If your company’s jet is occasionally used for pleasure as well as business — such as flying an employee to a vacation destination — you could jeopardize your tax deduction, increasing the cost of owning and operating the aircraft for your business.
The Internal Revenue Service (IRS) will disallow any deductions for expenses of a business aircraft when it is used for entertainment purposes. In a nutshell, if the jet was flown for 100 hours and 30 hours was for entertainment purposes, the IRS would force the company to disallow 30 percent of its deductions, including — and most significantly — depreciation deductions. For a company with a high-tax-basis aircraft, the loss of depreciation entitlements can push the lost tax deduction to more than $20,000 or $30,000 per flight hour (or more in the case of bonus depreciation eligible aircraft or aircraft purchased late in the tax year).
The disallowance even extends to “deadhead” flights, when the aircraft is needed for business use while an employee is using it for a vacation and the jet is brought home after dropping off the employee. The new rules provide that the company factor in the deadhead flight into the calculation of the disallowance and, even though no passengers are on board, the company will experience further loss of deductions.
The best antidote to this problem is to sell jet membership or block-time cards — licensed resellers of unused fractional shares — for entertainment flights. With these programs, you don’t own the aircraft but, instead, charter it from the card provider, purchasing a block of hours such as 25 or 50 on the card.
The benefit of block-time cards is that usually, the card provider has a fleet of aircraft they manage and are also able to draw from a wide array of charter operators, which means flight availability is often guaranteed with minimal notice.
Other benefits:
- Your account is deducted only for occupied flight hours.
- Deadhead flights don’t usually count toward your flight time.
- It may be possible to obtain a discounted rate or elongated time frame on which to use your card hours.
- You can choose the best possible aircraft solution based on the purpose of your trip — either light-, mid-, large-cabin or extended-range aircraft (as opposed to the one-size-cabin option with your company aircraft).
The biggest and most-important benefit to using a flight card: The disallowance rules relate only to the amount paid for the card, and tax depreciation is not a cost factored into the card. As a result, the after-tax cost of using a card is likely lower than use of a company aircraft with a high-tax basis.
For more information about maximizing your investment in your company jet, contact the experts at L & L International at sales@l-lint.com or call us any time at 877-453-8276.
The average private aircraft found in North America is a relatively modest affair, with neutral, somewhat predictable interiors. It’s not surprising that the elite aircraft owners in Asia expect their private jets to reflect their own unique cultures. Manufacturers are geared up to meet the needs of the growing and diverse Asian clientele.
Asian cultures, sophisticated interiors
Asian buyers overwhelmingly prefer to purchase brand new aircraft. Customization of the aircraft interior is popular in Asia with unusual appointments such a red walls and large, communal tables for family-style meals or mid-flight games of Mah Jong.
One glance at Jackie Chan’s private jet, made by Embraer, and you’ll know you’re not in Kansas anymore — or anywhere near North America, for that matter. The exterior of the customized aircraft sports a red and yellow motif, with a dramatic dragon design.
When it comes to selection of materials, no detail is too small. Aircraft manufacturer, Bombardier, prefers to source leather for their aircraft interiors from free-range cows grazed at high altitudes. In Switzerland, for example, free range cows are less likely to be bitten by mosquitos or encounter barbed-wire fences, ensuring a flaw-free leather product.
The smart and practical amenities
The Asian buyer is not only preoccupied with design. Some of the customization of Asian-owned aircraft is focused on safety. Many of the new planes feature high-tech controls and leading-edge equipment designed to make navigating Asia’s smoggier environmental conditions safer.
These new, customized jets may be available for sale in a few years, so don’t be surprised if the next pre-owned jet that catches your eye features an interior that adheres to the design principles of Feng Shui. You may even experience some unexpected balance, harmony and luck.
Any serious discussion about the future of private aviation has to factor in the explosive growth of Asia’s economic wealth. Asia is expected to contribute $40 billion in private aircraft sales over the next 10 years.
China takes center stage
China is driving much of the demand for private aircraft. In 2011, the number of Chinese billionaires grew by 66 percent (compared with the rest of Asia, where the number grew by 32 percent). Analysts predict China’s current fleet of just over 150 aircraft will grow to a staggering 2,470 by 2030.
