In the US, private jet users and those operating their aircraft for commercial use are governed by different rules, known as Part 91 and Part 135 respectively. What does this mean for operators when it comes to financing their aircraft, and how could it affect their plans?
It is possible that the financing structure will differ between the two, mainly because the aircraft will be serving different purposes, according to NAFA member Keith Hayes, Senior Vice President and National Sales Manager for PNC Aviation Finance.
A Part 135-structured aircraft, for instance, may experience heavier use, with its primary purpose being third-party chartered flights, where as a Part 91-focused financed aircraft will primarily be leveraged for the buyer's private, or company use. "Lenders consider the different ways the aircraft will be used when developing the financial structure," Hayes adds. "So, for instance, a Part 135 aircraft could have a lower residual value because it will have a more aggressive amortization due to potential additional wear and tear that the plan may experience."
NAFA member Steve Day, Head of Sale for the Americas at Global Jet Capital, says that since the operational profile of the subject aircraft is significantly different between a solely Part 135 and solely Part 91 platform, the financing terms and conditions would likely be "materially different", perhaps with shorter terms and higher rates depending on the strengths of the underlying obligor/creditor.
This article was originally published in AvBuyer Magazine, Vol. 27, Issue 2 2023.
