According to Stefano Boscutti, the price per gallon for private jet fuel has quadrupled in the past eight years. While the impact on your wallet depends on your model, with many jets you’re paying for hundreds of gallons of fuel per hour. Even worse, J Mac McClellan of FlyingMag isn’t hopeful about it getting any better: “Nobody can predict future trends, but higher prices sure seem more likely than lower.”
So how can private jet owners combat already-high (and likely to rise) fuel costs? Now could be time to look for a more fuel-efficient model.
Since the fuel crises of the 1950s and 1970s, jet designers have been interested in working towards greater fuel efficiency. Lately, we’ve been seeing steady improvement in fuel usage in jets — through better engines and aerodynamics. Lower weight, less drag, and the ability to fly higher are allowing jets to make big strides in fuel efficiency. Jets are now available in a greater range of sizes and performance categories, too, so owners can match their mission and the plane’s required fuel to their needs more efficiently.
Which Jets are the Most Fuel Efficient?
McClellan recommends the Falcon 50 as a prime example of a jet design with emphasis placed on improvements in weight and drag to make long range flights more efficient. The Learjet 35 and 36 and Gulfstream models, also emphasize long range capability, as well as the ability to climb directly to 41,000 feet or higher. At those flight levels, fuel flow and drag were significantly reduced while range was increased.
The recently announced Eclipse 550 Jet from Eclipse Aerospace was a major effort to improve efficiency and has earned recognition as the most fuel-efficient twin-engine jet in production today. It consumes a mere 59 gallons per hour at cruising speeds.
An unusual aircraft project competed in NASA’s Green Flight Challenge of 2011 and showed us a personal plane with better fuel economy than most family cars: The “Synergy” aircraft can carry up to five people with a fuel efficiency of 40 miles per gallon and boasts 10 times the fuel economy of a small jet at 10% the usual cost. Not only that, but the design and production of this jet was crowdfunded, illustrating that the public is interested enough in fuel-efficient jets to put their money where their mouths are. John McGinnis, the team leader of Synergy, says “In this second century of flight, we believe that ordinary families should have fast options to travel where they want, when they want, in quiet safety, with better economy than a car.”
Of course, there’s also the perception factor that business owners and entrepreneurs must manage. While “save the earth” may not be your business slogan, companies that visibly work toward green initiatives typically see more positive brand recognition.
The next time you’re in the market for a jet, consider a fuel-efficient model to give your brand — and your pocketbook — a boost.
Interest rates are low, but if you have the cash, does it make more sense to invest it in an aircraft purchase?
Cash vs. loan vs. lease
If you take a closer look at the current state of aircraft financing, you’ll see that the market is flush with cash. Industry experts think that in 2013, cash comprised about 65% of business jet purchases, 23% was debt financed, and 12% was comprised of leases.
On one hand, allotting cash to an aircraft purchase can be a sound, conservative investment. On the other hand, interest rates on private jet loans are still relatively low, ranging from around 2-3% for floating (LIBOR-indexed) rate to just under 7% for fixed-rate loans.
But to determine whether or not it’s worthwhile to take advantage of these low rates, one must consider the lenders’ mood in the current economic climate. Lenders today are cautious and typically require down payments of 10-15% on a loan. Thus, you’ll likely need to have some cash available, or have a guarantor who will put up the down payment. In addition, some lenders won’t finance older aircraft, so the make and model you’re shopping for might affect financing. Plus, closing on a loan takes time. Tasks such as title searches and documentation require a lot of effort. If you have an immediate need for a plane, a cash purchase can be much quicker.
If you’re hesitant to use cash, another option still is to lease a plane. However, this comes with its own set of hurdles: Many lenders are hesitant to or simply won’t do leases — or they will impose aircraft age restrictions.
The right choice
So what is the answer to the aircraft purchase quandary? Unfortunately the answer isn’t clear: Whether or not a cash purchase or financing is the best fit depends on your situation.
