stinsonjr

Hi guys.

There is a thread in the "Corporate" forum regarding when to hire a third pilot for an in-house flight department. This raised some questions in my mind that may be best answered here as well, and hopefully provide insight into thre frax vs. corporate (in-house FD) world.

The overall value of the fractionals is obvious - no pilot hiring, maintainence, etc. - simply pay to fly. At what point does a company need an internal flight department, if at all? Can the fractionals do everything that an in-house department can do, or are there instances where a company needs their own planes? What are some of the largest companies that are using fractionals and how many shares and different kinds of planes do they have?

Thanks guys - just curious about this. The fractionals really interest me and I hope to be able to go to one someday.

F16Driver

Companies need to fly a lot to justify all the costs of full ownership. I flew with a guy here at NJA that was part of 2 flight departments that were shut down because of NJA. That's when he decided to come over here. There are also some companies that have frac shares with us on top of their own flight departments.

BoilerUP

Late last fall, a quarter share of an Ultra from NetJets cost $2.2M.

From a pure budget and operational cost standpoint, we can fly our current Citation II 375 hours per year for what NJA charges for 250 hours per year in the Ultra...before surcharges.

stinsonjr

That is a great response - thanks. I was unaware the shares were that much in comparison.

UCLAbruins

Yeah but the problem with flight deparments is that many have 1 or 2 frames. What happens if that Citation II has a maintenance problem 20 minutes before departure??? or say you have to take 9 or 10 people from LAX to MIA? This is where the fracs come in. If you own a quarter share of a Hawker, and a wing falls off, they'll send you another one, might still be able to depart on time. Don't have to worry about maintenance fees, C checks, pilots' salaries, hangar fees, etc, etc, etc.

BoilerUP

If the airplane breaks, maintenance gets to working on it. If they can't fix it the trip cancels, or if they absolutely/positively have to go we charter. Dropping another airframe to cover an AOG or being able to "up-size" to a bigger plane is a nice perk of fractional ownership, but an owner certainly pays a premium for that privilege.

Fractionals make a lot of sense for some businesses and individuals...and they don't make sense for others. They are ideal for folks that don't need more than a couple hundred hours each year, need various types of airplanes at various times, don't want to deal with the "dirty" side of ownership, or want the simple convenience of one call and the airplane is there when they want.

Fractional ownership is NOT ideal for companies that fly 300+ hours a year, those that need/want the depreciation, have no need for various sized airframes or those that want or need true operational control and flexibility over their flight operations. That said, there are plenty of one (or even two) plane 91 operations that own a Marquis Card for the instances you describe above...

The bottom line is this: the true cost of fractional ownership is MUCH higher than operating one's own department beyond 200-250 hours of yearly utilization.

NJA (and CS and FX) provide a great product...but fractionals are by no means a universal solution to every company's lift requirements.

UCLAbruins

Nope, the frax are by no means a universal solution to every company's lift requirements, agree with that. But for many companies, they make life a hell of a lot easier. Like F16driver said, many companies that have a flight department, have an account with us as well. Gotta have that plan B.

Navajo31

Actually, frac owners CAN claim depreciation. They have title to an identifiable, depreciable asset. However, they will have to recoop the depreciation when they sell in five years unless they reinvest in another share.

RCA01

If these guys have solid part 91 gigs why must you NJA guys try and convince them they will soon lose their jobs to the indestructable, Uncle Warren's Berkshire Hathaway backed, controls 90% of the market, and the wing falls off a Hawker and we still fly because we are that good of a comapany.

We know your the best, just have slice of humble pie once per tour, provided by the company of course, and let all of us ride the coporate jet wave until the wind starts calming down.

UCLAbruins

What the hell are you talking about???? If that's you get from my post, then that's your problem. I'm not going to go out of my way to try to convince you that is NOT what I said at all. You believe whatever you want. The thread starter asked about the benefits of flight department vs fracs. I gave the fracs' side of the story, Boilerup did the same for his flight dept.