Originally Posted by
USMCFLYR
Thanks Salty Dog. Good explanation. When I wrote the above I forgot that I had read about the flight hour cut-off along the way. I'm just beginning to understand the fractional business, but I certainly just guessed that owning your own flight department must be enormously expensive with all of the accompanying costs. Truthfully I still can't say that I understand all the factors that figure into the flight hour cut-off when a fractional becomes more expensive than owning your own plane - but I'm learning
There are other ways frac shares can be better for a company even with high utilization. Correct me if I'm wrong, but you are buying flight hours per year and if you own a 1/2 share you could take 4 different airplanes at the same time to different locations--not possible if you own one airplane. However, owning an airplane painted in your colors is a status symbol which can be a boost to your company. Just don't take the coporate jet to Washington to beg for handouts. I still find it really hard to compare the fractional business model with commercial airlines. Is FedEX different from United? Absolutely. Is NJ different from Northwest? Absolutely. NJ owners own the plane they are flying on and are in a 5 yr contract. That's very different than going online and shopping for the cheapest ticket. If NJ starts to struggle, it will probably be due to corporate bad decision making. Given their track record, that's probably not likely in the next 10 years. Hopefully other companies will learn from what they're doing right.