Fractional Ownership

Fractional Fairytales - Private Air Charter

Private Jets

Once upon a time, long, long ago -- in the early 1990s -- the concept of fractional ownership in private aircraft was born, and there was much rejoicing throughout the land. People who never believed they'd be able to afford, or justify, owning a private jet suddenly had the opportunity to purchase partial ownership in one.

"At last," the people thought, "there is an affordable alternative to commercial airlines and private air charter. No longer will I be at the mercy of someone else's set schedules and destinations. I can fly where I want, when I want. No longer will I have to suffer interminable lines, deal with impersonal clerks, or eat indigestible meals. I will have my own private jet at my beck and call!"

But, like all fairy tales, there is more myth than truth in this tale. In reality there are few, if any, advantages to fractional ownership over private air charter.

FAIRY TALE:

Fractional ownership is more convenient than private air charter.

THE REALITY:

While it may seem that ownership, even partial ownership, of a private plane affords unparalleled convenience, the reality is far different. Whether the issue is a last minute booking, scheduling an intricate itinerary, or making certain that specific accommodations are attended to, private air charter can generally meet or exceed the services offered by a fractional broker. For example, while many fractional companies offer an eight-hour booking to take-off guarantee, Air Royale typically provides you with an aircraft in three hours or less. With over 5,500 private aircraft in our worldwide network, a take off can often be arranged within minutes of picking up the phone. And with Air Royale, you will have unparalleled choice in the type of aircraft you can choose for your flight, from a 8 passenger Lear Jet to a lavish Boeing Business Jet to a commercial airliner. While fractional ownership does permit you the option of flying in a type of aircraft other than the one you partially own, such an option requires complicated conversions of flight hours and often extra operating costs, and, with the limited fleets of most fractional operators, may take extra time to arrange.

FAIRY TALE:

The hourly cost of flying in a fractional aircraft is much lower than private air charter.

THE REALITY:

While the hourly charge of flying your fractional aircraft may seem to be hundreds, or even thousands of dollars lower than private air charter, depending on the class of aircraft, the true story is more complicated. Consider the fees the owner of a fractional must pay: in addition to the purchase of the share in the aircraft (hundreds of thousands to a million dollars or more), there are also monthly maintenance and operating fees (hundreds of thousands of dollars a year), along with insurance (more tens of thousands of dollars). And on top of all that, you will still pay an hourly fee for flight time. In contrast, when you book a flight through Air Royale, all you are paying for is the flight. When you add up all of these costs, Air Royale's hourly rate may be anywhere from one-half to one-third less than the typical fractional aircraft company's total hourly rate for a similar class of aircraft. You should also be aware that the monthly operating expenses charged by fractional companies are generally much higher than their actual costs of maintaining and operating the aircraft. Also, when the fractional company sells the aircraft at the end of the term of your contract, you will only recoup a fraction of your original investment. With Air Royale, there are no hidden fees. You will be quoted the total cost of the flight you've arranged, and that's all there is to it.

FAIRY TALE:

The fractional company's aircraft are all brand new, so they must be better and safer.

THE REALITY:

At Air Royale, we know the importance of safety. We also know there is more to safety than simply the age of an aircraft. All of our network aircraft are rigorously maintained according to FAA standards, and each is equipped with the latest avionics, including GPS and Traffic Collision Avoidance Equipment (TCAS) to ensure your safety. Our aircraft owners embrace independent safety auditors such as Wyvern, Q-Star and Argus. The interiors are tasteful, luxurious and kept immaculately clean for your comfort. The service is lavish and personalized -- everything from the choice of food to the in-flight entertainment is yours for the asking. Each aircraft is also equipped the latest technology for your business and personal convenience, including AirCell telephone equipment for direct dial calls and checking your e-mail.

FAIRY TALE:

Well, at least I own the darn plane!

THE REALITY:

While no one can deny the thrill of ownership, it is simplistic to believe fractional ownership is equivalent of owning your own plane. It would be similar to owning a time-share and believing you own the whole resort. The truth is, while you technically own a share in a particular plane, in effect you have a contract with the fractional company that allows you to use any equivalent aircraft in the company's fleet for a specified number of hours each year. You will rarely, if ever, fly on the plane you partly own. Unlike a plane you actually own, you will have little say over who uses your aircraft, how often it flies, or how far it goes. All of those decisions are in the hands of the fractional company managing the program, which provides the pilots, maintenance, and storage facilities for the plane. May we humbly suggest if you truly desire the pleasure of owning your own plane, then you should own your own plane, not a fraction of one. Otherwise, private air charter is clearly the much more economical and convenient choice.

FAIRY TALE:

Okay, so maybe fractional ownership isn't the way to go. But there are other air travel plans, such as charter block membership and air travel debit cards, which seem to offer certain advantages.

THE REALITY:

True, there are many plans for selling blocks of air travel time, and more are invented every day. But do they really have advantages over traditional charter air travel? Hardly. The problem with schemes like charter block membership is that, like fractional ownership, they require the prospective client to pay a great deal of money up front, with even less to show in return. For instance, Company A sells a charter block membership that consists of 25 hours in a small jet. It costs $39,000 up front for the membership, plus an additional $1,200 for each hour of flight time. The total cost is $69,000, or $2,760 per hour of flight time. If you pick up the phone to charter the same type of jet from Air Royale, the cost is only $1,650 per hour, a savings of $27,750 for the 25 hours. Quite substantial. Is there an advantage, in terms of scheduling or convenience, to paying more for the membership? No. Does the higher price reflect some other benefit of the program? Not at all. And, if you are interested in an even greater price saving, Air Royale does offer to sell blocks of charter air travel time -- but unlike the plan referenced above, if a client commits to purchasing a block of time, we never require any payment up front. Our clients only pay for the time as they use it.

Fairy tales can be enjoyable, and we can often learn many lessons from them, as long as we keep in mind the difference between fantasy and reality. If you want to be the hero of your own tale, just remember that in terms of cost, convenience, and service, let Air Royale be your knight in shining armor. Keep this in mind, choose wisely, and you too will live happily ever.

charter@airroyale.com