Owning a private jet comes with many benefits – full control, flexibility, and status – to name just a few benefits. However, the process of purchasing a private jet can be a complex operation with a large number of options and variables to consider.
However, breaking the necessary steps down makes the task of purchasing an aircraft far more manageable.
Of course, when purchasing a private jet there are a number of factors to consider – almost all of which are specific to your individual circumstances. For example, factors such as your budget, mission criteria, personal preferences, liquidity, and more, will all impact the right purchase option for you.
Benefits of Ownership
There are a select few benefits that come with whole aircraft ownership that cannot be replicated with other private jet flying options (such as on-demand charter or jet cards).
One of the main benefits of whole aircraft ownership is that you have full control over the aircraft. You know exactly where it has flown, exactly when it has flown, exactly who has flown on it. You can control when you fly on it without having to consider peak days or other customers. Moreover, you know its exact maintenance and inspection history, providing greater peace of mind that the aircraft has been maintained to standards that you are happy with.
In a similar vein, whole aircraft ownership provides you with complete customization and dedicated aircraft choice. You can choose the exact aircraft that you want to purchase in order to suit your needs. Once the aircraft is in your hands you don’t have availability issues for specific aircraft that you might experience with an on-demand charter for example.
Additionally, you can customize the aircraft to suit your exact requirements. You can control the layout of the aircraft interior, the upholstery, color scheme, inflight entertainment, WiFi capabilities, and more. The aircraft can be tailored to your requirements and demands.
Financially, whole ownership of a private jet can provide benefits as well. Firstly, private jet ownership can come with a variety of tax benefits. Of course, this will vary depending on the region that you are based in, along with the country that the aircraft is registered in. Therefore, it is important to consult with an aviation tax expert in your region to identify the potential tax breaks that you can experience when purchasing as an individual or corporation.
The financial benefits of whole aircraft ownership also extend to the hourly cost. Of course, the more that you fly, the lower the hourly cost. Therefore, if you are flying above 200 hours per year it is worthwhile doing a cost-benefit analysis of whole aircraft ownership compared with your current solution.
Different Types of Ownership
When it comes to purchasing a private jet there are three main options to consider: whole ownership, leased ownership, and fractional ownership.
Whole ownership is when you purchase the aircraft outright in cash or via debt financing. Debt financing is when the aircraft is used as security for the mortgage. In these circumstances, you can purchase the exact aircraft that you want, either new or pre-owned. You can customize the aircraft however you want. You (or the corporation) are the sole owner of the aircraft.
Additionally, whole ownership will result in you taking on the logistics of aircraft ownership, such as finding a suitable management firm, insurance, and maintenance, to name a few. However, whole aircraft ownership also comes with a variety of tax benefits and depreciation of the asset. For example, in the United States, an immediate tax deduction of 100% of the cost of a new or pre-owned aircraft is permitted.
Leasing an aircraft will probably require an initial deposit, monthly payments, and possibly a final lump sum payment. However, unlike debt financing, the lessor will keep legal ownership of the aircraft until the loan is paid off.
Within the world of leasing an aircraft that is the option of an operating lease. This is, in essence, much more like a long-term rental of the aircraft. The lessor owns the aircraft throughout your tenure, there are monthly payments, and the aircraft is handed back at the end of the term.
Finally, fractional ownership is when you own a proportion of the aircraft, such as 1/2, 1/4, or 1/8. This makes more sense when you aren’t flying enough to justify leasing or whole ownership.
Fractional ownership has a lower upfront cost than whole ownership and leasing. However, there are restrictions on the number of hours you can fly per hour. Additionally, you are unable to customize the aircraft to your exact desire as you are sharing it with other owners.
Furthermore, fractional ownership is more susceptible to peak days and you will be competing with the other owners for use of the aircraft. Therefore, if you wish to use the aircraft around popular times – such as public holidays – last-minute availability will be harder than the other two options.
Is Ownership Right for You?
Deciding whether or not private jet ownership will come down to two main factors – finances and utilization.
The first is perhaps the most obvious – do you have the available capital to invest in a private jet and maintain its operational expenses? The acquisition cost of a private jet can range from a few hundred thousand dollars to close to $100 million. Within this envelope, you will likely know how much capital you are able to tie up in a private jet. Additionally, your budget will likely be determined by how much financing is available to you.
When it comes to the operational expenses of a private jet, the total annual cost is dependent on the number of hours flown and the aircraft type. Different aircraft have different hourly fuel costs, maintenance costs, landing fee costs, and crew costs, to name just a few cost factors. Therefore, it is important that you identify how much you are willing to spend per year to satisfy your mission criteria.
The next factor to consider is utilization. If you are only flying 50 hours per year, for example, then private jet ownership will almost never make sense. However, once you start flying 200 hours or more per year, ownership can start to make sense. Even at 200 hours per year, depending on your mission criteria, whole aircraft ownership may not make sense. For example, if your missions vary greatly, all outside the realm of one aircraft’s capabilities, other options will likely make more sense. This, therefore, is one of the reasons that private jet owners are an elite club given the utilization and financial requirements.
If you decide that ownership is right for you, there are four questions to ask yourself to try and determine the best ownership choice.
First: available capital. How much money are you able to put upfront for an aircraft. If being able to buy an aircraft outright or secure financing for whole ownership is out of the question, then leasing or fractional ownership will make more sense.
