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Wealth Planning

Private aviation is reaching all-time highs

As we enter a post-COVID world, perhaps you’re thinking of owning your own plane. Here’s a look at the economics to see what’s right for you and your lifestyle.


Have you ever thought about owning a plane? If Falcons, Gulfstreams and Bombardiers float through your dreams, you’re in good company this year. While private plane usage for business nosedived during the pandemic, it soared among leisure travelers. Private plane takeoff and landing activity in the United States hit near-record highs this spring. Many were first-time private plane users.

Now a purchasing surge has dropped the global inventory of pre-owned private jets for sale to record lows, and charter travel in the United States has hit an all-time high. Low interest rates and attractive financing structures may be helping to fuel the frenzy. 1

But is owning a private plane right for you? 

Consider the personal factors

The first question to ask and honestly answer: How much will I (and the people with whom I would like to travel) actually want and need to fly? 

Owning your own plane generally starts to make economic sense if the answer is more than 150–200 hours a year. That accounts for the costs of:

  1. Acquiring an aircraft (typically $3 million to $70 million, depending on the aircraft’s size, manufacturer, model and age, among other considerations).
  2. Ongoing maintenance and other fixed and variable costs, such as flight crew and fuel. 

Why go for full ownership? Clients tell us they like to design and customize their planes’ interiors, and enjoy the consistency of the experience every time they fly. They can fly with little to no lead time, the same crew and pilots, and hangar their aircraft locally.

But there are options other than full ownership:

  1. Jet card programs: Clients usually prepay for 25 hours in the air, and can book travel as little as 24–48 hours before they want to fly. Jet cards tend to cost slightly less than charter on a per-hour basis, though they do have an upfront, rather than on-demand, cost.
  2. Fractional (share) ownership: This is similar to a “time share,” as it typically involves purchasing one-sixteenth of a plane and entitling the owner to a defined number of hours of usage. The plane is usually available the same day with a phone call; prices for fractional shares are typically in the $1–3 million range along with monthly management fees and hourly occupied fees.

Depending on your interest and time in the air, this guide will help you think through these options:

What are your private plane options?

The economic factors are favorable now

Today’s low interest rates have made jet financing more attractive. Aircrafts’ long lives and tendency to depreciate slowly tend to make them excellent candidates for long-term loans.

Aircraft prices (after plunging during the pandemic) have stabilized and are improving for some models. 

Rising use of private aviation also may make it easier to rent your jet when you’re not flying. Most aircraft management companies offer charter services that include operating underutilized private jets for a share of that revenue. Whether or not demand remains as strong for leisure travel, it’s likely to continue recovering among business travelers—a market already on the rebound. Business flyers like the time savings, ability to cover large geographic areas for multiple meetings in a short time, and of course avoiding delays and skipping security lines.

A private plane used primarily for business travel could create tax benefits in the year of purchase through bonus depreciation; you’ll want to consult your professional tax advisor.

 

We can help

While looking at whether a private plane suits your travel needs and current finances, you also want to be sure that it fits into your overall wealth plan.  

Speak with your J.P. Morgan team. With help from our Aviation Finance Team's deep industry knowledge and experience, we can provide you with both a range of customized lending options and review the implications for your current finances and long-term goals.

 

1.Business Jet Monthly, Aerospace and Defense Research, J.P. Morgan Securities, June 2021.


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