Wondering what’s going to be the least hassle in using a private jet? Check out our “buy vs lease” article for a look at what you should do.
Travel by private jet has been steadily increasing for years but has now seen exponential growth as travelers opt for private travel privacy, security, and convenience.
For savvy travelers with the financial means, the question now becomes, “Should I buy or should I lease?” First, let’s look at the pros and cons of whether to buy vs. lease to see which one works best for you.
Should You Buy vs. Lease Your Private Jet?
Although over 70% of jet travelers are Americans, only a small percentage of those travelers own their jets. However, those who do own jets fall into four main categories with one main thing in common- they all want to save time during their travels:
- Executives who can set their arrival and departure and use the in-flight time for meetings
- Families who want the experience of travel without the hassle that commercial flights can bring
- Celebrities who appreciate the luxury as well as the relative anonymity of private travel
- Avid travelers who prefer smaller airports closer to their direct destination
With the average price of a jet ranging from $3 million to $90 million, the price tag may be a bit daunting for some. But for others, the benefits of ownership outweigh other concerns.
Control Over Your Travel
When you own your jet, you control when you travel. There is no waiting to charter a jet or commercial flight.
You can take off and land when you need to, resulting in a more targeted use of your time, which can be spent in activities that you want to pursue.
Your private jet is an asset that provides you or your company with both present and future benefits. Therefore, the plane is a fixed asset, and you are allowed a tax deduction for its depreciation.
As part of the 2017 Tax Cuts and Jobs Act, a private plane used for business purposes can be fully depreciated in its first year. This is very significant since depreciation is one of the largest expenses of jet ownership.
Before you decide to buy your private jet, there are several factors to consider.
The Cost of Maintenance
The price tag for maintaining your jet can be anywhere from $500,000 to over $4 million.
These expenses include operation costs, routine and unexpected maintenance, salaries for crew members if you choose to have a crew, aircraft insurance, and hangar storage.
Frequency of Travel
If you travel infrequently, it may not make good fiscal sense to buy your plane. A good gauge will be if you travel less than 400 hours each year. If you do travel less, then leasing could be a better option than buying.
Should You Lease Versus Buy Your Private Jet?
Leasing costs vary and are dependent on the type of aircraft: $4,000 to $5,500 per hour for a 4 passenger light jet; $5,500 to $9,500 per hour for an 8 passenger medium jet; $11,000 to $20,000 per hour for a large jet which accommodates 12 or more passengers.
Types of Leases
There are two main types of leasing. First, there is wet leasing which includes the pilots, crew, maintenance, and insurance.
The other kind of leasing is dry leasing which does not include any of the above-mentioned privileges.
Dry leasing usually occurs over a longer period than wet leasing.
There are advantages to leasing versus buying a private jet
Lower Financial Commitment
Leasing a private jet provides many of the benefits of ownership without the financial commitment that is purchasing outright brings. Although leasing can run as high as tens of thousands per hour, that price is still lower than the millions required to purchase a jet.
When you lease a jet, your commitment ends at the end of the lease, as opposed to buying where you own the jet along with all its attendant expenses.
Leasing can be done on a one-time basis or for a specific period via packages usually sold in 20-hour increments.
You Get To Choose The Jet That Meets Your Current Needs
Your needs may vary from flight to flight. For example, you may need a smaller craft for a quick solo business trip to either an adjoining state or across the country.
Or you may prefer a larger jet to take your family on vacation to another continent.
If you have your jet and it is a small or medium-sized plane, you are somewhat limited. But, by leasing, you may choose the aircraft that works best for any given situation.
You Try Before You Buy
If you have thought about buying a jet but are hesitating, doing a short-term lease will enable you to try out private plane access before committing to the permanence of buying.
However, leasing versus buying a jet does mean that you do not have complete control over your time of travel. Your travel depends to some extent on the availability of the charter.
This can pose a slight problem, especially around the holidays when leasing becomes more expensive and has decreased availability.
Next Steps After You Have Decided
Being able to travel for whatever reason is one of life’s many benefits. However, there are many choices for the sophisticated traveler, who can avoid flying commercially.
After looking at the reasons for why you should buy versus lease a private jet, you may have concluded which one serves your purpose best.
Whichever one you choose, you will need experts along the way with extensive knowledge and experience with private jets and aircraft.
Please contact us at Republic Jet Center, where we look forward to putting our expertise to get you into the aircraft that best suits your needs.