Owning a jet really is one of life’s highest rewards, in fact, the latest research has found that the mean average wealth for a jet owner is $1.5 billion and more than one in three private jet owners are worth more than 500m (the wealthiest of the ultra-high net worths population). What this does point out is that the cost of owning a jet is more complex than first anticipated when you consider not only the purchase price but the extended costs of owning and maintaining your private jet, making ownership much more accessible for the wealthiest of the wealthy.
For this reason, embarking on ownership must not be taken lightly. The following questions provide a good starting point for your journey.
WHAT ARE YOUR REASONS FOR INVESTING IN JET OWNERSHIP?
There are many reasons why you may want to buy a private jet, but realising this will give you a better insight into whether you should:
- Purchase an aircraft outright
- Enter into a membership programme
- Consider fractional ownership
- Use on-demand chartering or ‘Jet Cards’
- You will have upfront costs of purchase, variable and fixed operating costs, overheads, one-off initial costs as well as depreciation. We’ll go into more detail further on.
- Membership programmes work on a Pay as you fly basis, although there may be an upfront cost involved in the form of committing to a number of hours flown throughout the year.
- You don’t pay for the maintenance or other operating costs.
- ‘Add ons’ and unexpected costs can make your initial quote a lot higher, so make sure you have accounted for everything.
- Better suited than charter, to members who fly more frequently
- May want to use in conjunction with ownership if your aircraft is being maintained or if you need a different type of aircraft for your travel since you have access to a whole fleet of aircrafts
- Membership programs offer full cancellation policies, often between24-72 hours in advance of the scheduled departure.
- Do not have to recruit your own crew or pay for their salaries
- Usually newer aircrafts
- Upfront costs although only part of the purchase price.
- Ongoing monthly maintenance fees but these equate to less than single ownership
- Limit restriction on the number of flying hours
- Again you do not have to recruit your own cabin crew
- Usually newer aircrafts
- Usually, you will need to pay an upfront deposit or full payment and may only refund a proportion if the flight is cancelled close to departure
- An expensive option if a frequent flyer
Each programme has its own merits and of course, the cost’s (monetary and nonmonetary) vary, so it depends how and when you intend to use the aircraft and your perceived value for owning one. Wealth-X, a research company has identified five key factors (using qualitative data) that can be identified against how the UHNW choose to fly.
Use this table to assist with your decision when buying a private jet, by mapping what it is of value, to you, against these key criteria ratings.
Rating out of 5
|Time||Control||Perceptions of Safety||Mitigating Risk||Perceived Value||Mean|
|Commercial First Class||2||1.5||3.5||1.5||4.5||2.6|
- Maximising Time
Since most private air travels are for business reasons, time is most important. That means the location and efficiency of the airport process are prioritised.
One of the main benefits of ownership is that your jet can be ready in a very short period of time, but on the flipside of ‘time’ could see it spent on recruiting, maintenance, purchasing and all other operations associated with owning a jet.
Flexibility to move, reschedule, delay the flight if need be. Control over the location, in-flight entertainment and catering
Again with ownership you have full control over this to suit an individual’s need and full personalisation of the onboard experience.
- Perceptions of safety
Many clients perceive the overall brand (look, esthetics, planes interior and exterior, cabin crew attire, the age of aircraft etc) go hand in hand with safety. If the brand is not flawless, flyers start to question what you do and how you treat the safety and maintenance aspect of the aircraft.
When you compare ownership to charter, you may have greater perceptions of safety knowing it’s your own jet compared to if you charter an aircraft, as there is no saying on what age or condition the aircraft will be in and may leave you feeling unsure about the safety of the aeroplane.
- Mitigating Risk
As an identifiable person, either in high power or celebrity status, you may not want to be recognised for various reasons. Through ownership, membership and fractional programmes, you can mitigate these risks by avoiding people, terminals and lounge waiting rooms.
You also mitigate the security risk of hijacking and terrorism through ownership.
- Perceived Value
People will weigh up the actual costs and their perceived value for each flying option.
Once you’ve decided that ownership is of value, the type of aircraft you choose will be dependant on where you want to fly to and the distance (as smaller planes will need to stop and refuel) and whether you are flying alone or other with people as this will be dependant on size of aircraft and capacity you will want.
Once you have an idea of these factors you can begin to look at the upfront and ongoing costs of ownership.
PRIVATE JET PRICE
There are many different types of jets to include small turboprops, light jet, midsize, super-midsize jets, heavy jets and luxury airliners…thus the price will be dependant on which size you choose, the model, age
(although an aircraft’s lifespan is measured in landings and flight hours), air miles and condition, but to give an approximate you could be looking in the region of between £1m – £70m
Preowned v’s New
Understandably a new aircraft will cost a lot more than a preowned aircraft, but since ‘safety’ is considered very important on peoples priority list, you may perceive a newer model (when looking at the concept we talked about earlier) to be safer and more comfortable, so the ‘cost’ (albeit monetary and non-monetary), may outway the price of a second-hand jet.
You also need to consider maintenance and repair cost. With the rigorous safety regulations being enforced, you may have to spend more in the long run on older models as they will need to keep up with these safety
regulations. You will find with newer models, they will be fully warrantied for the first few years to cover any problems, repairs and replacements that you will not have to pay for compared to older models.
If you are looking to buy a private jet, and need professional advice and guidance, using our extensive network of sellers we can find an aircraft on budget and based on your requirements.
UNDERSTANDING JET OWNERSHIP COSTS
As a jet owner, you will be responsible for the following costs and duties:
- Safety and maintenance
It is your responsibility to see that your aircraft is safe, secure and adhering to the EASA regulations.
- Salaries, recruiting, training and ongoing training
As an owner, you will want the best people flying your aircraft, who are experienced and qualified. All crew expenses, salaries, uniform, training are paid for by the aircraft owner.
- Manuals, publications and subscriptions
It is imperative to have the correct, manuals, subscriptions to the various platforms to help you operate your plane.
Insurance alone can be quite costly so you want to make sure you are comprehensively covered and ideally have an understanding of what needs to be included
Variable Operating Costs
- Navigation/Air Passenger Duty
- EU Emissions
- Misc expenses
- Small supplies
One Off Costs
- Air Operator Certificate Variation Fee
- Certificate of Airworthiness
- Certificate of Registration
- Radio license
- Noise certificate
- Operations Manuals
- Minimum Equipment List (MEL)
- Maintenance consumables
- Engine reserves
- General line maintenance
The industry is quite complex when you consider these points alone. As such it is recommended you seek professional and knowledgeable advice from an aircraft management company or have said company run the whole operation for you.