- 26 Feb 2021
- Dave Higdon
- Aircraft Ownership
There’s no need to buy the wrong pre-owned business jet out of necessity when Jet Cards can bridge the wait for the right airplane to arrive on the market. David Wyndham illustrates…
Following a tremendous year of pre-owned business aircraft sales during 2021, availability in the market is very slim, meaning you may not find the perfect jet for your need. It can pay to consider using Jet Cards while you wait. Here’s how…
The recent Asset Insight Quarterly Market Report, released on September 30, 2021, says it all:
• The sales volume increased 18% Year-over-Year (YoY)
• Inventory decreased 47%, YoY
• Demand from Q2 2021 to Q3 2021 increased almost 68%
• Only 5.6% of the active turbine business aircraft fleet remained for sale
• Of the aircraft listed for sale, the average days on the market exceeded 400 days (a new record).
As of this writing, the business turbine market has been picked clean of its most desirable aircraft. When quality aircraft come up for sale, they’re being sold for high market prices and may not even be listed for sale – most brokers have active clients waiting for aircraft.
As established already, many of the remaining aircraft have been on the market for well over a year and tend to be older models with higher times. Thus, those in the market for a good quality pre-owned aircraft should plan on waiting a while.
The Attraction of Jet Card/Membership Programs
Waiting doesn’t necessarily mean being grounded, however. For those unable to locate the right aircraft in today’s market, private air travel is still available through charter. With the charter market also in hot demand right now, it may be preferable to focus on the available Jet Card and Membership programs, since one major benefit of these is guaranteed availability of your aircraft type.
With Jet Cards, owners pre-purchase a block of hours at a guaranteed price. Most Jet Card programs start at 25- hours (Memberships have similar programs available).
If you plan to fly 300 hours annually, 75 pre-paid hours on a Jet Card program will last three months. While you search for the right pre-owned aircraft, you can continue to add or renew the Jet Cards while your broker searches for your right match. Even if a year passes before you conclude the purchase of your ideal aircraft, you can continue flying, quite possibly while saving money. Here’s how…
For higher rates of utilization, the financial equation supports whole aircraft ownership. Assuming you will not be chartering your aircraft out (and are thus 100% owner-flying), the break-even point where ownership has a lower total life-cycle cost is approximately 250-300 annual flight hours.
Those lower costs do not accrue immediately, but over the period of ownership. So, while a year of 300 charter hours, paid for via a Jet Card or Membership program, will cost more than the operating cost of your wholly-owned aircraft, the cost advantage of whole aircraft ownership relies on residual values (at resale) and perhaps tax depreciation.
It’s Worth the Wait…
In today’s market, many buyers are not finding the aircraft they want. If you buy what is available, as opposed to what’s best for your requirements, you face two major issues:
These expensive problems can more-than wipe out the short-term higher hourly costs of Jet Cards for up to a year. Viewed this way, we leave you with the following recommendations:
Ultimately, a turbine aircraft acquisition takes time and money. Done right you will have a great experience for years to come.