Purchasing an aircraft is very different from purchasing any other type of asset so, before making the decision to buy one, you need to educate yourself and carefully evaluate all your options. In this article we are going to list those important aspects of air aviation purchases that need to be considered so that flying private can be a pleasurable, stress-free experience.
Contact Primus Wealth – our wealth management experts are at your service to evaluate your options and to find the optimal solution for you to fly private.
Who can benefit the most from flying private?
There is no easy answer to this question. From a purely financial point of view, you should consider the hours per year you fly and the ratio between business and private usage. You do not necessarily need full ownership – on-demand charters, Jet Cards, or fractional ownership might be the perfect solution in many cases. If at first it is hard to predict the usage, you might want to start with on-demand charters or purchasing a Jet Card and make the final decision when you have a better understanding of your private aviation usage.
As a rule of thumb, we can say that on-demand charters are optimal if you fly under 25 hours per year; Jet Cards if you fly between 25-50 hours per year, and fractional or full ownership if you fly between 50-400 hours yearly.
What should you consider first?
You should start with considering why and how you want to use the private plane; whether you want to use it mainly for business, private purposes, or both. To identify the type of aircraft you would need, you should consider your future destinations, the number of passengers, and the hours you would fly. Setting a budget for the purchase, the annual operating costs and the yearly maintenance of the aircraft is essential, because this will help you decide between the options you have for flying private. If your decision is to buy an aircraft, you need to decide whether you want a new or used one. Although the purchase price of a used aircraft is more favorable than a new one, you should always consider the higher maintenance costs and the possible expiration of manufacturer’s warranties in this case.
Aircraft purchase and operation is highly regulated, so make sure to consult your wealth or financial advisors before coming to the final decision, because finding the best legal and financial structure for your aircraft ensures the most cost-effective operation.
How long does it take to buy an aircraft and what is the process?
Purchasing a new aircraft may take up to 12 months, as it will be customized according to your needs. The process in the case of a used aircraft is shorter – you can typically purchase one in 2 to 4 months.
The process however, in both cases, is very complicated as you need to consider taxation, regulation, insurance, aircraft management and operation, financing, and many other factors. Your wealth manager will need to involve a group of experts to make sure there is no oversight.
What ownership structure to choose for your private jet?
Having the optimal ownership structure is essential, so you need to consider many factors before the purchase. The most important ones include: where you want the aircraft registered, your financial residence, where the aircraft will be based, frequency and destination of flights. Establishing a limited liability company to purchase and own the aircraft might be a good solution to mitigate your personal liability, however, it can have serious tax consequences, so you need to consult legal and tax consultants when structuring the ownership of your private jet.
Owning an aircraft requires constant attention and you need to make sure that it retains its value, so make sure to pay close attention to regular maintenance, regulatory upgrades, and other operational factors.
Who should operate your private jet?
Operating a private aircraft is a complex procedure, so you might want to involve a professional company. This way, the operator will bear almost all responsibilities for the maintenance and the operation of the aircraft and flight safety.
Your Wealth management company will assist you with finding the optimal operator that fits your ownership structure the best.