Wichita Cessna Aircraft Co., a major supplier of planes to companies that sell shares in private aircraft, is getting into the business itself.
Cessna announced Tuesday it has bought 50 percent of TAG StarShares Holding, a year-old fractional jet ownership business and subsidiary of TAG Aviation, which offers air charters, aircraft management, sales and maintenance.
Former astronaut Neil Armstrong will be chairman of the new venture, to be called CitationShares Holding and based in White Plains, N.Y. The company will operate mostly in the eastern United States.
Fractional ownership programs allow customers to buy shares of an aircraft, rather than buying a whole airplane. It works much like a time-share vacation home.
"We're pretty excited about it," said Gary Hay, chief executive of Cessna. "We have studied this market and believe that the ideal opportunity has presented itself as we join forces."
Cessna knows the business well. Executive Jet Inc., the nation's largest fractional jet operator, has bought 127 business jets from Cessna and has 164 more on order.
For Cessna, the new venture means sales of additional Citation aircraft in this case to its own fractional jet business.
CitationShares Holding will offer customers two Cessna Citation jet models the newly certified, entry-level CJ1 business jet and the six-passenger Bravo. Customers will be able to buy as little as one-sixteenth of a jet.
A one-eighth share of a Citation Bravo will cost about $700,000 initially for 100 hours flight time, plus a monthly management fee of about $7,250 and an hourly charge of $1,100.
For the price of a share, plus operating and maintenance costs, the buyer gets the use of an airplane with a few hours' notice. CitationShares provides the pilots and fuel and takes care of scheduling and maintenance.
Raytheon Aircraft Co. and Bombardier Aerospace also operate fast-growing fractional jet programs.
Fractional ownership has "clearly proven to be a dynamic and growing part of the general aviation industry," said Ed Bolen, president of the General Aviation Manufacturers Association, a Washington-based trade group. "I think the move into it is kind of a reflection of the fact that this ownership vehicle is here and it's important to the industry."
In 1995, there were about 249 fractional jet owners. That number grew to 1,487 in 1999. And by 2004, the number of owners is expected to grow to nearly 6,000.
Cessna has supplied aircraft to the business since Richard Santulli, founder of Executive Jet, invented the fractional jet concept in 1986.
He claimed smaller companies often need airplanes but cannot afford them. But if an airplane were divided into shares, the cost for each person goes down.