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Which Aircraft is Right for Your Business?
Selecting an Entry-Level Aircraft Demands Due Diligence

For many first-time business aircraft buyers, a light aircraft, usually certified for single-pilot operation, is a typical choice. Today, that means anything from a piston airplane through an entry-level jet, depending upon the buyer's budget and flying experience. But those considerations are just starting points. Industry experts agree that considerable due diligence is mandatory, and such careful consideration could mean the difference between selecting a valuable business tool, and making a costly mistake.

"The first step is to match the aircraft to the mission – where you will go and the length of the trips," says Rob Massari, director of operations for the charter department of Bridgeford Flying Services in Napa, CA. "Under 200 nautical miles, a piston-powered airplane is often adequate, but if your trips are up to 400 nautical miles, you might consider a turboprop." For trips over 600 nautical miles, Massari recommends a jet.

Josh Rosenblatt, chief pilot for a Maryland-based IT company, advises anyone evaluating an aircraft to first consider runway lengths at airports where the airplane will be based and is likely to go.

There's also the matter of range, along with the average number of passengers per trip. Rosenblatt notes that often, an aircraft manufacturer will quote an IFR range – with an NBAA 45-minute reserve – with a specific number of seats occupied.

Tom Philips, an independent aviation consultant and contract business jet pilot in Missoula, MT, stresses the importance of making a list of all mission parameters and requirements well before shopping for an aircraft. "When I work with a client, I assign a value to each of the parameters, such as price, cabin size, range and likely city pairs. I put all this information onto a spreadsheet, so it will be easy to evaluate."

Philips also notes that a major pre-purchase consideration is whether the airplane will be flown by a professional pilot or owner-flown. This, he says, is driven by the complexity of the aircraft and insurance issues.

"If you intend to fly the airplane yourself, but have little or no experience on similar equipment, your insurance carrier might insist you fly with a pilot who has a high number of hours on that aircraft, or something similar, at least for a while."

Insurance providers, he adds, have become much more involved with operational issues, especially in light of the emergence of very light jets. "It's not just hours of experience they are concerned with," Philips says. "They also want to know what other aircraft you’ve flown, and how recently you’ve flown them."

Once the basic operational parameters have been determined, the buyer should look at the tax implications of owning and operating an airplane for business purposes.

"It pays to sit down with a tax professional, accountant and lawyer well before you buy the aircraft, to determine the [appropriate] ownership structure and depreciation [for your situation]," says Bruce Cort, president of Cort and Associates, Inc., a Potomac, MD-based aircraft brokerage firm. "Tax laws are very specific about this, and you have to do your due diligence up front to make sure you will comply with all existing rules and regulations, especially in the event of an IRS audit."

This tax analysis should include an assessment of ownership costs and establishment of an annual budget for the aircraft, based upon fixed costs, such as insurance or hangar fees, and variable direct operating costs, like fuel. "Depending on the airplane, fuel could be as much as half of the direct operating costs, today," Phillips notes. Determining the fixed and variable costs, he adds, is both a complex and time-consuming process. "If you don’t have the time or capability to do it yourself, retain somebody who can."

New Versus Pre-Owned Aircraft

The decision-making process should also consider new versus pre-owned aircraft. In addition to acquiring the latest, state-of-the-art equipment, a new aircraft usually comes with a comprehensive, multi-year/flight-hour warranty. However, Philips adds that aircraft only a few years old can present some of the best value.

"With an airplane that‘s just two to three years old, you get the benefit of having all the teething problems of new production aircraft resolved, as well as some degree of warranty coverage. And what you save on the purchase price can be put toward any upgrades or modifications you want."

Pre-owned aircraft are available through brokers, dealers and aircraft manufacturers, and directly through owners. In any case, the buyer should insist upon inspecting the aircraft's maintenance records, including those pertaining to completion of all mandatory and recommended service bulletin work, Philips stresses.

"Also, find out about any maintenance issues, such as the need for special inspections because of a history of corrosion problems," he says. "Brokers, FBOs and current and former operators are good sources of knowledge about a particular aircraft type, as well as aftermarket upgrades and available service bulletin work."

Phillips adds that equipment upgrades and modifications to be made should also be factored into purchase-price negotiations, with avionics foremost on the list, followed by paint and interior work.

Having done all the homework, the buyer should not expect perfection, even with an aircraft right off the assembly line.

"There will always be glitches," says Rosenblatt. "With something totally new, you are getting involved with the first generation of that airplane, and you are part of the experiment. But as aircraft age and the series moves along, they become a work in progress, as the manufacturer adds improved technology."

"When looking at an airplane, there is no substitute for planning and working with people who have done it before," Rosenblatt concludes.