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The Real Cost of Owning and Operating a Private Jet

The allure of private jet ownership is undeniable, offering unparalleled convenience and comfortability. For many, being able to invest in a private jet represents the pinnacle of success and freedom in travel.

However, the actual financial implications of private jet ownership extend far beyond the initial purchase price. When considering your first jet purchase, you want to consider the costs of owning and operating the aircraft so you know exactly what to expect.

How Much Does It Cost to Buy a Private Jet?

The most apparent cost of buying a plane is the purchase price, which varies depending on the aircraft’s size and capabilities.

Very light jets: These entry-level private jets, such as the Embraer Phenom or Cessna Citation Mustang, typically start around $3 million. They’re ideal for short trips and can accommodate four to six passengers.
Light jets: With prices ranging from $4 million to $8 million, light jets like the Cessna Citation CJ3+ or Embraer Phenom 300 offer increased range and passenger capacity, making them suitable for regional travel.
Midsize jets: Priced between $9 million to $20 million, midsize jets such as the Cessna Citation XLS+ or Bombardier Challenger 350 provide transcontinental range and enhanced comfort for 5 to 10 passengers.
Super-midsize jets: These aircraft, including the Gulfstream G280 or Dassault Falcon 2000S, range from $20 to $25 million. They offer an intercontinental range and lavish amenities for 8 to 12 passengers.
Heavy jets: At the top end of the market, heavy jets like the Gulfstream G650 or Bombardier Global 7500 can cost $35 million to over $70 million. These aircraft have a global range and can come with extravagant features, accommodating up to 19 passengers in total comfort.

New vs. Used Private Jets

Opting for a pre-owned aircraft can significantly reduce the initial cost, with used jets typically costing 20% to 50% less than new models. However, buying a pre-owned jet comes with additional hidden costs. Older aircraft may require more frequent repairs and component replacements. They may consume more fuel and need costly upgrades and modifications to meet current navigation, communication, and regulatory standards.

Financing

Financing a private jet usually requires a 10% to 20% down payment, with the remainder financed for up to 20 years. Interest rates for aircraft loans range from 6% to 8% for well-qualified buyers, adding substantially to the total expense of ownership over time.

Costs of Owning and Operating a Private Jet

How much does it cost to own a private jet? Beyond the costs of purchasing a private jet, owners must invest in ownership and operation costs. These expenses typically include:

1. Aircraft Insurance

Private jet insurance costs typically range from 1% to 3% of the aircraft’s value annually. For a $20 million jet, this translates to $200,000 to $600,000 per year. Factors affecting premiums include:

Aircraft value and type
Intended use (personal, charter, or corporate)
Pilot experience and training
Coverage limits and deductibles
Claims history
Operating area (domestic or international)

2. Hangar or Parking Fees

Hangar fees for private jets can be substantial, especially in prime locations or major metropolitan areas. Costs vary widely based on location, aircraft size, and facility amenities, generally starting from $30,000 and going up to over $200,000 annually.

3. Regulatory Compliance Fees

Compliance with aviation regulations incurs ongoing costs, including:

Aircraft registration fees
Airworthiness certifications
Annual inspections
Pilot medical examinations and license renewals
Compliance with noise and emissions regulations
International permits and overflight rights

These fees can accumulate to tens of thousands of dollars annually, especially for aircraft operating internationally.

4. Tax Considerations

The tax implications of owning a private jet can be complex and significant. Depending on how the aircraft is used, owners may benefit from depreciation deductions, which can offset some ownership costs. However, personal use of the aircraft may result in taxable fringe benefits.

Sales and use taxes on the initial purchase can be substantial, sometimes reaching millions of dollars for larger jets. Owners must also navigate federal excise taxes on flights, property taxes in some jurisdictions, and potential international tax issues.

5. Aircraft Management

Many private jet owners opt for professional management services to handle the complexities of aircraft operations. Aircraft management services often include fleet insurance, fuel, labor, and parts discounts, as well as offsetting ownership costs with charter revenue. These services typically charge 10% to 15% of the aircraft’s annual operating cost, amounting to hundreds of thousands of dollars for heavy jets.

6. Fuel Costs

Fuel is one of the largest variable expenses in aircraft operation. Consumption rates vary widely based on aircraft size, current fuel costs, and flight profile. A midsize jet might burn 200 gallons an hour, costing $520 to $600 to refuel. For frequent flyers, annual fuel costs can easily exceed $1 million.

