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The Great Divide

Fractional ownership is beginning to take hold in Canada, but the industry still lags behind the US, both in size and regulation.


October 1, 2007
By David Carr

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181-fractionFRACTIONAL OWNERSHIP is gaining traction in Canada, although the sector
is still in its infancy and has not experienced the same level of
maturity, both in terms of growth and regulation, as in the US. That
does not come as much of a surprise. The concept – first introduced by
Executive Jet Aviation CEO Richard Santulli – is now in its 17th year,
and remains one of the fastest growing segments of corporate aviation.
According to Gary Garofalo, a Washingtonbased aviation lawyer,
fractional ownership programs are reputed to be the largest category of
customers for general aviation manufacturers.

Witchita-based
AvData estimates that by year’s end shares purchased in 800 fractional
aircraft in the US will have reached almost 6,000 with NetJets (the new
name for Executive Jet Aviation) leading the pack with over 47% market
share (Flight Options and Flexjet fall in with 33.6% and 16.8%
respectively). In comparison, Canada has three firms – Avia Aviation
and AirSprint of Calgary, and Jet-Share Canada of Mississauga –
offering fractional ownership using a handful of business aircraft. At
the other extreme, OurPLANE, started in 1998 by two pilots from London,
Ontario has grown to be the world’s largest fractional operator of
small aircraft for the general aviation pilot.

Fractional
ownership allows for the purchase of an interest in an aircraft while
guaranteeing access to other aircraft in the program. Typically, the
share owned can be as little as 1/16 and as high as 1/2, with the owner
kicking in a fixed monthly fee for storage and other expenses, and
hourly flight charges. The size of the share owned determines the
number of flight hours per month made available to each shareholder. In
exchange, fractional owners get the use of an aircraft that is
comfortable, accessible and time-convenient, without the heavy cash
outlay or the managerial responsibility of operating a corporate flight
department.

As the convenience of ownership without the overhead
becomes more apparent in Canada, expect more operators like western
upstart Secure Air International to enter the fray, along with several
variations of the fractional ownership theme such as 25- hour prepaid
lease programs and Bombardier's Skyjet, a ‘pay as you go’ service using
a preferred number of executive charter operators in both Canada and
the US. Skyjet recently signed a marketing alliance with Air Canada's
high-end specialty charter brand Jetz, to jointly market their combined
product range of air charter services. "Bombardier Skyjet specializes
in arranging travel on small, midsize and large business jets, while
Air Canada Jetz specializes in operating larger charters," said
Nicholas Houseman, general manager of Bombardier Skyjet.

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