The wonderful news is you can own 100% of the jet, or own a part of it (fractional ownership). If you go for the latter, you get to decide how much of the jet you want to own. It all boils down to how much flying time your company needs, and the equivalent savings in terms of executive time.
There is a popular formula used in the jet charter industry that can help management assess if the company should own, partly own or charter:
A private jet, in today's market, can cost anywhere between $200,000.00 and $20,000,000.00. So the decision to own requires careful and intelligent deliberation. It is like buying too much house for what you need, or buying too little. This principle can apply to chartering a jet or owning and is usually based on the annual number of flying hours that a company logs:
- Flying hours of 25 to 100 per year -- chartering a flight is recommended. Companies have the option of reserving a block number of hours in advance, or buying jet cards that are pre-paid. Twenty five to fifty hours, in industry standards, constitute occasional use.
- Flying hours of 101 to 399 per year -- this is where fractional ownership would make more sense. In practice, it is close to owning an aircraft enjoying the perks of ownership. For instance, a fractional agreement provides access to a jet and crew within hours the request is received. Owning part of an aircraft also enables companies to take advantage of tax and cost advantages because a possession of a fixed asset means depreciation factors have to be considered in the calculation of tax liabilities. Part ownership also provides a company with the flexibility of choosing an aircraft geared to their needs. The range, speed, fittings, and passenger capacity of your aircraft will depend on your specific requirements and the number of flying hours you estimate for the next two to five years.
- Flying time of 400 hours per year -- this is when total ownership of a jet comes into play.
While industry experts will argue that the annual flying time is a key element in the decision to own or charter, only a company has the capability to make the final determination. It is the day-to-day operations of the company that ultimately says yes or no to ownership or chartering. If a company provides services, these questions loom large:
- Are our services critical in an industry that people depend on for their health and safety?
- Is the competition closing in with respect to customer support and JIT (just-in-time) delivery?
- Would saving time instead of money in delivering these services mean potentially higher revenues in the long term?
- What are the government and military implications of on-time delivery of our services?
While companies will hesitate to talk about their ownership of a corporate jet, given the security risk and the shyness about justifying this excess item, they are definitely well-versed about the edge it gives them over the competition. Statistics show that companies who own a jet are likely to make a second purchase within a certain time frame. Once the bug bites, the bite stays forever. And company executives won't reveal how jet ownership has raised profit levels, lest the competition outsmarts them.
Before you plunk down the cash for a four-seater or an eight- seater, it pays to shop around. There are jet makers and builders globally. There are accessories that can be configured into the cabin – accessories that you've probably never imagined existed. There are at least five major aircraft builders in the world today - Dassault, Bombardier, Cessna, Gulfstream and Raytheon - each of them intimately knows an executive’s “hot” buttons.
And you can choose between leather and the more synthetic ones…for that seat.