Leasing Versus Owning a Corporate Aircraft: What You Need to Know

The decision between leasing and owning a corporate or business aircraft is a critical consideration for corporations, high-net-worth individuals and charter operators. Each choice presents unique financial, operational and strategic advantages that should be carefully evaluated.

Our team at Jet Evolution specializes in guiding clients through the complexities of business aviation, ensuring they select the most suitable solution tailored to their operational needs and financial objectives. Whether considering full ownership or a flexible leasing agreement, understanding the key differences between these options can enhance efficiency and cost-effectiveness.

Aircraft Ownership

Clients exploring ownership should first understand the two primary ownership structures. Full ownership involves purchasing an aircraft (new or used) outright, gaining complete control over operations, customization and usage. Fractional ownership entails purchasing a share of an aircraft, reducing costs, but also limiting scheduling flexibility and operational control.

Ownership may advantages such as tax benefits, including deductible expenses and eligibility for depreciation. Being an aircraft owner may also provide asset appreciation due to certain high-demand models retaining stronger resale value. Ownership may also be beneficial for those who fly 400+ hours in a year.

However, an important consideration is the capital that goes into ownership. The initial up-front investments can be substantial, and the operational costs are ongoing. Operational costs include regular maintenance, crew salaries, insurance, hangar fees and more. Depreciation may impact the aircraft’s value over time and can affect resale potential as well.

Aircraft Leasing

There are two types of lease structures to be aware of as a client. An operating lease is a short term option (typically 2-5 years) that offers more flexibility than a finance lease, which is long-term and can lead to eventual ownership.

Leasing is a great option for those seeking greater stability in budgeting, financial planning, and liquidity preservation. This option also offers the option to upgrade to newer fleet models at the end of lease terms. Maintenance, management and operational support can be integrated into the agreement terms of a lease, making it the more feasible option.

Clients should be mindful that leasing can cost more than ownership over time if not careful. Leasing costs accumulate, but due to the lack of ownership, there is no asset value to be retained. Lease agreements can be restrictive regarding hourly usage and modifications as well. Leasing also does not offer the same tax benefits available through ownership.

Conclusion

Choosing between leasing and ownership requires a strategic approach, factoring in financial priorities, flight hours and long term aviation goals. Jet Evolution provides expert advice, helping our clients navigate acquisition, leasing agreements, and operational management to ensure a seamless aviation experience.

Please fill out the contact form for more information or if you have questions about leasing or becoming an aircraft owner.