“You’re absolutely right—and you can’t stand up in your [expletive] Rolls-Royce, either.”
Charters? Jet Cards? Fractionals?
Business jet travelers are passionate about their aviation choices. You can tell from the strong and contradictory opinions they offer when you ask them about the relative merits of charter, jet cards and fractional aircraft ownership or the companies that provide these services. This reflects in part the fact that evaluating access models and weighing options is a complex undertaking and that one flier’s ideal solution often won’t suffice for another.
So how can you decide whether charter, a jet card or a fractional share would be best for you? And how can you determine which provider or providers would best suit your needs? Large sums of money, personal safety and comfort ride on your choice. Aviation consultants and attorneys can guide you through the decision process, and it can certainly make sense to pay for their expertise. But you can point yourself in the right direction.
Start by considering how many flight hours you use annually. The rule of thumb is that up to 25 hours calls for charter; 25 to 50 hours is the sweet spot for jet cards, which are debit-style cards that provide guaranteed access to aircraft at preset prices; and if you’re flying more than 50 hours per years, fractional ownership—in which you purchase a share in a jet—begins to make sense.
The thinking behind the metric is clear. Many of the cards are sold in minimum denominations of 25 hours or face values of about $100,000, putting them out of reach of infrequent business jet users. Meanwhile, 50 flight hours per year constitutes a 1/16th share of a fractionally owned aircraft, generally the smallest size sold.
There’s logic to this calculus, but it can create the false impression that a continuum of access options exists along which a business jet user progresses as his flying time increases. In fact, some people employ a fractional share, a jet card and charter, while also taking advantage of a provider’s alliance with an airline for long-haul international travel. They decide which solution to employ on a mission-by-mission basis.
Moreover, the lines between offerings have blurred. Charter operators have morphed block charter—discounted flight hours sold in bulk—into jet cards, while jet card and fractional ownership programs now also broker charter flights for their customers. Meanwhile, program offerings have become more refined to appeal to a wider and more nuanced array of travelers. This gives you more choices than ever. But it also makes sifting through the access options and providers all the more challenging.
Before choosing a long-term solution for your private air travel needs, you must determine what those needs are. If you’ve landed a business contract that will require lots of travel for a small team to or from an area not served by airlines, or you’ve come into a windfall that will allow you to fly everywhere by private jet, you should begin by using ad hoc charter. Become familiar with the aircraft models that suit your routes, passenger loads and other criteria. See how much airplane, flight time and service you really need.
Make a detailed record of your flights. Note travel days, dates and time of day, the reason for each trip, how many people and who traveled with you, how far in advance you made the booking, the amount of baggage, how flexible you were about changing the schedule of each particular flight, the aircraft type, age and quality and what you liked and didn’t like about each trip.
Sifting this data will tell you, for example, whether you should look for a solution that provides the best savings on round trips or one that charges no premium for access on peak travel days, whether consistent concierge service is more important to you than simple savings and a host of other actionable information.
Business aviation can be about more than simply getting from point A to point B quickly, comfortably and privately, or avoiding the hordes, security checks, long drives to a commercial airport and threats of delays and missed connections. Business jet travelers will tell you that some of the best ideas and most productive meetings occur at 45,000 feet, while earthly distractions are far away. Others talk of the over-the-top customer service that turns flying into an experience they look forward to rather than tolerate.
How much are these potential benefits worth to you? The epiphanies come easier in a cabin you can stretch out in but a cramped aircraft may be perfectly capable of transporting you and your team where you’re going. And the highest levels of customer cosseting typically come with a price tag to match.
Carefully vet aviation service providers before you work with them. If a company is publicly traded, you or someone you task should review all relevant financial statements. If it’s privately run, request pertinent documents to ascertain that it is financially sound. Operating aircraft is a capital-intensive endeavor, and companies in this business need a healthy reserve of cash to pay for fuel, labor, parts and maintenance. When funds run low, maintenance is often among the first items that get cut back.
Check the FAA database for any accidents or actions involving the operator, and query the Better Business Bureau and other consumer agencies regarding complaints against any operator or broker you’re evaluating.
Charter, jet cards and fractional ownership share a framework of rules that govern flight operations and charges. Know your provider’s policies in these key areas:
Peak, off-peak and blackout dates. Most card and fractional programs specify travel days during which you may face restrictions on access or added costs, based on your membership or ownership level. Charter customers may face de facto blackout dates during peak-demand periods.
Cancellation policies. Review the notification time required for refundable cancellation of your flight. International flights and peak-travel-day bookings may require cancellation as much as five days in advance to avoid loss of the entire estimated cost plus associated fees.
Service area. Most U.S.-based jet card, fractional ownership and major charter companies cover the continental U.S. and Canada, portions of Mexico and the Bahamas and Caribbean, but primary service areas vary and you may be assessed positioning fees for flights outside such areas.
Trip minimums or daily minimums. Policies differ on minimum flight time. Many programs and charter providers charge a minimum of one or two hours per flight or a minimum usage per day.
Call-out times. The time required in advance to book a flight can vary widely, though typically higher-denomination cards and larger-sized fractional shares provide faster access than lower-cost products from the same provider. Charter customers should discuss call-out time requirements with their charter provider.
