Almost on a weekly basis, I open a newspaper to see another article declaring the launch of “the Uber of Private Jets”. And almost as frequently I see an article about the demise, restructuring or retreat of one of these models that was going to rewrite the rules of private aviation.
There are per seat models, membership models, shuttle models, to name just a few. All of them come up against the unavoidable reality of owning and flying a private jet - it is expensive!
Over a period of let’s say 5 years, the average length of even the best fractional jet ownership contract, the owner of the aircraft will receive a bill of a certain size. You can spread that cost over the life of the jet, you can share the cost with other people, you can defer the cost, but you cannot avoid it.
That total cost of ownership, which includes depreciation (normally the largest single cost), management, insurance, maintenance, crew costs, operating costs, fuel costs, landing and handling, catering, parking, etc, all has to be covered by the hourly rate that you can charge for the hire of the jet.
After 30 years of operation, NetJets, certainly the most experienced and efficient private operator in the world, with a fleet of around 700 aircraft worldwide, can utilise an aircraft for approximately 800 hours per year. They are limited by the average length of a flight (1.3 hours in case you are wondering), the number of flights per day, the number of operational days per year, downtime for maintenance, crew duty restrictions, opening hours of airports, etc. So all of those costs have to be spread across 800 hours.
All these models are trying to find a new way to spread that cost. In my experience after almost 20 years in the business, people who want to fly privately want to go when they want, where they want, with whom they want. They don’t want to fly on someone else’s schedule with other people they don’t know. They can do that if they want to anyway, it’s called Easyjet.
Therefore, in my opinion, there are no meaningful economies of scale that can be applied to bring about a significant price reduction when it comes to owning an aircraft.. You either have to spread the cost per seat, which doesn’t work as there are better and cheaper alternatives already, or per person, which is called fractional ownership.
As mentioned earlier, the biggest single cost of owning an aircraft is depreciation. As a rule of thumb, it would be reasonable to assume depreciation of about 50% over a five year period. If you buy a share of say 10% of an aircraft, you receive the same proportional depreciation, 50% of your purchase price, or in other words, 5% of the cost of the aircraft.
That means you have saved 90% of the depreciation cost, while having exclusive use of a aircraft whenever you want. On an aircraft costing several million dollars, that is a substantial saving, and effectively means you’re flying for free!
Hence in my opinion, whereas I opened this article saying there will never be an Uber of Private Jets, in fact it already exists and in 30 years, no-one has come up with a better solution.
In addition to the above advantages of fractional ownership, buying on the secondary market brings even bigger savings. Through Fractional Jet Europe you can enjoy the benefits of flying with the world’s best fleet without the need to purchase a share. Give us a call today to find out more, on 020 7534 7138!