If your company is showing strong revenue performance in 2012, and you’ve felt a little lightheaded after tallying up executive travel expenses, perhaps you’re wondering if private jet ownership is the right option for your business. Here are a few key questions that will help guide your decision-making process.
1. How many flight hours does your company log each year?
Experts suggest that just 25 to 33 flight hours per month may be significant enough to justify plane ownership. When doing the math, be sure to factor in commuting time from homes and offices and the amount of unproductive time spent waiting for flights at commercial terminals.
Also, consider the number of employees who will use the aircraft and the distances they fly. If overseas flights are common, flying privately may be more cost-effective and more practical than going on a commercial flight.
2. How much does your company spend annually on commercial air travel?
In addition to tracking current travel expenditures, look back at missed revenue opportunities. Were there new business opportunities that might have been captured if a VP had visited multiple client locations? Did an important customer cancel a contract because he felt he needed more face time with the CEO?
However, don’t underestimate the ongoing costs associated with private jet ownership, either. There are insurance premiums, fuel costs, catering, plane maintenance and pilot salaries — and that’s just for starters. For budgeting, a good rule of thumb is somewhere between $100,000 and $200,000 a year for operational expenses.
3. Is a new aircraft purchase the only option?
Not in this market. There’s plenty of inventory available for firms looking to score a great deal on a pre-owned aircraft. Choosing fractional ownership or even leasing may be a way for your business to test the waters before deciding to purchase a jet outright.
4. Now what?
If you’ve done some preliminary budgeting and still think private jet ownership bears a closer look, then you’ll need to reach out to a broker with the experience and resources to help you navigate the next steps. A relationship-minded broker will help address budget and usage concerns and can offer advice, insight and recommendations that will simplify the decision-making process.