On-Demand Travel: What's Your Best Option?
By Colby McDowell | VanAllen
Given the complexity of on-demand travel, it is not surprising that there is substantial confusion selecting the optimal solution for you. Each option comes with its own unique set of advantages and disadvantages. However, there are guidelines to assist you in choosing the best-suited option for each particular travel profile. Each need is unique; so is every solution. Use this guide to get acquainted with your choices and contact VanAllen for further insights.
ECONOMIC HURDLE POINTS
With whole ownership, the total fixed cost per hour decreases as flight hours increase. Whereas, charter and fractional ownership have a fixed cost across all levels of use.
As demonstrated in the graph, the economic hurdle points are ~125 flight hours to move from charter to whole ownership and ~200 hours to move from fraction to whole ownership. Variables such as tax treatments, travel profile, and charter revenue can vary these hurdle points by +/- 25 hours.
*Assumptions: Mid-size aircraft, $4M capital cost, $4.00/gallon fuel cost, 2 pilots, 10% annual depreciation. Charter includes 15% ferry factor and fuel surcharge
PROS
CONS
Whole Aircraft Ownership
•High level of control
•High service levels
•Dedicated staffing
•Greater privacy
•Enter/exit at will
•Highest commitment
•Requires oversight
•Cost variability (maintenance)
Fractional Ownership
•Guaranteed availability
•Upgrade/downgrade ability
•Multiple-aircraft use
•Smoother cashflows
•No ferry/empty leg costs
•Contractual commitment
•Scheduling limitations
•Potentially outsourced to charter
•“Overflying” premiums
Membership & Charter
•Ad hoc
•No capital commitment
•Potential multiple aircraft use
•Scheduling limitations
•Potentially outsourced
•Subject to availability