If I Decide to Purchase an Aircraft, Should I Charter It?
An increasing number of companies and individuals have decided to skip commercial flights and, instead, purchase their own business jet. Private aircraft allow owners to travel on their own schedule with added privacy and efficiency.
While the cost of ownership can be significant, by electing to charter their aircraft to 3rd parties, aircraft owners can offset many of the fixed costs like hangar space, maintenance, and crew training. However, not everyone who owns an aircraft decides to make it available for charter. This is a decision that requires an analysis of the type and age of the plane, as well as the owner’s flying schedule and personal goals.
Why a Private Jet?
The process of selecting and purchasing an aircraft can be very complex. Most prospective aircraft owners engage a professional aviation advisor to assist with navigating the market and determining the appropriate model for their travel needs. While a particular aircraft may fit the needs of one owner perfectly, it may not be the ideal aircraft for the broader charter market.
The total estimated flight hours an owner plans to fly will greatly influence which model should be purchased and whether it can – or should – be chartered. For instance, if a private jet is used predominantly for corporate purposes, then frequent use by key employees will decrease the hours the aircraft is available for charter.
In short, the decision to charter requires that aircraft owners have a very good understanding of their anticipated schedule. As a rule of thumb, if you plan to fly more than 150 hours per year, you are may be better off keeping the aircraft dedicated to your specific travel requirements rather than opening it up to the charter market.
Owners who have had success chartering their aircraft usually work with expert advisors to help organize flight logistics. Advisors assist by listing the multiple parameters that determine a jet occupation-to-charter ratio. Planned and unplanned travel dates, maintenance requirements, frequent destinations, and the average passenger profile all play a role in building a chartering schedule.
The Unavoidable Costs of Owning a Jet
Operational costs, like fuel consumption and jet maintenance, will vary greatly from model to model. Potential jet owners should have open discussions about these costs and should take them into consideration when deciding which plane to purchase. Additional expenses include cleaning services, hangar space, landing fees, crew training, and payroll. These expenses will influence the decision whether the owner of a jet can benefit from chartering their aircraft.
Don’t Forget the Crew
The cost of a well trained and experienced crew is easily one of the most overlooked and underestimated expenses associated with private aircraft ownership. A conventional jet crew consists of two pilots, both with the capacity to fly approximately 350 hours per year. Professional pilots will each earn, on average, around $200,000 annually – with captains and chief pilot’s commanding even higher annual compensation packages.
The decision to charter an aircraft will influence the number of crew members needed, the average flight hours worked, and the budget necessary to cover crew expenses. Let’s say an aircraft owner earns $3,000 for each hour they charter their jet, this means the jet would need to be available for at least 70 charter hours annually to cover the cost of one pilot’s salary. Depending on the size of the crew, costs could increase greatly from there. Special attention should be given to how chartering an aircraft will affect crew expenses.
How Old Is Your Jet?
A late 1980’s model year Falcon 50 is a classic, reliable, and elegant flying machine. While this super-midsize aircraft, with the proper maintenance, might serve its owner well, it would be more challenging to charter than a younger aircraft from the category like a mid-2000s’ Challenger 300.
The charter market strongly favors younger aircraft models. Charter clients enjoy contemporary aircraft design, modern amenities like WiFi and onboard entertainment – all tools that make them feel safe and comfortable while onboard. Offering aircraft that are more than 20 years old greatly restricts the market size. While rapidly developing technology may provide the possibility of updating a classic plane into a modern jet, for now, it is widely understood that mainly younger aircraft models are the stars of the charter market.
If the owner of a private jet intends to charter their aircraft, this should be well understood during the purchase process. This signals to jet advisors that they should recommend aircraft that not only fit the needs of the owner, but are also appealing for charter clientele.
To Charter or Not to Charter
Whether or not to charter an aircraft is a simple decision for some jet owners and a very complex decision for others. Listed above are the general concepts that should be considered before chartering an aircraft. Jet owners are often preoccupied with solving problems related to their own private lives and businesses. That’s why most engage a team of aircraft advisors each time they need to make an important decision regarding their aircraft. At Outlier Jets, we pride ourselves in our ability to use specialized knowledge and skills to help aircraft owners with every decision they may need to make. Contact the Outlier team to start discussing if chartering your jet is the right option for you.
November 29, 2021