Share a pizza? How about airplane ownership?

Originally Published by Corporate Jet Investor

Sharing is fun. A meal with friends. A (short) holiday with the in-laws. But how about sharing airplane ownership … with a stranger?

For many, that will sound far from attractive. You’re investing millions in a shiny new (or pre-owned) business jet, you expect full and free access 24/7. Right? Not according to Partners In Aviation (PIA). The company, specialising in matching two owners to share one aircraft, reports the idea is finally gaining traction – at least in the US.

While PIA is hardly an impartial market observer, there’s evidence that co-ownership and the sharing economy is becoming more popular – particularly with US millennials (born between 1981 and 1996) and Generation Z (GenZ, born between 1996 and 2010).

The sharing economy market was valued at $387.1bn in 2022 and is projected to reach $827.1bn by 2032, according to an Allied Market Research report last year. That’s a compound annual growth rate (CAGR) of 7.7%. The report singles out sharing travel as being particularly ripe for growth. “Sharing transportation dominated the market in 2022 accounting for two-fifths of the market share and is expected to dominate the market during the forecast period,” said the report.

“This segment is projected to attain the highest CAGR of 7.1% from 2023 to 2032, owing to its easy availability of ride-hailing services, unique discounts and growth of internet services in the market.” GenZ dominates the US sharing economy and is likely to retain that its – at least in the years up to 2032.

Clearly, the authors are not talking about sharing business jet ownership. But they have a point, according to Mark Molloy, president, PIA. Earlier during his 30-year plus career in aircraft sales, Molloy used to discourage prospective co-owners from trying the idea. “I used to think it [co-ownership structures] was good math but bad everything else,” he tells CJI. “Partnerships had a high mortality rate.” So, what’s changed? “The math has always been compelling but it’s how you work out all the details that has been problematic,” he says.

Now, with a formalised partnership structure that is binding in law, more owners and non-owners are being attracted to the idea of co-ownership, he claims. Previously, most PIA managed co-ownership partnerships involved matching two non-owners – often jet-card or membership users who wanted to step up into full aircraft ownership at half the cost. But now the company most commonly serves sole owners who want to sell half their underutilised aircraft.

Molloy prefers not to disclose the number of PIA clients but does confirm a series of recent partnership deals. This month the company closed a Cessna Citation II in Florida and recent previous co-ownership deals include a Gulfstream G450 and a Praetor 600.

The company specialises in matching co-owners for three categories of aircraft, which roughly each represent a third of deals. Those are light jets, midsize aircraft and super midsize. But the company has also matched co-owners for turboprops, such as the PC-12, and heavy jets.

Co-owners pay a one-off flat rate fee related to the category of aircraft concerned – regardless of whether it is new or pre-owned. PIA requires a three-year commitment from owners but there’s an option to exit early – although payment of a full market rate for their half share is not guaranteed for early exits. At the end of the three-year term, co-owners have the option to exit at an independently appraised full market rate for their aircraft or to renew for one year – which most do, says Molloy.

Two main motivations drive clients – cost and control, according to PIA. “All the big numbers are cut in half.” Molloy is talking about acquisition and fixed costs and some other costs. Operating costs are borne 100% by the co-owner flying the aircraft.

The other big motivation is control. Co-owners like the idea of ownership, flying in their own aircraft with their regular crew (“who become like family”) and a known maintenance history and manager.

A third motivation – growing in importance – is the appetite to lower owners’ carbon emission footprint. Molloy thinks this will receive much more attention in future.

Doesn’t co-ownership set up a rush to the online booking calendar? Apparently not. Co-owners have full access every other week and access during alternative weeks when the other co-owner is not using the aircraft. “The model allows owners to access their aircraft 25 or more days a month at half the cost, presenting a compelling value proposition for those who do not require full-time use of their plane,” he says. That availability arises because co-owners each typically use their aircraft for only 50 to 150 hours a year – one or two business or leisure trips a month. For utilisation of 200 hours a year, full ownership or other solutions are the best options, says Molloy.

But surely sharing multi-million dollar assets, such as business jets, is not the American Way? Mike Stengel, principal of consultancy AeroDynamic Advisory tells us most owners see their options in a binary sense. “Owners can either retain full ownership/access/control and bear all the cost or monetise their asset through aircraft management who may charter on their behalf to recover some of the cost,” he says. “The type of programme PIA offers seems to be a middle ground where you’re bringing in just one other owner who you can screen and align with on ownership philosophy, and not chartering out to the rest of the world.”

Co-ownership is very common at the low end of the general aviation world for Cessna owners and the like, but “the platform is interesting to be the matchmaker”, he adds. “Nevertheless, there will always be a segment of owners who want to retain 100% control and bear 100% of the cost just for the convenience and access at their fingertips.”

Molloy concedes: “Sharing hasn’t been the American Way – that’s why people often take six months between their first expression of interest in PIA and agreeing to co-share an aircraft.” But he detects a bigger appetite to share among younger generations.

“The sharing economy continues to be the avenue for the next generation, so I absolutely think all of those sharing models will continue to succeed. People are more comfortable sharing today than they were 10 years ago. And I think they will be even more comfortable [with the idea of co-owning a business aircraft] 10 years from now than they are today.”