If you have the cash, now is a great time to invest it in an aircraft purchase. And if you still want to take advantage of the low interest rates, you have the option to make a large cash down payment and finance the rest of the purchase.
However, if you don’t have the cash, you must decide whether to go the route of the loan or the lease. Your needs will determine whether a loan or lease is right, taking into consideration tax depreciation, amortization, your preferred aircraft’s age, and what terms your lender is offering. Regardless of which direction you go, if you are facing a financing decision, keep in mind that pre-approval from a lender can shorten the closing process.
When in doubt, you can’t go wrong by turning to a trusted industry expert to guide you through the process. For more quick answers, check out our online Financing Questions resource. And when you’re ready to buy, give us a call. The experts at L & L International can help you ask the right questions to reach the ideal financing terms and ensure you get the best aircraft for your money — cash or financed.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313), or visit us online.
An aircraft is a big ticket item, and the purchase of one involves a number of choices and decisions — each of which can make a big difference in your comfort and enjoyment of your private aircraft. Most experts say buying an aircraft is more like buying real estate than buying a car, even though a jet is a vehicle. This is because the process involves
- complicated negotiations,
- lots of necessary inspections, and
When you are ready to purchase a private aircraft, it’s a good idea to take full advantage of professional, experienced, knowledgeable brokers who understand the industry and can streamline the process for you.
How does a jet broker work?
One of the most important benefits of an experienced jet broker is that they have the right industry connections to get a good appraisal of a potential aircraft for you, your lender, and/or insurance company. They also have access to planes that are not yet on the open market, much like a good real estate agent knows what properties are likely to become available with the right incentives.
An experienced jet broker will ask the kinds of questions that reveal what type of jet you want and need — for instance, an entire jet is not always the right choice when a charter service or fractional ownership will work just as well. A jet broker will also know how to help you determine the size and type of aircraft that will best meet your needs. In addition, a jet broker’s goal is to ensure that your purchase is a good investment.
How do you choose a jet broker?
The best way to choose a jet broker who will do their best work for you is to start by finding one who
- has at least five years of experience in the industry,
- can clearly explain their process and their added value,
- has references they are willing to share with you, and
- can describe their brokerage fees willingly.
L&L International has all of the above, as well as the experience and drive to help make your aircraft purchase a smooth process.
Are the parts in your aircraft the real thing? Counterfeit aircraft parts, called Suspected Unapproved Parts (SUPs), could not only prevent you from meeting safety standards, but could also spell disaster for you and your crew if they fail.
What are SUPs?
SUPs are counterfeit aircraft parts that have been passed off as legitimate either without paperwork or with falsified documents. In most cases, both the part and its accompanying paperwork look genuine. How do these fake parts make their way into your aircraft? With the constant upgrade cycle in the consumer electronics and aviation industries, manufacturers cannot make parts for older aircraft forever. When parts from the original manufacturer are no longer available, counterfeits begin to emerge.
These bogus parts are often not re-manufactured but are simply old parts being resold. Part identification may have been tampered with; for example, a serial number may have been stamped over. A 2012 U.S. congressional study found that in 2009 and 2010, there were 1,800 cases of bogus parts reported, involving more than one million electronic components. The scariest part about this scenario is the level of sophistication of the counterfeiting: Many times methodical analysis is required to detect bogus parts.
How can we avoid SUPs?
As this problem has become more widespread, the FAA has begun to take more aggressive action and has developed programs to help protect consumers against SUPs. The FAA maintains a running list of Parts Manufacturer Approval (PMA) articles in the Regulatory and Guidance Library (RGL). This database contains the FAA Parts Manufacturer Approvals by make, PMA Holder, and part number. In addition, the FAA maintains an Unapproved Part Notifications list. And if you come across SUPs, be part of the solution by reporting them to the FAA’s SUP program.
