How much does a private jet cost? How do I buy a new jet? Is it worth it to buy a private jet? We share with you practical tips and objective knowledge to help you with your decision making process.
"Buying a private jet is like buying a car, no?" Most billionaires and other UHNW buyers may be top of class in their own field, but with less experience in private aviation. With more than 10 steps to buying a jet, it can be an expensive lesson for a buyer if he overlooks some details.
The pandemic made the economically insulated individuals rethink about protecting their families and business circle. Flying on private jets allow them to reach their destinations without airline reschedules, avoiding crowded airports and socially distanced with other unfamiliar passengers.
Billionaires can just go ahead and buy new private jets, but presently there is a shortage of those and although manufacturers are accelerating production, it will take at least six to nine months to speed up the supply chain and produce those new jets. Until then, buyers have to look at older pre-owned models.
Buying pre-owned private jets involves more elaborate steps before closing on a deal, and there are some kisser deals where the buyer really have to be aware. Here are the key steps to a purchasing a private jet.
Use a trusted advisor. Most new buyers will admit that an aircraft purchase is quite different than purchasing real estate, a car or any other large-scale asset, and having an expert to guide you through the process from start to finish, from the letter of intent (LOI) to delivery, is critical.
Between buying a pre-owned or new aircraft, it’s worth looking at both options. Buying a new aircraft with a five-year warranty, it will be comforting to those unused to ownership. Some buyers may want to test out having an aircraft, so as to understand whether it will work for them long-term. We suggest going with short-term ownership or a lease so the buyer can reassess the aircraft and the value it brings in a few years. A pre-owned aircraft will provide that opportunity to let the buyer have the experience ownership at a lower initial point of investment.
Go on a demo aircraft before making any purchases. A good way is to find a charter company that operates the aircraft type you like and test it out on your typical city pairs. Try out different models or manufacturers so you have a feel for how big the cabin is, the comfort of the seats and the noise levels when in flight. If you wish to demo a specific aircraft that is for sale on the market, typically, the seller will want some form of commitment, such as an LOI and a refundable deposit in escrow, before arranging a flight.
Focusing on the aesthetic details of a private jet such as the color of the paint or leather is normal; however, changing these cosmetics is relatively simple and inexpensive compared to the overall cost of the aircraft. Replacing soft goods such as seat material and carpet is a cost-effective way to tailor the jet to your taste. The specialist you engage will help you cover other important aspects such as future maintenance, aircraft technical specifications and its equipment capabilities (certain countries and regions have specific rules and equipment requirements), and the valuation in reference to the market.
Engage a aviation specialized legal counsel to help with the paper work and tax issues. Tax advisers can help determine structure and importation route. (if required) Then make decisions on aircraft registration, ownership structure (may require specialist to provide counsel)
Aircraft inspections are a very critical step to ensure that the aircraft condition and is what is as promised to you. Inspections can be divided into preliminary and the main aircraft pre-purchase inspections. The pre-purchase inspections are typically performed at a aircraft maintenance shop and according to the manufacturer checklist. Besides the aircraft itself, the documentation such as aircraft logbooks, birth records and maintenance records are equally important as they tell the pedigree, historical life of the aircraft and adds to the value.
With the inspections and any defects rectification completed, the purchase deal can be almost closed, except there is an important due diligence step to perform searches on title, and liens to ensure that the ownership can be fully transferred.
Having a management (operator) company is key to a smooth takeover and delivery of your private jet. The manager can ensure a hassle-free process so that you may be able to use your jet quickly.
Buying a private jet is an exciting and happy process, but sometimes it can end up being a perplex problem.
Speak with our experts to understand more about these steps, the current markets and the costs and benefits of ownership.