Have you ever been talking to a friend halfway around the world and said, ironically, “I’ll just hop in my private jet and we’ll meet for lunch.”
Flying around the world in a private jet has been the dream of many and the privilege of the uber rich for generations. When you think of people who can afford to fly in a private jet, you think of people with names like Warren Buffet, Bill Gates, and Steve Jobs.
But the truth of the matter is that it doesn’t take a billionaire to travel by private jet anymore.
While it isn’t something the common Joe working at a local business might be able to afford, the industry of aircraft leasing or private jet charter is becoming more and more economical.
But the question is, why and how would you lease a plane?
Well, let’s talk about that.
1. Aircraft Leasing: Why?
Aircraft leasing has many uses. In the 70’s people leased airplanes for tax relief, but in today’s day and age, businesses are avoiding the cost of owning an airplane by leasing.
Many airplane lessors will provide hangar space and full-service staff to run the airplane. Whereas ownership would mean you are responsible for everything.
Not Like Leasing a House
Unfortunately, leasing an airplane is not as simple as leasing a house. When leasing a house, if the water heater goes out, the Landlord pays for the plumber. If the stairs collapse, the landlord hires a carpenter.
Not so with aircraft leasing. The bankruptcy of Kingfisher Airlines is a good example of what happens when airplanes are leased but not taken care of while in the care of a lessee.
The company who leased the airplanes to Kingfisher, ILFC, could not retrieve their airplanes because vital parts were missing and some airplanes were in disrepair. The company is in legal battle still to this day.
This highlights a positive. When you know the jet you are leasing is aging, you can terminate the lease, as long as you have cared for the vehicle, and upgrade to a better, more fuel-efficient jet.
This is one of the main reasons major airlines lease instead of own their jets. Imagine if an airline owned their whole fleet. How costly would it be to upgrade a whole fleet of jets?
When each jet costs roughly $194 million and with a fleet of about 950 jets, that’s $1,084,300,000. Of course, that would be offset if they could sell their jets, but then they would be beholden to the market.
Again, airlines run on capital, and if all their capital is tied up in their fleet, they could never expand. When demand is unstable, the more flexibility you have in your fleet levels, the better.
Sale and Lease Back
Another method of airplane leasing used by major airlines is sale and lease back. With this method, an airline takes an airplane it owns, sells it to a lessor and then leases the same airplane back. This builds real capital for the airline.
Another lesson to be learned from the Kingfisher Airlines is that leasing mitigates the risk of ownership. American Airlines seems to have taken a page out of the Kingfisher playbook, but polished it off with better form. When they went bankrupt, they simply tore up the lease and handed back the airplanes.
2. Aircraft Leasing: How?
But I’m not an airline, and I’m not interested in leasing an entire fleet of jets.
Not to worry. As we said before, leasing a plane or owning a private jet has become much more affordable in recent years.
Instead of leasing a whole aircraft, some businesses will share a lease or share ownership of an aircraft.
Shared leasing is like your typical timeshare, except with a much smaller group of people.
How much time you lease or own depends on your stake. If you have a 50% stake in the lease or ownership, you may fly 400 hours, and if you have a 1/16 share, you have fifty hours of flight time.
Think of the all the hurdles you would avoid if you had guaranteed time on a jet each year. You no longer have to shop for airfare.
You no longer have to deal with TSA lines or checking your bags or cramped seating in a cramped airplane.
Even if you fly first class, you still have to deal with a crowded airport most of the time.
And then there is the widened range of available destinations. Did you know that with a private jet, you have access to more airports than you would with a commercial jet?
With approximately 19,820 airports in the U.S. today and only about 599 of them offering commercial service, it’s hard to get close to your final destination if it’s not in a big city.
Now, you will have access to virtually all airports in the United States. This could save you time and money on long rides from the airport to your actual destination.
And, as long as you are in connection with the people or other businesses with whom you share the lease, last minute travel is suddenly penalty free.
Airplanes are Made to Fly
Another thing to consider in either leasing or owning an aircraft. Airplanes are made to fly. This may sound obvious and redundant but think about it: if something is designed to spend minimal time on the ground and a maximum amount of time in the air, it will actually require more maintenance the longer it stays on the ground.
With shared leasing, the airplane is more likely to be in the air for more time. This will minimize the need for maintenance and repair over time.
Conclusion: Yes, You Can
No matter what your reasons are for wanting to use private air travel, the benefits outweigh the costs in many respects.
Remember, you no longer have to be a billionaire to take advantage of private air travel. Even if you aren’t in a position to currently lease or own an aircraft, even shared, there may be opportunities still.
When you are looking for a time saving and direct option, select an air charter to get you there faster and more efficiently. It can make sense for your business and personal life.