Aviation Business Models – Determining Whats Right for Your Needs
Determining whether or not private aviation is appropriate for you or your organization is a big decision. The convenience afforded by utilizing a private jet can be of great benefit to any organization with office locations or clients in different cities or states, but that benefit can be trumped by cost. Once you’ve made the decision to fly private, the next step is to find an aviation business model that works best for you. Fully understanding the benefits of each business model before entering into a contract will provide you the confidence to make one of the most important decisions for your organization; especially considering the high cost of flying in a private jet.
There are several different aviation business models to take into consideration and each has its own advantages and limitations. Owning a private plane is the most expensive way to fly. The initial acquisition cost, compounded with the constant maintenance of the aircraft, managing the pilots and flight crew and the endless variable costs; put aircraft ownership out of reach for most businesses and individuals. There is an aviation business model that helps break down the massive entry barrier facing potential aircraft owners; the fractional ownership model. Buying a fraction of an aircraft allows you to enjoy the benefits of private aviation without the headache.
NetJets is the largest fractional aircraft ownership company. While becoming a NetJets owner allows you to share the expense of owning a private plane with others, your initial cash outlay is still considerable. Depending on the interest, a fractional share can cost you well into the millions. A slightly less expensive alternative to fractional ownership is the Marquis Jet Card; it is a 25-Hour Block program. Marquis card holders don’t have an ownership interest in a plane, but they do have access to a private jet, 25-hours at a time. Sentient Jet also offers a fixed-price membership program. This program guarantees its members fixed hourly rates on a specific aircraft. To take advantage of Sentient’s fixed pricing, members are required to make large upfront contributions, usually in excess of $100,000. Stratos Jet Charters offers another way for businesses and individuals to fly private. Clients of Stratos Jets only pay for charter flights when they actually fly. With Stratos Jets “on-demand” business model, there are no upfront costs, no long-term contracts and clients have the flexibility to choose between different aircraft categories and types.
When you purchase a fractional interest from NetJets, you are buying a fractional share in a specific type of aircraft, such as a Citation XLS. During the term of your contract, aircraft hourly rates are fixed, which make it a viable travel option for individuals or companies who fly very frequently (more than 50 hours a year). Although fractional ownership is a considerable option, there are limitations. The upfront costs associated with purchasing a fractional interest are high and owners are restricted to a certain type of aircraft. Fractional ownership means you can only fly the specific aircraft type you bought into, a comparable one or downgrade to a less capable aircraft. In the event you need to travel with more passengers, fly a greater distance, or reach your destination faster, you must pay an unreasonably high fee to upgrade to a more capable aircraft. For example, if your fractional interest is in a Citation V, and you want to fly from New York to Los Angeles, you will have to stop for fuel along the way. This means that your flight will take longer than necessary. Purchasing a fractional ownership has its limitations and is an impractical and cost-intensive way to fly private.
Jet membership programs, such as the Marquis Jet Card from NetJets or Sentient Membership, are a less expensive alternative to fractional ownership. These membership programs share the same fixed hourly rate structure of fractional ownerships, but their programs don’t offer the economic advantages of owning and depreciating capital equipment. While joining a membership program further reduces the financial barriers to entry into business aviation, they share many of the same limitations of fractional ownership. The Marquis Jet Card membership, for example, sells 25-hours at a fixed hourly rate, in a specific type of aircraft, for a minimum starting price of $132,000. Another consideration is that Marquis Jet Card members, typically only have one year to utilize all their time. If they don’t or can’t fly the full 25 hours during the year, they’ll lose the remaining hours. Sentient Membership does not charge for unused hours but their fixed hourly rates are higher. While purchasing a jet membership offers the security of fixed pricing, it is not the best option for private jet travel, especially when compared to the benefits of Stratos Jets on-demand charter program.
Stratos Jet Charters offers the most flexible and competitive pricing in the business aviation industry. On-demand charters are individually arranged charter flights that are paid for on a trip by trip basis. The downside to the on-demand charter model is that you are not guaranteed fixed hourly rates. The advantage of Stratos Jets on-demand model is that it can offer a wide range of charter aircraft for every flight and allows their private flight advisors to provide the appropriate aircraft for the specific needs of each trip. Stratos Jets works with the most reputable local charter operators in the country to provide access to over 4,000 aircraft nationwide. While Stratos Jets doesn’t require membership, they do offer the security of a fixed hourly rate structure through their private jet membership program. Stratos Jets ensures that every charter flight they arrange on your behalf is conducted on the safest and most well maintained aircraft and is under the command of two of the most highly qualified pilots in the business aviation industry. With a charter agency like Stratos Jets, you gain all of the benefits of flying on a private jet without any of the limitations of other aviation business models.
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