History and Background

In 1986, Executive Jet Aviation, Inc. (EJA), created in the U.S. a new program that offered aircraft owners increased flexibility in the ownership and operation of aircraft by individuals and corporations. The Net Jets program offered shared aircraft ownership (fractional ownership), and provided for the management of the aircraft by an aircraft management company. Aircraft owners participating in the program agreed to share their aircraft with others having an ownership interest in that aircraft, as well as to lease their aircraft to other owners in the program that did not have an interest in that aircraft. The aircraft owners used the common management company to maintain the aircraft and administer the leasing of the aircraft among the owners. An FAA regional determination allowed this fractional ownership program to operate under 14 CFR part 91.

Since that time, the number of companies offering fractional ownership programs has grown. During the 1990s this growth was substantial and sustained. As of early 2000, the leading fractional ownership programs managed approximately 465 aircraft on behalf of 3,446 shareowners. By the end of 2001 there were over 3,500 owners of more than 5,000 shares of 650 aircraft. Growth in fractional ownership programs is expected to continue to increase due to downturn in world's economy.

Richard Santulli solution was an ownership model that offered all the benefits of full aircraft ownership – and more – with none of the responsibilities. It wasn’t long before his idea of fractional aircraft ownership had launched an entirely new industry.

Recent studies has proven that an increasing number of new prospects are making the move to fractional ownership as an alternative to flying commercially or owning a business jet outright. "About 30 percent of our business is from new people coming into Flexjet, so we're really excited about that," said Bruce Peddle, the company's vice president of sales and marketing.

Among the factors driving renewed interest in fractional ownership, as well as business aviation overall, is the declining availability of commercial airline flights, especially in smaller markets, said Mike Silvestro, CEO of Flight Options.

A continuing focus on "value" also is helping to drive growth. For example, the typical Flight Options customer has been the small business operator or entrepreneur who favors fractional ownership over buying an aircraft. "The common thread was that this customer was evaluating what was the greatest value," Silvestro said.

Today, larger business enterprises are turning to fractional for the same reasons. "We've had a great increase in business with medium-sized companies, and even good-sized companies…being much more receptive to going through their whole value proposition," Silvestro said.

Fractional business is continuing to build momentum.

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