Second: flexibility. How flexible is your schedule? Do you often fly during peak days? If you need to fly at the drop of a hat, then fractional ownership will not be a suitable option. Leasing or whole ownership will make more sense.
Third: hassle. How involved do you want to be in the ownership process? Fractional ownership provides the easiest way to get into an aircraft. Whole ownership is the more complicated way. Wet leasing is a happy middle when you have the freedom of ownership without all the hassle.
Fourth: customization and control. How much control and customization do you want? Do you want to choose the specific aircraft that you fly on? Whole ownership is the only way to have total control over the appearance of the aircraft, both internally and externally, along with the management and staffing of the aircraft. Fractional ownership does not allow for any customization over the aircraft. Leasing allows for some flexibility, however, this will depend heaving on the leasing contract.
So, you have decided that you want to pursue private jet ownership. The next step is identifying your parameters.
You will need to firstly work out how many hours you anticipate flying per year – this will allow you to better estimate the annual ownership cost of different private jets. You can do this by listing out all your annual missions, calculating the flight time for each leg, then adding up all the hours. Alternatively, use our Aircraft Selector tool to automatically complete this task for you.
Next, you need to work out the minimum range required for your future aircraft. From the missions that you have listed out you need to work out the distances between each point. This will give you a rough idea of the minimum range requirement.
An additional parameter to consider is passenger capacity. How many people do you anticipate will be flying on your private jet at any one time? Note this down and this will be your minimum passenger capacity requirement.
Furthermore, a somewhat overlooked parameter is ground performance. When you note down your mission criteria you need to know the runway length of each airport. It is important that you source an aircraft that can actually land and take off for your desired airfields. Again, use our Aircraft Selector tool to automatically calculate the minimum runway length required and view aircraft that suit these criteria.
These factors are the minimum required in order to find the right aircraft for your needs.
Find Your Aircraft
At this point you know that you are interested in private jet ownership, know your acquisition budget, annual ownership budget, and aircraft performance requirements.
This is the point at which you need to start filtering through the hundreds of private jet models that are available to you. There are a number of options that you can take to find aircraft that fit your criteria.
Firstly, manual research. The cheap way to find an aircraft that fits your criteria is to search online for individual aircraft and manually evaluate all performance specs and costs. However, this is extremely time-intensive and a lot of the required data can be hard to source – for example, current market values are not always readily available.
Secondly, use an online service that has all the necessary data in one place, right at your fingertips. Compare Private Planes provides the relevant data that will allow you to sort & filter aircraft based on your known requirements. Use the Aircraft Search feature to narrow aircraft down based on your budget and performance specs. This provides an easy way to quickly create a shortlist of aircraft that will meet your needs – from performance data to annual ownership costs, a visual range map to current market values for over 1,000 model years of aircraft.
Alternatively, use the Aircraft Selector tool to have all the work automatically done for you. Simply enter your mission criteria, as mentioned above, and receive a list of suitable aircraft, along with your personal estimated annual operating costs and acquisition cost.
A third option is to hire a consultant to help with the search. However, if you are still building up a shortlist of aircraft and evaluating the suitability of ownership, this can be too early a stage. However, it will vary depending on what stage of the search you are at and how involved you want to be in the process. Compare Private Planes can provide this personal service for a select few clients. Please get in touch to discuss this further.
A common mistake that is made when selecting an aircraft is trying to maximize its utilization to 100% of your missions. However, if there are any anomaly missions it is far more effective to select an aircraft that can do 99% of your missions, then use an on-demand charter to fill the anomaly.
Source & Inspect
Now that you have decided which aircraft you are most interested in (or which few aircraft you are most interested in), the next task is to source suitable aircraft.
This can be done manually by yourself, however, it is advised that you enlist professional assistance to find suitable aircraft. Using a broker at this stage will help you with vetting suitable aircraft, such as checking maintenance history, serial numbers, service records, and more.
If you wish to see which aircraft are available on the market, then you can head over to aircraft marketplaces such as AvBuyer and Controller. Here you can search for your desired aircraft model to see how to market is currently acting.
Once you have found the exact aircraft that you are after it is crucial that you ensure that it is worth the asking price and is in a suitable condition. This is far more than just checking safety issues. Rather, the inspection will help to identify any potential future expenses or hidden issues that you may have missed. Having your aircraft professionally inspected prior to purchase could save you potentially millions of dollars.
Now that you have found your dream aircraft you need to surround yourself with a qualified team of people.
This is the stage when you want to sort out financing and get a specialist aviation lawyer. An aviation lawyer will assist you with compliance requirements, tax, insurance, and more.
Additionally, you are going to need someone to look after your aircraft. You will need to crew the aircraft, schedule maintenance, do the accounting, coordinate flights, and arrange storage of the aircraft (i.e. hangarage). Unless you have a dedicated flight department, this is best handled by an aircraft management firm. There are benefits and drawbacks to choosing a larger firm compared with a smaller boutique firm. Therefore, it is important to contact a shortlist of management firms who are well versed in your aircraft type in order to settle on the best solution.
In conclusion, there are many steps involved in purchasing a private jet. Perhaps one of the most important steps is selecting the right aircraft. However, this is a stage that can be simplified by using our online suite of tools that will let you compare performance figures and finances. Additionally, you can receive a personal consultation tailored just to your needs if you contact us here.
Once you have begun the process of acquiring your new aircraft it is important that you surround yourself with qualified people in order to ensure that your aircraft is safe, compliant, and retains its value as best as possible.