Ownership, Lease, or Membership: Which is Right for You?
Private Aviation Membership
The waffle maker example: Ownership, Lease, and Membership. If you’re wondering, yes, you read that right. Will we be comparing a waffle maker to a fully loaded aircraft with the technology of transporting humans internationally? Absolutely.
Ownership
Owning something gives you full control of what you do with it. We put this in the context of a waffle maker. Now, it’s quite simple, if you own a waffle maker, you can use it anytime you want. But just because you own one, does not mean you are going to always make waffles. – I mean you technically could do that and it would be a dream but not the most practical or ideal situation. One of the ultimate symbols of luxury and affluence is private aviation travel. The most wealthy people in the world enjoy the unparalleled freedom and privilege that private jets provide. For such an intriguing and vaunted domain, there are a lot of misconceptions about it and the finances required to play within it. Of course, the first thing on your mind would probably be to purchase a private jet. On its own, a personal plane can be a smart investment, given that it can have an impressive resale value. But that’s not all there is to consider.
Upfront, the cost of a private jet can set you back anywhere between $2 million and $90 million, depending on the model, size, and amenities that the plane offers. Keep in mind that the size of your plane will also have an impact on the distance it can travel. Aside from the cost of the plane itself, it’s also worth considering the expenses associated with the operation and maintenance of your jet. Fuel, crew salaries, maintenance checks either planned or unplanned, hangarage, and insurance can all come to around $700,000 or $4 million in annual expenses.
Although owning a private aircraft can give you the flexibility and convenience you crave, there are factors like overall expenditure, liquidation, insurance, and parking that play a heavy role in the decision-making process.
Lease
Leasing an aircraft offers many of the same benefits of owning one—without the long-term financial commitment. Drawing back to our waffle maker, those who own the waffle maker won’t be using it every day, so they may consider leasing it to some coworkers or maybe some neighborhood kids. Leasing allows you to use it without the long-term financial commitment or initial investment. The same applies to aircraft, owners often rent their planes to generate revenue when not using their aircraft themselves. Aircraft lessees tend to choose one of two options available: A dry lease, or a wet-lease. A wet lease (also known as an ACMI lease) is a structure where the owner or lessor of the asset provides the aircraft with the entire crew, maintenance and insurance to the lessee, while a dry lease is solely the aircraft. With both leasing options come constraints. Leasing can be a more attractive option than purchasing depending on the utilization of the aircraft and how it impacts the ability to take advantage of any available tax benefits. Many people choose to lease an aircraft because they are not able to take advantage of the tax benefits that ownership can provide. Aircraft used for business purposes can provide tax benefits, but personal use does not. Understanding how the aircraft will be utilized can often be one of the primary driving forces in the decision to lease or purchase an aircraft. Although leasing an aircraft is rather similar to a vehicle, there are considerably more factors that weigh in. An example of this may be in the event damage was to occur to the aircraft during the lease, unexpected obligations may apply to the lessee.
Again, another attractive option but with all lease agreements there are restrictions and maintenance fees that should also be up for consideration when thinking about leasing an aircraft. This further comes into play depending on the lease agreement dependent on the lessor.
Memberships
What many private aviation companies are doing is making membership programs. Circling back to our waffle maker friends, if they decide to create a membership program, they would be giving specific people access to the waffle maker anytime in exchange for a membership fee. Membership programs vary between third party providers. But with all membership programs, you get to experience the luxury of private aviation without the financial burden. Private aviation membership programs include several benefits that are typically billed additionally when chartering flights on a one-off basis. These benefits may include but are not limited to preset safety standards and various inclusions, such as deicing, catering, and Wi-Fi. Service recovery guarantees from private membership programs offer replacement flights at their own expense in the case that an operator must cancel a flight, whereas one-off flights that are rescheduled may increase in price and the customer is responsible for paying the difference. Many membership programs come with different membership card options. If we were to look at LIVT’s Fly Anytime, Anywhere Black card Membership. The card fee includes standard charges and standard reposition within your three adjoined chosen service areas. Black Card Members also gain access to all Holiday flying dates, along with LIVT Empty Legs at no cost! Each Black Card Member is assigned a Life-Style Experience Coordinator who is dedicated to You and Your Flight Missions.
LIVT Memberships are pretty easy to understand and navigate but if you still need clarification, we’re always a call away. You can reach us at 1-855- 548- 5488 or email us at members@livt.life. Our core value is about saving you time so let’s not waste it by giving you insane options.
With three traveling options up for grabs, some of the most important factors you should consider are budget, time, and value of your time and money.
