Fractional Ownership and Jet Cards

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Fractional Ownership and Jet Cards
ABACEBusiness Aviation, the advantage can be
yoursJudith MoretonBombardier Skyjet
International

• 7 February 2007

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Air Travel Alternatives - Todays 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 - Todays
Complex Private Air Travel Environment (cont.) -
Fractional Ownership
Ad-hoc Charter
Block Charter (Jet Cards)
Low capital Monthly and hourly fees No
positioning or deadhead fees Owner-only
aircraft Short-notice guaranteed
available Consistent service Most
travelers -Block Fractional -Flown on fractional
program aircraft -Upfront all-inclusive fee -Many
of the same program benefits of fractional
No capital outlay 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 Service guarantees
No capital outlay Charter fees Positioning and
deadhead fees Charter aircraft As available, no
guarantee Various levels of service Infrequent
travelers On demand
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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 on-site
  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

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

• Trouble free Charter
• 1 call
• Consistent quality
• High level of Insurance

• 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 Owners 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

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Fractional Providers

• Major Providers
• Flexjet (Bombardier)
• NetJets (Berkshire Hathaway)
• Flight Options (Raytheon)
• CitationShares (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

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

• Trouble free ownership
• Aircraft management
• Flight planning
• Pilot training
• Maintenance
• Insurance

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