Owning a private plane gives you a sense of freedom and independence to go wherever you want, whenever you want. It’s the best way to see the world and conduct business. Yet, before a financial institution is comfortable giving you a loan for a private aircraft, they will first seek to understand whether you have the finances to cover the loan payments and operating costs of the aircraft. How do you know how much airplane you can afford? Let’s go over some of the factors that determine which type of aircraft you should purchase.
The Cost of a Private Jet and Other Aircraft
The main question to consider is: how much income is required to make the purchase? In 2011, President Obama created a stir when he said that someone making around $250,000 a year could own, operate, and charter their own private jet. That is not true. Even without factoring in inflation, the cost of buying a small aircraft or jet and operating it is a far greater investment.
On average, a used jet costs between $200,000 and $500,000, though some may be $2 million or greater. That being said, you most likely want a brand new aircraft—one fitted with the latest technology and comforts. In today’s market, most jets cost within the range of $5 million to $30 million, though models can fall outside of this range. According to the 2022 Aircraft Bluebook, the 2022 Gulfstream G700 starts at $78 million. If you were hoping to purchase your own version of AirForce One, you would need $660 million.
To better estimate your budget, take a look at the costs of an aircraft based on passenger size.
Domestic Light Jets (Up to 6 Passengers)
Convenient and cost-effective, light jets are used for those short trips between New York and Chicago or London and Paris. Light jets also make the weekend trip to the Caribbean all the more pleasurable.
- HondaJet Elite S – $5.4 million
- Cessna Citation M2 Gen 2 – $5.85 million
- Embraer Phenom 100 – $4.5 million
Domestic Midsize Jets (Up to 12 Passengers)
Midsize jets offer many of the same comforts as heavy jets but lack some versatility. These aircrafts are ideal for transcontinental flights or day trips for business.
- Cessna Citation XLS Gen 2 – $15.5 million
- Embraer Legacy 450/500 – Pre-owned costs around $16.2 million
- Embraer Praetor 500/600 – New ranges between $16.9 million to $21 million
International Heavy Jets (Up to 19 Passengers)
Heavy jets offer everything you need in terms of space for people and cargo. These aircrafts have excellent versatility when it comes to comfort, size, and range.
- Dassault Falcon 7X – $37 million to $58 million, depending on the year
- Bombardier Global 7500 – $75 million
- Gulfstream G550 – $15.5 million for the 2003 model and $41 million for the 2020 model
Other Variable Fees That Increase The Cost
Aircraft cost aside, next you must factor in the operating costs such as fuel, hangar space, insurance, administrative fees, pilot and flight crew. Let’s say you have a double-engine private jet that operates around 200 hours per year. You could end up paying over $1 million per year to use your aircraft.
There are also unforeseen repairs, such as blown tires which cost around $2,000-$3,000 to replace.
Putting Together the Financing
When it comes to purchasing and owning a private aircraft, the main goal is that you enjoy it. Consider the purpose of the jet. Do you plan on long international flights that take you from the US to Tokyo in a day? Will you need more than a pilot and a couple of crew members to operate the plane? What features in the vessel itself would you need to make it a worthy investment?
There are many different aircrafts to choose from, and so it is important to weigh the costs of the models that interest you with their initial price tag, depreciation, and operating costs.
One of the best ways to ensure that you always have the finances available for operating costs is to secure a loan. Getting a loan for an aircraft is similar to how you would obtain a loan for a home or a yacht, as you can choose between asset-based aircraft loans and credit-based loans.
The financial institution that you choose for your aircraft loan will consider several factors to come up with a monthly payment, including:
- Credit score
- Debt-to-income ratio
- Down payment
- Interest rate
- Estimated hours per year of use
- Make, model and condition of the plane
Offsetting The Cost With Chartering
If you would like to offset some of the operating costs to make owning a slightly larger private jet more affordable, you may consider chartering your aircraft to others whenever you are not using it. To charter a private jet costs roughly $1,300 to $3,000 an hour for an executive light jet; $3,000 to $5,500 an hour for a domestic mid-size or super medium jet; and $6,000 to $11,000 an hour for a heavy jet.
To put that into perspective, a round trip flight on a light jet from New York to Orlando will cost at least $20,000. As such, this is an excellent way to recoup some of the operating costs and pay down your loan without diminishing your enjoyment of your private craft.
Looking For a Flexible Aircraft Loan?
Determining how much of an airplane you can afford comes down to the overall cost of the craft, including the operating fees, and the loan that you secure. As such, your budget and creditworthiness plays a role in what you can and cannot afford. You have the option to make private jet ownership even more affordable by chartering it whenever you are not using the aircraft.
At Atlantic Horizon Capital, we offer flexible loan options to make owning the private jet of your dreams easier than ever. Whether you hope to own a brand-new plane or upgrade to the latest model, our team can help you find the best loan to suit your unique needs. Apply for your aircraft loan today or contact us with your questions.