Private planes are assets. Buy accordingly

The following article has been contributed by Alan Stalcup, principal, GVA Real Estate Investments. 

Most people ask the wrong question when deliberating over a private jet. They ask whether they can afford it. They’re looking at it like a consumer good with a price tag. And from that standpoint, no one can afford a private jet. 

The real question is whether the plane pencils. Whether it earns its place on the balance sheet the same way every other asset has to.

I buy apartments for a living. I’ve overseen more than $10bn in transactions. I don’t fall in love with a building because the lobby is nice. I underwrite it. What does it cost, what does it return, what breaks the model. 

A plane is no different. It’s equipment. Expensive, depreciating, cash-hungry equipment. And like any asset, whether it makes sense comes down to a few variables you can actually run the math on.

Variable One: Your Tax Position

Start here, because this is where the math can swing firmly in your favor or firmly against.

An aircraft is equipment you can depreciate. Under current law, you can depreciate all of it in year one. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualified property placed in service after January 19, 2025. Buy a $10m plane, place it in service, and you can write off the full $10m against your income that year.

Run that through a top bracket in a high-tax state. Federal at 37%, add California or New York on top, and a high earner is sitting near a 50% combined marginal rate. A $10m deduction is worth roughly $5m in tax you don’t pay.

Now finance it. Put 20% down and the bank carries the rest. You’ve committed $2m in equity. You’ve harvested $5m in tax savings.

That’s two million out, five million back. You’re $3m ahead before the plane has flown a mile.

The obvious catch is that the deduction only works against the right kind of income. The IRS treats aircraft as listed property, and the rules on active versus passive income are not a footnote. To offset your active business income, the losses have to be active, too. That means material participation, real substantiation and a structure built before you sign, not after the IRS calls.

And the IRS will call at the slightest provocation. There’s an active audit campaign on business aircraft right now, aimed squarely at owners who claimed the deduction and can’t prove the use.

To count against your active income, the plane has to be used more than 50% for qualified business purposes, and it has to stay above that line. Drop below 50% in a later year and you don’t just lose the benefit going forward. You recapture it. The excess depreciation you took comes back as income.

The numbers are brutal when this goes wrong. Take an owner who writes off a $25m jet in year one, then flies it mostly for personal use the next year. The recapture: more than $20m recognised as income. A tax strategy turns into a calamitous tax bill.

So the tax position is crucial. Get it right and the plane starts with $3m of ROI and climbing. Get it wrong and you’re funding the purchase and paying the IRS for the privilege.

Pencils down on the tax question before you go further. If you don’t have the active income to absorb the deduction, the math simply might not work for you.

Variable Two: Your Annual Flight Hours

Tax is the first-year story. Flight hours are the every-year story.

A jet costs money whether it flies or sits. Crew salaries, insurance, hangar, recurrent training. These are fixed. For a midsize aircraft they run well into seven figures a year, and the hangar doesn’t care how much you did or did not fly.

So the cost that matters isn’t the sticker. It’s the cost per hour you actually use it. And that number moves entirely on how much you fly.

Take a jet with $1m in annual fixed costs. Fly it 200 hours and you’re absorbing $5,000 an hour just to cover the fixed overhead. Fly it 400 hours and that drops to $2,500. Same plane. Same costs. Half the cost per hour, because you spread the fixed expense over more flying.

The industry breakeven against chartering sits somewhere around 200 hours a year, depending on the aircraft and your routes. Above that line, ownership starts to win. Below it, you’re paying full freight for an asset that’s parked.

So be honest about how much you fly. Not how much you’d like to fly. How much you actually will.

If you’re flying 200 hours a year, you don’t want to charter that trip. You’re past the line. Owning is the cheaper seat.

If you’re flying 50 hours a year, owning a plane outright is a bad trade. The fixed costs swamp you. You should be chartering, or you should be putting the asset to work so it isn’t sitting idle on your dime. Which is the third variable.

Variable Three: Who Flies It When You Don’t

Here’s where many owners leave money on the runway.

When the plane isn’t carrying you, it can carry someone else. Place it on a charter certificate through a management company and it generates revenue when you’re not using it. That revenue offsets your fixed costs. Depending on the aircraft and the market, charter income can cover somewhere between 20% and 50% of what it costs you to own the thing.

Read that against variable two and they start working together. Charter doesn’t just bring in revenue. It offsets idle hours, thereby diluting your fixed cost per hour. Charter isn’t a side hustle. It’s a fundamental part of making the ownership make sense.

Are you on the fence about managing the plane yourself or handing it to a company? Hands down, use a company. Not because you can’t manage a plane. Because the match favours scale, and you don’t have it.

A good management company buys fuel at volume you can’t match. They get insurance, maintenance, and hangar space at rates that come from running a fleet, not one tail number. They handle your pilots, your compliance, your scheduling. You save on nearly every line item, and you keep priority access. Your trips come first. The charter fills the gaps.

And as long as the company has real charter demand behind it, they help you offset the expense of paying them by keeping your plane in the air.

Putting Them Together

These three variables, taken together, determine whether your private jet works for you or against you. It’s always one or the other.

Skip out on the tax math and the upfront cost could be unadvisable at best and an audit-risk at worst. Disregard your flying hours and the real cost will surprise you. Fail to optimise idle time and your investment just keeps sinking. 

Get all three right and the picture changes. A financed purchase that’s $3m ahead on tax in year one, flying enough to beat charter, with an asset earning revenue against its own fixed costs. That’s not a toy. That’s a position.

I’m not telling you to buy a plane. I’m telling you to underwrite it like you’d underwrite anything else you put real money into. Run the three variables. Be honest about the inputs. Build out the structure before you sign, not after.

The plane is an asset. The only question worth asking is whether it pencils as an asset.