7. Crew Expenses

Crew and pilot salaries for private jets range from $85,000 to $300,000 per year, per person, depending on experience and aircraft type. Many jets require two pilots and additional crew members, like cabin attendants.

Working with a private jet management company like Latitude 33 Aviation allows access to a pilot pool, potentially reducing costs compared to maintaining a dedicated crew.

8. Aircraft Maintenance and Repair

Annual maintenance costs for private jets typically range from 5% to 10% of the aircraft’s value. Standard costs include routine inspections, component replacements, and unexpected repairs. Additional costs include cleaning, de-icing, and scheduled major inspections, which can exceed $1 million for large jets.

9. Operational Costs

Every flight incurs additional expenses covered under the flight’s operational budget. These include fees for landing, handling, navigation, and catering. When it comes to navigation fees, some countries require a fee to fly through their airspace. These fees show up like taxes on landing fee invoices.

10. Administrative and Legal Fees

Ongoing legal and administrative support for contract management, insurance policy management, financial reporting, tax planning, and regulatory compliance can cost several thousand dollars annually. These fees depend on the complexity of the operation and the extent of services required.

11. Aircraft Depreciation

While not a direct out-of-pocket expense, depreciation rates for private aircraft significantly impact the total cost of ownership. Jets typically depreciate 10% to 15% in the first year and 5% to 10% annually thereafter. Depreciation affects resale value and has tax implications.

12. Upgrades

Aircraft may require upgrades, especially when they’re bought pre-owned or need upgrades to comply with evolving regulations. Avionics updates, cabin refurbishments, and performance enhancements can cost millions over the aircraft’s lifetime.

How to Reduce Jet Ownership Costs

Alternative options exist for those seeking the benefits of private aviation without the full responsibility of ownership. You can reduce jet ownership costs by doing the following:

Chartering a Private Jet

Chartering a private jet may be the most cost-effective option for those who travel infrequently. It provides the luxury and convenience of private jet travel without the fixed ownership costs. The benefits of chartering include flexibility, privacy, security, access to various aircraft types, and no long-term financial commitment.

Fractional Jet Ownership

Fractional ownership offers a middle ground between full ownership and chartering. Buyers purchase a share of an aircraft and become one of many owners. Fraction jet ownership may provide more consistent aircraft access than chartering, with lower upfront and fixed costs than full ownership.

Enjoy Private Travel With Latitude 33 Aviation

Owning and operating a private jet comes with many upfront and secondary costs. Understanding these costs can help you make an informed decision when purchasing your private jet. For many, alternatives like chartering or fractional ownership provide a more balanced approach to private aviation.

Latitude 33 Aviation offers expert guidance and premium solutions across all of these options. As a leader in private jet charter, executive jet management, and aircraft sales, we provide unmatched ultra-tailored services and premium aircraft solutions. Contact us today to explore how we can tailor a private aviation solution to your needs.

How to Reduce Your Jet Ownership Costs

Whether you are traveling for business or personal leisure, owning a private jet can be one of the best investments you can make when you love to travel in luxury. If you’re unsure if owning a jet is right for you or if you’re looking to lower the overall expenses of your jet, there are several ways you can lessen your ownership costs and even make a profit. For example, many jet owners charter their jet when they are not using it or turn to an aircraft management service.

If you’re interested in reducing your jet ownership costs, here is a look at the differences between fixed and variable costs and some ways you can reduce those expenses.

Fixed vs. Variable Costs of Jet Ownership

You can divide jet ownership costs between variable costs and fixed costs. Variable costs are defined as expenses that are subject to change, while fixed costs stay the same over a specific period. By knowing the differences between these types of costs, you can better plan for the future and manage your overall expenses.

What Are the Fixed Costs of Owning a Private Jet?

