How to buy a private jet
Who wouldn’t love to own a luxury private jet? While this mode of transport might seem out of reach for most of us, private air travel and private jet charter are growing in both popularity and affordability – which is opening up exciting new possibilities for owning a private jet. We take a look at what goes into a purchase of this kind, because as you might have guessed – there’s a lot more to buying a private jet than handing over a cheque in exchange for the keys. Here’s our take on how to go about buying your own private jet.
Deciding when the time is right to buy a private jet
If you’re in the market for a luxury jet, the time to buy is now. Prices on used private jets have still not recovered to the levels they were at before the 2008 economic downturn – but there’s evidence they’re being snapped up now before prices begin to go up. According to Bloomberg, by the middle of 2018 the average price of a pre-owned aircraft had gone up 1.5% to $9.7 million, thanks in part to U.S. favourable business growth and lower corporate taxes.
If you haven’t yet made up your mind whether to buy a private jet, you can start to explore the possibility by carrying out a cost-to-benefit analysis. The rule of thumb is that if you or your executives spend 350 to 400 hours in the air each year then the expense of fully owning a private jet is probably worth it.
Part of this analysis is to get a general idea of the type of aircraft that would best suit your needs and your pocket. This will not only give you a ballpark figure of the initial outlay involved in buying a jet aircraft, but you’ll also begin to understand what it will cost to run your private plane. These running costs include fuel, repairs and maintenance, insurance, airport taxes and landing fees, catering and flight personnel along with the cost of layovers and stay-overs. You’ll need to build a financial buffer into your costings because these expenses can vary significantly from time to time with little or no warning.
If you don’t have a flight department to oversee the management of your jet aircraft, you’ll want to hire an aircraft management company. They will take care of pretty much everything to do with running your jet, from maintenance repairs to the hiring of pilots and onboard catering. This can cost as much as $250,000 a year.
How much does a private jet cost?
You’re probably not looking for the most expensive private jet in the world – this is an Airbus 380, owned and modified by Saudi Prince Alwaleed bin Talal al-Saud, which carries a hefty price tag of $500 million. At the other end of spectrum, the Eclipse 400 is one of the cheapest jets on the market. It accommodates three passengers and a pilot, has a range of 1,256 nautical miles and sells for around $1.2 million. Midway between cheap and expensive is the bestselling Citation XLS at $14 million. Right up there with the most popular private jets in the world, the XLS carries eight passengers in comfort. It has a respectable range of 1,850 miles and 90 cubic feet of luggage storage space. If you’d like to read more about costs, take a look at our blog on how much a private jet costs.
A handy tool to have on your desktop as you begin your journey towards private jet ownership is an online aircraft cost calculator. This will give you a good idea of what the private jet of your dreams will cost you, including running cost details based on actual use, as well as how financing, capital cost considerations, and residual value are likely to affect your operating expenses.
Where to buy a jet aircraft
If you’re set on buying a private jet on your own, then you can start your search here. In partnership with Jet Advisors, the Air Charter Service Aircraft Sales Division offers 100 years of industry experience in hundreds of private jet transactions. Throughout your purchasing process, we’ll manage the entire transaction. With your best interests in mind, we make sure that you are being catered for every step of the way. To ensure that you have every option available to you, no matter where you’re based, we research on a global rather than regional basis. Along with any export processes worldwide, we also coordinate the delivery of your aircraft and our wide network of partnerships ensure we can assist with; operations, legal representation, exporting, financing, crew staffing, tax planning and interior completion or aircraft management. Whether you’re looking to invest in you first aircraft or upgrade, we have the expertise to help when it comes to purchasing a private jet.
What to look out for when buying a private jet
Now is the time to get to grips with the specific jet you’re interested in. You’ve done your homework, at least in theory – but to avoid ending up with a lemon, you’ll need to employ the services of an inspector who has an impeccable reputation for thoroughness. Here’s what to look out for.
Know your plane!
