Plane Leverage

Signature_7-52Like most industries, private aviation is cyclical and susceptible to the quirks of the economy and other unpredictable force. It plummeted during the recession and now, with markers in recovery flying private is beginning to ascend. The good news is, as more jet companies are curtailing the economics of flying private to fit the needs of their clients, jet setting has suddenly become a reasonable proposition.

Look no further than UnityJets — which offers jet hedging — to make sense of all the details hiding in the contract’s fine print. This program, offered by a Miami-based private jet brokerage firm, acts as a third-party validation system on all methods of payment for your aviation needs. “The program offers a cost and benefit analysis that challenges the fixed-rate pricing of payment options,” explains UnityJets’ president, Kevin Diemar. “It allows clients to decide on a trip-by-trip basis — and at no additional cost to them — between using their Fractional Share, Jet Card, or selecting a One-Time Charter.”

To make that call efficiently, here are the options to be considered. The easiest and, arguably, most uncommitted way to pay for jetting is via chartering. This ‘on demand’ service allows for a choice in a desired aircraft, flight route, and travel date. In comparison with other options, this a la carte approach is the most expensive since it operates entirely around a client’s agenda.
Recently, Jetcards have become a popular option for those who don’t mind prepaying for a set number of flight hours (typically between 25 and 50) in their chosen category of aircraft. The logistics do get murky. When considering this method, keep the following questions in mind. Is the pricing transparent? Are there additional charges or restrictions on peak-time travel? Are there any fuel surcharges? Will your Jetcard fully refund your unused hours and discount return trips with options to cancel?
Particularly as it relates to planes operating with Jetcards —“It’s important to find out if your aircraft is part of an open or closed fleet,” explains Erin Portman of Flexjet, a fractional aircraft and private jet sales provider. “With the open option, those standards of management and safety are subject to different sources than just the brokering company you are working with.”
Should you be ready to take it to the next level, fractional ownership could be the way to fly. Clients buy an up-front ownership in an aircraft at its market value, plus the cost of additional monthly management fees.

Signature_7-53Shares usually start at 1/16th of the aircraft (for about 50 hours a year), and are purchased for a fixed term (usually five years) before being sold back at market value. With a one-time capital investment, it is paramount to keep in mind the aircraft’s exposure to depreciation of the capital cost and a long-term contract without exit options.

Without a doubt, big shots will opt to outright own an aircraft. Ownership costs will range from $2.5 million for a light cabin jet to $50 million for a long-range jet, without factoring in the annual cost of employing crew, maintenance, and the actual operating costs incurred in flight. This is the big league, folks — that functions on the merits of big itineraries or just plain big egos.

Before you join the top echelon of the jet set, private jet sharing may be the way to ease you into the club. The new kid on the block, Jump Seat, launched quietly only a few months ago, and is pairing up empty seats on private jets with clients looking to book those specific routes. Think of Jump Seat as the matchmaker of private aviation. At a significantly lower rate, the system not only helps out willing fliers, it offsets the costs of private flying for fractional owners without having to give up the habit. “Anyone can access the deals,” explains the company’s founder, Justin Sullivan. “You don’t have to put down a big deposit.” Unlike other jet-sharing programs, Jump Seatdoes not charge a membership fee, but it does put its participants through a vigorous background and credit check.

However mind-boggling, these options are pushing the boundaries of what was once considered financially impermeable to most. Yet what may be the biggest contributing factor to jet hedging’s success is the proverbial ‘art of the deal.’ “Over the years, I never heard a client ask for the cheapest jet,” says Diemar. “What everyone does want is the best price on the best aircraft.”

TOP EXECUTIVE AIRPORTS

ASE
Aspen – Great winter and summer destination for outdoor activities.
TEB
Teterboro – b¡Busiest private airport in the country. Who doesn’t love New York city!
PBI
Palm BeAch – Seasonal get away for all snow birds.
OPF
Miami – Is there a hotter place than the magic city?
TNCM
St Martin – One of our clients favorites Caribbean destination, that’s also a gateway to St. Barth’s.

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