By: Anthony Santoro, Esq.
Private aviation has become both a symbol of luxury as well as a practical choice for those seeking a personalized travel experience. As challenges in commercial transportation continue to cause frustration among first-class passengers, an increasing number of consumers are considering private flying as an alternative. The countless options, convenience, and flexibility of a private jet provide passengers with a level of comfort unmatched by commercial flying.
Private aviation holds several advantages that many find appealing: from the average two or more hours it saves travelers per flight, to the efficiency of the boarding process, and the many additional airport options that are typically not offered to larger commercial planes.
Today, flying private no longer requires the purchase of your own aircraft. Instead, several charter, membership, and fractional ownership options are available to a larger circle of high-net-worth individuals.
Flying Your Way: Navigating Private Aviation Choices
Our private aviation guide will lead you through some of the most noteworthy options so you can select the one that best suits your needs. As a reminder, the prices mentioned in this article are estimates based on research conducted by the Simon Quick team.
For those who are not quite ready to make the jump to a committed investment, several semi-private aviation outfits have entered the marketplace. Think of this model as Uber-like services for private jets. In summary, private jets are crowdsourced amongst popular, well-traveled routes, presenting the opportunity to purchase individual seats on private aircraft.
This can be a great entry point for individuals looking to test out private travel. Pricing is dynamic and will depend on the number of booked seats. Planes range in size from turb-prop to heavy jet. Some outfits have their own designated fleet – offering certainty to availability, while others broker extra seats on outside charters.
On-Demand Jet Charter
For those seeking a flexible option with a minimal capital commitment, on-demand charters can be a convenient solution. This option is made available through private aviation companies and private jet brokers who offer flights at an hourly rate. For those flying less than 25 hours per year, on-demand jet charters can be a suitable option.
You can book a private jet on-demand for your trip, typically choosing from a variety of aircraft options. You only pay for the time the aircraft is in the air plus any additional fees including landing or airport charges. The hourly rate can vary widely depending on the type of aircraft, its size, and included amenities. You can also expect higher rates during peak seasons, such as holidays, when availability can diminish. Other factors such as routing can play a significant role in pricing. Popular routes may be more cost-effective while those off the beaten path may come with a premium.
Rates for charters can differ depending on the service provider you choose. The following serves as an estimate of the hourly cost you can expect for an on-demand charter:
- Light jet (4-7 passengers): $3,000-$4,500
- Midsize (7-8 passengers): $3,500-$6,000
- Super Midsize (8-9 passengers): $4,500-$8,000
- Heavy Cabin Aircraft (10-15 passengers): $5,000-$10,000
Jet Card Membership
Jet card memberships have become a popular method of private flying among affluent individuals and families. They have evolved to become a practical choice for those comfortable with a chosen aircraft model year-round and within a set amount of hours in the air.
These membership packages include all the flexibility of a charter jet, but with more certainty around pricing and availability. Scheduling to fly is also a simple process, as charters can often be secured on a same-day basis, ensuring a quick and hassle-free travel experience.
Pricing can be nuanced and therefore difficult to gauge as it can depend on the provider and the contract. Generally, jet card memberships are more expensive relative to on-demand options, but with that higher cost, you are guaranteed an hourly rate and jet availability. Several factors such as the cost of goods and services may also play a large part in the cost of your plan.
The following serves as an estimate of the annual cost you can expect for a 25-hour Jet card membership:
- Light jets (25-hour jet card): $111,500-$200,000.
- Mid jets (25-hour jet card): $250,000; plus fuel surcharges.
- Heavy jets (25-hour jet card): $400,000; plus federal excise taxes and fuel surcharges.
Members typically purchase increments of 25 flight hours that can be used during the course of your contract period and are only charged for the time you spend in flight plus any additional fees including ground or pilot fees.
Jet card perks can include such benefits as complimentary ground transportation, catering, in-flight Wi-Fi, and access to special third-party membership events and discounts. A jet card membership is generally recommended for travelers flying between 25 and 50 hours per year.
It's important to remember that the quality of the jet provider can vary significantly. Factors such as the aircraft’s quality, the professionalism of the staff, and the range of services provided are determinants in the pricing of your membership. You can expect a roughly 25-40% price difference between budget carriers and higher-end carriers.
Pay close attention to the rollover policy for any unused hours. While some providers allow you to carry forward hours to subsequent years, others adhere to a use-it-or-lose-it approach. Therefore, it’s essential to review the terms and conditions of the provider you choose.