This goes way beyond specs, performance, cabin width and seat finishes. In some ways it’s similar to buying a motor vehicle. You want to avoid something that’s belonged to a car rental company and stood out in the sun in hotel parking lots (similar to a plane that’s done hard time and stood out in the hot, salty air). You do want to look for something that’s been pre-owned by a little old lady who’s driven carefully and had it cleaned each week even though it’s slept in the garage (the equivalent is a jet that’s been the pride and joy of a corporate executive). You’ll find all this out by going through the jet’s logs.
Know your plane’s cycles
It’s important to find out which maintenance cycle an aircraft is in. Maintenance expenses, particularly the large ones, are usually incurred based on calendar and usage. This is typically the reason why two aircraft that are the same model vary (at times substantially) in price. You don’t want to spend $4 million on your jet only to find that two months after purchase it’s due for maintenance amounting to $500,000.
Insist on a pre-buy inspection
Make sure a pre-buy inspection is carried out at a certified 145 repair station. The only way to know for sure if a plane is in good flying condition and worth the asking price is to have it inspected from top to bottom and tail to tip. This includes a close study of all the flight logs and paperwork, as well as the engine programs and/or logs. It’s not only about catching those big-ticket maintenance discrepancies that could save you millions post-purchase; it’s more importantly about your safety when you fly, and that of your staff and crew.
Take a test drive
Yes, it’s worth getting a feel for a plane before buying. Of course, this will cost you more than a tank of gas, but it’s worth it. If you’re thinking about buying your own private jet, you’ve probably spent a fair number of hours inside airplanes – so you’ll know what you like about a cabin and what you don’t. If you’re buying new, most manufacturers will provide demos around the airport area to qualified buyers.
Buying versus leasing a private jet
If the hours you spend in the air justify use of a private jet, but the numbers just don’t add up, you could consider leasing. You’d be in good company – more than 33% of commercial airlines lease at least one-third of their operational aircraft. This allows you to get all the benefits of owning an aircraft without the long-term financial commitment. Leasing is also a great way for first-time buyers to try out private jet ownership without being locked into a hefty financial decision.
Leasing allows you two options. The first is called dry-leasing – which means you lease the aircraft but without pilots, cabin crew, or being responsible for maintenance or insurance. Dry-leasing is typically used by lessees who will need a jet for a longer period. The other option is wet-leasing. This includes the pilot, cabin crew, etc. and is usually for a shorter time frame.
Whether opting for dry- or wet-leasing, it’s much less expensive than purchasing a private jet. It’s an attractive proposition for a business owner who needs the speed, convenience and flexibility of private air travel, while still enjoying greater liquidity in the long term.
We understand the hassle associated with owning a private jet, but equally understand the cost involved if you fly regularly. We offer bespoke private jet leasing solutions, which allows you the flexibilty of having an aircraft 24/7 without the inconvenience.
Making use of private jet sales brokers
Using the services of an aviation broker or consultant is highly recommended. They charge a fee of course, but if you’ve chosen a reputable broker, they’ll expertly manage the purchase of your jet and be able to give advice about the ongoing operation of the airplane. Fees charged by aviation brokers are usually between 2 and 5% of the purchase price. A growing trend is paying a broker a set fee for an Acquisition Agreement which can range from $25,000 to $150,000. Most experts say that it’s best to agree to a set fee before proceeding with a plane acquisition.
Used versus new private jets
When you order a brand-new jet from a manufacturer, you’re likely to have to wait a year or two before taking possession of your plane. New jets are also more expensive to buy than used, but on the flip side they generally have a five-year, tip-to-tail warranty. You also know exactly where your jet’s been and what it’s been up to.
On the other hand, there’s a whole range of used jets on the market today – which means more choice of size and model, and more negotiating power when it comes to price.
