Year-End Private Jet Deals – Only Fools Rush In
Is private aviation on your holiday wish list? Here’s what you need to know before rushing into a year-end deal.
It's November, and holiday decorations are already popping up. Private jet providers, like many businesses, are pushing to get deals done by the end of the year. Salespeople have their eyes on quotas and bonuses. As a result, they may urge you to, “Buy now to take advantage of the end of the year incentives,” while email offers encourage potential customers to “Beat the 2020 Price Increases.”
No one wants to miss out on a good deal, especially one for a big-ticket item like a fractional jet share or a jet card. Indeed, some incentives from private jet companies may expire at the end of 2019, but new, and in some cases better, deals most certainly will be available in January. Some prices no doubt will go up in the new year, but it's important to remember that with a fractional jet share purchase, charges such as management fees and hourly rates for flying will increase in January even if you buy now.
End of year advertisements that dangle the prospect of holiday trips via a private jet vs. the cramped middle seat of a commercial airliner are enticing, but it is critical to remember that the holidays will include “peak travel days” when you may not be guaranteed access to your private jet.
All that said, don't necessarily hold off on making a deal; instead, do your homework and don't rush into a big purchase. The cost of doing the wrong deal will far outweigh any year-end benefits and incentives.
Here are some suggestions to keep in mind as you consider any private air travel investment:
Know Your Travel Profile
The private aviation market is ripe with options. Thoroughly assessing your needs is key to finding the option that best suits you. How many flight hours do you need? Where do you intend to fly, and how many people and pets will be traveling with you? What's your budget, for both the initial purchase and on an ongoing basis? Do you have any special needs, such as luggage requirements or the ability to fly two flights simultaneously, if say, you're bringing family in from various locations? There are a number of data points to consider when selecting the option that best fits your needs.
Identify the Best Type of Program for You
Is a fractional share your best bet? Or is a fractional jet card more appropriate? Would you be better off with a block charter jet card? Or would traditional charter best serve your needs? Your goal should be to purchase maximum flight time on aircraft that best fit your needs from reliable and financially stable companies at a minimum cost. Making the wrong choice can cost you…Making the right choice can free you from the flight delays, intrusive security, and poor service that characterizes the commercial airline experience, in a way that does nothing less than change your life.
Once you determine the right type of program, shop around to find the provider that best suits your needs and budget. More than price, your first and foremost concern should be safety. You're putting nothing less than your life and the lives of your family members and business associates in the hands of the provider/operator, its aircraft, and pilots.
Know the Full Cost
Use a sharp pencil and estimate the total cost of this investment. The bottom line should include fuel surcharges, expense increases, and, in the case of a fractional purchase, a conservatively estimated resale value for the share. Reading the fine print before you buy is the only way to avoid unexpected costs.
Understand the Risk
The contracts, not the beautiful brochure, will govern your rights and obligations. The documents may look simple, but private air travel arrangements involve complicated legal, regulatory and liability issues, and substantial dollars. Jet providers have, over time, moved from a business model in which the customer enjoyed cost certainty to one in which the contracts shift more and more variable cost risk to the customer. The more risk – financial, legal, etc. – you assume, the more important it is that you have experienced legal counsel review and negotiate these contracts.
Negotiate the Terms
Despite what the salesperson is telling you, certain aspects of these contracts are negotiable. When you are putting lives and thousands, or millions of dollars, at risk, you want to make sure that the jet company's promises are ironclad. As you'd expect, jet companies draft their contracts in a way that gives them a great deal of latitude, while largely limiting your recourse if they don't live up to their end of the bargain. In addition, a well-negotiated contract can add significant value enhancements for you – including minimum flight time waivers upgrades, etc. An experienced attorney will help you take best advantage of these benefits.
Work with a Private Aviation Attorney
You may first think to call on your in-house or family attorney to review your jet contract — bad idea. Your average attorney understandably won't have experience with how these contracts work and won't know which aspects are negotiable and which are not. Faced with these circumstances, you may be inclined to go ahead and sign the “standard” contract, only to find out later that you've made a costly mistake. The stakes are too high. You should have an experienced attorney, who specializes in aviation transactions, review and negotiate the contracts.
We traditionally close many deals at the end of the year. In doing so, we counsel our clients that there's always time to be thorough. The same is true for you.
Author James D. Butler is an attorney and CEO of Shaircraft Solutions – a Maryland based consulting firm advising individuals and businesses on investments in private air travel for over twenty years. A foremost private aviation authority, Mr. Butler has in-depth knowledge of the full spectrum of today's private aviation options, including fractional ownership, jet card programs, and charter, and also specializes in fractional share valuation disputes. Shaircraft's clients range from business executives and retirees to family offices and professional athletes. Mr. Butler can be reached directly at firstname.lastname@example.org or (301) 652-9885.
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