When you own a jet, you’ll have a few costs you know will stay the same over time. These costs can vary based on the jet’s size and type, but once you’ve agreed to the terms, these costs won’t be subject to change. Some of the fixed costs of owning a private jet include:

Capitalization costs: Your capitalization costs relate to the amount of money you have to pay to purchase or lease the aircraft, including the interest related to it.
Insurance costs: If you own a jet, you also have to purchase insurance to legally fly it. Your insurance expenses, such as liability and hull coverage, will come at a fixed rate.
Hangar: When you’re not using your jet, you’ll store it in a hangar. This hangar space will come at a fixed fee per month.
Management fee: Many private jet owners will hire a management team to handle various administrative services, such as accounting, record keeping, aircraft scheduling, maintenance coordination, and Federal Aviation Administration (FAA) compliance monitoring, among other tasks. These services will come with a set fee from the management company.
Flight crew: Your jet needs a crew to fly it, and you’ll have fixed costs related to hiring a company to screen and interview flight crew candidates. A hiring or management company will also conduct a background check on candidates before presenting them to you. Along with paying for the screening and hiring process, you’ll also have fixed expenses that account for a crew’s salaries, benefits, uniforms, drug testing, and communications.
Flight crew training: You may also have expenses from continuously training crew members. These training costs are fixed, as training is conducted annually. Flight crew training ensures your pilots are as well-trained as possible and updated on the latest aviation information.

What Are the Variable Costs of Owning a Private Jet?

In addition to the fixed costs of owning a private jet, there are also several variable expenses. These include:

Parts and maintenance: Since you can’t account for every repair or replacement part your private jet will need, any expenses incurred from maintenance or parts fall under variable expenses. You can usually hire an aircraft management company to facilitate repairs and replacement costs.
Fuel: The costs to fuel a private jet are some of the main variable expenses you’ll have to pay whenever you travel. The price per gallon can change based on market fluctuations and by the location where you’re buying fuel, with some jet owners choosing to negotiate an airport’s fuel price in advance to better plan for their coming trip’s expenses.
Crew meals, travel, and hotels: Whenever you fly, you’ll need to cover the changing costs of your crew’s travel expenses, such as their lodging and meals.
Landing and parking: Whenever your aircraft arrives at its destination, you’ll likely have to pay a parking and landing fee that varies based on the airport. Since airports can charge different fees, it’s a good idea to check the costs of landing fees in various airports before deciding on your route.
Oil and other operating materials: Your aircraft may need materials like oil, nitrogen, aviator’s oxygen, methanol, and TKS fluid for maintenance and proper operation. Since you can’t always predict when you’ll need these items, they’re considered to be variable costs.
Cleaning and upkeep: You can schedule regular cleanings, but your costs can vary at times due to the location of the cleaning service or the need for more in-depth cleanings. Depending on how often you use the aircraft, you may have to pay for more cleaning services to ensure your aircraft is sanitized and always looks its best.
Catering: Whenever you order catering for your flight, you’ll pay for the costs of it, with the expense varying based on the cater’s pricing and the type of options they provide.

Using Charter Revenue to Reduce Aircraft Ownership Costs

With all of the fixed and variable costs related to jet ownership, you may want to reduce your ownership expenses. Many jet owners offset their annual operating costs through charter revenue. When you allow others to charter your jet, they’ll essentially rent your jet for a particular period and pay you whatever price you set. By chartering your jet, you can reduce your fixed costs significantly, such as your capitalization expenses, and even make a profit over time.

To charter your jet to other private flyers, you’ll need to define your scope of operation under the FAA’s 135 Air Carrier certificate. Applying for this certificate and having it approved will allow you to charter your jet to other flyers.

Below are some of the primary factors that influence the amount of revenue you can gain if you decide to use your jet for charter flights:

Age of aircraft: Newer aircraft tend to be more in demand than older aircraft. Due to the higher market demand for newer aircraft, a more recent model can often attract more flyers and increase your revenue as a result. Additionally, newer aircraft typically don’t have as many maintenance needs, resulting in lower variable costs for your jet.
Fixed and operation costs: Different aircraft come with different fixed and operational costs. These expenses can vary based on your jet’s make and model, with some aircraft featuring higher margins between their direct operating costs and the charter rate. Selecting an aircraft with fewer expenses related to private jet operating costs, such as fuel burn, maintenance, and engine expenses, can help you raise the profit you make per chartered flight.
Human capital: When you charter your flights, you can offset the costs of hiring pilots and crews for your personal flights. Instead of hiring individual crews per flight, you can end up hiring a two-person pilot team for around 350 hours a year. If you don’t plan to fly 350 hours on your own, chartering can help you reduce your human capital costs per flight by ensuring you get full use out of your crew and avoiding hiring new crews every flight.
Engine reserves: Typically, engine companies attribute engine reserves to hourly expenses, with many engine companies requiring jet owners to pay for a minimum annual dollar threshold. Even if you don’t fly enough to meet this annual dollar threshold, you’ll still have to pay for it. If you charter your jet, you can more easily meet this minimum and reduce your annual fixed costs as a result.

