Moving up from charter
You might be better off buying your own aircraft–especially now
By James Wynbrandt - February 1, 2010
Has there ever been a better time to be a charter customer? Rates have declined significantly and aircraft availability is unfettered. Yet some charter operators are advising regular customers that now is the time to consider buying an aircraft, and more charter users are seeking acquisition advice on their own, according to some charter companies. The thinking goes like this: Fire-sale prices of quality used models combined with the ability to charter out the airplane when you’re not using it can make owning financially attractive even for some low-time charter users.
“Charter customers think if they aren’t flying at least 200 hours per year, it doesn’t make sense to buy an airplane,” said Toby Batchelder, sales manager of Minneapolis charter operator Elliott Aviation. “That’s not the case anymore.”
When a charter company’s managers advise customers to buy instead of charter, you have to ask what’s in it for them. The answer is that many charter operators also offer aircraft acquisition and management services; so as these providers see it, they’re not losing business when a customer becomes an owner–they’re gaining an aircraft for the charter fleet while earning an acquisition fee and ongoing management fees.
As for what aircraft buyers have to gain, while low prices and an expectation of charter income are driving many deals, enticements to own also include depreciation and other tax benefits as well as fleet discounts on expenses like insurance, hangaring and crew training.
“We have inquiries from three clients asking us for a cost analysis of aircraft ownership,” said Robert Seidel, senior vice president and general manager of Jet Aviation at New Jersey’s Teterboro Airport. “The prices of airplanes are so depressed, they think owning makes sense.”
It just might, but make no mistake: there’s no cheap way to own a jet. As Seidel put it, “If someone is telling you that if you buy an airplane, they’ll put it on charter and you’re going to get paid to own it, I’ve got a bridge in Brooklyn I can sell you.”
Might a fractional share or jet card be a better purchase for someone seeking to take advantage of low aircraft prices? That depends on your situation. These solutions require less commitment and upfront expense than full ownership, but if all you want is guaranteed access to aircraft, you can effectively get that now via charter because the market has so much excess capacity. And neither fractional shares nor jet cards offers the opportunity for charter income.
On the other hand, some circumstances may render charter income hard to get. For example, if you’re based in North Dakota and need regular access to a Gulfstream V, you’d better not count on offsetting some ownership expenses with charter revenue because you probably won’t find much demand for that jet in that market. As such, a fractional share might make more sense for you.
Share This Article With Others