Fractional Jet Ownership
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Bailey & Partners regularly presents seminars in cooperation with Boeing Capital Corporation on Fractional Jet Ownership and leasing. These seminars are for Clients, C.P.A.s, Bar Associations, Business Managers, and Aviation Groups and are provided on an ongoing basis. Often, these experts are concerned with doing "due diligence" in advising their clients or companies on fractional ownership. These sophisticated experts ask questions of our panels. Traditionally, an aviation law focused firm, Bailey & Partners has been involved with Fractional Jet Ownership from the beginning.
This website has received more than 800,000 requests for information from more than 96 nations since 1998 when it was first put up, often asking excellent questions. In this section of the website, we are repeating some of the most Frequently Asked Questions put to us by clients, experts, and the public.These questions generally fall into one or more of the following categories:
- How does "Fractional" work?
- How is fractional different from chartering or time sharing?
- What does fractional ownership cost?
- Are contract terms and prices negotiable?
- Who are some of the typical buyers of fractional interests?
- Who are the major sellers of fractional interests? (The operators or program managers)
- Can fractional interests be bought and sold?
- Can a fractional ownership acquisition be financed?
- What is a fractional owners responsibility for the actions of others?
- What are the tax implications for mixed business and personal use?
- Other
frequently asked questions how does "Fractional" work?
Q: What are the distinguishing
characteristics of Fractional Ownership?
A: Greatly oversimplified, Fractional Ownership is a relatively
new concept in the world of aircraft ownership and usage. It utilizes
new concepts in aviation law. The concept of Fractional Ownership combines
the ownership, the usage, and the maintenance of a single airplane which
is part of a fleet of many airplanes. Fractional Ownership is made possible
because of a series of intricate agreements between the purchaser or lessee
and the operator which meet the varied requirements and restrictions of
Federal Aviation Law. It allows one to purchase or lease-purchase a fractional
interest in a single aircraft and guarantees on demand 24/7 availability
to the purchaser of that airplane or another airplane from an entire fleet
of aircraft all available either to the buyer on demand anywhere with
relatively little advance notice. As illustrated by the logo the single
aircraft in the center is owned by multiple fractional owners and is part
of a larger fleet of fractionally owned aircraft. Usage is based on hours
in the air, beginning at the point from which you wish to depart rather
than from a charterer's base of operations. Each fractional owner has
a depreciable asset on the books for tax and financial reporting purposes.
Q: What if I need my airplane and it is not available because some other fractional owner is using it.
A: If your aircraft is not available, another aircraft will be taken from the fleet operated by the operator under the "Master Interchange Agreement," which provides that any owner of the fleet may dry lease another's aircraft. If another aircraft is not available from the master interchange fleet, the operator will charter a third party aircraft as "supplemental lift" for you.
Q:
Will I be able to use my aircraft (or another) anywhere in the United
States? How about Canada or Mexico or Europe?
A: In general, you will be able to use your aircraft anywhere in the Continental U.S. Your ability or inability to use your aircraft or hours outside the Continental U.S. in Alaska, Hawaii, Canada, Mexico or Europe will depend on the operator you select and the deal you negotiate.
Q:
What are major differences between Part 91 and Part 135 of the law and
how does that affect fractional ownership?
A: Greatly oversimplified, Part 91 of the Federal Aviation Regulations
applies to a turbine powered aircraft owned by an individual or company
which is under the "operational control" of that individual
or company. The Part 91 operator is regulated in terms of usage but nowhere
as much as Part 135 operators are regulated.On the other hand, Part 135
operators include charter operators and air taxis and are very heavily
regulated. They are inspected by Federal Inspectors to assure compliance
with various safety regulations, including maintenance of the aircraft.
The qualifications and allowable flying hours of the pilots and crew are
heavily regulated. The crew is tested and retested every six months. The
crews and those who maintain and repair the aircraft are subject to drug
testing. There are many more regulations, having to do with safety.A critical
feature of Part 135 regulation is the airports which can be used. Typically,
they must have weather reporting facilities and personnel for instrument
flying conditions (IFR). Depending on the aircraft being used, the runway
must be of a certain minimum length. Many of those regulations go back
in history to the 1950's before the use of many modern systems.
As a general rule, the operators of the fractional program meet Part 135
safety standards and requirements but allow the fractional owner to operate
as a Part 91 owner.
