Three things to consider when purchasing an aircraft.
Few endeavors involve as much capital and forethought as procuring an aircraft for your business. It’s an enormous decision and one that should not be embarked upon without taking stock of all that it entails.
For example: Did you know that even if you have cash on hand to buy an aircraft outright, financing may be a better option? And if you do decide to finance your plane, did you know that your lease payment isn’t the most expensive part about owning an aircraft?
First, let’s look at the strategic advantages of owning an aircraft. Make no mistake, the benefits are many, but they can be boiled down to three main categories: time, privacy and security.
When you own your own aircraft, you’ve purchased a large reserve of time that you can spend focusing on your business. You can now go from one location to another without the hassle of commercial flying and all that it entails – TSA, boarding lines, baggage, flight schedules, cancellations, etc. Owning an aircraft turns 30 minutes of flight time into an hour of total travel time – instead of what could be three hours with commercial airlines. It also makes business meetings while traveling possible.
If you’ve ever tried to hold a meeting on a commercial flight, you know it’s virtually impossible. Not only is it cramped, but there is no lack of prying eyes and curious ears that can compromise a strategic conversation. Owning an aircraft brings a level of confidentiality that may make meetings in the air your most preferred conference room.
Finally, personal security is maximized because you have ultimate control of passengers, pilots and crew. Plus, when traveling internationally, you have the ability to fly more directly to your location and depart quickly should the need arise.
Three things to consider
1. Buying vs financing?
While it’s true that you may have the capital available to buy your plane outright, financing is usually the better option. That’s because financing rates on aircraft are so favorable, you’re better off putting that cash to work where it can earn a return that’s greater than the interest rate.
2. Are you prepared for the cost?
While leasing does not require as large of a cash outlay as buying, it’s still a big expense. Even so, your regular financing payments pale in comparison to the cash demand of operating your aircraft. Whether it be pilots, fuel, maintenance (scheduled or unplanned), hangarage, insurance or landing fees, the actual purchase of an aircraft is not the most expensive part of owning it.
3. How will you use it?
While there are over 30 private aircraft models available in today’s market, in each passenger and distance class there are really only two or three models to choose from. Therefore, it’s critical to have a firm grasp on how you intend to use your aircraft, the distance you will most consistently fly and how many passengers you will need to take with you.
Finally, there are many important and specific steps to purchasing an aircraft. Purchasers must know what they’re getting into and be familiar with all that the FAA requires for owning, operating, leasing, financing, buying and selling an aircraft.
If all of this information has you thinking about where to start, ask your bank – but be particular. Many banks are able to finance your aircraft purchase, but few treat it as the specialty it is.
If you’re ready to take the next step toward purchasing a private aircraft for your business, it goes much smoother when you work with an experienced professional.