Several management companies provide fractional ownership programs for aircraft, including NetJets, Flexjet, Cirrus Aviation Services, and AirSprint.
As a result of this purchase, owners have guaranteed, limited access to the plane or a similar one in the operator's fleet, proportional to the size of their share.
Typically, the latter is charged only when an owner or guest is on board, not during the plane's travel to a pickup point or its return to its home base after a flight.
In the commercial system, customers purchase or lease a fraction of an aircraft, alongside numerous other anonymous individuals.
[2][1] Although the aircraft is shared, owners are guaranteed access with 4–48 hours notice, depending on the provider and plan.
The size of a share may provide additional benefits including: In the United States, fractional owners and operators are subject to Federal Aviation Regulations, FAR Part 91, Subpart K.[3] Private air travel advisors can be of assistance with navigating and negotiating the so-called "boilerplate" fractional contract.
Owners are not stranded when their plane is undergoing maintenance, and they can upgrade or downgrade to other fleet aircraft for special trip requirements.
The "fair market value" calculation is a key consideration and can dominate the overall cost-benefit analysis of the fractional ownership format.
The original formula for fractional flight is similar to its present incarnation: customers purchase proportional shares of aircraft that are guaranteed to be available.
As more client-owners join, a network effect results in a reduction of expensive empty legs: with a critical mass of customers, the theory is that it becomes more likely that a particular trip can be accommodated with minimal deadheading.
According to Halogen Guides, which covered the industry, the initial assumptions underestimated the complexity, overhead costs and peak demands.
Finally, the burgeoning diversity of structural offerings (fractional ownership, fractional cards, charter cards, ad-hoc charter) creates an environment where clients may employ a portfolio of solutions, tapping each alternative depending on the cost profile of each trip.
Even Warren Buffett's NetJets lost $80 million in 2005, attributed to foreign expansion and U.S. efficiency losses (specifically, paying for higher-cost charter flights when owner demand outstripped capacity).