Q: The regulations refer to "operational control." Isn't that really a fiction? After all, the aircraft is maintained by a third party and the pilots are also selected by a third party. The airplane might not even be available.Where is the "operational control" of the purchaser who is relying on being subject to Part 91, in order to get in and out of small airports which do not meet the requirements of Part 135?
A: The purchaser of the fractional interest decides when and where the aircraft goes. The "operational control" requirement of Part 91 is met when the owner of the fractional ownership chooses schedule and destinations. The operator of the fractional program is required to comply strictly with all safety regulations concerning maintenance and crew. This combination of Part 91 and Part 135 gives the fractional owner control over when and where the aircraft is used and gives both the government and the owner assurance of safety standards being met.
Q: Has FAR 91 been challenged as applied to Fractional ownership?
A: To
the contrary, on July 18, 2001, proposed final regulations published providing
for the creation of a new subpart 91 K which will apply to fractional
ownership. This new subpart will largely codify the existing law and regulations
in their present form. It is expected that there will mot be any material
changes when adopted by the FAA.
2. HOW IS FRACTIONAL DIFFERENT FROM CHARTERING OR TIME SHARING?
Q: What are the principal immediately obvious differences between chartering and fractional programs?
A: There are many differences. In fractional, the buyer owns an asset on its books which qualifies for depreciation and tax benefits and may have value at the end of the 5 year program. In chartering, the chartering party only has a business expense deduction if eligible, and a canceled check at the end of the flight.In chartering there is no guarantee of an available aircraft or crew. In fractional programs, the aircraft and crew availability is guaranteed. Tax depreciation in a fractional program is typically 5 years, but 7 years for aircraft placed in a charter arrangement with a Part 135 operator. In chartering, there typically are charges for "deadhead" or ferrying time getting from the charter operator's base to where the airplane will be needed and getting back to the charterer operator's base after reaching the destination of the charterer. In fractional, getting to the starting point and back from the destination is normally at the cost of the fractional operator for trips that begin and end in the Continental U.S.There are also differences in crew selection, qualifications and charges which vary from operator to operator and charterer to charterer.
Q: How is Fractional Ownership different from Time Sharing?
A: Typically, in time sharing, the partial owner's usage of a particular aircraft or fleet of aircraft is subject to the prior or conflicting usage of other time sharers. Unlike Fractional Ownership, there is no right in time sharing to on demand availability of an aircraft.
Q: Is there a reason why the operators offer fractional shares of an airplane, rather than incorporating an aircraft and selling shares in the corporation?
A: Yes. The primary reason is to avoid the problem of the ownership certificate being deemed a security under various securities laws. However, there is also restriction on this type of structure at Federal Aviation Regulation 91.501(b)(5), which essentially prohibits the formation of "flight department companies, or conducting a de facto charter operation by syndicating or incorporating an airplane.
Q: If I don't need the depreciation, or don't want to show aircraft ownership on the financial statements, can I lease a fractional interest instead of buying one?
A: Yes, you could lease a fractional interest. How the lease appears or does not appear on your books and financial statements will be decided by you and your accountant and the companies selling and financing the acquisition by purchase or lease. You could also avoid owning or leasing by simply buying hours through Marquis Jet Partners program.
Q: If I don't need the depreciation or lease expense, can I try Fractional Ownership at a lower cost?
A: Yes. Marquis Jet Partners can provide as little as 25 hours on a fixed cost basis without you having ownership, but having many of the advantages of the NetJets program. To contact Marquis Jet Partners click here
Q: Who supplies the maintenance and the pilots?
A: The operator is obligated to maintain the aircraft and to provide two pilots for each flight. If the aircraft is damaged due to the negligence of the operator or another owner or is undergoing routine periodic maintenance the operator is still obligated to provide you with another from the fleet or charter one for you.
3. WHAT DOES FRACTIONAL OWNERSHIP COST?
Q: What does it cost to buy into a program and what do I get for my money?
A: The purchase price of buying into a fractional jet ownership ranges from about $200,000 for a 1/16th interest in a KingAir (technically a turboprop, not a jet) to about $20,000,000 for a one half interest in a Boeing Business Jet. The least expensive pure jet currently available would be a 1/16th interest in a used BeechJet for approximately $275,000, which seats 7 people and has a range of about 1,750 miles with a load of 7 people.A typical or median jet transaction costs about $1,250,000 plus management fees of $12,500/month plus hourly usage fees of about $1,750 per hour or a total purchase obligation of approximately $3,000,000 including insurance and finance costs over a 5 year period for a 1/8th interest.You get the use of the aircraft (or of an equivalent aircraft) for 50 hours per year for a 1/16th interest and 400 hours per year for a half interest. (Some negotiation is possible)
Q: Is there a cheaper way to try Fractional Jet Ownership?
