If you’re in a position to own a private jet, then congratulations. Likely, you’re already familiar with business aviation, perhaps through chartering a jet or owning a share in one. For more frequent fliers, owning a private jet provides the ultimate in flying freedom. But the big question to ask is this one: should you buy or lease your private jet?
That question has no simple answer as it can depend on several factors. Your attorney and accountant may have much to say about it, but here are some reasons why either option might be considered.
1. Prestige — Never underestimate the power of telling someone that you own a particular aircraft. These days, many companies are invested in shared ownership, but there are still quite a few Fortune 500 businesses and private individuals that own their aircraft outright. When you fully own your aircraft, you can do what you want to it as long as FAA rules are followed. You can come up with a unique paint scheme, hire flight crew and mechanics, gut the interior, and even charter it out when you’re not using it. Whether you own a Citation Mustang, a Boeing Business Jet or something in between, it is yours.
2. Financial — If you lease an aircraft, you put money down and make monthly payments for the duration of the lease. You’re also responsible for maintenance, repairs, upkeep, fuel, and related charges, but at the end of the lease term, you can return the aircraft, buy it or get another one. When buying a jet, you’ll need to come up with a significant amount of money before you take possession of the aircraft and will most likely need to finance the balance. This significant capital outlay deters some companies from making that investment. It is a decision your board of directors will have to weigh carefully with much input from the financial and legal minds that know what is best.
3. Taxes — Your accountant must know how both state and federal tax compliance will affect aircraft ownership. Know that both will want their piece of the pie, thus there can be some advantages to leasing over owning. How the aircraft is owned is important too — if it is owned by an individual, a whole different set of taxes may apply than for corporate ownership. Your accountant will advise you on the business use of the aircraft versus personal use, the impact of state sales tax, depreciation, and other considerations. There are too many other factors to cover here as accounting rules can vary from state to state.
4. Sensitivity — The flip side to prestige is sensitivity. As in being aware that having such an important asset on the books can open a company to scrutiny. Businesses with very active shareholders may find that every major purchase made is scrutinized and becomes the talk of the annual meeting. For some businesses, active consumers may criticize ownership, not understanding that business jets can be a much more efficient way to travel than the airlines. What it may come down to here is your public relations and internal communication teams identifying potential perception risks both within and without the company for owning a jet outright.
Whether you buy or lease will depend largely on the factors mentioned here and other points that are unique to the company or an individual. Certainly, it is worth exploring both options and weighing them to determine a course of action that is right for you. Once that decision has been made, you’ll enjoy taking to the skies in an aircraft that takes you from point to point without the drama and time crunch of the airlines.
Tiffany Lawrence is a professional blogger that shares the latest news and information on airplane and jet sales. She writes for Avjet.com, a leader in aircraft, airplane and jet sales as well as aircraft management.