Fractional Aircraft Ownership Cost in 2024: A Transparent Analysis

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Aug 6, 2023

15 min read

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    Fractional aircraft ownership costs sit in the middle of the price spectrum, somewhere between private charter flights and full aircraft ownership. The premise behind fractional ownership is that all the owners share the benefits of a private jet while also sharing all the costs and aircraft management obligations.

    The fractional jet model is taking off among business executives and high-end travelers as it offers flexibility and exclusivity without the burden of full ownership.

    But what are the true costs and considerations associated with fractional jet ownership? Here is what you can expect with this approach.

    What Does Fractional Jet Ownership Mean?

    Fractional jet ownership offers elite travelers the anonymity and luxury lifestyle afforded by private jet ownership while reducing the costs associated with operations and management.

    How does fractional jet ownership work? Under this model, you purchase a share (aka a fraction) of a private jet, with a third-party company taking over the management concerns.

    Fractional jet shares range from 1/16th of an airplane up to a full share. The arrangement typically includes a maximum number of flying hours per year, a monthly management fee, and an occupied hourly fee, with everything depending on share size.

    Fractional Jet Ownership Benefits

    Exclusivity and anonymity

    For those who prefer to travel with discretion, private jet ownership, fractional or otherwise, promises anonymity: no fighting for tickets, no lineups, and no sharing space with the general public. You’ll have the luxury of flying when you want and with the passengers you choose.

    Tax Benefits

    A fractional private jet share comes with all the tax benefits you’d expect from full ownership. If purchased for business use, fractional owners can write off all or a portion of the costs as a tax deduction. Depreciation tax benefits may also apply.

    Aircraft Availability

    In some regards, aircraft fractional ownership affords greater aircraft availability than even full ownership. As a fractional owner, you gain access to a fleet of aircraft managed under the fractional jet provider. You’ll never have to worry about downtime, including for aircraft maintenance or inspection. Within the fleet, there should always be an aircraft available.

    Revenue Sharing

    Many fractional jet ownership providers, including Volato, participate in revenue sharing. At the end of your term, when the ownership agreement ends, you’ll earn back your share of the sale price. Plus, your share will ensure you earn a proportional fraction of the revenue when it flies, even if you are on board.

    Headache-Free Travel

    Private jet travel is a luxury, but private ownership is more of a burden than you might expect.

    Many unforeseen operational costs and management considerations make private jet ownership comparable to running a new business. Under the fractional jet ownership model, these concerns are handled by the management company, ensuring your next flight is always headache free.

    Cost Breakdown: Fractional Jet Ownership Prices

    All vehicle ownership, whether a Mercedes or a HondaJet, comes with a few more cost considerations than strictly the purchase price. Fractional jet ownership is no different.

    Although there are slight differences within every agreement, you can expect the following costs associated with fractional private jet ownership:

    • One-time acquisition cost
    • Monthly management fee
    • Occupied hourly fee
    • Additional fees

    Purchase Price

    The purchase price for a fraction of a private aircraft varies depending on share and model, but you can expect prices to start at  $550,000 for a 1/16th fraction of a very light jet like the HondJet. This is a one-time cost covering a set term of ownership, usually five or ten years.

    Management Fees

    Fractional jet ownership providers charge a predetermined monthly fee, which covers the standard operational expenses including crew training, insurance, hangarage, and aircraft maintenance, among other concerns. Prices are outlined within the management agreement but will vary with the size of jet and fractional share.

    Consider this like the condo strata fees for the upkeep and maintenance of your jet. They apply whether or not you choose to fly that month but ensure your aircraft is safe, insured, and ready for flight when you do take off.

    Occupied Hourly Fees

    On a per-use basis, there are also occupied hourly fees. Every hour you use your jet, you’ll pay for the crew, fuel, and in-flight services. Again, these fees will vary based on the type of jet and share size. Fuel prices will also impact the rate.

    Miscellaneous Additional Fees

    In some circumstances, you may encounter additional fees including local airport surcharges or deicing costs. These are not included in your ownership agreement.

    Here is an example of the first year breakdown of fractional aircraft ownership costs:

    Purchase Price: $549,000 (1/16th share)

    Occupied Hourly Fee: 50 hours x $4,200 an hour = $210,000

    Management Fee: $5,950 a month

    Total First-Year Cost of Fractional Jet Ownership: $830,400*

    • not including any additional fees

    Calculating Hourly Flight Expenses in Fractional Jet Ownership

    The hourly rate to fly privately is called the occupied hourly fee, or OHF. Fractional jet ownership providers charge an hourly fee calculated by hours used, and it covers the variable costs including in-flight services, crew, and fuel — with fuel being the largest variable dependent on market prices.

