Jet Cards May Be Overstacking the Deck

James Butler Addresses Growing Concern Over the Impact of Jet Cards on Fractional Owners

In his February 2006 “Inside Fractionals” contribution, Shaircraft CEO, James Butler, investigates the growing concerns of owners who fear that increasingly popular jet card programs are hurting service and devaluing their aircraft. Because they provide additional revenue, providers love jet card programs, which typically provide 25 hours of flight time without a long term ownership commitment. But how are these programs affecting the fractional owner? Butler cites complaints such as strained capacity, increased charter and other fleet management problems, service delays, added wear and tear on the aircraft and more. As one NetJets owner confided, “At times service has gone to hell… They’ve taken all of the joy out of fractional ownership.” A Flight Options owner expressed concern that hours flown to service jet card holders are decreasing the value of his aircraft. The providers’ response? Former Flight Options executive, Cameron Gowans, insists that aircraft are limited to 800 flight hours per year and that hours sold through its jet card program come from unsold capacity. Butler points out, however, that it is commonly known that fractional aircraft are flown as much as 1,200 hours per year. Sanjay Saihgal, of Flexjet, admits that card programs can have a negative effect on fractional owners, “We learned pretty quickly…that you cannot have too big a share of your total fleet sold out to fractional cards.” Butler’s take: “Some providers seem to be managing the growth in their card programs carefully. However, faced with the allure of additional revenues, it seems likely that providers will continue to grow these programs to the limit of what fractional owners will tolerate.”

Download: “Jet Cards May Be Overstacking the Deck” (PDF)

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