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8/9/2019 Blink Press 20080830 International Herald Tribune Web
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Private jet cards emerge as alternative to ownershipBy Holly Hubbard Preston
A decade ago, the only people with ready access to private jets were
heads of state, top corporate executives and rock stars. Not anymore.
These days, anyone with a couple hundred thousand dollars to spare
can join the jet set, leaving commercial aviation's frustrated masses behind at the ticket counter.
How to do it?
While you could charter a plane or buy a fractional share in a jet, the better option could be
to purchase a private jet card.
At least that has been the experience of Peter Rohr, a private wealth adviser for Merrill
Lynch in Philadelphia, who oversees about $1.5 billion in assets. Of his 87 clients, Rohr
said, 22 used jet cards purchased through fractional providers like NetJets, owned by
Berkshire Hathaway, and FlexJet, owned by Bombardier, or from private charter operators
like Sentient Jet.
A representative of the working wealthy, Rohr described his card-holding clients as busy people with lifestyles that demanded efficient air travel, whether for a short weekend trip
to the Bahamas or a business trip between London and New York.
"It all comes down to convenience," he said, noting that his clients wanted to avoid
commercial airports, control their own schedules and, perhaps most important, save time.
According to the most recent World Wealth Report, published by Merrill Lynch and
Capgemini in June, private jets, yachts, high-end automobiles and other luxuries are the
biggest "investments of passion" for high-net-worth individuals.
But private aviation, relative to other asset classes, is a challenging passion to indulge.
Priced in the millions of dollars, jet planes are an expensive proposition, even when the
expenses are shared among partners. Ownership costs are huge, as are operating costs and
aviation taxes.
"Owning your own plane, which has to be registered somewhere and can be subject to
VAT," or value-added taxes, is a complex matter, said Andrew Penney, managing director
at Rothschild Trust in London. In Britain and elsewhere, spending on a jet must be wholly
and exclusively incurred as a business expense to be able to claim a tax deduction.
So it was a welcome development when NetJets, the world's largest provider of fractional
jet ownership, introduced its private jet card program in 2002. With no ownership
commitment required, this is a big selling point for people reluctant to shackle themselves
to a high-maintenance asset.
The cards have proven popular not only among those new to the world of private aviation
but also among veteran jet owners. Rohr, the Merrill Lynch adviser, said he had a client who recently sold his Gulfstream III and signed up for a private jet card. "This was a
person who could afford anything," Rohr said. "For him, it was so much easier."
Robert Dranitzke, the director of marketing, communications and corporate social
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responsibility at NetJets Europe, said the card program was "the most successful
innovation we've ever had" since it entered the fractional ownership market in 1986. The
company now has an estimated 4,870 cardholders worldwide. FlexJet, its closest rival,
declined to disclose how many cards it had sold, but said that its card sales had risen 51
percent in the first half of this year from a year earlier.
Positioned as an entry-level product, the NetJets card program allows customers to
purchase 25 hours of occupied flying time - meaning from wheels up to wheels down - with
its fleet for a starting price of $131,900 in the United States and €131,000, or about
$193,000, in Europe, not including taxes and fees.
The trans-Atlantic difference in prices is due to higher European costs for aircraft
maintenance, pilot salaries and other expenses, Dranitzke said.
Card holders can choose to take larger or smaller jets and can alternate between NetJets's
U.S. and European programs, trading their hours and aircraft access. Available aircraft
cover a wide range of possibilities, from a seven-passenger Hawker 400XP, often used for
midrange trips, like from Dublin to Stockholm, to a 14-passenger Gulfstream V/550
capable of making the long haul between Manchester and Los Angeles.
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