Inside Fractionals: Buying Into the Rotary Club

While the vast majority of helicopter passengers either charter or own, they do have a third option in some geographical areas: they can purchase fractional shares, just as business jet travelers do.

Like fractional programs for fixed-wing aircraft, the ones for helicopters require paying for the share of the asset, plus a monthly management fee and a charge for time flown; they also involve a buyout from the program operator at the end of the ownership contract—typically a five-year agreement with early-exit options, as with many fixed-wing fractionals. But that’s about all that jet and rotor fractional programs have in common, besides guaranteeing access to an aircraft.

While you can buy into a fractional jet from locations throughout the U.S. and Europe, fractional helicopter ownership options are much more limited. More than 2,200 operators offer helicopter charter, but only a handful of programs in the U.S., all based in New York or Los Angeles, offer fractional helicopter ownership. Internationally, such ownership is available in São Paulo and Buenos Aires in Brazil.

The sizing of helicopter shares and the way operators charge for flight time can differ markedly from the fixed-wing fractional model. Helicopters, after all, aren’t designed to fly the 800 hours per year that business jets are expected to operate, and flights may last only a few minutes, whereas fractional jet programs typically mandate minimum flight times of at least one hour.

Executive HeliShares of Van Nuys, California, divides its twin-engine AgustaWestland A109 helicopter shares into thirds, entitling each owner to 200 hours of flight time annually. The company charges $2 million to $2.5 million for a one-third share, a management fee of less than $10,000 per month, and about $1,500 per flight hour, according to chief pilot Lance Strumph.

In the New York metro area, Sikorsky Shares—operated by the Associated Aircraft Group (AAG) and backed by the manufacturer Sikorsky Aircraft—sells one-sixteenth shares in its S-76 twins. These shares give owners 75 “units” of flight time, with charges based on a “zone” plan. Concentric rings, radiating out from New York City, define six zones, and the company charges travelers one unit for each zone they fly in.

A trip between New Jersey’s Teterboro Airport and Manhattan costs one unit, for example, while a flight from New York City to Boston costs six. AAG president Scott Ashton declined to provide Sikorsky Shares program costs.

Within their service areas, rotorcraft have a wider choice of departure and destination points than business jets do, though local ordinances and other strictures limit permissible landing sites. However, an approved landing/takeoff spot is usually closer than the nearest airport, and operators can help identify and apply for necessary approvals for off-airport landing sites for a fractional buyer. That said, efforts are underway or anticipated to limit helicopter operations in places like Manhattan and Long Island, New York, and it’s important to be familiar with such efforts and their potential effect before purchasing a share.

In Rio de Janeiro and São Paulo, the absence of any restrictions of this sort, along with gridlocked street traffic, has helped fuel fractional ­helicopter sales at a company called Avantto, which began operations in 2011. Avantto—which has 55 helicopters and some 160 shareowners in its fractional program, according to CEO Rogerio Andrade—uses the AgustaWestland A109E Power, Airbus Helicopters’ EC120 Colibri and AS350 E3 Esquilo, and the Robinson R44. Andrade notes that nearly every new commercial building in São Paulo is topped by a helipad, bringing the city’s total to some 300 such facilities. (A 1972 fire, in which hundreds were rescued by helicopter, led to a mandate that all public buildings in São Paulo have a full sprinkler system or rooftop helipad.) The challenges to growth in Brazil concern culture rather than infrastructure, he says, as “this idea of sharing things is kind of new.”

The need for lift to and from summer redoubts or as a means of avoiding freeway gridlock notwithstanding, demand for fractional helicopter ownership in the U.S. appears tepid so far. AAG has three fractionally owned S-76s in its fleet, in addition to a company-owned copter for supplemental lift and five managed aircraft that service customers for its charter business and Excalibur Card—the rotor equivalent of a jet card.

New York-based HeliFlite Shares, which inaugurated fractional rotorcraft ownership in 1998 and operates the Bell 430 and Sikorsky S-76, has scaled back its fractional marketing in favor of promoting its HeliCard. HeliFlite spokeswoman Elizabeth Garcia says fractional ownership is “something the consumer is moving away from.” HeliFlite has three fractionally owned helicopters in its seven-aircraft fleet.

In Los Angeles, meanwhile, Executive HeliShares, which has three fractionally owned A109s, aims to replicate the ownership experience in its charter operations as a means of promoting sales of shares to potential buyers. But Strumph notes that “sometimes that makes it harder to sell fractional,” as charterers are already enjoying some of the advantages that drive purchasing decisions.

Still, there are cases where rotorcraft shares can make a lot of sense. The tax advantages may make partial ownership the most financially attractive option. Users who want to have consistent access to a rotor model operated by a fractional program, rather than take what’s available through charter, are fractional ownership candidates, too.

Additionally, travelers using business jets to commute between, say, New York and Washington, D.C., may save time door-to-door by using a helicopter, thereby upping their usage enough to justify an ownership stake.

On the downside, while fractional jet buyers typically enjoy access to the latest aircraft models, which only later enter the jet card and charter fleets, the opposite may be true in the rotorcraft world, as providers usually have more charter customers than fractional owners. AAG, for example, will soon introduce an S-76D, the newest S-76 variant, to its charter fleet, but hasn’t committed to adding the D model to its Sikorsky Shares fleet.

If you determine that buying a share of a helicopter does make sense for you, carefully vet the provider’s financial stability and pay particular attention to maintenance policies and practices. Rotorcraft are more complex and require more servicing than fixed-wing aircraft, and maintenance quality can affect both safety and the residual value of your investment.

James Wynbrandt, a private pilot, is a regular BJT contributor who has also written for the New York Times, Forbes, and Barron’s.