Go ahead. Make a splash. Just be sure you’re not diving headfirst into the shallow end. (Illustration: John T. Lewis)

Time to buy?

Older business jets now sport bargain prices, but consider some caveats before you purchase one.

Because prices of preowned business jets have never been more attractive, you may be wondering whether the dream of owning one is now within your reach. It might be. But before the dream morphs into a nightmare, make sure you consider all the angles—and that your expectations don’t overreach the realities.

If you’re contemplating a first purchase, you’ve probably already at least dipped a toe into the industry, perhaps as a charter user, jet-card holder, or fractional-share owner. Now, full ownership might seem like the next logical step. Maybe you’ve found that you regularly charter the same aircraft type, but availability is sometimes an issue. The control of full ownership could be the answer for you. Or perhaps you’ve identified a mission that could take your business to the next level, but the aircraft available to you don’t have the range or passenger capacity to make it work. Buying a more capable jet—and maybe even offsetting some costs by making it available for charter—might be the right move.

But when it comes to older jets, some caveats are in order. The sorry state of the global economy and the resulting glut of preowned inventory have much to do with falling prices. But a less-appreciated reason is that technological improvements found on newer jets have accelerated over the past decade. Engine advances have made them incrementally more fuel efficient, quieter, and more environmentally friendly. Techno-leaps in avionics have not only made aircraft safer but have increased their utility and efficiency as more direct routings and improved traffic control have resulted.

Cabin electronics and connectivity hardware have also improved markedly, with vast improvements in bandwidth over the past five years—and lower cost. All these advances might not be available in older aircraft. Today’s new jets represent lots more than fresh paint schemes.

One bright spot for buyers of older aircraft concerns residual value.

One way to evaluate the prudence of buying an older airplane is to compare it with acquiring an older factory or office building. The price might be right, but what about upkeep? Will you need to refresh the electrical service to accommodate modern demand? Does outdated HVAC equipment translate to prohibitively higher energy bills over time (not to mention environmental concerns)? Does the building have sufficient communications equipment to accommodate your business needs? Or, can it be easily updated without a cost-prohibitive gutting of the interior?

Many of the same concerns could accompany buying a previous-generation jet. It may well be that due diligence will reveal that the older airplane is a good deal, even with the cost of upgrades. In fact, some particularly capable airframes (the Beechjet/Hawker 400, for one) are good targets for “remanufacturing” programs involving modern engines, avionics, cabin electronics, and refreshed paint and interior at reasonable prices. But you don’t want those costs to come as a surprise.

One such cost is financing. Deals vary, but depending on the terms, the monthly payment for principal plus interest could wind up representing a surprisingly small percentage of the overall budget. Most of the other costs associated with aircraft ownership are not that much lower for an older airplane than for a newer one. In fact, some might be higher.

For example, most new aircraft have at least a portion of the maintenance charges incorporated into the purchase price as warranty coverage. Owners of an older aircraft are on the hook for all maintenance charges. Further, as an aircraft ages, life-limited parts and systems come up for overhaul or replacement. In some out-of-production aircraft, those parts and components might become harder to find over time. Maintenance service contracts help spread out the charges, but unhappy surprises are more likely with older airplanes.

Hangars don’t know what year the aircraft that are under their roofs were manufactured, so storage charges are measured by wingspan, not life span. Training is similarly agnostic to the age of the airplane involved, though some older, less prevalent aircraft might not have as many training facilities available.

One bright spot for buyers of older aircraft concerns residual value—as long as you lean toward the glass-half-full frame of mind, that is. Over the past decade, buyers of new aircraft have taken a beating in the “return on investment” column. It used to be that factory-fresh business jets sold after a few years at a generous percentage of their original price. But those days disappeared with the global recession of 2008. That’s probably the big reason you might be considering a purchase now in the first place—to turn other owners’ misfortune to your advantage. As long as you’re diving into the older-bizjet pool with the assumption that you’re acquiring a largely depreciated asset to begin with, you can’t be distressed with diminishing values.

So go ahead. Make a splash. Just be sure you’re not diving headfirst into the shallow end.    

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