The private jet habits of the rich and famous
Knight Frank’s The Wealth Report 2018 predicts that the number of ultra-wealthy individuals (those with a net value of more than $50 million) will grow 43% between 2017 and 2022, while the number of demi-billionaires (those with a net value of more than $500 million) will increase by 39% in that same period. As the number of ultra-wealthy and demi-billionaires increases, the market for private jets and jet charter is expected to grow, too.
Those who change their personal fortunes enough to own a private jet will join the ranks of rich and famous high-flyers that include: John Travolta, who flies three private jets – a Gulfstream jet, a Lear jet, and Boeing 707-138; Oprah Winfrey (Bombardier Global Express XRS), Donald Trump (Boeing 727-23); Tom Cruise (Gulfstream IV); Jackie Chan (Embraer Legacy 650); Jay-Z (Bombardier Challenger 850 Learjet); and Bill Gates (Bombardier BD-700 Global Express). If you’d like to know more about the private jets of some of the most influential people on earth, we’ve covered everything in this blog.
Accessing financing for a private jet
Lenders like Merrill Lynch, CIT and Center Capital Corp. no longer offer aviation loans, but there are still dozens of lenders to choose from.
Typically, a standard loan agreement is between three and five years, with loan amortizations of 15 to 25 years on newer aircraft and around 12 years for models that are around 30 years old. This is only an indication – the terms of a loan and interest rates offered will vary according to the model and condition of the plane, date of manufacture and its intended use. Keep in mind that you might be charged prepayment penalties of up to 3% for the first three years, as well as standard legal fees.
Here, too, you can choose to go it alone or get the advice of a finance broker. Since financing a private jet is a complicated business, it makes sense to get the best advice you can, especially if your purchase is expected to amount to at least $1 million. A finance broker will take the time to understand your requirements and the financing terms that meet your objectives. They’ll also already know who to approach for the best terms on a particular airplane.
Before going through with a private jet purchase, you’ll also need to consult a tax attorney, especially in light of the recent changes to the tax code that incentivize the purchase of an aircraft. You’ll need the expertise of a professional to take advantage of the financial rewards that you’re entitled to when buying a private jet. An aviation tax attorney will help you take care of all the tax planning, insurance and FAA compliance issues that come with your purchase before you can fly.
Buying a private jet – but not to fly
Yes, really! Building with planes is one of the coolest architectural trends out there. Complete aircraft, or their parts, are being used as homes, office spaces and even libraries. If you’re interested in living in a jet or using its parts to build something special, California is the place to go. Aircraft ‘boneyards’ are where retired planes go to wait out the remainder of their days in desert conditions (to minimise corrosion). Here you’ll be able to buy a jet whole or for spare parts. Aluminium fuselages are sold at a cheap price, so they make an excellent building material. If aircraft boneyards sound like something you’d like to know more about, read our blog on some of the most famous – and eerily beautiful – ones around the world.
Joanne Ussery of Mississippi bought a Boeing 727 instead of a house. She had limited funds and a need for space. Her plane-home cost a mere $2,000 for the plane's hull, $4,000 to move it to her lot by the water and $25,000 for refurbishments. She now has hot running water and electricity, three bedrooms, a living room, kitchen and laundry, and master bathroom with Jacuzzi.
One of the best examples of buying a jet to live in (or under) can be found in the remote hills of Malibu. The innovative and environmentally friendly 747 Wing House, created by American architect David Hertz from a Boeing 747-100 airplane, is a unique home that has not only won numerous awards, but has become the poster child for aircraft repurposing.
There’s a ton of other innovative architectural designs that incorporate airplane parts – read more about it in our blog.
If you’d like to find out more about private jet ownership, read our piece on the most affordable private jets available today for a look at advancements in the aviation industry that have helped to make the convenience, flexibility and cost of a private jet much more realistic. And if you decide that you’re not ready just yet to buy a private jet, there are easy ways to charter a private jet for specific trips. Or there's fractional jet ownership and private jet card clubs, that offer you a range of benefits when you pay for private jet charter.