A: Yes. One can get many
of the principal advantages of Fractional Jet Ownership for as little
as $115,000 (approximate) for 25 hours usage of a Citation V Ultra. Marquis
Jet Partners has an arrangement with NetJets to utilize the NetJets on
demand availability, aircraft, pilots, maintenance, etc., for Marquis
jet Partners. You will not be an owner, but you will get many of the advantages
of the NetJets program through Marquis Jet Partners. To contact Marquis
Jet Partners click
here
Q: How will my hours of usage be calculated? Do I pay for "deadhead" or "ferrying" time to pick me up at my destination?
A: In general, in most situations, you are charged for hours from 6 minutes before "wheels up" to and including 6 minutes after "wheels down." You are not normally charged for time to the start point or after the destination point within the Continental U.S. There may be special charges if you wish to keep the aircraft on the ground waiting for you. This has to be negotiated.
Q: Is there a monthly cost?
A: Yes. Typically, before usage, the median monthly cost of a 1/8th fractional ownership management fee is $12,500/month for 5 years. An additional hourly fee for usage will be made for fuel. This fee varies greatly depending on the aircraft and the world oil markets.
Q: Is there any economy of scale in buying?
A: In general, there is no economy of scale. 2 1/8th interests will ordinarily cost about the same as a single 1/4 interest..
4. ARE CONTRACT TERMS AND PRICES NEGOTIABLE?
Q: How negotiable are the deals?
A: Some provisions are very negotiable and some are not negotiable at all. What is or is not negotiable varies by deal, buyer, operator and the then current market conditions.
Q: Does the purchaser or the purchaser's advisor need assistance in the purchase of a fractional interest?
A: Yes, unless the buyer is sophisticated in matters of aviation and aviation law and has experience in negotiating aircraft transactions, the buyer will need help.Most buyers, even if sophisticated, will want help on what amounts to a $3,000,000-five year contract. (The price of a 1/8th fractional interest purchase of a Citation Excel is about $1,250,000. The monthly maintenance fees are about $12,000 per month or $720,000 over 5 years. The hourly fee for the 500 hours will be about 1500/hour or $750,000. Add supplemental Insurance and financing costs and the total cash commitment on an "average" purchase is well over $3,000,000.)Most buyers need help in deciding which is the best aircraft for their existing and anticipated needs and then deciding when and how and where to buy or lease it or alternatively, if they should be using charters. Unfortunately, those who need help often will not admit they need help and then we are called upon to get them out of a situation they need never have gotten into.
Q: How complicated is the paperwork in buying a fractional interest?
A: The paperwork is quite simple if one simply signs what is put in front of them with no questions and no negotiation of price or terms. Alternatively, there may be as many as 100 points to be agreed to. Some of these 100 points are simple and have little economic effect. Some of these points are complex, and have great economic effect over the contract term and any other dealings between the parties.
5. WHO ARE SOME OF THE TYPICAL BUYERS OF FRACTIONAL INTERESTS?
Q: What is the NBAA White Paper, and why is it important?
A: The National Business Aircraft Association (NBAA) hired an independent consulting company to study whether the use of business aircraft resulted in benefit to the shareholders of the company. The extent of the study and the findings of the study, which were published in 2001, were beyond any expectations.The study was made covering a period of 7 years, from 1992 through 1999, of 335 companies which continuously were part of the Standard and Poor's 500 during the entire period. Of the 335 companies, 214 regularly used business aircraft and 121 did not.In those companies which used business aircraft there was a 343% Return on Equity ( ROE). Among the companies which did not regularly use business aircraft, the Return on Equity was only 177%, a difference of 166% over the seven year period. Similarly, the companies that used business aircraft had a superiority in asset utilization (3%) and in EBITDA.The central finding of the White Paper is:"...business aircraft can make a substantial difference in how a company performs it's mission, in many cases generating significant gains in the drivers of shareholder value."
Q: What type of individuals (as opposed to companies) typically benefit from fractional programs?
A: Individuals in the business, entertainment and sports worlds are high on the list of individuals who use fractional programs. Fractional has been described as the ultimate upgrade. Athletes, entertainers and other financial and corporate VIPs typically have the need for privacy and security when they travel and frequently are on schedules or going to destinations not easily satisfied by airlines.
Q:
What other characteristics do buyers of fractional ownership interests
exhibit?
