Weighing your options

These days, private fliers who don’t want to buy an aircraft have lots of alternatives. 

Travelers who want to fly privately but can’t or don’t want to opt for full aircraft ownership have typically enjoyed three options: charter, jet cards, and fractional shares. Choosing among them can be challenging, and now you have other alternatives to ponder as well, including lease arrangements, membership clubs and purchase-support programs. Let’s look at the pros and cons of each of these options.

Air Charter 

Charter is the entry-level solution for anyone who wants to fly privately. If you need an airplane on a one-time or occasional basis, this is your only practical choice. Yet many sophisticated, high-time flyers also use charter to augment their jet cards and fractional ownership stakes. 

Charter lets you select the aircraft type or even model you want for each flight. Moreover, with today’s one-way, point-to-point pricing (rather than the round-trip rates routinely charged before the advent of floating fleets), it generally offers the most economical way to go. However, it doesn’t provide guaranteed access, and at times of peak demand, you may not be able to find a suitable aircraft at a reasonable price.

Jet Cards

If you need 25 to 100 flight hours per year, perhaps to supplement other lift, or require aircraft at times when charter may be unavailable, consider jet cards. Some cards provide a block of flight time—25 hours, for example—aboard a specific category or model of aircraft; with others, charges for use of more than one aircraft type are deducted from a deposit, such as $250,000.

When they were introduced more than a decade ago, jet cards’ occupied-flight-time-only pricing model provided a cost advantage over the round-trip rates most charter providers charged. That advantage has disappeared with the advent of one-way charter fees, but cards can still be appealing because they offer guaranteed access and consistent service. 

Fractional Ownership

Fractional ownership can make sense if you need at least 50 flight hours per year in one category of aircraft. You’ll spend more per hour aloft than with charter or jet cards, but you’ll pay only a fraction of the cost of buying and maintaining an entire jet. And you’ll enjoy all the benefits of aircraft ownership, including guaranteed access, wholesale operating costs, and the opportunity to offset your expenses with depreciation tax deductions. 

Fractional shares, typically based on 800 annual flight hours, are sold in stakes ranging from one-sixteenth (50 hours) to one-half (400 hours). Upon entering a fractional program, you pay the appropriate prorated amount for your share; after that, you pay a monthly fee for administration and maintenance and a per-hour fee when you use the aircraft, to cover the flight crew, fuel, and other expenses. The ownership period is fixed—typically at three or five years—and at the end of the term the provider buys your share back at market value. 

In addition to high service levels, fractional providers often offer new business jet models that charter and jet card customers can’t yet fly; in fact, the fractional programs often serve as launch customers for manufacturers’ latest aircraft. 

Leasing

Leasing has long been an option for heavy users of business aviation. What’s new is the availability of “wet” leases, which offer benefits of fractional ownership, including lower hourly rates, without tying up the capital that ownership requires. Under “wet” as opposed to “dry” leases, the owner retains responsibility for operating the aircraft. As a lessee, along with a monthly management fee and per-hour charge for flight time, you make a monthly lease payment. Delta Private Jets, NetJets, and Flight Options are among providers now promoting “wet” leases.

Consider such a lease if you need 50 or more flight hours per year on one aircraft type and wish to avoid the capital investment of fractional ownership or can’t take advantage of its tax benefits. A lease can also make sense for companies that want to avoid carrying aircraft on their books.

Purchase-Support Programs 

In the heady pre-2008 charter market, many operators promised owners of quality aircraft a minimum number of charter hours per month, thereby guaranteeing income to offset their costs. Today, with demand for charter growing, providers are encouraging aircraft buying. 

Delta Private Jets’ Ownership Assist program, for owners and prospective owners of select Citation models and Legacy 600s, guarantees coverage of 80 to 100 percent of financing costs through charter revenue, and handles all maintenance and fixed costs while providing the owner with 30 hours of usage on up to 20 days per year at no cost. Since introducing the program in the middle of last year, DPJ has added 14 aircraft to its fleet through Ownership Assist.

Flight Clubs 

For an initial membership fee and annual renewal charges, so-called flight clubs offer guaranteed access to mixed-model fleets at costs typically below jet-card rates, and without the hefty deposits that card programs require. 

