Is a Private Jet a Good Investment for Your Finances?

Owning a private jet is often seen as the ultimate symbol of wealth and convenience, but it comes with significant financial implications. Beyond the prestige, purchasing and maintaining an aircraft requires careful analysis to determine if it makes sense from an investment perspective.

To assess whether a private jet is a sound financial decision, it’s important to consider costs, tax benefits, depreciation, potential income opportunities, and alternative ways to allocate capital.

Acquisition Expenses

The cost of a private jet varies widely based on size, range, manufacturer, and age. A new light jet, such as the Embraer Phenom 300E, starts at around $10 million, while a long-range Gulfstream G700 can exceed $75 million. Pre-owned jets offer a lower entry point, with some older models available for under $5 million, though maintenance and upgrade costs may offset those savings.

Beyond the purchase price, buyers must account for transaction expenses. Aircraft registration fees vary by jurisdiction and must be paid to the Federal Aviation Administration (FAA) in the U.S. or equivalent authorities abroad. Legal and consulting fees for aviation attorneys and brokers can add tens of thousands of dollars, ensuring compliance with regulations and favorable contract terms. Title searches and lien checks are also necessary to confirm clear ownership and prevent legal disputes.

Financing a jet introduces additional costs. Interest rates on aircraft loans typically range from 5% to 8% as of 2024, depending on creditworthiness and loan structure. Lenders often require a down payment of 15% to 30%, meaning a $20 million jet could require $3 million to $6 million upfront. Lease options exist but may include restrictions on usage and resale.

Operational Outlays

Ongoing expenses significantly impact the financial feasibility of private jet ownership. These include fuel, crew salaries, insurance, and storage, all of which can add millions of dollars annually.

Fuel

Jet fuel is one of the largest variable costs. Prices fluctuate based on global oil markets, but as of 2024, Jet A fuel in the U.S. averages around $6 per gallon. A midsize jet like the Bombardier Challenger 350 burns approximately 300 gallons per hour, translating to $1,800 per flight hour. For an owner flying 300 hours per year, fuel expenses alone could reach $540,000 annually.

Additional costs arise from fuel surcharges at certain airports, particularly in international locations where taxes and handling fees increase the price per gallon. Some owners attempt to mitigate costs through discount programs, but savings are often marginal.

Crew

Operating a private jet requires a trained flight crew, typically at least two pilots. Captains earn between $150,000 and $250,000 per year, while first officers make $80,000 to $150,000. Benefits, including health insurance, retirement contributions, and per diem allowances, add to costs.

Some owners employ flight attendants, particularly on larger jets, at an additional cost of $60,000 to $100,000 annually. Training and certification expenses, such as recurrent simulator training mandated by the FAA or EASA, can cost $20,000 per pilot each year. If the aircraft is used frequently, standby or relief pilots may be necessary to comply with duty time regulations, increasing labor costs.

Insurance

Aviation insurance protects against liability, hull damage, and operational risks. Premiums depend on aircraft value, usage frequency, and pilot experience. For a $20 million jet, annual insurance costs typically range from $50,000 to $200,000.

Hull insurance, which covers physical damage to the aircraft, is calculated as a percentage of the jet’s insured value, usually between 0.5% and 1.5%. If an owner insures a $20 million aircraft at 1%, the annual premium would be $200,000. Additional policies, such as war risk coverage for international travel, can further increase costs.

Storage

When not in use, a private jet requires secure storage, either in a hangar or at an airport’s fixed-base operator (FBO). Hangar rental fees vary by location, with major hubs like New York’s Teterboro Airport charging upwards of $10,000 per month, while smaller regional airports may offer space for $2,000 to $5,000 monthly.

Owners who opt for tie-down parking instead of a hangar face exposure to weather-related damage, increasing maintenance costs over time. Some choose to build private hangars, which can cost several million dollars upfront but eliminate recurring rental fees. Additionally, storage costs may include de-icing fees in colder climates, which can range from $1,500 to $5,000 per application, depending on aircraft size.

Tax Considerations

Owning a private jet presents several tax implications that can influence overall costs or benefits. The tax treatment depends on usage—whether for business, personal, or both—since different rules apply to each scenario.

For business owners, one of the most significant advantages is the ability to deduct expenses under the Internal Revenue Code, which allows ordinary and necessary business expenses to be written off. If the jet is used for legitimate business travel, costs such as maintenance, crew salaries, and airport fees may qualify as deductible expenses. However, personal use of a company-owned jet can trigger taxable fringe benefits, requiring the owner or employees to report the value of personal flights as income based on IRS-published rates.

The Tax Cuts and Jobs Act of 2017 introduced 100% bonus depreciation for new and pre-owned aircraft used for business, allowing owners to immediately deduct the full purchase price in the year of acquisition. As of 2024, the allowable deduction is 60%, with further reductions scheduled annually until it phases out in 2027. This means an owner purchasing a $10 million jet in 2024 could potentially deduct $6 million in the first year, significantly lowering taxable income. However, if the aircraft is later repurposed for personal use or sold, depreciation recapture rules may apply, leading to additional tax liabilities.

Sales and use taxes also impact ownership costs, with rates varying by state. Some jurisdictions, such as Oregon and Montana, do not impose sales tax on aircraft purchases, leading some buyers to register their jets there to avoid significant upfront costs. However, states with higher tax rates, like California and Texas, aggressively enforce use tax rules, requiring owners to pay the equivalent of sales tax if the aircraft is substantially used within the state.

Depreciation and Valuation

Private jets, like most capital assets, depreciate over time, affecting resale value. Depreciation depends on market demand, technological advancements, regulatory changes, and maintenance history.

Larger, long-range models like the Bombardier Global 7500 tend to retain value longer than smaller jets due to sustained demand from corporate buyers. On average, a new private jet loses 10% to 15% of its value in the first year, followed by an annual depreciation rate of around 5% to 7%. After a decade, many jets are worth less than 50% of their original purchase price, though well-maintained aircraft with updated avionics and interiors may command a premium.

Charter Income Potential

Some private jet owners offset costs by making their aircraft available for charter when not in personal use. Chartering requires compliance with FAA Part 135 regulations, which impose stricter maintenance, operational, and crew training requirements than private use under Part 91.

Revenue varies based on aircraft size and range. A midsize jet like the Cessna Citation XLS+ can command around $4,000 per flight hour, while a long-range Gulfstream G650 may earn $10,000 or more per hour. However, owners typically receive only 85% to 90% of these rates after management companies take their share.

Aircraft management companies handle scheduling, marketing, and compliance for charter operations, but their fees can range from $5,000 to $15,000 per month, plus a percentage of charter revenue.

Resource Allocation Alternatives

Instead of full ownership, individuals and businesses seeking private air travel can explore fractional ownership, jet card programs, and on-demand charter services.

Fractional ownership allows buyers to purchase a share of an aircraft, typically ranging from 1/16th to 1/2 ownership, granting access to a set number of flight hours per year. Companies like NetJets and Flexjet manage these programs, handling maintenance, crew, and logistics.

Jet card programs provide prepaid access to private flights without ownership obligations. Providers such as Sentient Jet and Wheels Up offer fixed hourly rates, allowing travelers to purchase 25 to 50 flight hours in advance.