personal aircraft

  • Tracey Cheek posted an article
    What Is the Best Personal Aircraft to Buy in 2019? see more

    NAFA member Jason Zilberbrand, President of VREF Aircraft Value Reference & Appraisal Services, shares advice on finding the best personal aircraft in 2019.

    When buying an aircraft for personal use, there is a litany of factors that will go into your decision-making. Whether your intentions are to take day trips for the weekend or intercontinental excursions, finding the best personal aircraft to meet these needs will come at wildly different price points.

    In addition, the number of passengers and on-going costs for the aircraft can affect your decision.

    Keep reading for a VREF  breakdown of various examples for the best personal aircraft you can buy in 2019.

    Single Engine

    The most utilitarian and hassle-free aircraft are single engines planes. With price points in the low or sub-six figures, a single-engine plane can get you flying for a low cost of ownership.

    Here are some of the best buys for 2019:

    Pre-Owned Beechcraft Bonanza

    • Price $100k – $375k
    • 765nm range
    • Seating for 6

    Pre-Owned Cessna 206 Stationair

    • Price $100k – $225k
    • 730 nm range
    • Seating for 6
    • Features a large rear “clamshell” door easy load-ins

    Other notable players in this category are the Piper Cherokee Six, Piper Malibu Mirage, and, of course, the trusty Cessna 172.

    Twin Engine

    Pilots enjoy the redundancy or dual engines of a twin. Twins handle larger payloads and faster speeds, as well as faster takeoff and climbing speeds.

    These tend to cost less than high-performance single engines but garner higher ownership costs due to the second engine.

    Examples of deals in 2019:

    Beechcraft Baron 58

    • Price $200k – $1.4 million (new)
    • 1700nm
    • Seating for 6

    Pre-Owned Beechcraft Baron 55

    • Known as the “Baby Baron”
    • Price $75k – $175k
    • Though smaller, it comfortably seats 6 passengers

    Other Notables: Piper Turbo Seneca II, Cessna 310R

    Turbo Props

    Typically known as a “Step-up airplane,” turboprops have taken a huge share of the market from the multi-engine planes of the past. While pilots originally bought twin-engines as a way to make them and their families feel safer, turboprops have made great leaps in sophistication and reliability. Their short takeoff and landing capabilities make dealing with emergencies much easier.

    Turboprops do incur higher purchase prices and operating costs. They are extremely efficient at lower altitudes and slower speeds.

    They enjoy the ability to access smaller airports and runways and are ideal for day trips of 500nm or less (think, Miami to Nassau and back). Be sure to enlist the help of a professional aircraft appraiser because of the substantial jump in price.

    Here are some of the standouts:

    Piper Meridian (2002 – 2015)

    • Price $650k – $1.5 million
    • 1,000nm range
    • Seating for 6 in plush interiors with upgrades

    TBM 700 (1990 – 2005)

    • $750K – $1.5 million
    • 1,350nm range
    • Seating for 6

    Best Personal Aircraft – Jets

    Jets are at the top of the personal aircraft hierarchy. They fly further, faster and with more people than the other categories on this list.

    Jets have massive price tags and ballooning maintenance and hangar fees. But for the business or personal traveler who demands speed and global access, this is the personal aircraft of choice.

    Very Light Jets

    Cessna Citation Mustang

    • “Most bang for your buck” smallest member of the Citation Family
    • Price $1- $2 million
    • 1170 nm range
    • Seating for 5 plus 1 crew

    Eclipse 550

    • The only brand new twin-engine jet for $3 million
    • 1125nm range
    • Seating for 5 plus 1 crew

    Light Jet

    Cessna Citation CJ3 or CJ3+

    • Price $3.75 – $6 million
    • 2,000nm range
    • Seating for 6 passengers plus crew

    Embraer Phenom 100

    • $1.75 – $2.25 million
    • 1,178nm range
    • Seating for 5 plus crew

    The Best Fit

    As mentioned above, finding the best personal aircraft for you is a combination of factors that fit your lifestyle and intentions. Yet, both a hobbyist and a global businessperson can enjoy the freedom that private aviation provides.

    With any aircraft purchase, be sure to reference our reference guide to make sure you have the most accurate data and valuations.

    This article was originally published by VREF on May 2, 2019.

  • Tracey Cheek posted an article
    3 Ways to Finance your own Corporate or Personal Aircraft see more

    NAFA member Keith Hayes, with PNC Aviation Finance, shares ways to finance your own corporate or personal aircraft.

