Aviation investment

Investing in an Aircraft 

Purchasing an aircraft requires a thoughtful analysis of your business and personal needs, and a serious review of your financial situation. It’s a significant investment that shouldn’t be undertaken without strategic input from an experienced aviation attorney. Important questions to ask yourself as you are contemplating the purchase of a high-value asset such as an airplane are:

• Why do I want to own an aircraft?
• Can I pay for all attendant operating costs?
• Is it for business or personal use?
• Should I share the purchase with someone else?
• Should I buy it outright, or finance or lease?
• Is the aircraft going to hold its value?

Most experts believe that the recreational aircraft market is less affected by the economy, keeping aircraft values relatively consistent. However, the value of  business aircraft, particularly jets, tends to be more reactive to economic fluctuations and technological obsolescence. 

Aircraft Ownership Offers Personal and Business Freedom

Aircraft ownership may be a great investment for those who travel by air frequently, either for business or personal travel. For personal travel, owning an aircraft  provides you the freedom to travel at the last minute, and to change plans and itineraries. If you have a business, it gives you the freedom to travel to remote locations to visit your customers with a relatively short lead time. With private commercial air travel, customs, lost luggage, middle seats, and other frequent travel headaches are lessened or abated.

Do Airplanes Hold Their Value?

People typically invest in things that hold their value - otherwise, it’s not much of an investment. Unlike other forms of transportation, such as motorcycles and cars, aircraft can increase in value over the years, although this is not always the case. These are the following items that can increase or decrease the value of an aircraft:

Airframe hours and age - For every hour a plane flies over the fleet average, it loses some value. Early in a plane’s lifecycle, total airframe hours have a greater impact on the plane’s value. 

Engine hours - The closer an engine is to the manufacturer’s recommended overhaul time, the less its value. Note that records of a good maintenance program and consistent  use are also important. 

Installed technology - Installed technology definitely has an impact on an aircraft’s investment value. Old systems such as air conditioning and deicing add operational costs and reduce the value of an aircraft. New avionics will generally increase the aircraft’s value.

Records and Airworthiness Directives - Complete records evidencing regular maintenance and prompt responses to Airworthiness Directives can increase an aircraft’s value. Incomplete aircraft logbooks can negatively impact the value of an aircraft. 

Damage history - If you’re buying an aircraft, your pre-purchase inspector should closely look at damage history and repair records, and the extent to which major components were affected. 

Paint - Note that while paint jobs may increase an aircraft’s value, buyers should be aware that new paint can hide surface corrosion. 

Interiors - Interiors can affect the value of your aircraft. When selling, some owners update their interiors to reflect the latest color and design trends. Though seemingly superficial, this can increase the value of your aircraft.

Upfront Costs of Your Investment

The first consideration in terms of your investment cost is the price of your aircraft. Ultralights range from $8,000 up to $17,000. Single-engine planes can cost from $15,000 up to $120,000. Multi-engine aircraft range from $75,000 to $350,000. Jets can run into the millions of dollars.

You will need to pay for storage, preferably in a hangar. Insurance coverage is a necessity, both to cover damage to your aircraft and for liability coverage if you or others are injured by your plane. Maintenance of the engine, avionics, airframe and propellers is required, in most cases on an annual basis. This is not a comprehensive list of costs, and there will be many other expenses.

Should You Purchase a Plane?

Now that you better understand the investment opportunity of buying and owning a plane, you can consider whether ownership is right for you. Lento Law Group has extensive experience in helping potential purchasers answer the often difficult and complex questions about aircraft ownership.