    Fractional owners at Volato benefit from occupied hours charged at cost. As an example, the hourly rate for a 1/16th share of a HondaJet starts at roughly $4,200 per hour plus fuel. Just keep in mind the occupied hourly fee varies depending on a number of factors, including location, fractional share, fuel costs, flight hours, and more.

    Monthly Management Fees for Fractional Jet Ownership

    Management fees, which cover all the back-end support for an aircraft, including hangarage, insurance, and maintenance costs, range depending on share size, management company, and jet size.

    For a 1/16th share of a very light jet like the HondaJet HA-24, the estimated monthly management fees start at just over $5,950. Monthly management fees increase relevant to share size and jet size.

    Fractional Jet Ownership Agreement

    As a fractional owner, you’ll likely be required to enter into several separate agreements, which all govern the purchase, management, and use of the aircraft:

    • Purchase agreement
    • Management agreement
    • Master dry lease agreement

    Fractional Jet Purchase Agreement

    When you purchase your share of the aircraft, you’ll be required to sign a purchase agreement. This details the share price, title and condition warranties, exit strategy, and sale conditions.

    Fractional Jet Management Agreement

    Because the management of the aircraft is handled by a third-party provider, you’ll be required to enter into a management agreement with them. This governs all the management and administrative costs, annual occupied flight hours (if applicable), and limitations of use, and outlines any variable fees. Any revenue-sharing programs will be detailed in this agreement.

    Master Dry Lease Agreement

    Finally, because fractional ownership is a co-owner relationship, the master dry lease regulates the use of the aircraft fleet between the owners. If one owner needs to fly, but their specific jet is unavailable, they will benefit from access to other craft managed by the provider.

    Fractional Jet Ownership vs. Full Ownership: A Financial Comparison

    What’s the better option: fractional jet ownership vs. full ownership? Often it boils down to your budget. If we look at a side-by-side comparison of fractional aircraft ownership costs associated with partial vs. full ownership of the same jet, fractional ownership is significantly more affordable regarding both purchase price and operational costs.

    You only pay a portion of the purchase price because you are buying a share of the aircraft. You also reap all the benefits of sharing the ongoing operations costs for insurance, training, maintenance, and storage.

    Let’s look at a fractional jet ownership cost comparison:

    Fractional Jet Ownership* Full Ownership
    Purchase Price $550,000 $2 Million and Up
    Annual Operational Costs $71,400 + OHF $500,000 to $1 Million

    Fractional Jet Ownership Cost Comparison

    • Estimates are based on 1/16th share of a very light jet.

    Jet Cards vs. Fractional Jet Ownership

    Jet Cards vs. Fractional Jet Ownership

    Beyond an ownership model, many private jet providers offer jet cards or membership-type programs. You can think of these as pre-loaded credit cards for purchasing flight hours.

    Purchased in hourly increments, you are guaranteed a cheaper rate and typically greater flexibility and aircraft availability than if you were to charter the same service.

    At Volato, we created the Volato Insider Program. It’s like a jet card but better. It’s a simple deposit drawdown program that caps charter rates on highly trafficked routes and promises no blackout days, repositioning fees, or monthly fees.

    Selecting the Right Fractional Jet Ownership Plan

    Does it make more sense to buy an entire share, a 1/8th share, or a 1/6th share of a private jet? Should you purchase a very light jet or a super mid-size jet? How much will you fly in the next five years? These considerations and more go into your purchasing decision.

    As part of your research into fractional jet ownership programs, you’ll want to ask yourself the following questions:

    1. How many hours a year do I expect to fly over the next five years?
    2. How many passengers per flight do I expect on average?
    3. How much flexibility do I need with access, aircraft size, and hours?
    4. What is my annual budget?

    Generally speaking, most providers structure ownership around aircraft size and maximum flight hours a year. The larger the share, the more guaranteed hours a year.

    At Volato, we’ve removed the maximum hours per year restriction. Our innovative fractional jet ownership ensures you can fly as much or as little as you like, no matter the size of your share.

    What are the Downsides of Fractional Ownership?

    Of course, any ownership model has pros and cons, especially because every traveler’s circumstances are unique. Taking time to consider the advantages as well as the disadvantages of fractional jet ownership is critical before signing any agreement.

    Jet Model Limitations

    Beyond budget limitations, outright ownership allows you to purchase the private jet of your choice. In contrast, aircraft fractional ownership restricts you to the fleet managed via your management company.

    Ongoing Management Fees

    Fractional ownership comes with monthly management fees, which apply whether or not you travel that month. These fees, consistent from one month to the next, cover the insurance, hangar storage, maintenance, and all other operational costs handled by the management company.

    Agreement Limitations

    Most agreements restrict flying hours according to aircraft share. For example, a 1/16th share allows for 50 hours of flight a year, and a ½ share would include up to 400 hours.

