OUTRIGHT OWNERSHIP Finally, at the top of the value chain
is outright ownership; be that of a pre-owned aircraft or a brand new one. Outright ownership is appealing when users often have a last-minute change of plans or require a lot of flying time. Vick says that the threshold is about 225 hours a year. However, Segard says ownership has
never been a financial decision—it is a financial black hole in fact. “The bills are huge, the maintenance
costs are significant and it is very time consuming to manage—the running costs alone are around 10% of the value of the plane and the plane’s value as an asset depreciates at a rate of around 10% each year. “They also spend an estimated three
months of the year either being fixed or out of action for some other reason. However, they are a massive status symbol or trophy asset.” Given the financial commitment
of owning an aircraft outright there are numerous considerations in terms of funding it and also in terms of its future value. Pre-2008 private jets held their value well, but as recession hit, the demand for both new and pre-owned jets slumped leaving some with an asset that was costly to maintain and impossible to dispose of. This is significant given that most ultra-wealthy individuals
Above: Eymeric Segard, chief executive and founder of Geneva-based LunaJets, which is experiencing a growth of 35% per year of its private charter flights, with a 40/60 split between leisure and corporate clients.
want to preserve their capital and, at the very least, not eat into their working capital to maintain as an asset of depreciating value.
OWN OR LEASE? Two ownership models exist: ownership and leasing and,
according to Vick, leasing is seeing good origination volumes currently. He says leasing has flexible terms over several time options, such as three, five, or seven years. Importantly, there is no residual value risk and no disposition risk as the craft is simply returned to the lessor at the end of the lease. “Users need to be aware that they are paying a
substantial premium for outright ownership and that they also need to arrange for proper management,” Vick said. “This is often placed with a specialist company that takes
care of annual operation and operation costs: crew salaries, maintenance (routine and unplanned), aircraft insurance, and hangarage, or parking.” But the trade-off for this huge expense is unlimited flying
They are a massive status symbol or trophy asset
82
CAMPDENFB.COM
flexibility and carte blanche on absolutely every element of the craft. This can often mean customisation both internally and externally. It also means that owners can select the crew and pilots and decide every single detail as regards in-flight catering and service. Outright ownership also means that the user can plan his or her itinerary and have the freedom to make last minutes changes or do something spontaneously without the worry that a plane might not be available.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100