    Corporate and personal aviation has returned, after being grounded, or at least stalled, in the wake of the Great Recession. Rising financial markets, growing corporate earnings, a strong U.S. dollar, and increasing consumer and business confidence are driving demand for private aircraft. Faced with crowded airports, jammed-packed commercial aircraft, and ever-present delays, high-net worth individuals and corporate executives alike are increasingly turning to private aviation to relieve the time constraints and delays of commercial flying and to take advantage of the myriad of smaller airfields located closer to their final destinations.  Before ringing the airplane broker and kicking the tires, consider these financing options:

    Traditional Loans

    No different than your smaller purchases – like houses, cars and boats – your traditional aircraft loan can be fixed rate or floating rate. Some financial institutions offer a hybrid which features a floating rate loan with the option to buy a “swap.” In other words, you can lock in your rate and benefit from early payoff and interest rate increases. Not a bad idea in a rising rate environment. Traditional loans can be structured for as short as 30 months or as long as 120 months with amortizations as long as 240 months. Just keep in mind, the longer the terms, the higher the interest rate.

    Asset Based Loans

    Over the last fifteen years, this type of financing has become an increasingly popular option for individuals and businesses seeking aircraft ownership without making financial disclosures or guarantees. Only a select number of organizations offer this product, but it has a number of benefits, including:

    • No financial disclosure or covenants – Truly hassle-free asset based financing.  No need to forward years of tax returns and K-1’s or to disclose financials of a privately owned company.
    • No or limited personal guaranties – This may be very important for companies that have bonding requirements or covenants limiting the amount of debt or guaranties than a company may incur. There may be partners involved in the ownership and the owners may be unwilling to sign on the other partner’s debt.
    • Non-recourse – If the borrower defaults, the lender can seize the plane, but cannot seek out the borrower for any further compensation.

    Aircraft Leases

    As with other types of large equipment, businesses as well as individuals may elect to lease an aircraft as an alternative to purchasing.  An individual or business may have multiple reasons to lease instead of purchase, including cash flow considerations, federal income tax considerations, sales tax considerations and accounting treatment. There are several types of leases with the choice often determined by how the aircraft will be used:

    • Non Tax Lease – The lessee (the bank or other entity granting the lease) owns the asset for tax purposes. Typically, this option is put in place for off-balance sheet treatment. The lessor will use the aircraft only for business and has an “appetite” for tax depreciation, therefore, can take advantage of the tax benefits.
    • Tax Lease – The lessor owns the asset for tax purposes, realizing the tax benefits such as the depreciation of the aircraft. Because the lessor takes the tax benefit, the lessee is typically offered a more favorable interest rate.

    Where do you start the journey to find a lender? Often, borrowers start their financing search where they have an existing banking relationship. However, that may not always be your best financial option.

    General aviation industry knowledge should be a critical criteria for your lender. For example, does your lender have expertise with the FAA requirements? Are they aware of new regulations on the horizon that could impact your purchase? Does your lender have an established specialty in aircraft financing or only do an aircraft loan every once in a while at the request of a marquee customer? Is the lender credentialed with key trade associations like the National Business Aviation Association (NBAA), National Aircraft Resale Association (NARA), or and National Aircraft Finance Association (NAFA)? If you don’t know, aircraft brokers and dealers, aviation attorneys and aircraft managers are a good source for referrals and recommendations.

    This article was published by PNC Aviation Finance.

     

  • Tracey Cheek posted an article
    Can a prospective aircraft owner benefit from claiming 100 percent "bonus depreciation"? see more

    Can a prospective aircraft owner benefit from claiming 100 percent “bonus depreciation” even though the owner expects to fly the aircraft for personal use? Yes, with limitations and careful structuring under the Internal Revenue Code (IRC). However, in doing so, it is essential to harmonize potentially conflicting rules in the IRC with the Federal Aviation Regulations (FARs) and state law, including sales/use tax laws.

    The Tax Cuts and Jobs Act of 2017, which became law on December 22, for the first time allows aircraft owners temporarily to take 50 percent or 100 percent bonus depreciation deductions on preowned aircraft. It also doubles the pre-existing 50 percent bonus depreciation to 100 percent of the cost of certain new aircraft.

    A business taxpayer who owns an aircraft can take 100-percent bonus depreciation deductions under the IRC against gross income if it uses the aircraft in its trade or business or for production of income. However, an owner cannot take depreciation deductions for personal use, including entertainment, amusement, or recreation.

    The IRC allows certain owners to deduct depreciation from gross income by two methods. The first is straight-line depreciation created under the Alternative Depreciation System. This allows owners to take equal depreciation deductions each year of the “recovery period”—the years to fully write off aircraft. That is six years for aircraft operated under Part 91 and 12 years for aircraft operating under Part 135.

    Read the full article on AINsight.