Pattern description

Fractional ownership describes the sharing of a certain asset class amongst a group of owners. Typically, the asset is capital intensive but only required on an occasional basis. While the customer benefits from the rights as an owner, the entire capital does not have to be provided alone.

Inventive problems

Application examples

NetJets established fractional ownership of aircraft in the 1960s. Customers buy fractions of an aircraft, entitling them to a certain allotment of flight hours. They are not restricted to a particular aircraft type, but can use any of the company’s fleet of over 800 planes worldwide. By this means NetJets guarantees its customers an available aircraft within 24 hours, a situation commensurate with owning a private aircraft oneself. Adopting this business model allowed NetJets to create an entirely new market segment in the field of private aviation.

The tourism industry has developed timeshares. Customers buy the right to use a holiday home, typically a resort condominium unit, for an allotted period of time each year. Switzerland’s Hapimag was one of the innovators in this area. Founded in 1963, it is now one of the world’s leading timeshare providers. Customers who purchase Hapimag shares acquire the right to use one of over 56 resorts in 16 countries. Hapimag is responsible for maintaining the properties and managing reservations, for which it collects a yearly maintenance fee. Timesharing led to the introduction of an entirely new concept in the tourism industry which proved to become one of its fastest growing segments.

Mobility Carsharing is a Swiss vehicle-sharing company and was one of the first to commercialise the concept of Fractional Ownership within the car business. The scheme operates on the basis of short-term leasing of cars by individual users. Mobility Carsharing provides many central and regional Self-service stations across the country, available around the clock for short-notice, short-term vehicle rental. Card-carrying customers pay a fee for membership and bear the costs of fuel and insurance, but are freed from the commitment and expense of outright purchase. The company recoups the initial capital and running costs by receipt of ongoing members’ rental fees. The Self-service operation also reduces overheads and increases profits. Today, the company is one of the most successful car-sharing operators, with over 100,000 customers.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business