Buying a Private Business Jet Aircraft
| Buying your own private executive jets is a big investment for an individual or organisation. If you need to fly more than around 400 hours per year it is probably cheaper to purchase a jet outright than to take air charters or a fractional shared ownership. |
The first consideration will be which type of plane - how many passengers need to fly and where do they have to go to. The following are the types of aircraft on the market:
Very Light Jets - VLJs have 4 seats and can travel on short flights under 2.5 hours with a range of around 1,200 miles. Costs are up to $3 million.
Light Jets - These light and versatile planes can carry up to 6 passengers up to 2,000 miles. List price between $6 million and $12 million.
Medium Jets - Midsize and Super Midsize jets that can carry up to 9 passengers on distances up to 3,500 miles and cost up to $22 million.
Heavy Jets - Long-range corporate jets with inter continental flying capacity. Fly up to 19 passengers in comfort and cost up to $70 million.
Business Airliners - Business jet offerings from Boeing and Airbus which cost up to $80 million or even more for a wide-body jet.
If you buy a new aircraft direct from the manufacturer you can probably negotiate a discount off the list price. This is one advantage over fractional ownership programs where you will pay full retail price for your share of the plane. You may also require customisation of the aircraft to your own specification - there are no limits to how much this can cost!
You will need to consider your finance options and the interest charges over the lifetime of your ownership.
Once you have purchased a suitable aircraft you will have to consider (approximate) running costs and give estimations on operating a medium range aircraft.
Pilots and Crew will cost around $500,000 per year.
Insurance - this can set you back up to $400,000 per year.
Management Charges - this can cost between $125,000 and $250,000. They may be able to charter out the plane when not in use which will recoup some costs back.
Training and Maintenance - this will add another $400,000 annually.
Fuel Costs - Depends where you fly, but will cost at least $1,500 per hour. 400 hours would be $600,000.
Catering - Add $10,000 for food and beverages (again there are no limits)
Other Costs - Landing Fees, Airport taxes, Hangar rent, Weather Forecasting.
So operational costs would come to around $3 million per year and more for a larger aircraft.
One very important aspect to consider is the depreciation of the aircraft. A new plane will lose a significant amount of value after 5 years, depending on the type of aircraft and how many hours it flies. Depreciation of your own aircraft is likely to be less than that of a fractionally owned one which will be flown more.
You can purchase aircraft directly from manufacturers or use a dealer or broker. You could also buy a quality used aircraft (with low flying hours) which lessens the impact of depreciation.
Ensure you do a full cost benefit analysis before purchasing a private jet and discuss all accounting and legal issues with a professional.
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