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A piece of the action

The twisted genealogy tree of fractional ownership programs

Tracing the history of the 35-year-old fractional ownership industry is a bit like trying to follow the genealogy of the Dutton family on the popular television franchise Yellowstone. 
Photography by Chris Rose.
Zoomed image
Photography by Chris Rose.

There are lots of branches in the family tree and maybe even a little incest.

While a few family names form the trunk of the tree and remain—such as NetJets and Flexjet—many others are dead twigs, relegated to dusty and often cryptic Wikipedia pages. Who remembers Avolar, Delta Private Jets, Raytheon Travel Air, Citation Shares, and Avantair, for example? Some like Avolar, a division of United Airlines, were aborted before takeoff.

Others, such as Citation Shares and Travel Air, were attempts by aircraft manufacturers to get into the game, even though such moves had them competing with their own customers—traditional fractional companies, which are major purchasers of business jets. In the end, such short-sighted thinking would lead to those programs being absorbed by other fractional companies.

The granddaddy

NetJets is often seen as the granddaddy of programs to sell fractions of business aircraft to individuals. The aircraft owners are provided a limited number of hours per year in an aircraft, although it may not be the actual aircraft in which they own a share. Typically, the owner agrees to a minimum of a five-year ownership plan, paying for anywhere from an eighth to one-half of an airplane and enjoying the tax and depreciation benefits of such an acquisition. The owner then also pays a monthly management fee and an hourly operation fee when the owner or their designee is on board.

The concept started in the mid-1960s when Executive Jet Airways, later Executive Jet Aviation, was formed to provide charter and aircraft management services. Early investors and officers included such colorful charters as actor Jimmy Stewart, U.S. Air Force Brig. Gen. Paul Tibbets, TV host Arthur Godfrey, and U.S. Air Force Gen. Curtis LeMay. Through much evolution and checkered history, it began offering fractionals for sale under the leadership of Richard Santulli, who is credited with the idea that multiple individuals could own a business airplane managed by a third party. The program launched as NetJets in 1987, with the now famous QS (quarter share) incorporated into the tail end of all the company’s registration numbers.

NetJets promised to have an airplane on the ramp anywhere a customer in the United States needed it, usually with only a few hours’ notice. With customers only paying for occupied hours, the secret sauce to success was to optimize all those deadhead legs. Over time, NetJets got it right, and has been a consistent leader in the industry.

Billionaire investor Warren Buffet took notice, and his Berkshire Hathaway company bought NetJets in 1998. Today, the company has nearly 1,000 airplanes in its fleet and is pining for both more airframes and pilots.

The success spawned many, many other programs, including Flexjet, which was started by Canadian aircraft manufacturer Bombardier, but ultimately was purchased by Directional Aviation, which had started Flight Options. Directional Aviation is overseen by Kenn Ricci, who, like Santulli, is considered a pioneer in the charter and fractional ownership world.

Nick Copley, founder of the website, lists 10 companies as valid players in the fractional space, although one of them, Jet It, shut down early last spring after running out of cash and leaving the owners of its airplanes in the lurch. Not included in Copley’s list is Wheels Up, which is technically a membership charter program not a fractional company. Like Jet It, Wheels Up ran into financial problems earlier this year and as recently as June was “on life support,” according to one industry executive. However, Delta Airlines and a group of other investors in August infused $500 million into Wheels Up in exchange for equity. Interestingly, Delta sold its Delta Private Jets division to Wheels Up in 2020, becoming Wheels Up’s largest shareholder at the time. The latest deal was meant to stabilize Wheels Up and prevent it from entering bankruptcy.

The success of such companies is important to airframe manufacturers. Over the decades, fractional companies have placed orders for billions of dollars’ worth of airplanes, growing their fleets into some of the largest anywhere—with NetJets exceeding the size of the largest airlines.


Photography by Chris Rose. Photography by Chris Rose. Photography by Chris Rose. Photography by Chris Rose.
Various models of the Cessna Citation line have dominated the fractional ownership market for decades. Textron’s broad product line allows fractional operators to offer shares at a variety of price points, meeting many different mission requirements.

Making it work

The early success of such programs began to blur the line between typical business flights covered under Part 91 of the federal aviation regulations and Part 135 charter operations. The FAA struggled for years to regulate the burgeoning businesses and finally in 1999 called a group of industry leaders together to hash out a set of rules. In the end, the agency and the industry agreed that fractional operations should be included in Part 91, but in a new, dedicated subpart. FAR Part 91 Subpart K became effective in November 2003, allowing fractional programs more than a year to comply with the new regulations.

