Fractional ownership.

A growing option for business aircraft operators is fractional ownership, in which companies or individuals own a fraction of an aircraft and receive management and pilot services associated with the aircraft's operation.

Fractional ownership allows companies that have never before used business aircraft to experience many of the advantages of business aviation quickly and without many of the startup considerations typically associated with traditional flight departments. It also allows existing flight departments to supplement their current aircraft when needed. Executive Jet Aviation (NetJets), which began its fractional program in 1986, and was followed several years later by Bombardier's Business Jet Solutions (FlexJet), has promoted the concept of fractional ownership the longest. Others, including Raytheon Travel Air, Flight Options and CitationShares, have since entered the marketplace. This segment of the industry has experienced substantial growth.

According to Honeywell Aerospace's Business Aviation Outlook, a major contributor to the strength of the industry continues to be fractional ownership. The fractional segment continues to grow by extending the benefits of business aviation to new customers. Although fractional operations account for about 7 percent of the global business aircraft fleet and service nearly 4,000 shareholders, Honeywell estimates that roughly 45 percent of the current aircraft order backlog is from fractional operators. By 2012, the fractional ownership fleet will comprise 10 to 12 percent of the active business aircraft in the world. On a yearly basis, fractional demand in the near term contributes around 15 to 16 percent of annual deliveries but could increase into the 20 percent range by 2012.

In 1986, there were three owners of fractionally held aircraft. By 1993, there were 110. From 2000 to 2002, the number of companies and individuals using fractional ownership grew by 52 percent, from 3,834 to 5,827 shares; the growth from 1999 (2,607) was 124 percent.

The number of airplanes in fractional programs grew 11 percent in 2002, from 696 to 776. "Honeywell Aerospace continues to believe that only a small portion of the potential fractional business has been developed, and we believe that continued growth in this segment is sustainable for years to come," noted Honeywell president and CEO Bob Johnson.

Source: NBAA 

Bombardier Continental

Seating: 8-16

Range (nm): 3100

Cruise Speed: 459

Wing Span (ft): 63.8

Dassault Falcon 2000

Seating: 10

Range (nm): 3,3,372

Cruise Speed: 528

Wing Span (ft): 63.4

Cessna Citation VII

Seating: 2+7

Range (nm): 2,098

Cruise Speed: 527

Wing Span (ft): 53.5

GulfStream V 

Seating: 7+2

Range (nm): 7,901

Cruise Speed: 560

Wing Span (ft): n/a

TOTAL NUMBER OF FRACTIONAL SHARES, 1986-2002

'02   5,827
'01   4,871
'00   3,834
'99   2,607
'98   1,551
'97     957
'96     548
'95     285
'94     158
'93     110
'92      84
'91      71
'90      57
'89      51
'88      26
'87       5
'86       3

Source: AvDataInc. Wichita, KS, 2003

Total fractional shares sold as of 12/30/2002

Note: Table made from bar graph.