A: There probably are as many reasons for buying fractional ownership interests as there are buyers. However after representing many famous and not so famous companies and individuals and their attorneys and agents, we have been able to identify some of the general characteristics of buyers. In many cases this is their first experience with jets. They want to stick their toe in the water and see what it is like to have a 24/7 on demand access to a jet. Initially we are called on to negotiate ways of get out of the deal if the buyer is unhappy, which we do. However, we later get calls asking us to renegotiate deal to increase rather than decrease the number of hours. Most of our subsequent to purchase calls are to renegotiate a trade in. After trying this new concept, they are very happy and want more and more hours. Many have had bad experiences with charters not being available when and where they needed the airplane. Some already have corporate jets and need only a few more hours in a different type or more economical type of airplane. Some already have corporate jets and find it too expensive or too burdensome. Before 9-11 they were calculating the value of the lost time in airports trying to connect at hubs and the problems of missed connections due to delays and flight cancellations. Since 9-11 and the security delays at airports there has been another calculation of the value of lost time and lost opportunities to the business and an even greater surge in interest in "going jet" for the first time.
6. WHO ARE THE MAJOR SELLERS OF FRACTIONAL INTERESTS? (THE OPERATORS OR PROGRAM MANAGERS)
Q: Where do I look to buy a fractional jet interest? (Who are the major players?)
A: Until recently, there were 4 major players: NetJets, or Executive Jet (owned by Warren Buffett's Berkshire Hathaway), FlexJet, a subsidiary of the Canadian company, Bombardier; Raytheon Travel Air, and FlightOptions (which deals only in fractional interests in used aircraft). FlightOptions and Raytheon have recently formed a new company called Flight Options, LLC, which is 49% owned by Raytheon.
Q: Which companies sell what types of aircraft?
A: In general, FlexJet only sells interests in new or used aircraft manufactured by Bombardier including the LearJets, Challengers, Continental, and Global Express. NetJets sells fractional interests in the Cessna Citation series, Hawkers, Falcons, Gulfstreams, and Boeing Business Jets. Raytheon sells fractional interests in Hawkers, Beechjets, Challengers and King Airs. Flight Options sells fractional interests in used aircraft in its varied fleet, which grows larger as aircraft come off of 5 year agreements or become otherwise available.
Q: Is it safe to purchase or use a "used" jet?
A: Yes. The maintenance of a jet aircraft is very heavily regulated by Federal Law. Just about every one of the thousands of parts of the aircraft, the engine and the electronics must be inspected, overhauled, and replaced at specific intervals of usage or time. The law requires detailed log books be kept by the owners, experts and companies who work on any part of the aircraft and are inspected regularly by Federal inspectors, often in surprise unannounced visits. (It is not uncommon for commercial airlines to use airplanes that are 25 years old and older.)
Q: How big are the fleets of the "big 4" ?
A: NetJets has a fleet of approximately 600 planes with approximately 590 on order. FlexJet has a fleet of approximately 115 planes with approximately 350 on order. FlightOptions, LLC has a fleet of approximately 195 planes with approximately 271 on order. Compare this to the fleets of American Airlines (719 planes), United Airlines (611 planes) or Delta Airlines (829 planes) (2002 figures).
Q: Are there other aircraft available in addition to Jets?
A: Yes. The world of fractional is rapidly expanding due to the events of September 11, 2001. Fractional interests are now available in Helicopters and pure piston aircraft.
Q: Can one lease or charter fractional hours from a fractional owner without being an owner or making a five year commitment?
A: Yes. There is at least one program, Marquis Jet Partners, which can combine some of the benefits of fractional without ownership or a five year commitment. Marquis is itself a fractional owner which then makes its hours available to those who want as little as 25 hours per year without a 5 year commitment. This program can combine the benefits of fractional with on demand chartering. When the purchaser purchases 50 hours or more from Marquis, section 91 will apply. A person buying 25 hours should check out the airports intended to be utilized for the ability to receive a section 135 jet. Currently, Marquis buys its fractional interests from NetJets. To contact Marquis Jet Partners click here
Q: What are the costs of this "mixed" Marquis Jet Partners program and are there major differences?
A: Currently, their prices range from $109,000 for 25 hours usage of a 7 passenger Cessna V Ultra which can travel up to 1,800 miles, to $329,000 for a 13 passenger Gulfstream IV - SP which can travel up to 4,600 miles, with several models and prices between the two. Price and type of airplane can be negotiated. Since the aircraft will be non owned the insurance needs may be different.