China has not been immune to the economic uncertainty of the past four years, but the country is still considered a growth market and has the second largest economy in the world, behind the U.S. In addition, the country’s significant land mass supports continued economic and population expansion.
Unfortunately, some Chinese government regulations and restrictions continue to hinder private jet adoption. High aircraft import taxes, significant user fees and an underdeveloped airport infrastructure have had a dampening effect on sales from the region, but industry insiders believe the situation will improve over time.
Indonesia and Asia Pacific showing strong demand
Indonesia is also a key player in the Asian market, with a growing class of high net worth individuals (HNI) supported by a strong economy. Also, Indonesia’s geography of more than 17,000 islands spread out over 3,000 miles makes flying by private aircraft the most practical option for the business traveler. The government is now taking a proactive approach to expanding airport facilities in this mostly rural country and is also implementing routine safety inspections of its private aircraft fleet.
The number of billionaires found in Asia Pacific now exceeds all of Europe, so it wasn’t a surprise when Gulfstream Aerospace recently reported that almost half of their 2011 third quarter orders came from the region. Of course, economic enthusiasm is diminished somewhat by Japan’s ongoing efforts to recover and rebuild from last year’s devastating earthquake and resulting tsunami and nuclear disaster.
Many private aviation analysts believe the global market for private jets is on the brink of a modest rebound in 2012. It looks as if Asia’s continued economic expansion is the fuel for that recovery.
Flying isn’t just the most convenient and fastest way to travel for business — it’s also the safest.
Christine Negroni reports in Executive Travel on safety protocols on airplanes: “From the plane seats to the cabin air to the course and altitude of the flight, every decision in commercial aviation comes after careful consideration of its impact on safety.”
Advanced safety features
Modern-day jets now have electronic controls, making today’s pilot a manager of information and technology. Global positioning satellites, advanced displays and telecommunication have played major roles in improving safety statistics. Pilots are warned of approaching terrain or potential conflicts with other airplanes.
Other elements that make flying safe include movement detection monitors, compact aircraft flight controls, protective and fire-retardant seating and cabin insulation, and emergency lighting.
Even with all these features that ensure all commercial flights are safe, travel by private jet is still safer.
Taking security to the next level
According to Fred George, blogger for Aviation Week, flying by private jet has security advantages. For example, at most FBOs, front-desk personnel greet all visitors. Staffers quickly determine the purpose of individuals’ visits and how best to assist them — or escort them off the property if they don’t have a legitimate reason for being there.
“Business aircraft crew and passengers also spend very little time inside the FBO or GA terminal when they arrive or depart the airport, providing a relatively small window of time during which they’re potentially exposed to ground-based threats,” George writes.
Incidence of accidents
The National Business Aircraft Association has statistics, compiled by Robert E. Breiling Associates, Inc., that support the idea that flying by private jet is safer than commercial flying.
According to the NBAA, commercial airlines had 0.16 accidents — 0.0006 of which resulted in fatalities — per 100,000 flight hours in 2010 compared with 0.07 accidents with no fatalities per 100,000 flight hours for corporate/executive aircraft. That’s the lowest number of accidents for any flight designation. General aviation flights experienced 6.86 accidents with 1.27 fatalities per 100,000 flight hours last year.
At a time when many companies are rethinking the cost of operating business aircraft, the value of the enhanced safety and security benefits of traveling by business aircraft may be priceless.
No one enjoys the helplessness of feeling sick, but when traveling — particularly overseas — sudden illness can be problematic and potentially dangerous. Fortunately, Private Jet MD offers comprehensive services to keep you safe when a variety of troubles occur.
Ensuring your health and safety 24/7
For a low monthly membership fee, Private Jet MD provides emergency medical evaluation and case-management from western-trained doctors and nurses. They arrange and oversee transfer and evacuation of patients to pre-screened medical facilities for continuous care anywhere in the world. When it’s time to return home, Private Jet MD handles the arrangements for transport to a U.S. hospital and, if needed, companion care during the return flight.
The staff at Private Jet MD also monitors global health and personal security risks, and delivers up-to-the-minute reports and safety information. Before trip departure, they assist travelers with understanding on-the-ground health risks and warnings about destination countries.
