Fractional ownership has arrived in Europe with the introduction of two well established and popular programmes. The emergence of this new form of aircraft ownership will inevitably change the climate of business aviation in Europe, just as it has in the US, but what those changes will mean to those of us engaged in the business of charter and aircraft management is still not clear.\rTo predict the possible effect of the fractional programmes, one must first understand why they have been so popular. My view is that the fractional formula has, under certain circumstances, solved two of the most common problems associated with private aircraft ownership, namely high fixed costs and low asset utilisation. The programmes are also easy to access, have a predictable cost, limited financial risk, and a defined exit strategy. And, the various suppliers have done a reasonably good job of delivering a quality transportation product.\rFractional ownership is not the answer for every travel need and represents only one of a range of products available to today's consumer of business jet services. It can be a cost-efficient solution or, depending on individual travel patterns, it can be a very expensive alternative to either charter, or full ownership. Nevertheless, its popularity and longevity prove that it serves a need. Those of us trading within the industry will either have to accept the reality of fractional ownership and adapt to the changing business climate, or face the prospect of losing business. It's that simple.\rHow does TAG view the growth of the fractional programmes? My 'top down' view is that the health of the entire industry is dependent on OEM deliveries, and the more new aircraft that are sold, regardless of how that occurs, the better off we are. TAG may have to alter its business strategy to compete, but our opportunities to prosper will be greatly increased by the number of new aircraft sales and new aircraft users generated by the fractional programmes.\rNew aircraft deliveries are forecast to remain steady at approximately 600 units a year, with 'whole aircraft' sales still representing the single largest percentage of the market. As prominent as TAG Aviation is in the management business, our market share is still relatively small. Therefore, we believe that there is still plenty of room for growth in the whole aircraft sector. Even though some aircraft sales may be replaced by fractional shares, it is likely that many more fractional owners, having experienced the benefits of private transportation, will increase their flying and move up to full ownership. Therefore, TAG's strategy is to continue to build safety, service and efficiency into our customised management programmes to ensure that we remain the supplier of choice in aircraft management.\rThe fractional programmes are probably the largest purchasers of charter hours in the world today, so for many charter operators, the fractionals look more like a customer than a competitor. Nonetheless, fractional and charter often do compete for the same travel customer, and TAG recognises the requirement to build a superior charter product and position it to offset the availability and quality concerns traditionally associated with charter. Based on the growth of our charter business in Europe, we have been particularly successful in achieving these goals with our fleet of owned aircraft.\r For ten years in the US, many knowledgeable people said that fractional ownership would never work. The same opinions are often heard in Europe, with tax, cultural and regulatory differences often cited for justification. I am sure that these arguments have merit, but I am equally sure that fractional ownership will eventually be successful in Europe, just as it has been in the States. But, rather than seeing it as a threat, I believe that fractional ownership will compliment the growth of charter and full ownership, as more people around the world discover the crucial role that business aviation, in all of its forms, plays in economic expansion.\rRoger McMullin\rceo of TAG Aviation Holding S.A.