Get Over the Guilt of Private Jet Travel
Private jet travel is often maligned as the epitome of excess and extravagance. Yet for many, it is one of the primary enjoyments they derive from their wealth. Flying private has the ability to make the world accessible on your terms while avoiding what everyone else agrees is the definition of not fun – navigating the stressful and difficult world of commercial air travel. Add to this that airlines have long been a favorite target of terrorists. Despite continuous efforts to harden airports and airlines as targets, the threat remains.
There are also other risks that are unique to UHNWIs. This does not just apply to the hyper-visible celebrity and their family. Even those from relatively anonymous backgrounds, especially young family members, can be targeted for kidnapping. While this may not be everyone’s favorite topic to discuss, it is a real concern for the affluent. Not only is private jet travel a sublime experience, it makes a lot of sense from a security standpoint.
There is Never Enough Time
With wealth comes increasing demands on time, and an ever-expanding array of personal and business commitments. Family, charitable activities, business - all require time and frequently attendance at seemingly endless events and meetings. Private jet travel is hands-down the fastest and most efficient way to travel, making otherwise impossible schedules achievable. A multi-leg itinerary will have to be cancelled with one missed connection on scheduled service, not to mention the exhaustion associated with commercial air transportation. Private jet travel gives back that one thing that can never be purchased; time.
Jet Cards, On-Demand Private Jet Charter, and Private Jet Ownership
Jet cards, on-demand private jet charter, or outright private jet ownership are the three primary private aviation solutions offered in the marketplace, and all of them have strengths and weaknesses. While there are several “ride-share” programs whereby essentially commercial airline scheduled service is disguised as private jet travel, the savings comes at the sacrifice of privacy, flexibility, choice and convenience – the very reasons that you fly private for in the first place.
A jet card program is great for knowing exactly what your private jet flying spend will be, yet it comes with restrictions. Pricing can be quite competitive on some routes (especially one-ways), but peak-period blackouts and inconsistent quality due to the large vendor pools required to support jet card programs are common complaints. On-demand air charter is exactly what it sounds like; going out to the market when you need to book a private jet charter and determining what the market pricing is for a given trip. Unless you are very savvy with this process, we recommend utilizing an air charter broker to navigate the market. This will ensure that any private jet charter options presented to you are well-suited for the charter flight. A broker can also ensure that the aircraft and operator meet industry-recognized independent third-party safety and quality standards. Not all charter aircraft or charter operators are equal.
What About Private Jet Ownership?
Truth be told, private jets and their associated maintenance costs are expensive assets. A pre-owned late model light or mid-sized pre-owned jet costs between $2-5M. For heavy jets such as a Gulfstream G650, the retail price clocks in at $65 million. At first blush, the cost may put private jet ownership out of reach for some. Why spend millions of dollars when your annual private jet charter spend is a fraction of that? What this conclusion ignores is the ability to depreciate and defray the cost of the asset over a relatively brief period of time, resulting in a total out-of-pocket cost that is similar to or less than that of both jet card programs and booking private jet charters. For many, ownership is indeed a valid approach to fulfilling their private jet travel needs.
Let’s do the Math on Private Jet Ownership
Say for example you are in the market for a 9-passenger jet with at least six hours of range, enclosed lavatory, and plenty of headroom. A “super mid” jet would meet all of these parameters nicely. Assuming you finance the aircraft at a cost of $4M, after factoring in charter revenue from sales (the aircraft is utilized in the commercial Part 135 business jet market when you are not using it), depreciation, and costs associated with operating the aircraft (such as fuel, crews, maintenance, insurance), your air charter spend for 100 hours of use annually would be in the neighborhood of $300 - $400,000. This competes very well with on-demand and jet card rates, along with the convenience and benefits of aircraft ownership.
Consider that the market rate per hour for this same aircraft is around $4-$5,000, and you can see that there is a compelling case for private jet ownership. Aside from some potential savings, owning versus booking a private jet each time you travel affords unparalleled control, including aircraft type, age, and interior configuration. The savings may be (but not always) less pronounced compared to some jet card programs depending on your private jet charter travel patterns, but in return you are saying goodbye to blackout dates, inconsistent service, and dealing with different air carriers and aircraft from one trip to the next. Selecting your own aircraft, an interior that fits your tastes, crews that work for you, and owning the schedule are all notable examples of the control that comes with ownership.
The Trade-off of Private Jet Ownership
Life is all about compromise. Essentially aircraft owners are accepting the higher financial risk of asset ownership in return for potentially a lower overall spend along with the benefits of full private jet ownership. A primary risk lies in the ability of the aircraft to generate revenue to defray ownership costs. While the current private jet charter market demand is robust, like all markets, things change. Owners need to be prepared to shoulder the additional cost should the presently red-hot air charter market cool, as all markets eventually do. There can also be unforeseen maintenance costs. Like owning a second home that you sometimes rent to offset ownership, at the end of the day, you own the asset along with the costs associated with maintaining it. That said, like all asset ownership, risk can be mitigated via a careful and strategic approach.
Is Private Jet Ownership Right for You or Your Client?
Private jet ownership makes financial sense for many people. Most aircraft owners are already accustomed to taking calculated risks. In fact, wealth generation and risk have always been intertwined. The key is to know what those risks are beforehand, and reduce it as much as possible, while still ultimately accepting that in the worst-case scenario, you can manage it regardless of which way the private jet market is headed.
Walk Before You Run
If you or your client are not regularly flying 100 private jet hours per year, you would be better served flying on-demand. This is a wonderful way to sample different aircraft and determine what would best fit your needs. Jet Card programs are also a viable alternative depending on your private jet travel profile. Our air charter brokerage services have helped clients with their private jet travel for over twenty years.
Want to learn more? Contact us and find out how we can help with flying private.