Airplane Fractional Ownership - Joint ownership is defined in 14 CFR §91.501(c)(1) of the Federal Aviation Regulations (FAR) as "an arrangement whereby one of the registered joint owners of an aircraft provides the flight crew for that aircraft and each of the registered joint owners pays a portion of the costs specified in contract.
Under this agreement, one registered owner can provide the flight crew and the other registered joint owners can pay a portion of the fixed cost of ownership as specified in the agreement. Each co-owner is responsible for covering its own direct operating costs individually. All co-owners must be listed on the aircraft registration certificate.
Airplane Fractional Ownership
Only U.S. registered aircraft that can operate under FAR Part 91 Subpart F may use the joint ownership agreement. To be eligible, an aircraft must belong to one of the following groups:
What Is Fractional Jet Ownership?
Aircraft, including piston airplanes, small airplanes and all helicopters operated under the small aircraft exemption may also benefit from reimbursement options permitted under Part-91 Subpart F, such as an exchange agreement. Members should visit the Small Aircraft Waivers online resource for additional information.
Timeshare flights may be subject to Federal Excise Tax (FET). For information on this tax, members should access the IRS Online Commercial Transport Tax Resources for IRS Part 91 flights. Fractional Jet Ownership is ideal for those who want the luxury and convenience of private flying but don't want the hassle and fees associated with owning a jet plane. With fractional ownership, many people can share the costs and benefits of owning a jet. Since many people own the plane, in most cases fractional ownership of the jet includes the jet management company.
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Fractional ownership of a jet is professionally managed co-ownership of an aircraft. By purchasing fractional ownership of an aircraft, owners can share the use and cost of the aircraft. Each shareholder is allocated a certain number of busy hours per year that he can use to fly the plane. Flight time is typically between 50 and 400 hours, and most jet fractions are multiples of one-sixteenth.
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Most part-ownership aircraft belong to the light or medium jet families. The most common jets used in fractional property are:
Light single-engine and multi-engine piston aircraft can also be used for partial ownership. These types of fractional ownership are aimed at private pilots, not business people.
Each fractional plane owner will have a certain percentage of ownership that correlates with the number of hours they can use the jet each month or year. Here are some examples of how they work:
Under a jet partial ownership agreement, there are many smaller agreements. It is important that you read and understand the entire contract before signing.
An Easy Guide To Fractional Aircraft Ownership
The purchase agreement is the main agreement between the jet management company and other partial owners with whom you share ownership of the aircraft. This Agreement includes the Supplier's warranties and representations regarding the condition and title of the Aircraft. It will also indicate how you will share the property with other shareholders.
This is a contract between you, the shareholder and the aircraft management company. The contract specifies how many hours the fractional owner can fly, the cost of the flight, and when he can fly. These agreements also specify how rollovers work, the owner's right to exchange where owners can fly, and peak travel days when owners have more restrictions.
A master dry-lease exchange agreement is an agreement between the fractional owners of an aircraft that clarifies the relationship between the fractional owners. This agreement usually binds each owner to other owners using the aircraft.
The binder/escrow agreement is a preliminary agreement for the sale of a fractional share. It requires the buyer to make a deposit before the seller takes the buyer's share. This agreement also guarantees that the owner's prices will not change, sets a fixed delivery date and identifies the specific aircraft in which the buyer is buying shares.
Charters? Jet Cards? Fractionals?
Fractional jet ownership will have a lower total cost. Full ownership requires huge upfront costs, such as buying a plane, buying a hangar, and hiring a jet management company. Since fractional ownership allows all of these costs to be shared, it is less of a burden for individual shareholders. While full ownership eliminates the need to share the use of the aircraft, the increased costs may not make it worthwhile. Whether you are looking to buy a jet for personal or business use, partial jet ownership can help keep costs down. With maintenance and management issues, fractional ownership can provide shareholders with the luxury of private flying without the hassle and added expense of owning a jet. To learn more about fractional jet ownership and stay up to date on all things aviation related, subscribe to FLYING magazine.
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