“Running a fractional business is hard and complicated,” Copley said. He has reported on the industry for decades and founded SherpaReport in 2006 to cover the fractional and charter business, among other luxury means of travel. “You’ve got a floating fleet and to make it work, you need to get to a certain scale. You need to be very smart about all your scheduling for both your aircraft and all your staff, all your pilots. That’s a complicated model to get right with all the variables—planes, meeting maintenance schedules, pilots being sick, and everything else that goes into that very fluid equation—and that equation is very large and it’s very complex and it’s very hard to get right.”

A longtime industry executive, who wished to comment on background only, noted that Jet It “did the classic Avantair thing.” The company didn’t charge enough. While Jet It charged only about $1,600 per hour for use of the HondaJets in its fleet, other operators charged 50 to 100 percent more, according to Copley. Avantair famously went bankrupt a decade ago, parking its fleet of Piaggio Avanti P180 turboprops.

Most industry analysts agree that a ratio of 60:40 is necessary to succeed, meaning 60 percent of flight hours are revenue producing while 40 percent are repositioning flights.

Anything more for positioning flights leads to financial peril.

And that’s the reason most such programs use business jets rather than turboprops. The slower turboprops can’t be repositioned quickly enough to meet customer demands, which means a larger fleet is needed, driving up costs. That may be a factor, among many others, in the financial challenges at Wheels Up, which primarily uses Beechcraft King Air 350 turboprops in its fleet.

An exception to that rule is PlaneSense, which was started in 1995 by George Antoniadis. The program launched with a Pilatus PC–12 single-engine turboprop and has remained viable ever since, growing its fleet of PC–12s and later incorporating the PC–24 jet for longer-range missions. Observers note that the company’s success is because of its slow growth and sticking to shorter range missions ideal for the PC–12.

Flexjet opened a new $50 million headquarters in September, including this impressive global operations control center at Cleveland’s Cuyahoga County Airport. NetJets has almost 1,000 aircraft in its fleet. The company is based in Columbus, Ohio, and has outlets in Scottsdale, Arizona; Denver; and San Jose, California.

Other ideas

Of course, not everyone needs the 50 or 100 hours a year of transportation that comes with owning a share of an airplane. Sensing a market for those with lesser needs, Kenny Dichter launched Marquis Jet in 2001, taking advantage of the excess capacity among fractional programs during the economic downturn after the 9/11 terrorists attacks. Marquis Jet customers could buy a jet card stocked with 25 hours of flight time. Marquis bought time from NetJets to satisfy its customers. The card program grew rapidly, and like fractional programs in general, has been copied numerous times by other companies. Dichter ultimately sold Marquis Jet to NetJets and later went on to create Wheels Up. He stepped down as Wheels Up chairman and CEO in May, but remains a board member.

Jet cards came about as a way to remove the friction from the charter business, Copley observed. Buying a charter flight was complicated and time consuming, he said. Jet cards made it easy and efficient for the customer, buying hours at a fixed cost. However, once moving beyond about 50 hours of flight time, buying a fraction of a business jet is often more practical than continually buying jet cards.

Fractional companies use jet cards, charter, and aircraft management as a means to fully utilize and supplement their own fleets: selling excess capacity via the cards; introducing customers to private jets through their charter programs; supplementing their fractional fleets upon occasion with aircraft from their charter fleets; and managing whole aircraft for customers whose needs take them beyond the practical limits of owning a share. Most companies also operate their own aircraft sales operations as means of selling off their own aged-out airplanes.

To manage such operations, the large fractional programs utilize sophisticated command centers that resemble NASA launch control facilities and the operations centers at the largest airlines.

Noting all the moving parts in such a program and the economic challenges of running a large fleet and meeting customer demands, one senior industry executive said: “It’s a crazy model. It shouldn’t work.” And yet it does. Fractional programs launch and recover thousands of flights a day with an enviable safety record, all the while introducing new customers to the benefits of general aviation flying.

Thomas B. Haines is the former editor in chief of AOPA media.
Thomas B. Haines
Thomas B Haines
Contributor (former Editor in Chief)
Contributor and former AOPA Editor in Chief Tom Haines joined AOPA in 1988. He owns and flies a Beechcraft A36 Bonanza. Since soloing at 16 and earning a private pilot certificate at 17, he has flown more than 100 models of general aviation airplanes.

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