A corporate jet can be of benefit to many executives and corporations thanks to the ability to travel at short notice, respond faster to unfolding situations and customise your routes, timings, and destinations.
Travelling by corporate jet enables you to operate alongside your schedule, making it more time-effective and cost-efficient for active corporate leaders. There are also security benefits as it allows you to avoid crowded public airports.
In this article, we’ll look at the pros and cons of buying vs chartering a corporate jet for private travel.
Buying a private jet can cost anywhere from $2 million to hundreds of millions of dollars, depending on the plane’s model, age, size and condition. This represents a huge investment for many business executives and corporations.
Chartering has fewer upfront costs, making it a much more cost-effective way to use a private jet when needed. Private jet prices can vary depending on a few factors including the flight distance, length of your trip, the number of passengers and luggage, for example, but prices can start from as low as a few thousand dollars.
When you buy a private jet outright, you are subject to massive capital risk. If the plane then falls into disrepair, develops faults or suffers depreciation, you could easily lose money. Chartering, on the other hand, takes away that risk as you only pay for the services you use or an annual membership.
After initial purchase costs, there are other long-term costs associated with private jet ownership that should be taken into consideration.
Unless the jet is in a warranty period, any maintenance or repair fees will be the owner’s responsibility and these costs can run into hundreds of thousands of dollars per year. During repairs and maintenance you won’t be able to access your jet for flights either, so you’ll need to charter or travel on a commercial airline.
In addition to maintenance, the ongoing costs of a private jet include hiring costs for pilots and crew, aviation insurance, hangaring, and safety inspections. All these are an essential part of jet-ownership and don’t include optional extras such as interior renovations, which can add to the overall cost.
Whether or not buying a private jet is the most economical choice for your corporation will largely depend on flight frequency and how often you will utilise your private jet. If you’re flying regularly – totalling hundreds of air hours annually – then buying may be a viable option but if your jet will spend prolonged periods sat in a hangar, then you could be wasting your hard-earned money.
For many corporations, private air travel makes more financial sense and comes with a range of added benefits, however in many cases, private jet ownership is an unnecessary and costly investment with chartering providing a more economical and sensible solution.