As many individuals and families achieve financial success, one of the things they often consider is whether to dive into private aviation and purchase a jet. Who wouldn’t want to fly private? The ease and luxury of flying when and where you want without having to wait in endless lines or deal with increasing flight delays is extremely attractive. It’s certainly a topic we are asked about more often by our clients.
They are not alone. Interest in private aviation has increased significantly since the onset of the COVID-19 pandemic, with current private aviation activity 20% above pre-COVID levels.
Although buying your own jet can certainly seem enticing, it can also be a major expense and a commitment that can be fraught with potential headaches.
Fortunately, a variety of other options are available for those interested in experiencing private aviation, each with varying levels of costs and benefits. Trying these alternatives can offer a taste of the private aviation experience, which can help a family determine how much of a financial commitment they want to make and which solution makes the most sense for their situation.
Here are four options to consider:
Charter a plane
This is no different from calling an Uber, in essence. When chartering, you simply select the airplane, the destination, the time — and you’re done. No further commitment. The experience is customizable and specific to that flight. You pay the prearranged fee, and once you land, you’re off the hook.
Although chartering a plane is certainly more expensive than flying commercial, compared with the other solutions offered in this article, it is the cheapest option due to the lack of a long-term commitment.
Think of chartering as a “test drive” of private aviation. It allows one to get a feel for the experience before committing to a longer-term solution. There are numerous providers of charter aviation services. Simply Google what is available near you to identify potential providers.
Purchase a jet card
This is the next step up in private aviation. Typically when purchasing a jet card, you commit to a private aviation company and a specific class/size of plane. Think of it as a type of debit card where you purchase a certain number of flight hours — typically in 25-hour increments. Once those are exhausted, you must purchase more hours to keep flying.
Some of the biggest players in jet cards are Flexjet, VistaJet, Sentient and NetJets, to name a few.
Jet cards usually require a significant initial capital outlay, so be aware that it can be a significant upfront cost, but those flying hours are available to you until they are exhausted. That said, on a per-hour basis, jet cards should result in a cost savings over chartering a plane.
This starts to make sense once you plan to fly at least 50 hours per year via private aviation. With fractional ownership, you purchase a stake in a plane and receive a set number of flying hours or available days based on your ownership interest. For example, for an $8 million jet, if you pay $1 million for your fractional ownership, that will provide you with one-eighth of the flying access available for that plane.
Fractional ownership contracts typically extend three to five years. After that time, you may choose to renew your fractional contract, the provider may choose to sell the jet and return the fair market value of your shares, or they will sell your interest if you choose not to renew and return the current value of your investment. As you can see, with this option, you can recover some of your initial investment at the end of your contract.
Buy your own jet
Once you’ve explored and potentially tried the other private aviation options available, and assuming you anticipate enough flying hours to justify the expense, it may be time to consider purchasing your own jet.
Some things to consider: Do you want to buy new or used? The used-jet market is much different from the market for used cars. You can buy a 15-to-20-year-old airplane, and it could fly for another 15 to 20 years if properly maintained. If you decide to buy new, be prepared to wait. There is still a significant post-COVID backlog of orders for new jets. It could take two or three years for a new aircraft to be delivered.
Buying your own jet is the most expensive option. As the owner, you are responsible for hiring and managing pilots, paying for and coordinating the maintenance of the aircraft as well as regulatory fees and compliance, among other expenses. A management company can take care of all of that for you, but that is, of course, an additional cost. Expect to spend at least $3 million for a business jet, with an additional outlay of several hundred thousand dollars per year for staffing, maintenance and other costs.
If you do go down the path of owning your own aircraft, there can be a number of benefits, such as the option to customize the plane as you wish, chartering out the aircraft to recover some of the costs of ownership, and tax benefits.
No matter how you choose to fly, private aviation can be a delightful experience for successful families. The key is to take off with your eyes wide open, having thoroughly explored the best options for you and your family.