Q: What aircraft are available from Marquis?
A: Currently the following are available: Citation Ultra, Citation Excel, Citation X, Dassault Falcon 2000, Gulfstream IV-SP, Raytheon Hawker XP and Raytheon Hawker 1000.
7. CAN FRACTIONAL INTERESTS BE BOUGHT AND SOLD?
Q: Can we sell our fractional interest?
A: Yes. If you want to sell it back to the operator there will be one set of rules and procedures. This must be negotiated in the purchase contract.If you want to sell it to another owner, there will be a different set of rules and procedures. This also must be negotiated in the purchase contract.If you want to sell it back to the company as a "trade in" on another purchase there will be a third set of rules. This must be addressed in the purchase contract.
Q: If the prices of aircraft go up, can I make a profit on the sale of my fractional interest?
A: To begin with, you must define "profit". If you define profit to mean that you will get more dollars for your fractional interest than you paid, the answer is normally "no," although it occasionally happens. If you define "profit" as meaning getting more for your fractional interest than the remaining book value after 5 year depreciation, then the answer is often "yes."
Q: If I sell my fractional interest back to the operator, how do we calculate what credit I will receive?
A: There typically will either be a formula based on time elapsed or a reference to "Fair Market Value." In either case, the operator will impose a 4% to 7% "brokerage" or "marketing" fee. These formulas can sometimes be negotiated.
Q: Can I sell my fractional interest to a third party?
A: Generally, the third party would have to be approved by the operator. Various factors would be considered including the financial strength of the third party, the intended use by the third party, and the geographic location of the third party being in or not in a place easily accessible for the particular operator.
8. CAN A FRACTIONAL OWNERSHIP ACQUISITION BE FINANCED?
Q: Can one get financing on the purchase or lease of a fractional interest?
A: Yes, but the purchaser will need a strong financial statement and the financing entity will have very stringent requirements, which are set forth in a loan, lease, or synthetic lease agreement. For example, a fixed formula regarding any repurchase by the operator would be typical. If one is depending on financing to complete a deal, it is imperative that the financing requirements be known in advance and negotiated in conjunction with the purchase contracts.
9. WHAT IS A FRACTIONAL OWNER'S RESPONSIBILITY FOR THE ACTIONS OF OTHER OWNERS?
Q: As a co-owner does the fractional owner have responsibility to third parties for the negligence of another co-owner?
A: The insurance provided by the aircraft management company contains a "Breach of Warranty Endorsement" protecting you from claims brought by third parties for negligence by the management company or other owners.
Q: Is it alright to set up a subsidiary or affiliated corporation to own and operate the aircraft, for liability reasons?
A: Yes, it is common to set up a subsidiary corporation or limited liability company (typically in Delaware) to own and operate the aircraft, but that company must be involved in a line of business separate from providing air transportation. If there is any reimbursement beyond the company's subsidiary actual expenses, the subsidiary may be deemed a de facto charter operation and be subject to fines by the FAA.
Q: What sort of insurance is typically provided?
A: The operator will ordinarily carry large amounts of insurance on the aircraft (typically full hull value and approximately $300,000,000 or more for liability, depending on management company and aircraft type). War and terrorism related coverage has been sharply curtailed since the events of September 11, 2001.
Q: Does the purchaser need an additional insurance policy?
A: Yes. The buyer should consider buying additional insurance to protect their interests and provide a separate defense if necessary, in the event of a problem. This insurance was usually quite cheap when purchased from the same company that insures the aircraft; however, there has been some turmoil since September 11, and the market has not yet returned to normal pricing levels.
Q: Can I rely on the operator's coverage information?
A: The purchaser should get a copy of the operator's policy (not just a certificate of insurance). The policy should be reviewed by an insurance agent or broker who understands aviation, in order to be sure that the purchaser has what is needed.
10. WHAT ARE THE TAX IMPLICATIONS FOR MIXED BUSINESS AND PERSONAL USE?
Q: What are the tax differences between owning a fractional interest and owning a 100% interest?
A: None. In general, the benefits and burdens from a tax point of view are exactly the same for ownership of a fractional interest or ownership of a whole interest.
Q: If a fractional interest is used essentially for business and incidentally for personal use, how is the personal use taxed for income tax purposes?
