by Michael O’Keeffe
I’m often asked by both current aircraft owners and non-owners what options are available for owning or operating private aircraft and what is the most economical. While there are numerous ways of owning a aircraft some of the most noteworthy are as follows:
Whole Ownership: This is traditional aircraft ownership whereby a corporation or individual owns the aircraft and enjoys all of the benefits. This offers maximum flexibility, tax advantages and has the greatest amount of financial risk.
Partnership: This method of ownership is similar to whole ownership but the benefits and risks are shared by the group of partners. The benefits include lower individual costs while the negatives include less availability of the aircraft to any one partner.
Lease: This is similar to leasing a car whereby the lessee pays a monthly rate for the aircraft for a given time period. With interest rates being so low, the popularity of a lease seems lessened. It’s often used by companies that don’t want to show the aircraft on the balance sheet. (This is not to be confused with a lease-back)
Fractional Ownership: This popular method of aircraft ownership allows an entity to purchase a “share” of an aircraft. Shares of ownership can be 1/2 of the aircraft down to just 1/16 of the aircraft. The quantity of available shares for a given aircraft model is determined by the fractional service provider. Each of the owners are allocated a given number of flight hours annually based upon their share of equity. Owners also pay monthly management fees.
Jet Cards: This popular form of travel is similar to a prepaid phone care whereby the card has a given value and that value is reduced each time you fly. This form of travel is popular due to its simplicity and a cardholder only pays for what they use. Some operators allow a card holder to utilize different aircraft types within the operator’s fleet depending upon their requirements.
Charter: This method of travel is similar to renting a limousine. You pay the cost to take you to your destination and back at a quoted flat rate. Charter is popular for its simplicity. The negative is you will pay for the aircraft to return home empty if you elect to stay at your destination for an extended period of time. If an aircraft was charted to take a week-long ski vacation, you will either pay for the aircraft and crew to sit on the ground at the destination or you will pay to have the aircraft fly home empty.
We’re happy to discuss the merits and pitfalls associated with each of these transportation methods in greater detail. Please feel free to call anytime.