What the price includes. Pricing policies aren’t uniform; applicable fuel surcharges may not appear in cost estimates. The 7.5 percent federal excise tax on all flights within the U.S. isn’t included in the prices quoted by all jet card and charter operators. Other costs that may not be bundled in charter, jet card or fractional pricing include crew overnight fees, de-icing, catering and ground transportation.
Charters – What’s New
Charter operators are forging alliances to create fleet and marketing networks that can deliver more optimized travel solutions. Last fall, Van Nuys, California-based Clay Lacy Aviation and Chicago’s Priester Aviation announced an alliance that creates a network comprising some 70 charter aircraft across the U.S….Last December, San Francisco-based charter and card provider Xojet added TWC Aviation in San Jose, California, to its Platinum Partner network, giving TWC’s charter customers preferred access to Xojet’s fleet of Challenger 300s, Citation Xs and Hawker 800s, and giving Xojet card customers guaranteed prices and access to TWC’s large-cabin business jets…Executive Jet Management, NetJets’ air-charter arm in the U.S., introduced a Web site this spring that can deliver immediate estimates of trip costs and simplify guaranteed-quote requests…The per-seat pricing concept has advanced in the past year. Greenjets morphed into Blackjet, lowered its membership fee and expanded its service network; meanwhile, contenders including California’s Surf Air and London-based Victor have entered the per-seat field.
Charter customers tend to:
...be occasional users. Charter provides access when you need it, and you don’t have to lay out cash in advance.
...be based near a business aviation hub. Lots of nearby lift helps make charter convenient.
...need a variety of aircraft. If your passenger loads and distances traveled often change, charter can provide a right-sized aircraft for each mission.
...make frequent round trips. Round-trip charter fares remain one of business aviation’s great bargains; jet cards’ one-way pricing model penalizes round-trip travelers.
...have flexible travel schedules. You can realize savings on non-peak flights.
...be bargain hunters. The empty-leg and spot market offer great deals that dedicated charter shoppers can take advantage of.
Ownership Perks with Less Upfront Investment
As noted earlier, jet cards are debit-style cards. They provide access to a single model or category, or to a fleet of various categories of business aircraft. They may be sold in hours of flight time (e.g., 25 hours) or dollar amounts (e.g., $100,000). Typically, the more money advanced or hours purchased, the lower the hourly rates. Created to mimic the fractional ownership experience, jet cards feature one-way pricing, guaranteed access and concierge service—all without the capital investment or commitment of ownership.
Hour cards generally best suit travelers who use one category of aircraft and like to keep tabs on their available flight time. Dollar-value cards make more sense for those who desire access to a whole fleet, where hourly rates vary with aircraft category. Several programs sell both card types.
Jet cards favor fliers who make one-way trips, as no roundtrip or repositioning charges apply. However, some programs offer roundtrip discounts and off-peak pricing. Many other rules distinguish individual programs, and it’s important to consider the impact of these rules in the context of your flying patterns.
Check the program’s replenishment policies and expiration rules. Some allow incremental purchases of flight time, a boon if you need just a few additional hours before the card expires, while other programs require purchase of a new full-value card. Also, many jet cards have a finite life – typically one or two years – after which unused hours or dollars evaporate.
Keep in mind that the purchase price typically goes into a general operating fund and is not segregated in a protected escrow account until you use the card. You will likely have little chance of recovering the funds if the provider defaults on its obligations to you. Take any reticence to share financial information essential to sound decision making as a warning sign.
Fractionals – What’s New
Last fall, NetJets added its first Global 6000 (also the first of its NetJets Signature Series aircraft, which features advanced cockpit and cabin technologies and designs)…This year, Bombardier’s Flexjet expects to add the new Learjet 70 and 75 and the composite Learjet 85 to its fleet. Meanwhile, the company’s new FlexShare program offers access to two aircraft from its Challenger and Learjet fleet for the price of one blended 50-hour fractional share, with hours of allocation (25/25, 40/10, etc.) set at purchase…Fractional ownership has reached China, as Beijing-based charter operator Deer Jet is selling shares in a Gulfstream G450 and a G550. The program targets customers flying 100 to 300 hours per year, and the aircraft can be flown anywhere in the world…Back in the U.S., Executive AirShare has introduced the EMBark32 card program, which applies credits earned for hours flown on the card toward a 1/32nd share in a Phenom 100. The company operates a fleet of Central U.S.- and Great Lakes/Midatlantic-based Phenom 300 and 100 jets and King Air 350 and C90B turboprops.
Fractional shareholders tend to:
...be heavy users of aircraft. For frequent fliers, owning an airplane (or part of it) can make more financial sense than renting via card or charter.
...desire consistent service and guaranteed access. Fractional programs provide high levels of customer service, and as an owner you have access to an aircraft whenever you need it.
...be in a position to enjoy tax advantages. Depreciation and other potential tax benefits can make ownership financially
advantageous compared with other access options.
...be consistent users of one aircraft type. Fractional programs make most sense if you primarily use just one category of aircraft (e.g., mid-size) or a particular model, though providers typically offer interchange options on a per-flight basis.
...appreciate easy ownership. Get the freedom and tax benefits that come with ownership while leaving administrative and operational responsibilities to the program.
...want the newest models. Fractional programs can be the fastest way to get aboard newly introduced aircraft models, thanks to the early orders that programs place.