Should You Select an Aircraft Management Service When Chartering Your Aircraft?

Private jet owners can hire an aircraft management service to handle the chartering of their aircraft. When you hire an aircraft management service, you add your jet to a licensed charter fleet. Since an aircraft manager knows how to optimize your chartering services, you can raise your private jet chartering profits.

An aircraft management service partner will also often have the expertise and industry connections required to help you save on parts, maintenance, fuel, fleet insurance, and hangars. They’ll manage your flight crews and ensure they’re trained appropriately as well.

Aircraft management services can also manage the charter revenue process, reaching out to potential flyers and adding charters that work for your schedule. A great aircraft management partner will have accounting services available that track how much your charter revenue is offsetting your annual costs, too.

Overall, an aircraft management service can reduce costs, increase revenue, and take much of the responsibility of managing your aircraft off your hands.

Other Options to Save on Jet Ownership

In addition to using chartering revenue and an aircraft management service to lower your cost of jet ownership, you can also find a few other ways to reduce your overall expenses:

Co-ownership: One way to lower your costs is to co-own your jet with at least one other person. By co-owning your jet, you save at least half of your money on fixed costs and the initial purchase price. Keep in mind that you’ll have to iron out terms with any of the other co-owners under this model.
Fractional ownership: Through a fractional ownership program, a buyer can purchase shares in a jet. The size of the share you buy translates to the number of hours you can use the jet, helping you get the private jet experience without paying the full costs of ownership. Fractional ownership can be great for buyers who know they’ll only use a jet somewhere between 500 and 400 hours each year.
Cooperative ownership: Similiar to fractional ownership, a cooperative ownership agreement involves a cooperative owner buying a jet and then selling shares of the aircraft to one or more other flyers. Instead of having a fractional ownership program handle the management of the aircraft, the cooperative owner will be responsible for it. If you’re a cooperative owner, you can make money on your jet by charging members for shares, and you receive more control over the terms of the jet’s use compared to a co-ownership or fractional ownership model.
Leaseback agreements: In a leaseback agreement, you allow another organization to lease your aircraft from you. Leasing a private jet to others is often a good choice if you don’t fly your aircraft a lot and want to save money on your operating costs. If you choose this route, make sure the organization leasing your jet has terms that work for you.
Pick an affordable fixed-based operator (FBO): When you own a jet, choosing the right FBO can help you save costs as well. Since an FBO can handle your fueling, maintenance, parking, tie-down, and storage costs, finding the right FBO can help you keep expenses down. Some FBOs offer significant discounts if you sign up to use many of their services.

Should You Own or Charter a Private Jet?

If you’re deciding between owning a private jet or chartering it, the biggest consideration you’ll want to take into account is how often you plan to fly. If you’re not flying more than 200 hours, the costs of owning, operating, and maintaining a private may be too great to justify owning a jet outright. If you only plan to fly occasionally, a private jet charter can be a more financially savvy option, as you get all the luxury of private flying without the costs of owning the aircraft.

However, even if you plan to only fly occasionally, purchasing a private jet can still be a good choice. With all of the options you have to split costs and make revenue off a private jet, it can be an excellent investment opportunity. By chartering the flight to others, you can reduce your overall costs of owning the jet and potentially make a profit.

You might also want to consider the entry costs of purchasing a jet. A newer and more capable jet can come with higher costs that may not make sense for your needs. If you don’t want to pay for entry costs, then chartering a private jet is a great choice.

Buy a Private Jet or Book a Charter Flight With Latitude 33 Aviation Today

At Latitude 33 Aviation, we’re dedicated to helping our clients find the right private flying experience for their needs. We regularly charter flights for our clients, delivering a stress-free, luxurious flying experience.

We also have jet acquisition and jet brokerage services if you’re interested in purchasing an aircraft. If you already own a private jet, our aircraft management services can assist you with various administrative services and help you offset costs via charter revenue.

Take a moment to review our jet acquisition services today. If you’re interested in chartering a flight or have any questions, you can request a quote or contact us directly.