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| Features |
A Piece of the Action
Mary Lou Pickel
07/01/2004
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Few people would confuse Tom Sullivan with a media kingpin—at least not
yet—though he certainly travels like one. Sullivan’s voice is familiar to fans
of conservative pundit Rush Limbaugh’s radio show; he fills in when Limbaugh is
on vacation. Roughly 20 times a year, Sullivan jets from Sacramento, where he
heads his own investment management firm and hosts a daily show on KFBK radio,
to Los Angeles to cover for Limbaugh. Sullivan prefers using private aircraft to
streamline his schedule, but, like many of us, he does not fly often enough to
financially justify owning a plane himself.
TOP VIEW
For those who fly consistently and can commit to a five-year
contract, fractional ownership offers an attractive mix of financial flexibility
and excellent service. But some fractional owners have found to their chagrin
that, at the end of their contract, their stake has declined in value. |
Seeking to balance his lifestyle
with the relevant financial considerations, Sullivan invested $200,000 for a
1/16th share of a jet managed by Cleveland-based Flight Options. His share
entitles him to 50 flight hours on one of the company’s aircraft over the course
of a year.
In opting for a small share of an aircraft rather than full
ownership, Sullivan has gained the flexibility of having his own jet without
shouldering the considerable costs and obligations of outright ownership.
Fractional programs typically require a five-year agreement; those wishing to
terminate a contract prematurely must usually pay a remarketing fee, which is
based on a percentage of the fair market value of the plane, typically 5
percent. Under the terms of the contract, we purchase a fraction of a jet,
usually 1/16th or 1/8th, for a price based on its market value. We also agree to
pay a fee for each hour of flight, which covers fuel, insurance and other
operational costs.
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