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Fractional Ownership and Jet Cards ABACE2011 Asian Business

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					Fractional Ownership and Jet Cards

ABACE Business Aviation, the advantage can be yours
Judith Moreton Bombardier Skyjet International

7 February 2007

Air Travel Alternatives
- Today’s Complex Air Travel Environment –
 With private jet travel there are a variety of alternatives available. These options can be broken down into 5 typical solutions. Each one offers inherent benefits, as well as limitations. Determining which solution is best for you and your unique situation depends upon your frequency of travel, destinations and personal preferences.

Ad-hoc Charter

Fractional Ownership

Whole A/C Ownership

Block Charter

Block Fractional Ownership

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Private Air Travel Alternatives
- Today’s Complex Private Air Travel Environment (cont.) Fractional Ownership

Ad-hoc Charter

Block Charter (Jet Cards)

Low capital No capital outlay No capital outlay Charter fees Positioning and deadhead fees Charter aircraft As available, no guarantee Various levels of service Infrequent travelers Upfront all inclusive fee Fixed hourly rates Typically no positioning costs Dedicated or audited fleet of aircraft Guaranteed availability Consistent service Insurance guarantees Audited pilots Monthly and hourly fees No positioning or deadhead fees Owner-only aircraft Short-notice guaranteed available Consistent service Most travelers -Block Fractional

On demand

-Flown on fractional program aircraft
-Upfront all-inclusive fee -Many of the same program benefits of fractional

Service guarantees

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What is Block Charter?
 Block charter provides guaranteed access to business jets and operates very much like a taxi service  A block of hours is purchased annually at a fixed price per hour  The provider will guarantee availability of the aircraft or a similar type provided you book within the time frame specified  Removes the unpredictable nature of ad-hoc charter and is most suitable for travelers who need to fly at least 25 hours per year.

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How to pick a provider
Key Questions to Ask
 Provider:
 How is the fleet managed

 What is the safety record of the provider
 Have the charter operators been certified by a reputable independent organization with onsite inspections

 What level & type of insurance coverage is in force



Aircraft:
 What is the age of the aircraft at their disposal  Do all the aircraft have the most advanced systems installed  Who maintains the aircraft



Pilots/Crew:
 How often and to what level of training do the pilots receive  What is the experience level of the pilots, both in total time and in A/C being chartered  Are both pilots Captain rated in the specific aircraft, fly only one type of aircraft and receive
recurrent training every six months in the most advanced flight simulators available

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Characteristics of Block Charter Jet Cards
 Pilot training  Operational Standards  Uniform Quality  Multiple Use  Upgrade/Downgrade  Guaranteed to fly  Fixed hourly rates

 No positioning costs

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A Summary of the Jet Card Concept
Jet Cards are a way to access business jets with no up front capital outlay but obtain guaranteed availability
 Buy the number of hours you need Select aircraft type Choose card size

 Average 1 year contract Easy to exit contract

The Jet Card
 Trouble free Charter 1 call Consistent quality High level of Insurance

 Pay fixed travel costs No Purchase price No Monthly management fee Fixed Rate for occupied hours

 Access an entire fleet Use larger or smaller aircraft Use multiple aircraft
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What is Fractional Ownership?
 Fractional ownership provides guaranteed availability of a business jet, entitling the purchaser to a specific number of hours annually.  Share sizes begin at 1/16th (50 hours), with no limit on the number of shares a person or company can own.  Purchasers become registered owners with the Federal Aviation Administration (FAA) for an undivided interest in the aircraft.  The Fractional provider manages the aircraft on the Owner’s behalf.

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Unique Characteristics of Fractional Ownership
 Training  Operational Standards  Uniform Quality

 Multiple Use
 Upgrade/Downgrade  Guaranteed to fly
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Where does Fractional fit?

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Key Areas to Consider When Evaluating Fractional
Annual utilization Typical travel patterns (degree of inefficiency)

Speed of aircraft chosen (as some fees are driven by flight time)
Overall demand on the fleet (# of owners per aircraft) Mix and age of aircraft in fleet Service level guarantees Policies relating to “chartering” in non-program aircraft (frequency, audit procedures)

Repurchase terms and market depreciation risk
Approaches to shielding potential liability Rules regarding how allocated hours are used and carried over
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Fractional Providers
 Major Providers

 Flexjet  NetJets  Flight Options  CitationShares

(Bombardier)
(Berkshire Hathaway) (Raytheon)

(Cessna)

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Fractional Ownership has become a substantial market segment
 540 total business jets in fractional service

 545,729 total hours flown annually

 4,337 registered fractional owners

 3,450 pilots flying for fractional providers
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A Summary of the Fractional Concept
Fractional ownership is a proven concept that is consistently meeting or exceeding owner expectations
 Own as much jet as you need Select aircraft type Choose share size

 Average 5 year contract Guaranteed repurchase

Fractional Ownership
 Trouble free ownership Aircraft management Flight planning Pilot training Maintenance Insurance

 Pay predictable travel costs Purchase price Monthly management fee Rate for occupied hours

 Access an entire fleet Use larger or smaller aircraft Use multiple aircraft
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