Guide
Fractional vs jet card: what you are actually buying
Updated
These two get compared as if they were the same product at different price points. They are not the same kind of thing at all, and the difference decides which risks you are taking.
A fractional share is a defined structure
Under 14 CFR 91.1001 a fractional ownership program means a system of aircraft ownership and exchange consisting of all of the following: management services provided by a single program manager on behalf of the owners; two or more airworthy aircraft; one or more fractional owners per program aircraft, with at least one aircraft having more than one owner; a minimum fractional ownership interest held by each owner; a dry-lease aircraft exchange arrangement among all the owners; and multi-year program agreements covering the ownership, the management services and the exchange.
A dry-lease aircraft exchange is defined in the same section as an arrangement, documented by the written program agreements, under which the program aircraft are available on an as needed basis without crew to each fractional owner. A fractional ownership interest means ownership of an interest, or holding of a multi-year leasehold interest, or a multi-year leasehold interest convertible into ownership, in a program aircraft.
That regulatory definition is the reason a fractional share behaves like an asset on your balance sheet with an exit value, and a jet card does not. It is also why the paperwork is heavier.
A jet card is a service contract
A jet card is prepaid hours at a contracted rate with a service promise attached. There is no aircraft interest, no exchange agreement and no residual value. What you are buying is availability on notice, and the contract terms are the product.
- Call-out notice: the guaranteed lead time, and what it becomes on peak days.
- Peak days: how many the programme declares a year, whether the list is fixed in advance, and whether the availability guarantee survives on them.
- Rate lock: whether the hourly rate is fixed for the term or subject to escalation or a fuel surcharge.
- Ferry and repositioning: whether you pay for empty legs, and any service area boundary beyond which the terms change.
- Expiry and refund: how long unused hours last and what you get back if you walk away.
- Funds protection: what happens to your prepayment if the provider fails. This is the risk people price at zero and should not.
How to choose between them
- Choose fractional when
- Your flying is consistent, in the 50 to 200 hour range, within a single cabin class, and you are willing to commit capital for a multi-year term in exchange for better availability and a defined exit.
- Choose a card when
- Your flying is lower or less predictable, you want the availability guarantee without the capital and the term, and you are comfortable with counterparty risk on your prepayment.
- Choose neither when
- Your notice periods are long and your dates are stable. Ad hoc charter, competitively quoted trip by trip, is usually cheaper than either and gives up little.