One such club is New York City-based Wheels Up, whose CEO and co-founder, Kenny Dichter, also launched Marquis Jet Card (now owned by NetJets). The company has a fleet of King Air 350i twin turboprops ($3,950 per hour) and Citation Excel/XLS light jets ($6,950 per hour) that are operated by Gama Aviation. Wheels Up provides midsize, super-midsize, and large-cabin jets at preferred rates through Jet Aviation, which also operates VistaJet Bombardier Global 5000 ultra-long-range jets for the club. Helicopters in the New York tri-state area are provided through HeliFlite. 

Family and individual memberships at Wheels Up cost $17,500 for the first year and annual dues run $8,500 thereafter. Corporate memberships and annual dues are $29,500 and $14,500, respectively. 

JetSmarter, another flight club, is a discount charter facilitator headquartered in Fort Lauderdale, Florida. It charges $8,500 per year for providing members direct access to charter operators for bookings without commissions, saving them 15 to 25 percent over retail costs on every flight, according to the company. In addition, JetSmarter posts more than 1,000 empty-leg flights per month, one to three days before departure, offering them free to members. (The company noted a $4 domestic or $18 international per-person charge on the empty legs, but failed to respond to a request for details about the program.) JetSmarter provides its charter brokerage service to nonmembers, who pay retail prices.

California’s Surf Air, another sort of flight club, operates scheduled service on Pilatus PC-12s to airports in the San Francisco Bay and Southern California areas and Las Vegas. Rates start at $1,750 per month plus a $1,000 initiation fee, entitling you to book two reservations at a time; for higher monthly fees, you can book four or six flights at a time. Surf Air compares itself to Netflix in allowing customers unlimited access, but restricting the number of flights they can book simultaneously. 

Membership has been purposely limited due to the company’s small fleet, but last year Surf Air placed firm orders for an additional 15 PC-12NGs and options for 50 more, and it expects to take delivery of nine this year. 

Meanwhile, Surf Air founder Wade Eyerly, who left the company but maintains his ownership stake, is inaugurating a similar club, Beacon, in the Northeast. Utilizing a mixed fleet of PC-12s and King Air 350s sourced from charter operators with FAA interstate commuter authorization, the company provides scheduled flights between Boston and New York. It also offers weekend flights to the Hamptons and Nantucket during the summer. Unlimited-access plans start at $2,000 per month.

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Comparing Jet Card, Fractional, and Leasing Costs

Evaluating the relative costs of access models is complicated by apples-to-oranges comparisons of fleets and program features. But Cleveland-based Flight Options’ offerings can give you some sense of how costs stack up, as it provides jet card, fractional ownership, and lease programs for its two fleet stalwarts, the Nextant 400XT light jet and large-cabin Embraer Legacy 600. Here’s what you’d pay for each option, not including fuel or federal excise tax:

Jet card (25 hours): For the 400XT, $132,500, or $5,300 per hour. For the Legacy 600, $238,000, or $9,520 per hour. 

Fractional program (five-year 1/16th share, providing 50 flight hours annually): For the 400XT, $250,000, plus a monthly management fee of $9,120 and a per-hour charge of $2,209. For the Legacy 600, $625,000, plus a $15,562 monthly management fee and a $4,326 hourly rate. (Owners receive fair market value for their shares at the end of the ownership term.) 

Lease (three-year): Same monthly management and per-hour charges as in the fractional program, plus monthly lease payment of $4,165 for the 400XT or $6,750 for the Legacy 600. —J.W.

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In the News

Charter Activity on the Rise 

Aviation information services provider Argus International’s data backs up anecdotal reports from operators that charter activity increased over the past year. 

California-based XOJet—an industry bellwether since it introduced all-inclusive transcontinental rates below $23,000 aboard Challenger 300 and Citation X jets—appears to blend charter and jet card features with its Preferred Access offering. For a $200,000 deposit, customers get a 4 percent discount on all XOJet flights and can access 1,000 additional aircraft through the company’s network of partners. 

Further savings are available by flying into and out of select airports and scheduling trips at non-peak times. But the rock-bottom transcontinental rates are gone, with today’s flights priced from about $28,300 to $32,200. CEO Brad Stewart says XOJet, which owns the fleet it operates (an anomaly in the charter world), had been pricing charter below cost until about 2014.
One sign of competition in the space: catering companies report that charter operators are upping the quality of their onboard dining. VistaJet and Meridian Air Charter are among the outfits enhancing their menus. —J.W.

