Besides feeling like James Bond, there are several reasons why investing in an aircraft for your business might be a wise decision. Companies choose to get a private plane for travel mainly for flexibility and time-efficient transportation. If you and your employees fly frequently, you can skip the inconveniences of traditional travel and increase your productivity at the same time.
There are over 21 thousand business aircraft in the United States, and you may be wondering what the best first airplane for your company is. There is no quick answer, as the right aircraft for your operations depends on your business.
Owning a business aircraft doesn’t make sense for every company, of course, and it’s important to examine your business operations to determine if owning a plane is a cost-effective solution before you buy.
In this article, we’ll discuss the planning process to acquire an aircraft, which type might be right for your company and other critical considerations and benefits.
Create a Plan for Buying a Business Aircraft
The most important part of buying a company aircraft is careful planning. Purchasing the aircraft should be the last piece of the puzzle and should only happen after you have all of the logistics figured out.
Let’s discuss the steps in an aircraft acquisition plan.
1. Conduct an Operational Assessment
The first step is to figure out your company’s transportation needs:
- How much will the aircraft be used?
- How far do you and employees typically travel?
- How many passengers do you plan to carry?
- What is the cost/feasibility of other modes of transportation — commercial airlines, taxis, rail, rental cars, etc.
Discuss with your company and determine your needs for the present. Also, try to identify possible future needs like new clients, new places of business and other changes that could affect the use of your aircraft.
2. Consult Aviation Experts
We recommend employing the help of experienced aviation business brokers — people who have been through the acquisition process before and can help you troubleshoot common problems and avoid setbacks.
Your broker should be knowledgeable about all aspects of the acquisition process. Business aviation is a unique specialty, and you need someone experienced who knows its ins and outs — don’t rely on your company’s acquisition team alone.
When you find a competent business aviation broker, work with them to determine the right aircraft for you, and discuss the logistics of storage and maintenance. A good broker can help you hone in on an airplane that meets your company’s needs.
3. Determine Management Structure
You and your advisors need to determine who will manage the aircraft — either an in-house team or an external management company.
If you decide to use an external management company — as many businesses do — you’ll need to find one in your area that maintains an excellent reputation and offers the facilities and accessibility you need.
With a third-party management company, it’s important to involve them in the acquisition process of your aircraft, to make sure it complies with FAR regulations and can be legally operated by their company in the ways you intend.
Some companies mitigate costs by leasing the aircraft to a charter company — they use your plane during times when your company isn’t, which can provide a significant revenue flow.
4. Ownership Structure
Your company must determine the formal ownership structure of your aircraft to minimize liability and protect your assets. There are several different approaches — from individual ownership to forming a company within a group of consolidated companies — and the right one depends on your operation.
No matter which option you choose, you must ensure it complies with FAA regulations for your intended use of the aircraft. You need to consult with an advisor who knows these regulations, and you should be beyond doubt that your ownership structure is legal and advantageous before you set it in stone.
One common error is to form a company with the sole purpose of owning your business aircraft. People do this in an attempt to limit personal liability, but according to the FAA, it legally classifies the company as a commercial air carrier and subjects you to a stricter set of rules and regulations — something you don’t want.
5. Tax Planning
Before the acquisition of an aircraft, your company needs to figure out how the transaction and ongoing expenses will fit into your company’s taxes.
You must consider items such as sales tax, income tax issues, federal excise tax, as well as FAA administrative expenses. Proper planning allows you to minimize tax expenses and the overall cost of owning your business aircraft.
Allow your company ample time for tax planning, as the best course of action may be to form a new ownership structure to acquire the aircraft — as described above — which may involve tax-related registrations.
Select the Right Airplane for Your Business
Once your acquisition plan and the logistics are in place, you get to think about the more exciting part — the type of aircraft that’s right for your business.
Consider the following six areas when thinking about what aircraft is right for your operation:
With many factors to consider, determining your budget is not always an easy task, but after careful planning, you should have an idea of your price range. Once you have your budget, it’s a useful limiting factor to apply to your search.
Having a budget in mind will help you and your broker find an airplane that has what you need for the right price.
2. Plane and Engine Size
You’ll want to consider the size of the plane you’ll need to carry multiple employees and their baggage while leaving enough room to be comfortable and get work done. The size of your aircraft determines the interior space, and the size of your engine(s) affects your range and capacity.
Here are the general types of planes you may want to consider:
- Single-piston or very light jet — For short-range flights and about two to five passengers — these are great for getting in and out of airports quickly.
- Multi-piston or light jet — Still for shorter-range flights, these planes can fit up to eight passengers and are better at handling sub-optimal weather than their smaller counterparts.
- Turboprop — Ideal for short to medium-range trips and can carry up to eight passengers — these planes are typically easy to maintain and fuel efficient.
- Midsize jet — Typically more roomy than other planes with their range. They’re good for short to medium distances and seat around eight passengers.
