Fractional Jets - Track Record

Track Record

After twenty years, it is unclear that the model works in its current form. The original fractional model anticipated selling planes in 1/4 fractions, rather than the 1/16 or 1/32 fractions that have emerged. Each additional partial owner creates more demand and schedule chaos for each plane, particularly during peak periods. Further, the theory that a growing customer base will reduce empty-legs has proven limited. While there have been some improvements, the best-case “floor” of empty traffic is still above twenty percent of total traffic. Worst case for new operators can approach 50 percent.

According to Halogen Guides, which covers the industry, the initial assumptions underestimated the complexity, overhead costs and peak demands. This has been further impacted by the dramatic popularity of fractional card programs. The card programs place even more owners against each plane; each owner enjoying fully guaranteed access with as little as a single-year, 1/32 share commitment. For instance, a 25-hour Marquis Jet card represents a 1/32 share ownership of a jet in the NetJets fleet (NetJets is the provider of aircraft for Marquis Jet). Instead of the original "worst case" of four owners requesting simultaneous Thanksgiving travel, 16-32 may do so for a single plane.

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. Certain trips can be most economically served by fractional, card or charter. If a client gets to cherry-pick for each trip, the fractional provider typically absorbs the least efficient travel.