    But not all fractional ownership models come with these restrictions. Volato’s Fractional Ownership program ensures no restrictions or penalties on the number of hours you can fly — no matter your share size.

    FAQ

    How much does it cost to own a fractional jet?

    Share size, jet size, annual flight time, and management company all impact the cost of ownership. At the bare minimum, you can expect to pay $549,000 to own 1/16th of a very light jet, plus roughly $5,950 a month for operational expenses. Occupied hours are extra, which are priced according to the agreement, share, and variable costs like crew and fuel.

    What is the annual cost of jet ownership?

    Purchase price aside, if you own a private jet, you are responsible for all upkeep, insurance, labor, storage, and much else. Unsurprisingly, these costs can add up and may cost you millions of dollars a year in operational expenses alone.

    As a fractional owner, you are only responsible for a portion of these costs. With the smallest share (1/16th) for a HondaJet or equivalent, you can expect the operations expenditures to be around $71,400 annually.

    What are the disadvantages of fractional ownership of an aircraft?

    As outlined above, every ownership model comes with pros and cons. One of the disadvantages of fractional aircraft ownership includes ongoing monthly fees, which apply whether or not you fly. Of course, you don’t need to wrangle insurance or maintenance issues because these tasks fall onto the lap of the management company — but the management costs still apply.

    Other disadvantages may include use limitations based on share size, aircraft limitations depending on fractional jet ownership program, and the fleet under management. Some companies also restrict flight schedules during peak times.

    What is the lowest cost of ownership for a jet?

    At the cheapest, a used mid-size to super mid-size private jet will cost approximately $2 million to purchase outright. Layered on top of that are the annual costs of maintenance, management, and crew, which can range anywhere from $500,000 to several million depending on usage, hangarage, and insurance.

    On the other hand, owning a fraction of a jet substantially reduces the upfront and ongoing costs. For light or very light jets, fractional ownership share prices begin at $549,000 as per Flying Mag, with the annual management fees typically starting at $71,400

    Is it cheaper to rent or buy a private jet?

    Chartering and outright ownership sit at opposite ends of the spectrum in terms of costs, with charters as the most affordable option. The cost of fractional jet ownership sits somewhere in between these options. If you only fly a few times a year, charter will always be cheaper. But, if you expect to fly more than 50 hours a year, fractional ownership becomes the most cost-effective option.

    How much does fractional jet ownership cost per hour?

    Occupied hourly costs under the fractional model will vary depending on share size and jet model. However, you can expect rates to start at $3,700 / hour plus fuel. This typically covers crew, and catering and is calculated based on a number of factors from airport location to fractional share.

    Are there any additional fees for fractional jet ownership?

    Fractional jet ownership prices cover the share of the aircraft, but you’ll also want to consider the ongoing operational expenses. First and foremost, there are the monthly management fees charged by the management company. This covers insurance, hangar space, maintenance, and other related costs.

    Secondly, occupied hourly rates still apply. These costs, charged by the management company on an hourly basis, cover fuel, catering, and crew wages.

    How do I exit a fractional jet ownership agreement?

    Most fractional agreements are structured as five or ten-year contracts. In Volato’s case, all our fractional ownerships are five years, with the aircraft sold and revenues divided at the end of that term. But what happens if your circumstances have changed and you want out earlier?

    You can find the exit policy and procedures outlined within your original purchase agreement, but the specifics will vary depending on the management company. For example, some companies may require you to sell your share back to the management company, while others allow sales to third parties.

    Are there any tax benefits to fractional jet ownership?

    The beauty of fractional jet ownership is that it comes with all the tax benefits of private jet ownership. As with vehicle purchases, jet owners can deduct the depreciation of their aircraft at tax time. You can expect the value of a jet to depreciate by 10 to 30 percent annually.

    Additionally, the purchase and management fees may qualify as a business expense if the aircraft is used primarily for business travel. Speak with your accountant to find out how to best incorporate fractional jet ownership costs into your taxes.

    A Flexible, Affordable Private Jet Ownership Program

    Fractional aircraft ownership costs, maintenance, and other concerns are all handled by a management company, with the costs divided equally among owners, according to share. The fractional jet ownership model makes high-end travel more accessible and flexible than ever.

    Volato is shaking up fractional private jet ownership with unlimited hours, unlimited days, and a revenue share on all trips, even when you are on board. We help you enjoy the benefits of full aircraft ownership at a fraction of the cost.

    Fly Volato. Get in Touch.

    Disclaimer: This post is intended for informational purposes only. Volato is not responsible for omissions or inaccuracies in such information, or for data that is no longer accurate due to delay, change in law, rules, or regulations.

    The choice is clear.

    Contact our team today to learn more about our jet share, jet card, aircraft management, and charter programs.

    Contact our team today to learn more about our jet share, jet card, aircraft management, and charter programs.

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