The Evolution of Fractional Ownership: A Literature Review

Fractional ownership of business aircraft has evolved into a major force affecting not only business aviation, but also all of general aviation. This paper provides a history of fractional ownership, an explanation of how it works, the climate that has fostered its growth, how it compares to other "traditional" means of air travel, and an examination of challenges affecting its future. There are three key findings in this paper. The first is that a range of usefulness has evolved for fractional aircraft ownership as compared to total aircraft ownership or charter services. This range of usefulness, based on a compilation of data from several authors, is between 145 and 387.5 annual flight hours. Second is that fractional ownership has redefined the business aircraft consumer, reducing the up-front acquisition cost and providing convenient access to business aircraft. An individual with an annual income of $10 million or a company with annual revenue of $30 million have become, through fractional ownership programs, the new business jet consumer target markets. Third is that fractional ownership has had a major commercial and economic impact on general aviation due to tremendous growth rates. Key sources used in compiling this paper included articles from a number of aviation industry publications and journals, as well as government publications.