Used Charter or Fractional Jets: Pros & Cons

Potential buyers shopping the pre-owned business aircraft market for aircraft previously flown in charter or fractional ownership operations need to be aware that such aircraft usually represent a different proposition to same – or similar – model jets formerly used exclusively for private owners’ personal or business travel. Here’s why…

Aircraft made available part of the time by private owners for revenue-producing charter work represent something of a gray area between purely private flying and full-time charter or fractional business-model use. But those which are exclusively used by commercially-focused operators on revenue-producing work nearly always exhibit key characteristics of which potential buyers must take account.

For buyers, the biggest difference between a purely privately operated jet and a directly comparable one (in terms of age/type) flown for profit is that the charter or fractional-model aircraft will have accumulated much more flying time than the private example, according to Jim Mitchell, Executive Sales Director for Elliott Jets.

The key corollary to the important difference is that a higher-time aircraft should be priced more cheaply than a lower-time jet. And in normal market conditions, distinct price differentials between higher-time and lower-time examples of a given aircraft type are indeed found.

According to Tyler Bowron, a Principal of Hatt & Associates, in normal market conditions high-time aircraft are typically valued at prices 10-15% lower than those for comparable low- time aircraft.

However, in the buying frenzy which resulted from the COVID-19 pandemic, many inexperienced but well-off first-time purchasers surfaced. According to Bowron, those buyers – often acting on their own, without expert aircraft-buying representation and desperate to have their own aircraft – created a distorted market in which used jet prices shot up.

For instance, he says, Cessna Citation X jets which were valued at less than $2m in 2018 were selling for prices in the $4.5m-$5m range by 2022.

As the COVID-19 pandemic has receded, the pre-owned jet market is gradually returning to its more normal state.

Aircraft being marketed now at inflated asking prices – over-optimistic brokers are invariably doing the asking – are not seeing any buyer interest, according to Bowron. As those aircraft fail to sell and remain on the market for months on end, eventually their asking prices are likely to fall.

Some inexperienced first-time owners who bought at the peak of the 2021-2022 purchasing frenzy but failed to realize the scale of the long-term financial commitments to operate and maintain their aircraft year-round are already trying to dispose of their aircraft, says Bowron.

Former Charter/Fractional Jet Advantages

But despite the clear pricing differentials that exist in a normal market between high-time jets and comparable low-time private aircraft, formerly commercially operated business jets can represent bargains. There are two important reasons for this, says Mitchell.

First is that each charter or fractional-use operator – whether it is a fractional ownership company, a jet card operator, or another type of fractional-use business model – needs to keep its aircraft available to fly on demand, 24/7 when the aircraft is not undergoing maintenance.

It is in the interest of every charter or fractional-use operator to ensure its aircraft are properly maintained and completely current in terms of airworthiness compliance. Any operator who fails to ensure that runs the risk of being grounded temporarily or permanently by its national airworthiness regulator.

The second reason why former for-profit, higher-time jets can be a very attractive proposition, Mitchell says, is that business aircraft are designed to be in the air as much as possible. The more often they fly, the more it keeps their systems and machinery – and particularly their engines – running smoothly.

For instance, the seals on the fuel valves in an aircraft which only flies for 100 hours a year are very unlikely to work as well as those in an aircraft which is operated for 900 hours a year.

For similar reasons, Pratt & Whitney engines which have been inactive for 30 days or more have particular maintenance requirements which must be performed before they are allowed to fly again, notes Mitchell.

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