When thinking about buying your first airplane, you’re probably mulling over features that mainly involve amenities and purchase price. While these are important, there are many factors to explore, and you could make a costly mistake if you don’t take them into consideration. Here are some of the most common errors first-time buyers experience and advice on how to avoid them.
1. Misassessing your mission.
In a rapidly changing business environment, it is often difficult to know what kind of range you will need five years from now, but we suggest you buy an aircraft based on the trips you fly 80% of the time. Definitely learn about the runway lengths and altitude limitations of your frequent destinations and seek an aircraft that can perform well in those locations.
2. Underestimating costs of ownership.
Expenses beyond the purchase price are where the real costs of owning business jets enter the picture. Fixed costs impact your bottom line whether the plane is in the air or not. These include insurance, storage, taxes, calendar-driven maintenance and financing, if applicable. Fuel prices can vary as much as $4 per gallon depending on where you travel. Overhauls, avionics upgrades and unexpected equipment issues can certainly throw a budget; many owners consider parts or engine maintenance programs to mitigate and project these costs.
3. Overlooking the tax implications.
Some states provide fly-away exemptions so that you don’t owe sales tax on the purchase to that particular state, but many states have use tax laws that can be navigated properly to create the lowest tax burden possible. One big mistake people can make is not hiring an attorney or the right attorney in order to better understand the tax implications of buying an aircraft, where to take delivery aircraft, and/or where you should keep your aircraft. Sometimes a state line makes hundred thousand dollar difference.
4. Listening to bad advice.
You can spend hours of research online, but the vetting process is really about consulting with the right professionals for guidance and advice. Friends, mechanics and pilots aren’t the only qualified experts that can really assist you in making the right decision. There’s a club of owners out there for almost every brand and model of aircraft, so it’s wise to consult with these individuals before investing in business jets. And of course, a good broker has a wealth of information about aircraft values, both current and historical and can often makes introductions to other clients who have considered the same aircraft.
Buying an aircraft can be time-consuming and costly. Carefully assessing your mission, budget, other financial implications and available support can definitely save time, money and headaches in the future.
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