Flying Private- Demystifying The Options

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Private air charter continues to grow and spawn new market segments. We get asked regularly about developments in private aviation including the emergence of membership-based charter options. These programs may offer access to a specific fleet of aircraft not otherwise available to others, the ability to pay by the seat, and/or the ability to share private charter flights with others in order to reduce cost. Which one is right for you?

Fractional Ownership

Through fractional ownership multiple owners share the costs of purchasing and operating an aircraft. Shares usually start at around 50 hours annually, and owners are guaranteed access either to a specific or similar aircraft in the operators fleet including privileges to upgrade or downgrade to other types depending on their need. Fractional owners pay a fixed hourly rate when flying on-board the aircraft. They also pay a monthly maintenance fee for aircraft upkeep, expenses to hangar the aircraft, pay pilot salaries and training costs. Users that make many one-way trips per year may find fractional ownership beneficial. Programs start well into the six figure range for a minimum share of a light jet, with monthly management fees around five figures.

Jet Cards

Jet cards are a popular option for those flying in excess of 25 hours per year. Dating back to the late 1990s they are in essence the original form of private jet membership program. Up front investment depends on the number of hours budgeted for private air travel per year but few cards are offered below the $50,000 level. Think of them as a form of prepaid private air travel where the user banks hours that can be cashed in on demand. They can offer some advantages such as no aircraft positioning fees and bonus time for your up-front expenditure.

How much you save will very much depend on the program you select and your particular travel habits. In many cases you may be locked into one specific fleet size with little flexibility to upgrade or downgrade your aircraft to suit a specific trip without incurring additional costs. There may also be premiums on peak period travel such as during major holidays or sporting events when demand is highest. It may be difficult to use your card when you want it most without depleting your investment faster than intended. And you should remember that while you may benefit from a fixed hourly rate for a charter in most cases you will still be charged for other trip expenses including fuel surcharges, international fees, cleaning and provisioning expenses, hangar charges and more. The wide number of programs of this type (there are hundreds) requires some homework.

Private Jet Clubs

In the last few years a handful of new membership-based programs have emerged that aim to lower some of the barriers to private jet travel while appealing to a younger demographic. In most cases these programs start with a membership fee and an initiation fee which unlocks access to a fleet of aircraft. Membership costs can range from $10,000-$20,000 per year but also depend on available promotions. Hourly charter rates are then added on by usage. Aircraft may be chartered by the hour or in some cases shared with other members. High end perks range from discounted luxury accommodations to access to member-exclusive events.

Some of these clubs provide a shuttle-like product between major cities, using third party lift and charging by the seat. In theory the cost per person to fly on a private aircraft can be cheaper this way. Are the purported savings readily available? Its all about risk vs reward. Shared flights are initiated by members who need to purchase a minimum number of seats in order to confirm a flight. We found with few exceptions the minimum number of seats required to initiate a shared flight to be more than the cost of a retail charter flight between the two points in question. While a shared charter option could enable you to sell back unused seats to others, you need to ask yourself if you are willing to take on all of the risk up front. In practice a customer with a low risk profile would have to wait for someone else to launch the flight on the day (and time) you’d want to travel.

Other member-based models charter by the aircraft in a more traditional sense on a simplified fleet of one or two aircraft types at fixed hourly rates. This enables users to determine charter costs more easily. In practice we found rates on these closed fleets to be more costly on a per hour basis, and in some cases as much as 40 percent higher than on similar or identical aircraft on the open market. The challenge for these new business models is offering a one (or two) size fits all solution, controlling marketing expenditures and in some cases offsetting the high contractual rates paid to aircraft operators in order to guarantee availability to members. And if the fleet is particularly new then members are paying a premium to fly in them.

Chartering With ELEVATE

Ad-hoc charter offers a tremendous amount of flexibility and arguably greater savings for those who fly less than 25 hours per year. A straight charter allows users to fly where and when they want by selecting the most suitable aircraft. No capital outlays are required up front. There are no membership fees. You simply pay as you go. Hourly charter rates begin around $2,000 for turbo-prop aircraft and from $3,000 for a light jet. A broker such as ELEVATE is well positioned to find the best aircraft and price, and will manage all aspects of your trip to ensure a perfect experience. An experienced broker like ELEVATE will help you save money by sourcing locally based aircraft in order to avoid costly positioning fees, and by ensuring you don't pay more for an aircraft you don't need. As an ARGUS Registered Broker ELEVATE works to the highest standards of service and safety. You can count on our decades of experience and top of the line service culture.

Book now at www.private-jet.ca.