New Jet Card Advantages

Providers continue to introduce jet card products, features, and benefits. Delta Private Jets Card now offers 10 percent savings on select round trips and 5 to 10 percent savings on super-midsize jets flying between many East Coast and West Coast states. Marquis’s X-Country Card delivers discounts of more than 20 percent for transcontinental travel, and JetSuite, which operates Embraer Phenom 100s and Citation CJ3s, has cut prices for top-tier card depositors on routes including Chicago-Aspen and Nantucket, Massachusetts-White Plains, New York. NetJets’ Combo Card splits 25 flight hours between two jet models. 

Charter broker Magellan Jets’ new “design your own” jet card, which provides model-specific access to four categories of business jets (Citation X and Challenger 300 in the super-mid class), lets you choose “perks” and “add-ons.” Among them: waived peak surcharges, two free category upgrades, 1.5-hour (vs. two-hour) flight-charge minimums, fuel-surcharge discounts, waived interchange fees and free catering or ground transportation. Meanwhile, Sentient Jet, which pioneered the jet card at the turn of the century, introduced a card members’ portal this year to simplify managing flights and handle billing online. —J.W.

Fractional Ownership Continues Comeback

In a sign of the comeback that fractional programs have staged since their decline in 2008, last year NetJets hired back the last of the pilots it furloughed in 2009, and this year it’s adding 200 new pilots and 50 flight attendants. Some may crew the Challenger 350s and 650s that began joining the company’s fleet last fall. (NetJets is the launch customer for both of those models.) Last fall, also, the Columbus, Ohio company opened NetJets China, which offers charter flights and jet cards rather than fractional shares.

Flexjet, Bombardier’s former fractional arm, will be the North American launch customer for Gulfstream’s G500, which is scheduled for delivery in 2018. Flexjet will also add the G450 and G650 to its fractional fleet beginning in 2015 and 2016, respectively. This is the first time that Flexjet has gone outside Bombardier for fleet purchases.
Meanwhile, Flexjet was also slated to be the launch customer for the composite Learjet 85, whose development Bombardier “paused” earlier this year, following lengthy delays.

PlaneSense, which operates an all-PilatusPC-12/NG turboprop fleet, is accelerating its move into the jet age, ordering up to five Nextant 400XTi light jets, which are remanufactured Beechjets. The first delivery to the Portsmouth, New Hampshire-based company was imminent as we went to press. Shares in the 400XTi will initially be offered as upgrades for current PC-12 shareowners and pricing hasn’t been set. PlaneSense announced last year that it was ordering six Pilatus PC-24 light jets, which are currently in development, with deliveries beginning in 2017. —J.W.

Online Charter Booking Portals Expand

In the future, you’ll have real-time access to the world’s air charter fleet and will be able to book and manage flights with simple mobile apps that maximize options and minimize costs. At least, that’s what the principals behind an expanding roster of charter booking portals predict. 

Skeptics claim that the complexity and cost of charter arrangements render this do-it-yourself approach unviable. Be that as it may, one portal, PrivateFly, sold a $500,000 charter on a BBJ via its online booking app in the past year, according to company CEO Adam Twidell.

Proprietary platforms that track the business aviation fleet to identify available lift power the sites, which include Victor and Returnjet (both, like PrivateFly, are UK based). After an initial registration, you can use the apps to indicate where and when you want to fly, the number of passengers and other booking parameters, and the sites employ algorithms to select suitable aircraft and calculate the journey’s price. But few such sites or apps currently incorporate a click-to-pay function. Rather, they provide a link so you can contact the operator to complete the booking, with the Web portal receiving a commission from either you or the operator.

Victor—which introduced an iOS app and entered the U.S. market in March—is an exception. After you input a potential flight, its site lists available aircraft and estimated costs, and within 30 minutes of a quote request, you receive detailed information for three suitable aircraft, including prices, photos, tail numbers, cabin floor plans, operators’ names, insurance information and air operating certificates. A click-to-pay function lets you complete the transaction seamlessly. —J.W.

James Wynbrandt is a private pilot and a regular BJT contributor.