“I'll check my seat first before I sit down. I don't want any more surprises. ”
How to Buy a Business Jet
You've decided to buy a jet. Maybe it was your most recent airline trip from hell that convinced you. Perhaps a growing business commitment increased the need for easy access to locations where even Southwest doesn't go. Or maybe you just want the freedom and excitement of private flying and would like to be able to keep your golf clubs and favorite sweater on the airplane.
Actually, it's probably not just one reason, but a complex matrix of factors that add up to one conclusion: it makes personal and fiscal sense for you or your company to own a jet.
If that's the case, you could start your search for one by surfing the Web sites of business jet manufacturers, going straight to the "Contact Us" page and dialing a salesperson. But a better place to begin your research might be the golf course. No doubt, you've sought out the experiences of friends and colleagues when it comes to vacation spots, your next car or a new venue for office space. Choosing your jet is another decision that could benefit from learning the good and bad experiences of others.
In any case, it probably won't be long after you reveal your desire to buy that your jet-owning golf buddies will tell you about their "guy." (Yes, sometimes the "guy" is a gal.) Operating an aircraft in today's regulatory environment is no task for an amateur. Financing, management, scheduling, crew, insurance, maintenance and a host of other details also set the bar for jet operation far higher than anyone can realistically expect to attain without professional help.
Most aircraft owners, unless they are large businesses with a fleet of jets in their own hangar, outsource management services to specialists. Large firms such as Sentient Jet and Jet Aviation afford a wide range of service expertise in exchange for monthly fees. Their size offers financial leverage when it comes to insurance, maintenance, training and even fuel purchases. Some buyers prefer smaller management firms on the theory that they will provide more personal attention. But whether large or small, any good management company has one representative a speed-dial away who can answer your questions and address your concerns. He (or she) is the "guy."
It's best to try to acquire the phone numbers of at least a few of these representatives so you can choose the one who makes you feel most comfortable. Once you have someone you can trust to understand your needs, you've found a vital source of information. Maybe your management rep will be directly involved in the jet-search process, or maybe he will refer you to a broker or brokers. Either way, the management company will be responsible for keeping you happy in the long term, so it is in its interest to ensure that your search puts you in the right airplane.
Control your emotions
When selecting the right airplane for yourself, resist any urge to make a purely emotional decision. It might be OK to impulsively splurge on a new sport sedan,
or even buy into a risky business opportunity. But a private jet is unique, and not just because of the number of zeros on the check. It is partly a business asset, partly a transportation system-and partly the coolest vehicle you've ever shopped for. The key is to retain a balanced perspective on all those parts.
For some companies-if not individuals-a private jet is no more than an appliance of convenience. While a business jet cabin is certainly more appealing than any seat on an airliner, that element is secondary to the time saved in bypassing airline schedules and hub-and-spoke routing. As such, the purchase is made using industry-standard best practices of due diligence. Numbers are crunched, consultants are consulted and the deal is made.
In most cases, however, there is at least some personal involvement in the decision process. That can start with recommendations from the crowd around the country club bar, but watch out for bias in areas that might not apply to your needs. For example, a friend might sing the praises of his company's long-range Gulfstream 450. But if most of your flights are less than 2,000 miles with four to six passengers, that jet might be a poor choice for you. As elegant as the big Gulfstream is, you'd be leaving a lot of its capability on the table, while still paying for the inherent cost of that capability. For you, a smaller, not-quite-as capable jet that costs less to own and operate-but is just as aesthetically pleasing-may make more sense.
Think about size
Some jet owners want the world to know how successful they are. The bigger the jet, the better. For about the same money you'd spend for a much smaller business jet, you might be able to purchase a retired airliner and outfit it for VIP duty (but you will pay a price in fuel burn and limited airport access). And for some businesses, a large intercontinental jet that can serve as a mobile office and secure "hotel room" makes good fiscal sense. The success of the Boeing Business Jet program (corporate versions of the 737 and 757) attests to this.
But for many buyers, discretion is the better part of valor. The less remarkable the size of the jet, the easier it is for board members and stockholders to accept the business advantage it affords. There will always be conflict over the practical value of private aviation and its perceived excess. Truthfully, extremes at both ends of the spectrum are not hard to find. But keeping the size of the company airplane consistent with its mission is an important step toward retaining an accurate view of its worth-not just for those who fly on it, but for the shareholders who benefit from its real-world contribution to everyone's bottom line.
Ask any consultant to help you choose a jet and the first question is likely to be, "What's the mission?" There are several elements that go into defining exactly what trips you want to fly. While there is likely to be at least some unknown here, you can project a lot based on experience. If you've been chartering, you already have a smart view of what you'd like your airplane to do. Review the trips you've chartered and consider what additional flights you might have taken if you'd owned your own jet. You might have been limited by availability of charter aircraft. With your own airplane, you can go when you want on much shorter notice. Fractional ownership often (though not always) provides more consistently available service than charter, and fractional owners moving up to full ownership usually have an even more accurate measure of their needs.
Defining the mission is more complicated for those who have little or no experience in private aviation. Often, the buying decision comes as a result of new business, or profound growth in one area of an old business. Or maybe the buyer has recently retired to a second home in a new area of the country and wants to be able to travel easily between homes, or to visit grandchildren.
The best practice is to work closely with the management consultant on projecting the type of flying you will be doing. Give best estimates of the likely destinations, frequency of flights, number of passengers and the need for stops along the way to pick up family or business team members. As the television detectives tell witnesses, "You never know what tiny detail might be important."