Fractional Jet Ownership
Many providers also offer fractional interest programs as an alternative to full ownership of an aircraft. For those consistently in the air, it may be the most appropriate option for you. You can think of fractional jet ownership as timesharing for private jets. Owners do not share the use of an individual aircraft, instead, they share a fleet of identical aircraft with other owners. Fractional jet ownership is typically the most expensive private aviation option out of the options discussed here, so it’s generally recommended for travelers flying more than 50 hours per year to ensure they are making the most of their investment.
After paying an initial acquisition fee, which may vary depending on the projected number of flight hours per year, owners gain access to a fleet of private jets. This acquisition fee includes the initial cap investment in exchange for a share in the aircraft. Additionally, monthly management and operational fees are also assessed.
Fractional jet ownership can also carry additional costs including a capital fee, occupied hour fee, and miscellaneous expenses. Similar, to other options, the pricing structure is nuanced and contingent on aspects such as the aircraft model or style selected.
Below is an estimate of prices you can expect when evaluating fractional jet ownership options.
- 1/8th ownership of a Light Jet: $400,000 to $1 million.
- 1/8th ownership of a Midsize Jet: $700,000 to $1.5 million.
- 1/8th ownership of a Heavy Jet: $1 million to $2.5 million or more.
After making a purchase, it’s important to note that there are still limitations on your usage. Monthly usable hours are allocated based on the percentage ownership of the aircraft you own. To illustrate, one-eighth ownership would equal roughly 100 hours of flight time while one-fourth offers around 200 hours. If you have one-half ownership of an aircraft, you can enjoy around 400 hours.
For those considering fractional jet ownership as a business expense, this investment can offer potential tax advantages. As the aircraft ages, capital depreciation can be considered as a net operating loss.
Tax Benefits and Drawbacks
Private aviation can offer financial benefits in addition to the comforts that it provides. The Tax Foundation produced extensive research regarding the Tax Cuts and Jobs Act of 2017 (TCJA) and its profound effect on private jet depreciation. Specifically, the TCJA increased the bonus depreciation percentage from 50% to 80% through one year of ownership, which allows owners to write off 80% of the expense of the purchase.
However, starting in 2023, this bonus depreciation percentage is being phased out in 20% increments. By 2024, we expect this to be around 60%. Another notable benefit with the acquisition route is after one year of using the aircraft exclusively for qualified business purposes, a portion of the usage going forward can be used for personal use.
Often, what initially attracts consumers to fractional ownership is the premise of tax deductions, however, the requirements to meet these benefits can be extensive and complex depending on your circumstances. Before making such a large commitment, it’s worth consulting with a financial advisor to ensure you are aware of possible drawbacks and advantages of fractional ownership.
Private Aviation Comparison Chart
The following chart provides an overview of the options we've explored for your private aviation needs.
How Simon Quick Can Help
When assessing the most suitable option for your specific needs, there are various factors to consider. Simon Quick can help you examine each of these alternatives and decide which is best for you. In addition, they have a deep network and have worked with many of the top aviation providers. To speak with an advisor directly, call us at (973) 525-1000 or send an email to email@example.com to discuss your situation in detail.
About Anthony Santoro, Esq.
Director / Client Advisor
Mr. Santoro joined Simon Quick in 2022 and currently serves as a Client Advisor. His expertise includes tax, executive compensation, estate planning and wealth transfer. Prior to Simon Quick, Anthony worked as an attorney, where he concentrated his practice on trust and estate planning and administration, representing owners of closely held businesses and principals of private equity funds. At Simon Quick, Anthony provides clients with holistic oversight and counseling at the intersection of law and finance. Mr. Santoro also sits on the Financial Planning Committee which is responsible for identifying financial planning opportunities and disseminating guidance to advisors at the firm.
Mr. Santoro began his financial services career with Ayco, a Goldman Sachs financial planning focused firm. At Ayco, he supported the growing needs of high-net-worth individuals and their family offices. From there, he served as the Director of Financial Planning for an Upstate NY fee-based planning firm with more than $600M of assets under management. Most recently Anthony served as an Attorney in a Trust and Estates Law Firm and as a Partner and Family Office Director with their affiliated RIA.
Anthony graduated with a BS from SUNY Albany and his Juris Doctorate from Albany Law School. He is a member of the New York State Bar Association and Financial Planning Association of Northeastern New York. Anthony is a volunteer with the Flora E. Kippins Foundation and enjoys hiking and skiing with his wife and two daughters.
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