lease," he says, "while with a fraction of the property you have a big prepuy. "Consequently, you loose the immediate use of this principal with a fraction of the agreement, although you can be expected to recover a fraction of it at the end of the agreement period.

They also advise customers to consider the end of life costs variable. In Butler' s view, in the 90s there was typical of a guarantee amount which was given back at the end of a fraction of the agreement. At the same time, a rental agreement shifts the risks to the supplier.

At the end of the leasing relationship no cash is given back, but this is compensated by the security. After all, when it comes to the choice between fractional property and a leasing relationship, the nature of the use can be a decisive determining element. Will the aircraft be used for private or private purposes? There is a difference of opinion as to which is the best choice in case of commercial use.

As Gallagher says, "We want to see whether the aircraft is being used for commercial or private purposes to determine what kind of fiscal benefits are possible. If it is suitable for commercial use, the expedited amortization plan could make the acquisition of shares more attractive than a leasing contract. "However, it recognises that it may be desirable for some entities not to have an item of property, such as a small part of an aircraft, in their accounts.

"The new GAAP requirements effective from January 1, 2019 will recognize the leasing charges as a commitment associated with a right of use. Such a new method of reporting could alter the motivation of some enterprises to engage in leasing or purchasing. Doyle also points out that those who plan to use their flying lessons for commercial ends are considering possible fiscal benefits and drawbacks of each one.

When you weigh up your choices, you may also find the entire property vs. broken aircraft articles useful. Below is an outline of the documentation required for a Fractional Aircraft Arrangement.