For your part, be wary and keep a watchful eye. When buying replacement parts,
- check labels against those of parts from a legal and trusted source,
- Know who you’re buying from and be suspicious of low-ball or bargain-basement pricing, and
- Be skeptical of damaged shipping boxes, reused labels, smudged or odd-looking stamps, and any other indications of tampering.
Better yet, take advantage of the knowledge and experience of a reliable jet broker. A jet broker’s expertise can be invaluable in finding certified, safe replacement parts for your aircraft.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313), or visit us online.
One of the most common issues in buying used aircraft is identifying incorrect pricing. And it’s easy to understand why: Aircraft pricing is a complex process that involves a lot of different factors. Many buyers fall into one of two common traps:
- The “but-Joe-said” scenario — When buyers base their cost expectations on the recommendations of friends, coworkers, or industry professionals such as pilots, they can end up overpaying or over- or under-buying for their needs. The problem is that most people, even if they’re familiar with aircraft, aren’t well-researched in the entire market and all of the nuances that affect a jet’s fair market value.
- Caveat emptor — Is the price too good to be true? Buyers might not know what’s hidden behind a low price: damage history, missing records, big inspections almost due, the need for engine repairs, or more. Unknown factors can shoot up future expenses in a jiffy.
However, buyers aren’t always completely in the dark — there are ways to get educated on fair market pricing. You can look at resources such as the Aircraft Bluebook and VREF values as well as cross-reference N numbers. You can review an aircraft’s logs and talk to the current mechanic. However, research can’t make up for experience, and these resources don’t account for other, harder-to-spot variables that influence cost:
- Avionics — If a plane needs a new and updated radio, you could be looking at an additional cost of $20,000 or more.
- Engine time — Engines have a limited life expectancy, which is defined by the Time Before Overhaul (TBO). This value is set based on when the average engine needs to be overhauled. If you buy a plane that is nearing its TBO limit, you need to factor in the cost to overhaul the engine.
- Exterior and interior condition — Considerations such as exterior paint condition and corrosion or the need for an interior update can influence the price of a pre-owned aircraft by thousands of dollars.
- Location transfer — Remember to figure in the cost of transporting your newly purchased jet to its new home.
All in all, the best way to get the best price is to have an expert’s assistance in the purchase process. Experience, knowledge, and working with a jet broker you can trust are the keys to avoiding pitfalls and making sure you don’t pay more than you should for the right plane.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313), or visit us online.
There are pros and cons to buying any new or used aircraft. There are obvious advantages to buying a new plane —the latest avionics and safety features, a warranty, and that new plane smell, to name a few. But those pros are offset by a couple of big downsides: the cost and long wait time.
To sidestep those shortcomings and take advantage of current market conditions, many potential buyers are considering pre-owned jets. However, fears of incomplete logs, unknown previous owners, potential repairs, aging components, and a lack of bells and whistles make some would-be buyers nervous. But all of these potential downsides can be avoided by working with an experienced jet broker.
A knowledgeable broker eliminates the risks involved with purchasing a pre-owned jet by providing you with access to jets that have a known history with complete logs, maintenance records, and information about the previous owners.
The time is right
And the timing couldn’t be better for talking with a broker about purchasing a pre-owned jet. Since the financial crisis of 2008, the value of previously owned business jets has been declining. Before that time, there was a large push to order new aircraft. Then the economy began to tighten and many of those lightly used aircraft went on the market, leading to a current surplus of undervalued pre-owned jets.
Now is the time to take advantage of this robust used jet market. Buyers today have an opportunity to purchase any variety of pre-owned jets at a great value, but it isn’t likely to stay this way for long.
More jet buyers are entering the market as commercial travel becomes increasingly cumbersome and international demand for private jet ownership grows. As the interest in used jets continues to rise, the supply of pre-owned aircraft will be stretched thin and costs will go up.
The reality is that potential private aircraft buyers are already recognizing the great value offered by previously owned planes. Many older model airplanes are undervalued, despite the fact that they still have long lives and offer great performance.
