Private Jets: Buy, Rent or Co-Own?
Private jets have become increasingly more popular among companies in the last few years. Today, big and small businesses are in the market for a vehicle that can move their executives around, not having to rely on airports or fixed flight times.
The two main reasons why companies choose to buy private jets are scheduling and flexibility. Having a private jet means you can fly whenever it's convenient for you, without delay, passenger lines, layovers or security controls. Additionally, there are also significant tax advantages to owning a corporate jet.
Apart from productivity and scheduling, when compared to first-class tickets, renting or owning a private jet may not be such an expensive investment.
Private Jet Ownership vs Rental
Purchasing a private jet can be a glamorous endeavor, but it also means that your company will have to pay between $2 million up to $100 million for it.
Aside from the money involved in the aircraft purchase, the company will also have to pay for the upkeep, the fuel, insurance, hangar costs and flight crew salaries.
Renting or chartering a private jet is less expensive, yes, but it also has its downsides. The company will not need to cover maintenance costs, FFA registrations, insurance, hangar or flight crew costs, but it will have to respect the aircraft and crew schedules. Hence, no "fly by the seat of your pants, last-minute meetings."
Another limitation is that the charter company may not be able to fly into the airport you want or to accommodate a multi-airport schedule. Consequently, you may need to organize your flight and connections between two or even three different charter companies.
If you or your company find yourselves chartering a jet frequently, you may want to consider hiring a company that specializes in corporate jet management and let them handle the scheduling.
Fractional Ownership of a Corporate JetIf you are struggling to decide between rental and complete ownership, their advantages and disadvantages, fractional ownership or co-ownership of a private jet is an option may be the right choice for you.
Co-owning an aircraft can vary depending the company you choose. Some companies sell private jet timeshare, which means you pay to own 1/16th of an aircraft for approx. $500k and have unlimited access to any aircraft of the fleet (provided that you give at least a 10-hour notice.)
Others sell blocks of time (50 hours or more) aboard any of their aircrafts. It can be more restrictive than renting or timesharing, and the aircraft options are more restricted. In addition, the assignment depends on the approval of the owner of the jet, so it may not be as convenient if you have a lot of unscheduled flights.
Fractional ownership offers three main advantages:
- It helps determine exactly how many hours you really fly for a year. Once the year is over, you can reevaluate and see which option is best, if ownership, rental or co-ownership.
- You can upsize or downsize your aircraft at will and find the best size and model for your needs.
- It provides the feeling of owning and flying a corporate jet without committing your expenditures and making a risky investment.
If you choose this option, make sure you consult a tax accountant to see if fractional ownership of a private jet qualifies for tax deductions.