Most management companies also hold charter certificates under Part 135 of the Federal Aviation Regulations. The management company you choose is likely to ask whether you'd like to place your jet on its certificate to offset some of your expenses with charter revenue. The key word here is "some." Almost no one expects to make a profit chartering their airplane. [See "Can You Make Your Jet Pay for Itself?" in our April/May 2008 issue.-Ed.] How much you are able to offset depends on how much leeway you'll give the charter operation.
Some owners offer only limited charter availability for their precious jets. In some cases, only specified, trusted clients are authorized. Others cede so much control that they become like just another charter customer, subject to scheduling restrictions and limitations. If you don't book far enough ahead, you get squeezed out of your own jet.
When you're deciding whether to offer your aircraft for charter, keep in mind the cost of additional maintenance required for operating under Part 135-a stricter schedule for inspections and shorter intervals for other required work-not to mention the extra wear and tear on tires, brakes and engines.
Considering Preowned Aircraft
Some of the advantages that go with purchasing a used car also apply to buying a preowned jet. (Aircraft brokers shun the word "used" as vociferously as BMW dealers do.) On the other hand, there are certainly benefits to buying new, with a full warranty and all that support and attention from the manufacturer at no additional cost.
Depending on the market, you're likely to be able to afford much more airplane from the preowned inventory- but not always. When manufacturers' backlogs stretch out several years, as is the case now, a late-model low-time jet that is available today can command as much as-or more than-the new jet that won't be delivered until 2012. Because the preowned market is more active than the one for new jets, it has always been one of the best barometers of the health of the business aviation industry. There are those who keep close tabs on what airplanes are for sale and at what asking price. It is considered normal when 10 percent of the existing fleet for a model is available. When availability is appreciably more or less than 10 percent, it's a good sign that the market for the model is particularly weak or strong.
Beware of dipping deeply into the older-jet pool for a bargain. The longer-in-the-tooth a jet is, the more costly it will be to maintain as parts and systems reach their life limits and need to be replaced. Also, an airplane that has passed through several hands is more likely to have encountered an owner who wasn't conscientious about maintenance. Finally, because the acquisition cost is low, it's psychologically tougher to spend the big numbers for maintenance. It has been said that if you couldn't write a check, at any time, for 20 percent of the airplane's value without straining the budget, you can't afford to buy it in the first place. One observer noted about older models' bargain prices, "You usually wind up buying them over and over again as time goes by."
As with the purchase of any large-ticket corporate asset, negotiations for a private jet can involve a wide range of parameters. On a deal for a new jet, for example, there might be room for movement on the cost of the interior completion package, warranty coverage, training costs for pilots and maintenance staff and parts discounts. On a preowned jet, features to consider include total time and cycles (takeoffs and landings) on the airframe and engines; whether or not its engines are on a maintenance service plan (commonly called "power by the hour," though this is the registered name of Rolls-Royce's engine warranty program); the condition of its paint and interior; updated avionics; and the condition of systems.
Overriding all these factors is the old chestnut: supply and demand. When backlogs are deep and preowned inventories are low, it's a seller's market. If they are able to wait, new-jet buyers can sometimes play one manufacturer against the other, using extended lead times as bargaining leverage. In the case of preowned airplanes, it comes down to a matter of measuring all the elements of each available model and making the best deal on the best jet.
One final suggestion: as you examine the spreadsheets and pore over range maps and fuel-consumption data, don't block out all your emotions. Try to keep in mind how you felt when your mom and dad took you along shopping for a car. Sure, there were lots of facts and numbers to consider, but there was also the simple thrill of contemplating your family's shiny new auto. It doesn't hurt to allow some of that excitement to seep into the process of selecting a jet. Buying an aircraft is a rare and special experience. Enjoy it.
Pre-Purchase Inspections: What They Foresee Is What You Get
In today's information age gone wild, you wouldn't buy a used Volkswagen without a CarFax history. You should expect a much fuller report on any pre-owned jet you're considering for purchase.
Pre-buy inspections are an important part of due diligence, and the investment is seldom wasted. It's much more about dollars than about safety, though good inspections can and do uncover safety-of-flight issues, especially in older and not-so-well maintained aircraft. Identifying big-ticket maintenance discrepancies before signing on the dotted line can save literally millions in surprise expenses down the road.
The elements you should look for in an inspector are brutal honesty and solid expertise in the particular model you are interested in buying. (Factory-owned or -authorized centers are a good bet.) With business jets, much of the "inspection" involves a thorough review of the computerized documentation that is required for every hose, nozzle and brake pad that goes into an aircraft. Records from engine maintenance service plans ("MSPs," in aviation shorthand) will tell you when the parts that spin will need to be revitalized, and how much it will cost. As with buying a house, any shortcoming your inspector finds can be leveraged against the selling price. In some cases, the inspection will give your sufficient reason to walk away from the deal.
Going for a Broker
Assuming you're not an expert in the business jet market, who should be doing due diligence for you when you're buying an airplane? Whether buying new, or a used jet from a trusted friend, it makes sense to have a professional guide you through the process with a checklist of best practices. But how do you decide where to place your trust?
You might start by visiting the Web sites of the National Aircraft Resale Association (www.nara-dealers.com), the National Business Aviation Association (www.nbaa.org) and the General Aviation Manufacturers Association (www.gama.aero).
Each has a code of ethics to which its members must adhere.
The first contact you have with a broker or buyer's agent may be through a referral from a satisfied buyer you know. Back that up by checking other references. The importance of the relationship you have with your broker cannot be overemphasized. You need to be sure you can trust his or her judgment; and in turn, you must trust that he or she has asked you all the right questions.