Jet Owner Index: Understanding Private Jet Cost

What does a private jet cost? Am I getting the right one?  Do I really need a new one?

Wait – save $2MM? How can that be possible?

Private jet cost and acquisition can be daunting when you think about the lack of tools. And I mean tools that give you a distillation that matters. If it goes fast, but burns a ton of fuel – am I better off? Am I saving money by going with the thirsty fast one? Or should I get the efficient slow one? And if it goes fast… how many airports am I giving up that I can’t land at?

The Jet Owner Index answers a universal problem:

Distill information from sales people and other heaps of data into a comparative format.  The goal might be to answer a question:  When I look at the different factors – where does it stack up against its alternatives?

Is it a better choice than that one, that big sexy thing over there by the fuel truck?

Private jet cost analysis is simple as a stand alone absolute. It has fixed and variable components. In a perfect world you want to fly as many hours as possible.  Do that while defraying your per hour use cost – if you are running a business.

Or… you may want to preserve it for only your use.  Accept the big fixed costs and let it be a hangar queen.  Over 50% of the business aviation fleet lives such a life – don’t feel bad about it.

But the obfuscation and limited amount of simple analysis for a quick comparison is a fact of life.  Every jet manufacturer knows this: Buying a private jet is an emotional experience.

That is why private jet cost analysis isn’t typically at the forefront of the sales process. You might here more of:

“Did you see that red one with the stripe?”

Some people on this planet buy private jets like you and I might be a car.  I’ve never attained that level of financial success, but I’ve observed this species in their habitat.  Invariably the moment comes when emotions kick in and data, charts, comps are needed.

When playing the advisor, sobriety and a comparative tool is how to protect the buyer.  Frank talk about how unimportant the interior or paint job might be is also important.

Imagine being able to present disparate data simultaneously.  Do it for  everything in category and class.  Then allow the prospect to weigh the fields that mattered most to them.

Such musings drove us to build a tool that shows (in 4 pages or less) how a group of similar aircraft compare. Using a straight average and equal weights, we even have an easy winner from the example grouping of mid and super mids:

The Best Buy

The graphic above uses hybrid from data from the FAA, aircraft sales databases and cost tools.

The Challenger 300, Gulfstream G200 (née Galaxy), Citation 680 (Sovereign), Citation X (750) and the venerable Hawker 900XP (HS-125-900) are grouped.  Then we compare specific factors, using parameters that are easy to understand.  Once that is done, a simple picture emerges for each factor.

The index works from a master table where everything is quantified from a baseline for the group:

• Depreciation: How much value will it likely retain?
• Population: How many exist with commentary on what this matters.
• Production Thickness: When it was made – how many were made per year?
• Carry Capacity: How much can it hold relative to its own weight?
• How Popular on the Charter Market: Put another way, can it make money?
• Efficiency: Miles per gallon, pure and simple.

An Alternate View

In the case of our initial super-mid candidates, a straight average of all of the above was taken.  Apply equal weight to all items, and low and behold, we have a winner.  If you were a jet, popular, efficient and retained value, you’d likely to be a Challenger 300 / 350.

But maybe charter popularity, efficiency and smaller airports you are more important?  Then you’d more likely be a Citation Sovereign taking the gold:

So the next time you hear someone wonder, in awe, about private jet prices – simply offer, “Well what matters to you? Being able to sell it for close to what you bought it for? Going to many more smaller airports? Or telling your friends how fast it goes?”

Indulge in a little data, comparisons and common sense.  It’s really fun and makes the right people nervous.  And it puts that pressure on the Seller *before* you sign that LOI or purchase agreement.

Next Steps

Does aircraft evolution, technology and value, get you out of bed in the morning?  The don’t hesitate to contact me via email at adam@jetowner.com or text me at (617) 901-3245. We develop leading edge financial, acquisition and management tools and we like to share.  We like people.  And we do almost anything when asked nicely.