How The Fractional Jet Model Works
The original formula for fractional flight is similar to its present incarnation: customers purchase pro-rata portions of aircraft that are 100 percent guaranteed to be available. The fractional jet provider then purchases an additional 26 percent of capacity (over and above the fleet purchased by clients) to fulfill that guarantee. These extra planes brings the guarantee to 98 percent statistically. The last 2% of the guarantee represents holidays and other worst-case situations. To close this gap in the guarantee, the company relies on “supplemental lift” from charter -– either from affiliated companies, or trusted third-party charter operators. 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. In reality, it is not clear how many aircraft is required to reach an efficient scale, whether it is 50 aircraft, 400 aircraft, or whether it ever happens.
Read more about this topic: Fractional Jets
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