From minor mishaps to major events
Private Jet MD’s plans provide up to $1 million in medical expenses for any travel destination in excess of 150 miles from the patient’s home. They also assist with less critical medical concerns such as eyeglass and prescription drug replacement.
Private Jet MD’s expertise extends beyond the practice of medicine. They help manage lost or stolen passports and provide referrals to language translation services and legal experts. In extremely dangerous security situations where the local U.S. Embassy cannot be reached, they connect travelers with private security firms for protection and transport.
Advance planning is critical
Doing a little homework before your trip makes coping with travel emergencies far less frightening. At a minimum, take these precautions:
- Leave copies of itineraries and passports with family or friends
- Review your insurance policies to understand your coverage in the event of an overseas illness
- Visit the state department’s website for tips and warnings about health and security risks and customs information
Your next business or pleasure trip will be more productive and enjoyable when you know you’re ready for the unexpected. And if unpleasant emergencies do arise, having Private Jet MD at your side means never having to face your worst case travel scenario alone.
On Feb. 6, the U.S. Senate passed a Federal Aviation Administration (FAA) bill that will expedite moving the nation’s air-traffic control system from radar to global positioning system (GPS)-based technology. The House passed the bill the previous week, and now it moves to the White House for signing.
Among other things, the bill sets aside $11 billion of the $63.4 billion, four-year budget for modernization of the air traffic control system. It’s about time — this technological upgrade is overdue.
The U.S.has the most complicated air space in the world thanks to a vibrant and varied general aviation community, so the U.S. should definitely have the safest, most advanced control system possible.
GPS-based air traffic control has many advantages over the radar system:
- Positions are updated every second, rather than every six seconds.
- Closer together, more frequent take-offs and landings are possible.
- Pilots know exact locations of other aircraft and obstacles on the ground.
- Steeper descents use less fuel.
Also, the FAA predicts a 50 percent growth in air traffic over the next 10 years. Without GPS, that growth would be very difficult, if not impossible, to accommodate.
The FAA bill requires that a GPS-based landing program be in place at the 35 busiest airports by 2015. Onward and upward! After we get the GPS air traffic control in place, then we can start worrying about unmanned drones (airspace for them is also mandated in the bill) spying on us from above. Did someone say Overlord?
In 2008, the economic downturn created a perfect but devastating storm for the private jet industry. Corporate aircraft owners sold off their jets to free up cash while potential buyers abandoned new and pre-owned aircraft orders in droves. The result was a market saturated with unwanted aircraft inventory, very little demand and a gloomy outlook for the future.
However, as 2012 gets underway, the future of the private jet market shows signs of a modest but growing recovery. Here are a few indications that the bottom of the buyer’s market has either arrived or, at the very least, is rapidly approaching.
Prices still decreasing as inventory ticks up slightly
According to a recent study, pre-owned aircraft prices continue to fall, albeit at a much slower rate than in recent years. This deceleration in pricing along with the slight growth of available inventory creates an ideal environment for buyers to act with confidence. Once the market has fully recovered, demand will siphon off the excess inventory, driving jet prices higher.
Meanwhile, attractive financing options look solid. Interest rates continue to hover at record lows, and the Federal Reserve Board is signaling that rates should remain steady through 2012.
Corporate demand predicted to grow
The economies of the BRIC countries (Brazil, Russia, India and China) continue to grow at an exponential rate, creating a booming class of wealthy individuals with both the desire and the disposable income to purchase private aircraft. As this trend continues, the market may quickly recover from the inertia of the past few years and eventually struggle to keep up with new inventory demands.
In the U.S., 2011 was a good year overall for many companies, with earnings and profits rebounding to (almost) pre-recession levels, triggering renewed appeal for private aircraft ownership.
Economy and politics creating uncertainty
However, many economists warn that a complete economic recovery in the U.S. may still be several years away. In addition, 2012’s election cycle and the politically-charged climate in the U.S. lead many to worry about future regulatory changes and tax increases for corporations of all sizes, adding to the overall unease in the market.
While much about the global economy remains unsure and unsettled, one thing is certain. Low prices, attractive interest rates and a healthy inventory of aircraft combine to create a near perfect climate for companies or individuals looking to land a great deal on a private aircraft.
