Making the decision
Buying a new or pre-owned jet can be a complex process, which typically takes around six–eight weeks for completion.
While clients may be excited by the idea of owning their own jet, it is generally advised that if they are not going to fly at least 150 hours a year, they should not be purchasing their own aircraft. The cost of owning and maintaining a private aircraft can be in the region of $1 million per annum. This includes hangaring, maintenance and crew, with fuel adding $250,000 if the client were to fly for 200 hours annually.
If the client doesn’t fly enough to own their own aircraft and travels by private aviation fewer than 25 hours per year, the on-demand charter market generally makes sense.
If the client flies privately more than 25 hours per year, but still not enough to own their own aircraft or they simply don’t want to, the other two options are fractional ownership and private jet cards.
With fractional ownership, you are buying a share of a plane and typically make a three to five-year commitment. Multiple owners share the costs of purchasing, leasing and operating the aircraft.
A Private Jet Card is a private aviation product that enables holders to use different aircraft at agreed-upon fixed hourly rates. Jet cards are offered by large and small fleet operators and charter brokers. Traditional Jet Card programs are prepaid hours of occupied flight time on a given aircraft or size of aircraft.
Of course, some clients will have such a passion for owning an aircraft that they may choose to purchase even if the flight time hours do not justify the costs.
How to buy: assemble the right team
If a decision has been made to purchase, a range of specialist advisers are needed. Typically, this includes a lawyer, a broker, tax advisors, technical advisors, insurance brokers and valuers, as well as a company like JTC to structure and administer the asset.
For first-time buyers, it is important to have a well-designed aircraft acquisition plan, which considers how and where the aircraft will be used. An aircraft and structure can then be agreed on.
Once the aircraft has been identified (often via the broker) the advisors will need to consider which jurisdiction the aircraft is registered in and the jurisdiction in which it will be registered following purchase.
To avoid the many pitfalls and decide whether full/part ownership or leasing is the best option, clients should get early advice. They should equip themselves with a team which has experience in aviation and can direct you in the right way.
Initial outlay on getting the right structure and procedures in place will prevent having to unravel an unworkable structure and incur unnecessary costs. Buying an aircraft is complex. It is therefore important to have the right team on board from the outset to make sure clients can relax and enjoy their new purchase.
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