To Own or Not to Own? New NBAA Guide Helps Answer That Question

May 21, 2012

The decision to utilize an aircraft for your business isn’t as simple as selecting a suitable aircraft to buy, or finding the best deal. You must decide if it’s best to purchase the aircraft outright, or perhaps participate in a fractional ownership program. Charter may also be an attractive option for infrequent fliers, along with prepaid flight card or block charter programs.

It’s easy to be overwhelmed by so many choices, which is why NBAA has compiled an easy-to-understand resource comparing the various aircraft ownership and use options available.

The newly published NBAA Rules of Thumb for Aircraft Ownership and Operating Options guide features concise explanations of the options, including the advantages and disadvantages of each. It also suggests guidelines to help users determine the option best suited to a particular travel profile and annualized hourly aircraft usage.

“In today’s business aviation environment, there are a lot of choices to consider,” said Jeff Agur, managing director of fleet planning and aircraft acquisitions with The VanAllen Group, who assisted with creating the guide as a member of NBAA’s Tax Committee. “There are also a lot of questions and even some confusion over which resource might best match certain travel needs.”

For example, whole ownership of an aircraft offers several advantages to someone who flies more than 175 hours annually, including guaranteed availability and the ability to take full advantage of tax deductions for depreciation and interest. However, a user may determine that the aircraft and operational choices available through a fractional ownership program might better suit their needs, with less overhead and, in many cases, reduced expense.

Charter services offer a cost-effective option for those who fly fewer than 50 hours a year and within a specific region. Aircraft availability may be limited, however, and users often are not able to select flight crewmembers or insurance coverage levels. Purchasing flight time through a flight card or block charter program provides many of the advantages of fractional ownership and charter, respectively, though sometimes at a higher cost and with greater risk to the buyer, compared with more traditional alternatives.

In addition to detailing the various choices, the NBAA guide also applies these examples to a case study, with detailed cost evaluations of each option. “The purpose is to guide potential users of these resources and help them identify which option hits the ‘sweet spot’ for their particular needs,” Agur noted.

The NBAA Rules of Thumb for Aircraft Ownership and Operation Options guide was compiled by Agur and other volunteers from the NBAA Tax Committee who offered their time and skill to compile the required information.

Review the Rules of Thumb for Business Aircraft Ownership and Operating Options (1.5 MB, PDF)