As times change for Fortune 500 companies, the use of fractional jets is in decline and the private jet charter is on the rise, experts say.
Fractional jets, or fractionally owned jets, are private jets that are group-owned by a number of companies. Each company shares the cost of ownership, maintenance, licensing and upkeep, giving them access to a jet without the full cost of owning and operating one. This arrangement is traditionally ideal for large companies that will regularly need the use of a private jet – a situation that was once common in the high-powered world of corporate leadership.
The much better-known practice of chartering a jet represents almost the opposite arrangement: the company simply rents a jet, not taking in ownership at all, from a charter service. This arrangement is more cost-effective if the company is going to need jets more sporadically: for instance, if certain seasons will require more travel than others, or if a jet is only needed for special events.
The difference between the two methods is why industry watchers say more companies are switching to the charter as a cost-saving measure. While private jet flight remains a symbol of corporate status and success, companies have cut back on many of the events that would normally merit sending executives by private plane – meaning their usage is more sporadic. Since they do not use planes routinely, they would lose money by bearing the cost of partial ownership, and instead spend the money only when there is a need for the service.