Comparison study of buying an airplane, fractional share, jet cardrivate jet charter

8. Page 2-1

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2. Definitions 




Private Jet Travel: Understanding the Options  

October 2003 




We begin by briefly introducing the reader to today's business aviation offerings through the 
following definitions.  
Whole Aircraft Ownership.  Owning aircraft has been the transportation solution of choice for 
many companies and individuals from the dawn of aviation.  It remains an extremely flexible and 
powerful travel tool. The capabilities of today's aircraft -- from a 30-minute hop, to carrying a 
team of twelve between the U.S. East Coast and Asia -- and their variety -- from light piston 
aircraft all the way to modified commercial transport jets -- could scarcely have been dreamed of 
a few decades ago.  There are also myriad ways to hold, operate, finance and even share the 
use of private aircraft. In this Study we refer to the acquisition or lease of a 100 percent interest 
in new or used turbine aircraft (jet or turboprop), employing an internal or "external" 
(management company) flight department.   

On-Demand Charter. Also known as "air taxi", traditional charter provides on-demand access to 
a wide range of aircraft for almost any conceivable type of mission. From booking a single one-
hour trip, it could also extend to dozens of trips each year, varying mission profiles and use of a 
wide range of aircraft.  Thousands of companies offer On-Demand Charter services. Some own 
their aircraft, some leverage downtime on aircraft that they manage on behalf of private owners, 
and some are pure brokers matching supply with demand, either via online "demand 
aggregation" engines or through old-fashioned means such as the telephone. 
Block Charter.  In its purest form, "Block Charter" has been around for decades and involves 
simply buying a block of charter hours.  It has enjoyed resurgence in recent years, with several 
companies marketing new, more sophisticated Block Charter programs. These companies 
typically sell blocks of 25, 50, or 100 hours. Payment is in advance and the account is debited 
as usage is incurred -- either on an hour-by-hour or dollar-by-dollar basis -- based on the type of 
aircraft used, flight hours consumed and any miscellaneous costs. Some take the form of 
membership card programs, with the card's color reflecting the level of commitment and 
available benefits.   
Fractional Ownership.  As the first truly creative concept to hit business aviation in decades, 
fractional aircraft ownership (sometimes called "frax") appeared in the mid-1980s and has taken 
the industry by storm ever since. It is best viewed as a means of obtaining a partial interest in an 
aircraft, combined with a mechanism for sharing in all of the aircraft in the program (which can 
be hundreds). All operations are arranged and managed by the program manager. Fractions 
begin with a one-sixteenth share, typically providing 50 hours per year over multiple years.   

Block-Frax.  Borrowing characteristics from both Block Charter and Fractional Ownership is an 
offering that, for purposes of this Study, we refer to as "Block-Frax".  Block-Frax companies 
acquire Fractional Ownership shares and sublease those shares (and hours) to customers. 
They are able to offer smaller blocks of time (typically beginning at 25 hours) than those 
available under Fractional Ownership, along with rights to participate in the Fractional 
Ownership network.  Block-Frax companies do not operate aircraft -- an affiliate of the Fractional 
Ownership program does -- and their customers do not hold title to their aircraft.  Customers 
typically pay up-front for the year's usage. 



"Chartering a plane, either directly from a charter company or through a charter broker, is often the most cost effective way to fly private."

Independent Source: Deloitte Private Wealth, Private aircraft: Flying private makes sense for those with the right information (page 20)
*This website has no affiliation with Deloitte.