Jet Card Programs--Who's Still Standing?

It's been a rough year for the jet card programs. A lot of companies have ceased operations and many customers have lost deposits they put down.

Here's the current landscape: The major fractionals are still operating card programs: Net Jets, Flexjet, Flight Options and Citation Shares.I don't have any information that tells me any of these companies are not going to make it through the recession. Then you have the next tier which is companies that are the middle man between you and a charter company. The largest of these include Sentient and Delta Air Elite.

For a buyer, it's decision between accessing a fractional fleet and having a company determine which charter operators are safe and reputable. Typically, those companies that use charter aircraft will be cheaper than the companies that access a fractional fleet. They will also give you more choices and not lock you in to one type of aircraft.

If you're currently looking at jet card programs, ask about financials and safety. Don't assume everybody is the same. They're not.

Aircraft Fractional Ownership: A Good Choice?

The usage models for business aircraft look something like this:

Flying hours per year                           Aircraft Recommendation

0-50                                                    Charter, Jet Card

51-200                                                Fractional Ownership

201-400                                              Purchase Used Aircraft

401+                                                   Purchase New Aircraft

The determining factor is multiple use. Do you ever need access to 2 aircraft in one day? If the answer to this question is 'Yes', you may need a combination of different choice: for example a fractional share and a jet card. Most companies will let you buy a card from them and a fractional share and get multiple use. Or, you can buy from different companies.

More options. More choices.

What's Happening with Fractional Ownership of Airplanes?

This past month, we've seen Rich Santulli resign from Net Jets and Jet Republic cease their European operations.

What does this mean for the future of aircraft fractional ownership?

In my opinion, a few things:

• Jet Republic started operating at a very difficult time--namely last fall. I would surmise their funding dried up (as is happening to funding everywhere) and they were unable to proceed with their aircraft order for Bombardier Lear 60's.
• Net Jets has operated for years without making a profit. I  can recall one quarter in the last 10 years where they reported a profit. At the end of Q2, 2009, they were posting a loss of 250 million. There was no way they could continue on this path of 'non profitability'.  I'm sure that's why Rich Santulli resigned. They need to consolidate and cost-cut and an outsider would be more able to get this done.

The flaw of the fractional model is aircraft acquisition. The current environment is much more accepting of a model where you don't own anything.