Any number of experts can help you buy a jet. Unfortunately, I am not one of them. But I did buy a jet — my first — recently, and the experience taught me some lessons. It is entirely possible that you and your company will employ an expert or two to help you find a turbofan-powered airplane and that my experience will seem bush league to you. It did not seem bush league to me. Since buying the jet, I’ve spent several hours listening to recorded messages when looking for information from Rockwell Collins (FMS database), CAMP (maintenance tracking) and Williams International (engines). These phone calls include a lot of “press 1 for this,” “press 2 for that” instructions. So, picture my imaginary phone interactions with the Jet Buying Gurus (JBGs) when I set out to buy one: JBG: “Thank you for calling the Jet Buying Gurus. Press 1 if you need a jet. Press 2 if you want a jet. Press 3 if you don’t need a jet, but want one anyway.” Me: #3 JBG: “OK, I hear you want a jet but don’t need one. What kind of jet do you want but not need? Press 1 if your average mission is 500 nautical miles or less, 2 if 500 to 1,000 miles, 3 if greater than 1,000 and 4 if you don’t know.” Me: #4 JBG: “That’s fine. I understand you don’t know your typical mission. Are you going to be the pilot?” Me: “Yes.” JBG: “OK, I will assume you will fly your airplane single-pilot. If that is correct, press 1.” Me: #1 JBG: “One final question: Do you have any idea how much it costs to own and operate a single-pilot jet?” Me: “Obviously not!” And so it went. Based on these imaginary conversations, I concluded that the primary candidates were the Cessna Citation series of jets, the Hawker Beech Premier 1, the Embraer Phenom 100 and the Eclipse Jet. Older Citations (501 SP, Citation II) seemed like dinosaurs. Bigger, older airplanes (Citation Ultra, V) seemed too big and burned too much fuel. Newer, cooler airplanes (HondaJet, bigger CJs) were too expensive. What’s a guy gonna get for a million bucks? A CitationJet built in the 1990s, that’s what.
For $1.2 million, an older CJ1 or Premier 1 (but not the 1A) would be possible. That’s where I settled. That’s where I started to look. I was an entry-level guy with just barely entry-level money looking at the bottom rung — or close to it.
I had originally thought a CJ1 would make the most sense. The airplanes are plentiful, popular, easy to work on, have simple systems and are, well, just plain cool. I was already typed in the CE-525s and familiar with the Collins Pro Line 21 avionics found in most.
I originally dismissed the Beechcraft Premier 1 because of its complexity, the parent company’s financial woes (bankruptcy) and its sketchy reputation as a runway runaway. Surprisingly, I found Premier 1s to be priced similar to CJ1s of the same vintage. The Premier is 80 knots faster and doesn’t really burn that much more jet-A.
This is where the intricacies of jet buying clearly became more involved than anything I’d previously attempted. I quickly realized I needed help, and I found it in three places. I turned to an experienced light-jet broker for market assessment, a tax consultant for tax advice and for setting up an LLC (everybody says you need one, but most experienced lawyers claim they really don’t protect your assets that much), and a mechanical person to review every potential airplane’s maintenance past.
I found Mike Shafer, of Mercury Aircraft Sales, to be an invaluable resource. Mike sold our Piper Cheyenne and was experienced in purchasing these types of jets. As a broker, Mike had access to sales data and to airplane histories. He had a feel for the market. He cautioned me repeatedly about the significant increase in costs associated with buying a jet compared to the turboprop I had managed and flown for 17 years. He provided me with annual expense estimates for CJ1s compared to Premiers. He told me that the Premiers originally sold for 30 percent more than the CJs but the market had accounted for the concerns mentioned here.
I wore out controller.com every day. I got my head turned several times, only to be reined in by Mike. One airplane in South Africa had a flamboyant paint job and an unbelievable price. I was smitten until Mike told me that the airplane had once been written off for scrap after a hailstorm.
Gradually, I learned about engine programs. A few airplanes sold for hundreds of thousands less than others, but they weren’t on engine programs. Once the buy-in amounts and overhaul prices were figured in, they were still overpriced. Jim Mitchell, the highly experienced, highly successful salesperson at Elliott Jets, the venerable Midwest outfit, made this point vividly to me: “Dick,” he said, “you are buying two engines and an insurance policy for those engines. The fact that you get some seats and some radios and a coffee pot is just gravy.”
When I asked Mike for his guiding principles in helping a first-time jet buyer, he said, “With first-time jet buyers, the key is to understand the mission profile and anticipated usage. I focus on airplanes that match the requirements and compare them. It is critical to clearly state the costs of ownership — not just the price tag. If they aren’t scared away at this point, we get down to the meat of the matter once the proper ownership structure is established.”
A complete market survey, he said, should be conducted to provide a value analysis, including past trends and anticipated market forces. A select list of aircraft will eventually rise to the top, and a first choice will be selected. Proper planning and counsel throughout this process is vital. Along with a broker, assembling an experienced team consisting of a tax specialist as well as maintenance and legal representatives is essential to a successful transaction.
Daniel Cheung, at Aviation Tax Consultants, helped us navigate various states’ sales-tax laws. His company set up our LLC in about an hour. He lamented that we didn’t own a business that could own the airplane and thereby spend pretax dollars to fly. His advice to first-time airplane buyers wasn’t limited to jets, but it is good advice nonetheless.
“I network with Mike Shafer and many other brokers, as well as sales folks with the OEMs [original equipment manufacturers, such as Cessna and Gulfstream]. My biggest advice is to keep the customers from speaking with their regular CPAs and lawyers initially. There is simply too much bad information and bad advice given to potential airplane buyers that prevent many from moving forward with a legitimate business aircraft purchase. The analogy is if you need a heart valve, you don’t go to your family doctor, you need a cardiac surgeon.”
Pros deal with prospects and clients daily, and can provide sound initial advice, which sometimes might be not to buy an airplane for tax-deduction purposes. Or they can assess the situation and come up with some outside-the-box planning ideas to help justify the purchase of a business aircraft.
“Pretty early on in the process,” Daniel said, “we will request to speak to our client’s CPA and other advisers. We work closely with these advisers, who know the client better than we do. We simply focus on all aviation compliance matters to complement what the state sales/use tax or FAA regulations compliance requires.”
Brad Guyton was once the director of maintenance at Hawker Beechcraft and Raytheon. He now consults, helping buyers like me find the right airplane with the right history at the right price. I don’t intend to ever buy anything — not even a used toothbrush — without consulting Brad first.
When I asked him for an example of a nuance that might get by an inexperienced evaluator, Brad replied, “Sure. For example, a specific make and model aircraft is known to get corrosion cracking in certain areas of the fuselage. Instead of relying on standard inspections to catch it, spell it out specifically that you want those areas inspected.”
Though I didn’t seek out a particular seller, I was the beneficiary of Elliott Jets and the company’s salesman, Jim Mitchell. Elliott’s 80-year history and strong reputation in the industry was a great reassurance when minor discrepancies in engine times and other matters confounded my wife, Cathy, and me. In the end, we had to trust Elliott, and I am convinced that our faith was well-placed.
There you have it: one man’s experience of buying a jet for the first time. So far, the costs have been a bit startling, but the airplane has been magnificent beyond any of my most grandiose fantasies. Buying a jet is way more complicated than buying a house at a similar price point. You don’t just get a termite inspection and show up at closing. If done properly though, there will be few surprises with your new-to-you jet, except that amazing rate of climb and those incredible speeds at Flight Level 400.