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Comparing Private Aviation Models: On-Demand Charter vs. Fractional Ownership vs. Jet Cards

October 4, 2017  |  Aviation, Private Aviation

After an unprecedented decade of growth and innovation, private aviation is far more accessible today than ever before. Yet for all its modern flexibility, convenience, and choice, flying private still carries a reputation for being too complex and hard to navigate—in particular for first-time private flyers deciding which model best suits their personal travel preferences and daily schedules.

To simplify what isn’t actually such a convoluted process, we have created a comprehensive guide to the three main flight program models travelers should consider when flying private: on-demand charter, fractional ownership, and jet cards. Complete with honest insights about each model’s primary benefits, this should help you identify a program that not only works with your personal schedule, but also makes sense financially.

On-Demand Charter

XOJET Challenger 300 Plane Flying On-Demand Charter

Undoubtedly the most flexible of your three alternatives, XOJET’s on-demand charter is designed for flyers who want full control over their travel experience. Free of any binding contracts or residual value exposure, clients can reserve a flight with as little as 24 hours’ notice and enjoy a personalized membership solution that fits their individual charter needs. Access Solutions, XOJET’s new subscription-based membership model, provides three tiers of smart flight programs: one for occasional flyers (Select Access™) and another for consistent flyers with more than 25 hours of flying needs per year (Preferred Access™). Elite Access™, our third and most comprehensive program, is the leading alternative to fractional because it provides high-volume flyers with the same flight guarantee, albeit with superior optionality.

The difference is, on-demand charter clients are exempt from the one-size-fits-all approach—that is, being stuck with the same jet class regardless if it’s an urgent business trip from L.A. to New York or extended vacation from New York to South Florida. At XOJET, our position as both an owner-operator (of North America’s largest fleet of Citation X and Challenger 300 super mid-size jets) and enterprise broker (for an additional 1,200 aircraft of varying sizes through our industry-leading Preferred Partner Network) means our clients gain access to choose the most appropriate aircraft for their mission, thereby maximizing both efficiency and economics. It also means they’re in great hands, considering we are well-versed in the science of aircraft operations and only select aviation partners that are like-minded in their approach to safety and maintenance.

As for the price tag, Elite Access members pay on a per-flight basis with one easy, all-in hourly rate. Select and Preferred Access models are based on a dynamic pricing structure. They follow market rates and fluctuate depending on dates of travel, aircraft type, and destination, much like staying at a hotel. Meaning, flyers who are flexible in these categories can manipulate their flight preferences and significantly lower their costs.

Regardless of which program clients are enrolled in, over time the on-demand model is up to 30% less expensive than fractional ownership and jet cards.

The Bottom Line:

Known for its unrivaled flexibility, control, and overall value, XOJET’s on-demand membership is ideal for the business traveler who wants limitless service options, no long-term commitments, and the highest standards of customer service. With three tiers of Access Solutions that can accommodate both occasional and frequent flyers alike, it is the only model where clients can minimize up-front capital risk and avoid any of the associated costs of ownership.

On the flip side, while perfect for clients traveling to and from metro cities, on-demand charter can be financially unfavorable for those frequently visiting harder-to-reach towns and rural areas.

Fractional Ownership

Bombardier Challenger 600 series Fractional Jet Ownership

Much like holders in a real estate timeshare, fractional owners can get in on the benefits of a privately owned aircraft by splitting the financial burden with a group of co-owners. This can be favorable toward frequent travelers who consume 50+ hours per year and prefer their expenses calculated at a fixed hourly rate. What’s more, large providers will handle the responsibilities of ownership—including maintenance and operation—and prepare the aircraft on short notice.

For all the appeal of owning shares in an aircraft, however, fractional ownership assumes a long list of drawbacks, especially now that tax benefits of ownership are rapidly dwindling. First is the considerable capital commitment that comes with owning a multi-million-dollar jet, including the exorbitant initial cost as well as yearly management fees. Next is the lengthy contractual obligation: Most fractional contracts run between 2 and 5 years, meaning owners whose needs and desires change cannot get out of their commitments without paying significant opt-out fees.

Furthermore, fractional owners are locked into certain inconvenient restrictions when it comes to the flying experience itself. Owning shares in a private jet means committing to that specific class of aircraft for each and every one of your trips. This may not always be a problem, but when certain flights call for more cabin space (to fit more passengers) or different field abilities (to maneuver shorter runways), suddenly you’ve run out of luck. Compare it to on-demand charter, which affords a complete range of aircraft choices to best suit your mission.

The Bottom Line:

Fractional ownership appeals to travelers who want to own a private aircraft, are willing to pay a year-round fixed premium, and frequent areas with higher repositioning fees or short hops with larger cabin jets unfavorable to on-demand charters (i.e. from Des Moines to Texas). It does offer a lower, fixed hourly rate than on-demand, but considering the hefty up-front capital outlay, regular maintenance fees, and lack of flexibility, is only a favorable financial option for those who fly well over 50 hours per year (on the same class of aircraft) and will keep doing so for the foreseeable future.

Jet Cards

Hawker Jet Take Off

Similar in concept to a debit card, jet cards allow clients to pre-purchase a certain allotment of flight hours on a single model or category of private aircraft. The premise is to mimic the benefits of fractional ownership—including fixed pricing, aircraft maintenance, and concierge service—while requiring less up-front capital investment and none of the responsibilities of ownership. In theory, it appeals to passengers who fly under 50 hours per year, frequently make one-way trips (because they are only charged for flying hours, not empty legs), want to preview the experience of fractional ownership, or simply don’t want to take on the capital risk of owning an aircraft.

The problem with jet cards, like fractional ownership, is the commitment cardholders often get locked into. Besides being limited to one class of aircraft regardless of mission and maneuvering restrictions on peak travel days, travelers are typically required to pay for their flight hours in advance and use them within a certain period of time (usually 1.5 to 2 years). Though terms may vary by contract, hours generally round up—1.5 hours count as 2—and expire at the end of the contract, amounting to nothing more than lost capital.

Of greater concern, though jet cards can provide a cheaper alternative to fractional ownership, their significant up-front cost weighs unfavorably on the grand scale. Because cardholders are splitting the costs of non-revenue-generating return flights, overall prices are usually higher than on-demand charter. And since jet cards often imply certain indirect costs, clients may pay be charged for taxi time (as part of their pre-purchased hours) and additional fees when landing at non-preferred FBOs. Meaning, jet cardholders aren’t just held to less flexible terms, they’re also paying more in the process.

The Bottom Line:

Designed for clients who fly fewer hours, jet cards can offer a similar product—a single jet class type available at a fixed rate, regardless of high- or low-demand days—for a smaller capital commitment. As a direct alternative, however, it generally cannot rival the combination of pricing, flexibility, and aircraft consistency offered by on-demand charter models like XOJET’s (aircraft interiors may vary greatly between flights for jet card holders).



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