(Bloomberg News) For Phillip Swan, forgoing the headaches of flying commercial was worth $146,000 for 25 hours of flight time on a private jet.
"We were just sick and tired of dealing with long lines and problems with privacy going through regular security at airports," said Swan, chief executive officer of a Bellevue, Washington-based company that makes disposable charcoal EZ Grills. Now Swan, 48, skips the lines and hops aboard a private aircraft with leather seats and grilled beef tenderloin meals. Instead of buying the plane, Swan opted for a jet card, which gives him access to an 8-person Learjet for 25 hours over 275 days.
Fractional ownership of private jets and use of jet cards is on the rise as commercial travel frustrates fliers, despite the high cost, according to interviews with executives at the three largest North American private aviation companies -- NetJets Inc., Flight Options LLC and Flexjet. Shared jets were originally used by smaller and mid-sized corporations, and have expanded to individual travelers as well.
Fractional sales increased almost sixfold in the first quarter compared with a year earlier at Flight Options, while sales of jet cards, a prepaid lease of flight time in 25-hour segments, rose 46 percent. Fractional sales at Bombardier Inc.'s Flexjet, which operates its jet-card program through Jet Solutions LLC, jumped 64 percent.
"To some people it's worth it to avoid all the security lines and the inconvenience because airline travel right now is this commodity," said Vitaly Guzhva, associate professor of finance at Embry-Riddle Aeronautical University in Daytona Beach, Florida. "It used to be an experience and now it's a hassle -- for those people, convenience is more important than value."
$111,000 Trip
Flying from New York to San Francisco on an 8-person Learjet 45 XR would use about 14 hours or $92,000 from a one year Flexjet 25-hour card, and also cost an additional $19,000 for fuel to total about $111,000. That compares with about $10,000 for four first-class round-trip tickets for the same trip later this month, according to a search on travel website kayak.com. First-class customers generally have access to priority check-in and boarding, expedited baggage service and faster security lines at some airports.
Fractional ownership and jet cards allow access to the perks of private jets without the cost and responsibilities of sole ownership that may include employing pilots, insuring the plane and finding a hangar, said Jordan Hansell, chairman and CEO of Berkshire Hathaway Inc.'s NetJets, which is based in Columbus, Ohio, and has more than 7,000 customers worldwide.
Additional Fees
Fliers who opt for partial ownership generally pay a base price for 50 hours of flight time annually for five years, or a one-sixteenth stake in the plane, which they can sell back after the contract expires. The price varies based on how far the jets can fly on one tank of gas and their size.