Biggest “gotcha” with NetJets?
Residual value. And it’s millions.
Years ago, you had to fly ~185 fractional hours before it made sense to buy your own midsize jet. 200 for a large cabin. Today, that number is closer to 160.
What's changed?
Take your entry level 1/16th share (50 hrs) on a Citation Latitude. After their standard 5 year contract, NetJets' marks residual value down to 52.7% — meaning your $20M jet is now worth $10.4M
The reason NJ's marks it way down - in all fairness - is bc the jet you’re a partial owner of flies 800 hours / year…. Not 200 like a normal Latitude. It depreciates 4x faster.
But in today’s market, Latitudes are barely depreciating at all (chart below) — 2% annually vs 10% in NetJets’ model.
What that means...
In current conditions, if you bought & owned a Latitude outright for 5 years, it might only lose 10-15% of its value ($2-3M). With NJ’s, it’s losing 47.3% ($10.4M)
What looks attractive in the short term becomes much more comparable at exit.