Buying vs. Chartering a Private Jet

Frequent business and luxury travelers usually fall into two categories: those who own private jets and those who opt to charter.

With the huge range of aircraft available today, the variable maintenance costs of privately owned jets - deciding between an outright purchase and chartering can be difficult, even for seasoned investors.

In this article, we take a look at the costs, convenience and obligations that come with owning or chartering a private jet.

Owning a jet - do the benefits match the cost?

Private jet ownership comes with several benefits, the biggest one being freedom to fly at short notice. With your own jet at your disposal, you'll be in a position to travel at short notice, practically every day of the year.

For executives who travel on a daily or weekly basis, the flexibility that this provides shouldn't be underestimated - and nether should the costs involved.

  • Private jets sell from as low as $3 million to upward of $80 million, depending on the size, make and model.
  • In addition, any modifications you may request (including refurbishment of upholstery and fittings in secondhand jets) could add several hundred thousand dollars to the final price tag
  • A private jet will need its own hangar space at your local airport, a permanent crew, regular maintenance and refueling. The annual costs of these overheads could range between $750,000 and $4 million annually.

Owning a private jet is a considerable investment with high monthly costs - on an asset that depreciates year by year.

  • Most private jets have a useful life of five to fifteen years, depending on the number of hours flown and other factors.
  • In reality, however, many jet owners replace their aircraft every five years or less.
  • This means that owning a private jet is a double recurring expense, with financing charges and maintenance costs running into millions of dollars a year.

These expenses will need to be weighed against the convenience of having a private aircraft at your disposal - especially considering the savings that a private charter has to offer.

The different types of jet ownership

Buying a jet is a major financial commitment, typically ranging between several million to tens of millions of dollars. As a result, there are several types of jet ownership that you may encounter.

Full ownership
This is the costliest way to purchase a jet. It requires a cash payment or financing, just like a home or vehicle purchase. You’ll also be liable for licensing and maintaining your jet and its crew.

Part, or shared ownership
This allows several owners to buy a jet, splitting all costs equally. While the total price will be lower than buying the same jet yourself, you’ll only have access to it on the dates you agree on with your co-owners.

A wet lease
This involves signing a lease agreement with an aviation company and receiving a private jet complete with crew for a certain period of time. The jet does not become your property and you’re usually not liable to maintain it.

A dry lease
This is similar to a wet lease, except that no crew are provided. Hiring and paying them becomes your responsibility.

Time-based ownership
This is a type of agreement that is similar to leasing a vehicle. You’ll have access to a jet for a certain period of time, while the jet remains the property of the leasing company.

While all of these options give you the use of a private jet, only full and part ownership allow you full control over the aircraft. Private jet leases are only as reliable as the company you lease from, and you’ll be relying on them to maintain your jet and keep it flight-ready.

The high cost of owning a jet (even on a shared basis) discourages many high net worth individuals from investing in their own aircraft. What’s more, the benefits of leasing can be matched or bettered by a private charter, which gives you access to a fleet of new, reliable aircraft and none of the hassles that come with leasing.

A private jet charter will also allow you to choose the aircraft that’s perfectly suited for distance you happen to be flying - because not every jet can make a medium or long haul flight.

Not all jets can go the distance

Flight distance is an important consideration for anyone considering a private aircraft investment. This is primarily because not every jet can fly a medium or long haul route without refuelling.

  • Jets that are able to fly longer distances (including transatlantic, transpacific, or inter-Asia routes) tend to cost upwards of $20 million.
  • Lower-priced models will need to stop to refuel and may not be unable to make these types of journeys comfortably.

Investing a substantial amount in a private jet, only to have your flight time extended for refueling, is a recipe for frustration.

In fact, you may end up with a longer flight time than you would on a commercial airline - defeating the purpose of flying private altogether.

In addition, many smaller jets may lack the catering, sanitary and other features that make long haul trips comfortable on larger aircraft.

Individual owners may not benefit from tax breaks

For businesses, especially those operating in favorable tax jurisdictions, a major advantage of owning a private jet is the opportunity for tax write-downs. Unfortunately, the same benefits don't necessarily apply to individual owners.

While companies can claim maintenance costs and depreciation on their business jets - with some tax laws being especially generous on depreciation for companies - individuals may not qualify for these deductions.

Overall, the decision to buy a private jet should only be taken after careful consideration. Generally speaking, if you aren't flying more than once a week it’s probably not advisable to buy - but chartering is an excellent option.

A charter flight - the private jet experience that makes good business sense

For the majority of business travelers and families who enjoy luxury vacations, chartering a plane is the best of both worlds.

  • The excellent charter rates on many popular routes allow groups of passengers to save on the cost of first class tickets, while enjoying a superior level of service and convenience.
  • Privacy, personal safety and personal data security are enhanced on a charter flights, with attentive service from the cabin crew.
  • Another major factor is the time saved by departing and arriving from private terminals.

While the experience of flying private is almost identical to that of a private jet owner, the financial cost couldn't be more different.

  • Charter flight passengers have no financial obligations beyond the flight they book.
  • The cost of crew, maintenance and refueling are borne by the aircraft owners, so that passengers only pay for the flights they take.
  • For charter passengers, this eliminates the regular costs of keeping the plane in flight-ready condition that private jet owners would need to bear.
  • Similarly, the cost of empty legs - returning an empty plane to its home hangar after a one way flight - aren’t borne by the charter customer.

Considering that these fixed costs can run into millions of dollars a year, the savings that charter flights offer are truly substantial.

Chartering beats ownership for multiple flights

Many businesses that own their own jets frequently run into the same problem: while one executive is flying to one city for a scheduled meeting, an urgent matter comes up in another part of the world - and the company jet is unavailable.

In this scenario, the company ends up having to charter a second flight or book with a commercial airline. In short, having a private jet doesn’t always guarantee that all members of the board (or the family) will be able to reach their destinations.

For most companies and higher income households, chartering is the most practical, flexible and cost-effective way to fly.

If you've been considering a private jet as an investment, you may want to hold off on the large financial commitment, avoid annual depreciation and remain flexible - simply by opting for a charter flight.

We’d love the opportunity to show you just how efficient a private jet charter can be.

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