Unbeatable value, limitless potential
One large appeal to used aircraft is the customization factor. A used jet easily can be modernized and customized to fit the buyer’s needs and budget — either all at once or over time. Improvements range from relatively inexpensive after-market products to full overhauls.
Quick ways to personalize a secondhand aircraft include updating the paint, recovering seats and headrests, and installing a new windshield. And technology upgrades can convert a used plane into a high-tech aircraft that rivals new models. Adding features like a speech-recognition system, cutting-edge avionics, and LED lighting will modernize any aircraft.
A private jet is always a crowd pleaser no matter the size, age, or price tag. But for the value, a pre-owned jet is a great option. Talk to the brokers at L & L International today — their expertise can guide you to the right pre-owned jet at the right price.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313), or visit us online.
If you’re already thinking about how to start the New Year, you’re not alone. On top of spending more time with family and friends, many of us are putting the following right at the top of our 2014 business resolution list:
- Reach out to new customers and expand our company’s reach
January is the perfect time to make these things happen, and a business jet can help you check all of these items off of your list:
- Save time and reduce stress. Commercial air travel is time consuming and frustrating. With your own jet, there’s no more arriving to the airport hours early just to strip down in security lines or deal with cancelled or delayed flights. Private air travel gets you in the air and on the way quickly, dependably, and without hassle.
- Grow your business. Flying commercially tethers you to a handful of locations and strict time schedules. With a corporate jet, the globe is your office. You can make business connections like never before and meet new customers in hard-to-reach places when your schedule permits. Having the ability to build relationships on a personal, face-to-face basis is priceless.
- Make travel time work double time. Corporate jets boast comfort and technology features that are far above what you’ll find in the commercial airline industry. Your jet can act as a second office to ensure that you stay productive en route — meaning you’ll boost productivity and still be home in time for the weekend.
Plus, a private jet can be the right investment if spending more time with family and friends is a top priority. A jet allows you to take control of your travel schedule, and because you can fly directly to your destination — even to multiple destinations a day — it means you’re better able to plan for time outside of work.
There are a number of investment options from sole ownership to fractional ownership to charters and more, and an experienced jet broker can help you identify the ideal jet and financial setup for your situation. The right jet can ensure your company’s success and make your New Year’s resolutions a reality in 2014 and beyond!
Many businesses use a “sole purpose” limited liability company (LLC) to own and operate a business jet. The reason people still follow this common structure is sound: They want to create a separate business entity with the sole purpose of owning and operating the corporate jet, thus protecting their other assets from liability. However, as the National Business Aviation Association (NBAA) and most aviation attorneys agree, it’s not that simple.
The FAA applies different rules to strictly private air transportation, which is regulated under Part 91 of the Federal Aviation Regulations (FARS), and commercial charter operations, which are regulated under Part 135.
Many businesses intend to own and operate their LLC under Part 91, but these rules are more relaxed and easy to unintentionally violate. Remember, even if you fly the private aircraft that is owned by your LLC, you’re still paying the LLC to cover all of its expenses, including fuel, pilots, hangar fees, and insurance. Therefore, the LLC is actually operating air transportation for compensation, and under FARS, an entity whose only asset is an aircraft that’s deemed to be in the business of providing air transportation service for compensation must follow the stricter rules of Part 135.
When your LLC is operating under Part 91 when it should be under Part 135, you face a host of penalties and may no longer be protected as an LLC:
- Insurance — If an aircraft is for commercial use and is subject to Part 135 regulations, it needs to be explicitly stated in the policy’s purpose-of-use clause. Otherwise, if an accident occurs and the aircraft wasn’t certified for Part 135 activity, your insurance coverage could be void.
- Taxes — The money paid to an LLC to fund aircraft operations is considered by the IRS to be compensation for transportation, making these payments subject to 7.5% federal excise tax (FET). This can come as a shock to unaware aircraft owners who find themselves in an audit.
- FAA fines — Violating Part 135 regulations could result in significant FAA fines that accumulate on a daily basis.