- Large jet — For long-range flights, these jets typically seat up to 16 passengers comfortably with full-standing headroom and a galley.
- Business liner/long-range jet — These large jets are designed for international flights, with sleeping facilities and plenty of room for even more passengers.
3. Interior and Layout
Be sure to examine the interior of any aircraft you plan to buy in person to make sure it fits your comfort and business needs. If you’re planning long flights, make sure there’s enough room to stand up and stretch and sufficient areas to sleep and work.
4. Your Passengers and Business Requirements
Depending on who your passengers will be may affect the level of luxury you want to look for in a plane. If you’re trying to impress business associates, you’ll want to choose an aircraft with a quality that reflects the level of professionalism of your company.
If the plane is used exclusively by staff members, however, you may be able to opt for something more modest.
Make sure your aircraft can comfortably reach destinations you frequently travel to, as well as locations you may have to travel to — it’s good to have more range than you need.
Before you decide to acquire a large aircraft, make sure the airports you will frequent can accommodate a plane of that size.
If you frequently travel long distances, it may be worth spending more to make sure you and your employees are comfortable for the duration of the flight.
6. Operation and Maintenance Costs
Not all aircraft require the same level of maintenance and operating costs, so it’s important to factor that into your budget. Consider insurance, management, crew expenses, repairs, storage and fuel. Your aircraft broker should help you get an estimate of these costs based on the type of airplane you choose.
Organize Aircraft Financing
If you’re considering buying an aircraft for your business, one of the first steps your company should take is beginning the process of securing a loan with a preferred lender. It’s often a time-consuming process, and if you start early, you can minimize delays.
While lenders require specifics about your aircraft before an actual loan will be approved, they can give you an estimate of what they will be able to offer if you have an idea of what type of aircraft you’re planning to buy.
The lender can then begin the process to approve the loan before the purchase of the aircraft, which means minimal downtime after you find the plane right for you.
Create a Business Aircraft Operation and Maintenance Plan
An essential part of your company’s planning process is to develop an operation and maintenance plan. You can either opt to do everything in-house or hire a third-party management company.
One thing to consider: Aircraft require routine maintenance and inspections from FAA officials to remain legally operable. That’s why many companies choose to hire third-party organizations that are already equipped to perform routine maintenance and prepare aircraft for inspections.
While there are costs and regulatory burdens associated with hiring your own pilots, mechanics and support personnel, some companies still prefer to keep their aviation in-house for ultimate control and flexibility.
But, if your company needs something that requires less attention and is completely turnkey, a third party option is probably better for you. Most aircraft management companies are already certified by the FAA and offer charter leasing if you want to offset the cost of ownership.
Whichever route you choose, you can always decide to switch to the other option if it doesn’t suit your company.
Enjoy the Benefits of a Business Aircraft
There are many upsides to owning a business aircraft. And if the budget for the company allows, it can be a beneficial business investment. A few of the most notable benefits include:
1. Travel Faster
If you or your employees frequently drive many hours or regularly fly for business trips, a small plane can drastically reduce this travel time that could be better spent working. Aside from the possibility of weather delays, flying almost always saves you time.
Forget lines at the airport and dealing with TSA security checks. When you have a business plane, your departure time is when you choose and isn’t limited to commercial departures. You can bring more luggage if you need, and you don’t have to wait at the baggage claim to get it after your flight — not to mention it won’t get lost or damaged.
For those with a company aircraft, security is much more streamlined, and boarding is often quick and easy.
2. Be More Efficient
Traveling and working often don’t go hand in hand aboard commercial airliners. It can be hard to work and concentrate with limited resources and space.
With your own aircraft, you spend less time dealing with the inconveniences of traditional traveling — which ultimately means more time you can spend working at your destination or on the plane.
3. Access to Smaller Airports
With commercial airliners, you’re often restricted to major hubs and large airports. That means sometimes, you have to rent a car and finish the rest of your journey on the road. If you can target smaller airports that are closer to your destination, it saves you valuable time and money.
4. Secure Business Partners
If you have the budget to secure a luxury aircraft, inviting clients aboard is an excellent way to make a lasting relationship and show that your company is professional and profitable. Especially if the client doesn’t usually travel by private aircraft, it’s hard not to be impressed.
Also, it can be hard to forge good relationships with people you’ve only talked to through email or over the phone. If you travel with one of your clients, it guarantees you hours of valuable face time and potentially valuable conversations.
According to a study published by the National Business Aviation Association, companies that maintain private business aircraft consistently outperform others that do not. And while this may be a result of a successful business and not the cause, it does communicate to clients that your company is successful and stable.
5. Invest in the Proper Ground Support Equipment
No matter what aircraft or management solution you choose for your company, aircraft maintenance is of the utmost importance for ensuring safe flights. For mechanics and others who repair and maintain aircraft, the proper aircraft ground support equipment is essential to keep them always protected and safe.
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If you have any questions about aircraft maintenance stands or would like to speak to one of our staff members, please contact us today.