Which option is best for me?

For well over seventy years, business aircraft have been a steadily growing part of general aviation. Beginning in the 1980's the industry's growth curve began a climb much like a Learjet lifting off the runway. Greater numbers in the business community began seeking the same convenience and productivity that had previously been enjoyed only by the nation's largest corporations and its wealthiest jetsetters.

Responding to this growth--and in turn, dramatically impacting it--a few individuals envisioned new methods of bringing private jet travel to the wealthy masses. The most significant was the idea of fractional ownership--the convergence of apportioned costs, computerized scheduling and large-scale service delivery.

Today, there are four basic approaches to accessing private jets: (1) full ownership, (2) fractional ownership, (3) "membership" or block-charter programs, and (4) traditional charter. Which option is right for you? Today there is a great deal of confusion about this. Up to this point in time, many of the fractional and membership programs have claimed that their approach was a "be all, end all" solution. Making matters worse, each has tended to "smear" the merit of the others; leaving even the sharpest business minds skeptical and confused.

FULL OWNERSHIP

In many ways, this is the simplest, albeit the most expensive of the options. You find a plane you want and buy it. With full ownership, you enjoy a level of personalized service unequaled by the other options. But even if you choose a charter company to manage your jet (which is often the most reasonable choice), the costs and responsibilities of ownership are enormous.

Nevertheless, if you plan to use your aircraft more than 200 hours per year, this may be your best solution. Clearly, tax issues and desires for "pride of ownership" will need to be added into the mix to steer you in this direction.

On the question of type of flying you will be doing ("one-way" or "roundtrip"), the matter is pretty irrelevant. Basically you will pay for all costs whether the aircraft is flying or in the hangar.

FRACTIONAL OWNERSHIP

The positive aspects of fractional ownership are obvious--you pay only a portion of the capital and operational costs of the aircraft. You also benefit from first-rate management and scheduling that is able to position an aircraft anywhere in the country (or the world) to serve you. And although you may never ride in the actual jet that you own, each is new and sufficiently uniform in amenities and decor to provide a high degree of predictable quality. Perhaps the most attractive benefit is that you are only charged for occupied flight.

What are the downsides of fractional ownership? One is the inconvenience of having to remove your entire luggage when you de-plane- even if it's for a short stopover. The efficiencies in routing aircraft to meet every owner's flight needs almost always guarantees that you will never use the same aircraft for your return leg.

A more substantial negative is the premium price you will pay for your share of the jet. This is not the case if you were to purchase the aircraft outright where 5-8% discounts are customary. The truth is that fractional programs buy aircraft from the manufacturer at a steep discount and charge their clients full retail. Most of these programs will guarantee buy-back of the aircraft; but again, at a steep discount. Let's face it. This is how fractional providers make their money.

Besides paying an upfront cost of owning your fraction, you will also be paying a monthly management fee for the many fixed costs associated with maintaining the jet. You also pay an hourly cost for each occupied flight hour. Although you are not charged directly for unoccupied flight segments, they are built in to the management fees. This results in a net hourly rate that is higher than traditional charter. This is fine if you generally travel one-way. It's not such a bargain if most of your trips are quick roundtrips or extended "road shows".

Fractional programs are probably your best option if you will fly between 75 and 200 hours each year, anticipate mostly one-way travel and insist on flying in new aircraft. Their national and even international scope also makes them attractive if you travel to diverse locations and want uniform service. Travel less than 75 hours a year and your best bet may be the next option.

MEMBERSHIP OR BLOCK-CHARTER PROGRAMS

Membership programs require an upfront commitment to purchase a set number of discounted charter hours. There are offered by charter operators with a sizeable fleet of their own or by third parties who rely exclusively on computerized networking to find available charter aircraft for their clients.

With these programs, you are not required to buy part of the aircraft; you pay for flight time only. All offer one-way pricing and most provide an alternative pricing structure for round trips or multiple-stop road shows. They also allow you your choice of aircraft type for each flight.

Perhaps the most significant downside of membership programs is the lack of consistency you may experience in levels of service due to the participation of multiple providers. Your best bet is to choose a program offered by a larger charter operator with whom you've built a relationship.

When is it smart to choose a membership program? Obviously, when you want to avoid the upfront capital costs of fractional share. But if you fly between 25 and 75 hours a year and anticipate a mixture of one-ways and round trips, this is going to be your best option.

TRADITIONAL CHARTER

Charter remains the best option for occasional use. There is no up-front or long-term commitment whatsoever. And with a wide range of operators and aircraft, to choose from, you are assured of finding the right aircraft for each flight.

Charter is also serving a new role as a strategic support to the full-ownership and fractional options. This is certainly the case when the owner of a full-size Gulfstream needs to fly to an airport accessible only by a smaller turboprop. Discerning fractional owners wishing to reserve their allotted hours for one-way travel also utilize charter for their round trip or international flights (for which fractionals impose heavy fees).

Obviously, the primary downside to charter is it's high cost for one-way travel. Like a taxi service, you end up paying for the empty leg back to the operator's airport.

Clearly, charter is the best and really only option for those who fly less than 25 hours per year. More than this and you're better off selecting a membership program that offers reduced rates for both one-way and round trip flights.

CHOOSING WISELY

Despite the rapid growth of the business aircraft industry, it remains one of the most personal of services where relationships are foundational.

Todd Kunkler is Vice President of Marketing for Spirit Aviation, Inc. For more information, contact him directly via [e-mail].