- Legal issues — The whole point of placing your aircraft in an LLC is to protect your business and your assets. But if the FAA determines the LLC is involved in illegal activity by failing to comply with Part 135 regulations, the protections of the LLC may no longer be relevant.
It’s important to note that LLCs can still work with the help of experts who know how to make sure you’re covered legally. To ensure your transition into jet ownership is as smooth as possible, work with a reliable, skilled broker. Whether your aircraft is for private or business use, the brokers at L & L International have the resources to make sure your ownership structure is ideal for your situation.
The website Best of Luxury recently announced their top 10 jet-propelled aircraft for September 2013. Topping their list is the Cessna Citation Mustang, which they describe as “the bold, smart choice for an entire new generation of jet-aspiring aviators.” The list also includes jets from the $1,000,000 Cirrus Aircraft Vision SF50 to the Embraer Lineage 1000, with a price tag that comes in just under a cool $50 million.
So how do you get your hands on one of these top-rated jets? Or any luxury private aircraft for that matter?
The best way is to contact a jet broker. What can a broker do for you? An experienced broker has the connections with manufacturers, distributors, and private parties to find you the jet you really want. They’ll often have access to jets not listed on the public market so you have a better chance of getting the jet that is a perfect fit for your budget and your lifestyle.
If you are a first-time jet owner, there are other advantages, too. A broker will run a financial feasibility assessment to see what jets you can afford while making sure you have the money for the maintenance and crew you’ll need. They’ll also make sure you have the right insurance, and they’ll know the security and industry regulations that come with owning your own jet.
Of course, developing a relationship with a broker now will also help you in the future: When the next “must have” list of jets comes out, your broker can help you upgrade without a hitch.
L&L International is ready to be your broker. We are one of the world’s largest groups of jet brokers, meaning we have more connections and resources to find you the perfect private or corporate aircraft. For nearly 20 years, we have assisted our clients 24/7 in their private jet search. We’ll find you what you are looking for, and you’ll love working with our dedicated and professional team. Start your search for the right jet with us today.
Tailwind Capital Group provides aircraft dealers, management companies and their clients unparalleled access to financing sources for aircraft acquisition and leasing.
Tailwind Capital’s global aircraft financing capabilities enable the firm to provide financing across a broad spectrum of equipment, whether it’s a King Air for a corporate buyer in Atlanta or an Airbus 320 for an Airline in Tiblisi.
Low rates, up to 100 percent financing and 25-year amortizations enable Tailwind to compete aggressively for your aircraft financing. Tailwind doesn’t draw the line at 20-year or newer aircraft; the group routinely finances older aircraft including G-IIB’s and G-III’s, as long as they are quality planes.
Tailwind is best known for its international finance, welcoming financing enquiries from Canada, Mexico, South America, Europe, Russia, Africa, the Middle East and Australia. Its international document checklist tells you what Tailwind needs to get started underwriting your aircraft loan.
Refinancing and upgrades
If your variable rate loan is no longer as attractive as it once was, Tailwind will refinance your current loan with a low-interest, fixed-rate loan.
When it comes time to overhaul your engine, make avionics upgrades, apply a new coat of paint and redo the interior, Tailwind can lend you up to 90 percent of the cost for parts, labor and installation. Long-term, low-rate financing options make your payments very manageable.
Tailwind has the experience and capability to provide the best terms available while taking the hassle out of the finance process. It can provide loans of any size, from $500,000 to $50 million. For those looking at aircraft leasing, Tailwind will structure a term and lease rate that will make you happy.
If you have an opportunity to buy a plane “real right” and flip it, Tailwind has the short-term financing to secure the aircraft, market it and make a substantial profit. The process is quick and simple: Tailwind either likes the deal or not and they’ll tell you quickly.
To contact Tailwind Capital Group, call (727) 781-9606; e-mail info@tailwindcapitalgroup.com; or visit www.tailwindcapitalgroup.com/index.html.