Lithium batteries, found in laptops and cellphones, have been known to spontaneously overheat and catch fire, creating potentially life-threatening situations during flight. As personal electronic device (PED) use has become commonplace for business air travel, equipping your aircraft with a firebag system is an essential safety precaution.
In the event of a lithium battery fire, the FAA recommends immediately following these steps in order:
- Spray the burning appliance with a fire extinguisher containing Halon to suppress the flames.
- Thoroughly douse the device with water to reduce the battery’s core temperature and prevent a hot lithium-ion cell from igniting other cells in the battery pack (a common occurrence called “thermal runaway”).
- Using heat-resistant gloves, place the device in a firebag for containment.
On-board firebag systems are supplied by these manufacturers:
- AirCare Access — The Aircare FireSock ™ Lithium Battery Risk Management System sells for $339.00 U.S. (includes bag, gloves and a sealable storage tube to hold 80 ounces of water)
- Ship It AOG — The Fire-Fighter firebag sells for $1075.00 U.S. (includes bag and gloves)
It’s important to note that firebags are only one weapon in an on-board fire arsenal and aren’t intended to replace fire extinguishers or water. The combined use of these tools, however, is essential to safe air travel in our electronic age.
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 numerous ways to compare commercial versus private air travel. When mealtime rolls around, there’s really no question about which option is going to taste better. Thanks to the rise in demand for private air travel, the availability of on-board catering options has exploded. Expanded menu selections and higher quality food provide dining experiences that range from the everyday to the gourmet — and anywhere in between.
Here are a few key considerations before ordering your next in-flight meal:
Meals that match the accommodations
Smaller jets intended for shorter flights aren’t usually equipped with a galley, so cold food such as sandwiches, salads, cheeses and non-perishable deserts like cookies are the best choices. Remember to request utensils, plates, glassware and trash bags for cleanup. You may also need a beer or wine opener for that special in-flight toast to a successful partnership.
With larger jets come food warmers and refrigeration units, so the catering options are almost unlimited. A wide variety of hot foods prepared by experienced and highly trained chefs can satisfy virtually any culinary craving. For overseas flights, remember to plan ahead for multiple meals and inquire about staffing to help with meal preparation and setup.
Fly far and dine local
Another option is to order from a caterer or restaurant that specializes in the local cuisine. Hankering for a hot dog in Chicago? Craving blue crab in Baltimore? Call a local caterer or restaurant and find out if they can deliver to the airport for a fee.
Find a catering company that comes recommended by private jet charter outfits or other corporate jet owners. Then ask the catering outfit if they accommodate special diets, how and when the food will be delivered, and if any special delivery or set-up fees apply.
Most importantly, remember that private air travel provides a unique opportunity to celebrate accomplishments, cement new relationships or just quietly cap the end of a long day. It’s time for private air travelers to take back the dubious reputation of airplane food by sampling and savoring new flavors in the air.
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.
Some say that baseball is America’s favorite pastime, but if you ask me, no sport is more American than football. There are so many more traditions built around the Super Bowl than the World Series. The parties. The commercials. The half-time show (I thought Bruce Springsteen was the best!). The tail-gating. The beer. The wings.
The private jets.
Serious fans obviously can’t miss the big game, and they won’t risk flight delays or tarmac waits to get to Indianapolis this year. When the Patriots take on the Giants on Feb. 5, Gisele Bündchen won’t be the only one who arrives in style.
Private jet companies expect to break the record of 611 private flights to the Super Bowl set in Dallas, Texas, in 2011 when the Steelers lost to the Packers. Considering that many fans will be traveling from Boston and New York City, two of the wealthiest cities in the U.S., the record seems reachable.
Indiana airports are feeling the pressure. The FAA has set up temporary towers to accommodate the extra traffic at three airports. Indianapolis Regional Airport is already near capacity and has a wait list for larger aircraft.
Here’s a look at the New York Giants’ flight to San Francisco to win the NFC championship game. The Patriots have enjoyed home field advantage, so their first flight of the playoffs will be on Jan. 29.
Who are you cheering for in the Super Bowl? And more importantly, how are you getting there?
