Question

Reply to the following discussion post 1 and 2 in your own words:

Discussion 1

From my perspective fractional jet ownership has many advantages. The biggest advantage is customer service. The air crew allows the owners to do whatever they want, including smoking on board and/or bringing your pet. Another advantage is flying anywhere you want with only 4-10-hour notice. Furthermore, the pilot accommodates the owners fears such as turbulence or flying over water by taking an alternative route. The plane is also stocked with the owner’s favorite snacks and drinks before the owner even boards the plane. In addition, the owner can sell their portion of the plane after five years of use. The disadvantages of fractional jet ownership are mainly the cost. It costs $600,000 plus $20,000 a month for operating expenses. Another disadvantage is the owners are only allowed 50 flying hours each year. Furthermore, fractional jet owners cannot customize the look or interior of the plane.

I think fractional ownership is a wise decision in the perspective of a company CEO and a potential shareholder. I think this because of the easy access and convenience to flying. CEOs and potential shareholders have busy schedules and may need to be in different places of the world with little time in-between. They cannot wait for the next flight that a local airline offers. They also can work comfortably on the plane and even hold meetings with important business personnel while in the air. Fractional jet ownership for CEO’s and shareholders allow more work to get done in less time.

If I owned a fraction of a Jet, the first place my fiancé and I would visit is Venice, Italy. The reason that would be the first place is because experts are saying that Venice can be destroyed within a few years due to the water level rising. I can’t say any OM concepts influenced my destination decision. I have always wanted to visit there because I love boats and they drive boats everywhere. We also really enjoy Italian food.

Discussion 2

My first question was "how much does this cost?" because it sounds awesome. I found an article from last year that states that the minimum cost would be $550,000 for 50 flight hours, plus monthly management fees which include maintenance, fuel, catering, etc. The monthly management fee for the smallest aircraft is $9600 (Forbes, 2017). It is clear that one needs to be very wealthy in order to be part of this ride-sharing service, which would be a disadvantage from my perspective.. ha! I also think that not being able to fire the crew if any issues arise is a disadvantage... that would make for some awkward flights. As far as the advantages, well, of course that the entire service is an advantage. The ability to fly anywhere with your family and friends is awesome. Also, I think that the fact that one does not have to worry about managing the crew, or providing the right maintenance to the airplane is also an advantage.

I really think that this is a genius business idea. From the perspective of the CEO, he/she is able to charge multiple people to provide the service, maintenance, management of the employees, etc. and they only have to own a limited amount of planes. People who own these planes are not always using them anyway, so this idea of sharing the planes is perfect to make a bit more money and also be able to please customers that might not necessarily have enough money to have their own plane.

From the perspective of a potential shareholder, I think that this is a wise decision because the investment is less risky than having your own plane. Also, like I already mentioned, the management, maintenance, etc. is taken care of for you. I like the way the business is described in the article. It sounds like the company will always have your back whenever you need it. If I had the money, I would definitely consider it.

I have not been to Europe yet, and my wife always wanted me to propose in Paris, so that would probably be my first destination. It would be awesome to be able to say "let's go to France for the weekend". After that, I would like to visit some other beautiful countries such as Italy, Greece, Australia... maybe even Egypt. Having the flexibility (and money) to own the fraction of a jet would be amazing. I do not think any OM concepts influenced my decision... but the inventory management of those flight hours would certainly go by really fast.

Answer 1

DISCUSSION 1: Fractional jet ownership combines many of the advantages- while eliminating many of the disadvantages of both whole ownership and joint ownership. In a classic fractional ownership program- you purchase un-divided tenants in common interest in a particular aircraft. Typically each 1/16th interest entitles the owner to 50 flight hours per year (although- newer programs are innovating continuously on this concept).
    This concept has proven so successful because your share allows you to access the entire fleet of aircraft in the program- facilitating both scheduling flexibility and aircraft type/size selection- thus allowing you to select the aircraft best suited to the mission on a flight-by-flight basis. Anyone budgeting 300 or fewer flying hours per year should consider fractional as an option.
    Some fractional programs are small with only a few aircraft and serve a regional market- and aircraft based at only one or two airport Some other advantages of fractional ownership include

• Sharing fixed costs among different or multiple owners which is less costly .
• Guaranteed buy-back provisions (less a “remarketing” commission).
• Flexible operating parameters with no difficulties.
• Luxury feels.

Though this conceptis best foe top management executives as it will really help them in lessening their burden as well as easily conducting or travelling for their business purpose any where they want . Any emergency can be easiely dealt with this concept . Even this cocept can be used as a retention strategy by giving this benefit of fractional jet ownership as executive compensation to the top most hierarchy of the company .

DISCUSSION 2: Owning the fraction of jet is very much expensive and can only afford by the elite class of society . Even the lowest amount for maintainance is too high which is next to impossible for a commom man to ever afford in his whole life span and also the matter is this sharing of ownership results in the efficient allocation of resources the overall owner doesnt use it overall so sharing some fraction between multiple owners is a great as well as cost effective idea.

From the perspective of the CEO, he/she is able to charge multiple people to provide the service, maintenance, management of the employees, etc. and they only have to own a limited amount of planes. People who own these planes are not always using them anyway, so this idea of sharing the planes is perfect to make a bit more money and also be able to please customers that might not necessarily have enough money to have their own plane.

From the perspective of a potential shareholder, I think that this is a wise decision because the investment is less risky than having your own plane. Also, like I already mentioned, the management, maintenance, etc. is taken care of for you. I like the way the business is described in the article. It sounds like the company will always have your back whenever you need it. If I had the money, I would definitely consider it.

Being to Europe with family or any trip becomes easy without any tention and stressby owning these fractional jet for the weekends if you have a wholesum of money , then you can take the advantage of an awesome weekend in no hapazard situation and also with all comfert.