A: The individual must include an amount in personal income as a fringe benefit calculated under a formula known as S.I.F.L. (for Standard Industry Fare Levels) which is revised periodically by the IRS. This tax treatment is extremely beneficial to the individual as opposed to allocating actual expenses from an accounting point of view.In July of 2001, the U.S. Court of Appeals for the 8th Circuit announced its decision in the Sutherland Lumber-Southwest case. The company had taken full deductions for the aircraft depreciation, operating expenses etc. despite personal use by corporate officers. The officers who had used the aircraft for personal uses declared additional income according to the S.I.F.L. rates formula, which was far below the amount of income they would have had to declare if expenses had been allocated between the individuals' personal use and the company's business usage. The court upheld what the company and its officers had done and upheld the company's business expense deductions. Subsequently, the Internal Revenue Service acquiesced to the result in the case, meaning that this fighting is behind us with a major taxpayer victory.
Q: What exactly is S.I.F.L. and where can I find the numbers?
A: S.I.F.L. stands for Standard Industry Fare Level. It is periodically recalculated and is calculated pursuant to Internal Revenue Code Regulation 1.61-21(g)(5). It is more related to the cost of a first class ticket than the actual out of pocket costs of operating an airplane. The use of S.I.F.L. normally provides a significant tax break to the company officials who use a company airplane for personal and family usage.
Q: Will the IRS accept that use of a corporate jet is good business and not a luxury for the rich?
A: Yes. Until recently it was every company for itself. The National Business Aircraft Association ("NBAA") White Paper on the subject combined with IRS acquiescence in the Sutherland Lumber-Southwest case, have pretty well cleared the air on this issue, which was once a major issue in many IRS audits.
Q: Will the purchase or sale of a fractional interest be subject to sales or property taxation?
A: Until now, the states have looked to where the aircraft was delivered and will be principally hangared or where it in fact is located on a given date for property taxation. From year to year, state tax inspectors will ask for the flight log and decide where the interest should be taxed if at all. Several states, do not apply a sales tax to the sale of a fractional interest or have a "fly-away" exemption if an aircraft is immediately removed from the state and accordingly many purchases are in those states. We often recommend considering the creation of a Delaware Corporation for ownership of the interest.
11. OTHER FREQUENTLY ASKED QUESTIONS
Q: Can we take a test flight?
A: Yes you can, but don't expect it to be free. It will probably cost somewhere around $2,500 per hour, depending on the particular aircraft and where the flight begins and ends.
Q: If the purchaser cannot use all its hours and wants to charter the aircraft to third parties, will it be deemed to be a Part 135 operation even if the chartering is only for small periods of time?
A: Yes. One must be very careful. Cost reimbursement in excess of direct out of pocket costs can result in the owner being deemed a Part 135 operator.
Q: Can a foreign individual or company own a fractional interest?
A: Technically, a foreigner may not register an interest in a U.S. aircraft. It is possible for a foreigner to have the benefits of a fractional ownership via complex trust and or corporate planning, but this will require some finesse.
Q: Is it true that fractional ownerships have been around for a long time?
A: Interestingly enough, the concept of fractional ownership as a means of transportation ownership is hundreds of years old. In the 1500s and into the 1800s it was common practice for owners of trading vessels to use fractional ownerships. Ships were loaded with trading goods and sent out to sell or trade those goods for items that could be sold on return. On liquidation of the goods acquired, the profits would be divided. A certain fraction would go to the Captain and crew of the ship, and the balance would be divided among the owners of the ship. This would be done on a voyage to voyage basis.The term moiety means a one half interest. A moiety of a moiety was a 1/4 interest. A moiety of a moiety of a moiety was a 1/8th interest and so on. Trading ship ventures were commonly sold in 1/64th shares. A merchant might buy anywhere from 1/64th to 32/64ths of the ship's profits and losses. Even in the 21st century, many national ships registries record ownership in 1/64ths. Today in the sale of fractional jet ownership interests, the common ownerships range from 1/16th to1/2 with a few operators offering 1/32nd interests as well.
Q:
Can I fly the aircraft if I am properly licensed and certificated?
A: In theory, yes. As a practical matter, no. Under the agreements, only the operator can provide pilots. If you can meet the stringent requirements of the operator in terms of experience etc. (not likely), in theory you could pilot the aircraft.
Q:
If I buy an interest, will I have any license obligation to the FAA or
any other government agency?
A: Yes, you will have to register your interest as a fractional owner with the FAA.
The above
information as to prices, laws and economic conditions is believed to
be accurate, based on information received from sources deemed to be reliable.
No warranty or representation can be made as to the accuracy of any of
the above information. Conditions change from time to time and the reader
is advised to get professional assistance before making decisions.
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