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Fractional Jet Ownership - YouTube
Channel: Biz Jet TV
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hi welcome back to booze jet TV its
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Paulie here today and before we get into
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the episode today which is all about
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fractional jet ownership I would like to
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invite you to subscribe to this jet TV
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if you haven't done so already please
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subscribe to this channel give us a
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thumbs up at the end of the video and
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also have a hunt round have a look
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around lots of interesting content here
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on the private jet industry and how
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private jets work how to lease one out a
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buy one different types of aircraft lots
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and lots of informations and have a look
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round and see see what else we have to
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offer here so let's get into the
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fractional jet ownership this is a
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subject which people have been asking me
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about for a number of weeks now and so I
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decided to cover this subject now
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fracture ownership basically means that
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you own a portion of a jet interestingly
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enough the very first private jet that I
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flew is a citation one back in the 1990s
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and this was a fractional ownership
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situation we had two owners decided to
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get together by 50 percent of the
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airplane each and you know I operated
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the airplane for them I managed as well
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it was it was interesting they did get
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on very well with each other sometimes
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they flew together as well
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so they didn't just only in operate
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independently for their companies they
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also did some stuff together the
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families used to fly together and things
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like that so it worked very very well
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but the the really the pioneer that took
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this model from you know just the local
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airplane owned by two guys down the road
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to you know a global scale was a guy
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called Richard Santoli now which
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essentially worked for goldman sachs he
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was a mathematician and he was looking
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at the private jet industry and he was
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working out you know how he could create
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a model which was slightly different to
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the charter the lease models that were
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out there and he came across a company
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called executive Jet Aviation he
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acquired the company now this has been
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originally this company was founded in
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1964 by a bunch of pilots they built the
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company up to a fleet of about ten Lear
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23s and they were flying around so he
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just centrally thought of acquiring the
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company and then
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developing this fractional ownership
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model and the way it started is he
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divided airplane into four so 25% for
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shares basically four quarters and in
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fact all the airplanes the the the
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registration of the airplane was Q s at
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the end Q s meaning called to share so
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he started the company they went out
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they bought a bunch of aeroplanes they
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started this fractional model and
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perfected it along the way one of the
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clients their cry was a gentleman called
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Warren Buffett Warren Buffett bought a
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25% share in a hawker 1000 flew for a
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few years for the company saw that they
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were going places that this actually
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worked for him because the beauty of the
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fractional ownership model is that you
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pay for just twenty five percent of the
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other if you're buying a quarter share
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so you pay for that share you then pay
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for a quarter of the maintenance of the
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area so that's so-called the fixed costs
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and then you will pay for on top of that
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just for the variable cost me in the
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hours that you fly this is convenient if
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you're flying over between 50 to 400
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hours and you don't want to buy a full
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airplane then what you would do is you
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would buy a fraction you'd pay for 25%
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of the maintenance and the fixed cost
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your budget to pay for 25% of the
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airplane and then you pay for the hours
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that you fly to the fuel play only for
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the fuel that you'd actually use etc etc
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and that's the way it it basically works
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now Jets have built the company up now
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to fleet of just over 750 aircraft they
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do have a global fleet now which is
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quite interesting and they do have
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smaller aircraft a larger aircraft so
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there's a number of different types of
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airplanes that they offer to their
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customers also a number of other players
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have come onto the market from Flex jet
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which originally started by Bombardier
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which started their own fractional
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ownership company and then they sold two
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directional aviation which then change
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the name and it's called called it flex
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jet we then have Nicholas Air which
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operate pc-12
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that's very local single-engine
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turboprop on a fractional model then
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we've got also plane sense in the US
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which operate both PC 12 and PC 24s and
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offering the fractional model so this is
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different to charter a different to
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releasing the advantage of a fraction
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model is that you own the aircraft so
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you have a say in you know the color
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scheme on the outside the interior what
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equipment to put up front for the pilots
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what Wi-Fi system to have onboard you'll
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get together with the other owners
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and decide what you're going to be
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having on your airplane you can't do
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this if you're charged and you can't do
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this if you're leasing but you can if
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you own a fraction of an aircraft then
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you can of course if you own the whole
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aircraft so this is really the model is
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it for you I don't know it would be
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advisable to speak to an aviation
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consultant aviation advisor to find out
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more about your business and I can do
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that for you we can have a chat and
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figure out what's the right model for
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you
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the fractional model model is actually
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on the increase right now the trend if
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you saw my previous episode visit TV
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then use the flights of fracture
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ownership aircraft you actually app by
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up by five point four percent in the
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month of August 2019 so and also they
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also done study on Millennials lately
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and they asked and Millennials a number
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of questions and they did say that the
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fractional model was something that
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appealed to them because they could
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share the cost of the airplane with
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somebody else and not too keen on
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actually sharing the flight I'm not sure
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if that's going to work in the private
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industry I've been very critical about
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that model about sharing a jet as in
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being on a jet with somebody else I
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think this is a model which is destined
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to fail because the private jet needs to
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stay private but you know sharing the
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cost of ownership
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I think definitely can work the
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challenge can be is if if this is on you
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know one airplane and both owners or all
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people or two of the owners want to use
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the airplane on the same day that can be
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a challenge but if you buy into a
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fractional ownership company that has a
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multiple aircraft and let's say you have
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three or four aircraft based in your
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city on the fractional model that if
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airplane a is not available you can use
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airplane B because you do earn a
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fraction of one of those types of
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airplanes and that's where NetJets makes
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jet you know other companies out there
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that oh a number of airplane and off
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airplanes and offering in this
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fractional model to their clients so
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definitely one to look at nothing wants
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you to study and evaluate in your
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private jet acquisition but that's all
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from me on this episode if you haven't
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subscribed to biz jet TV encourage you
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to subscribe like this video comment
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below we'd love to hear your comments
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love to see what you think and love to
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hear from you we go any suggestions and
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things like that was all from fat boy at
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this jet TV and I'll see you on the next
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one
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