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The business aviation fleet is aging, but with the benefits of better onboard technology, fuel efficiency and lower operational costs on newer aircraft, it may be time to look at a younger model.
A survey of senior executives from large U.S. businesses with companies that own or lease a jet has revealed that the national fleet is aging. Airbus Corporate Jet's analysis of industry data reveals that the average age of a business aircraft in the U.S. is 18.5 years, and in 11 states the average age is 20 years or more. According to Statista, the BizJet fleet age worldwide as of March 31, 2020 ranged from 9.1 years to 23.2 Long ultra-long-range jets were among the youngest, averaging about 9.1 years, followed by airliner business jets at 13 years. Light jets ranked the oldest on average, topping the chart at 23.2 years, followed by mid-size jets with 21.1 years and large jets with 18.1.Stats from Statista
While there is an appeal to flying classic aircraft, like an iconic warbird or a game-changing Learjet 23, there are associated costs and concerns to consider before entering an aging aircraft's cockpit. With newer technology comes improvements, notably with lower operational costs due to the many advantages of newer technology and safer equipment. Properly maintaining an aircraft becomes exorbitantly more expensive the older the aircraft gets. Finding specific parts, additional maintenance and expired warranties can raise costs quickly.
Aircraft owned and operated by a business are often depreciable, allowing the taxpaying business owners to take a large percentage in tax deductions for the purchase. Depreciation comes with its own set of specific instructions from the IRS. A bill providing tax relief included an extension of the 100 percent bonus depreciation credit that businesses use to claim 100 percent of the depreciation of purchased equipment, like aircraft, for the year it was purchased. The NBAA reports that to be considered eligible, the aircraft must be used at least 50 percent for business purposes. Using the plane for personal use can also impact how much of a deduction the business can look forward to.RELATED STORIES:House advances bipartisan bill that would restore 100% bonus depreciation through 2025IRS plans dozens of audits over corporate jet usage
If a plane is carefully maintained and outfitted with up-to-date safety features and improvements, an older plane can be as safe as a newer plane. The downside for many businesses would be the associated cost. With much of the BizAv fleet entering its second decade many businesses could benefit from an upgrade. For some businesses, buying a new light jet would be less costly than maintaining a 20-year-old jet. Replacing an older jet could end up saving a business money and providing better fuel efficiency and technology.
"Our analysis shows that a significant number of business aircraft in the U.S. are older, and many of their owners will be looking to replace them with newer, more efficient models," said Sean McGeough, VP of commercial ACJ for North America. "The level of innovation and development in the larger business aircraft segment has been staggering, and this bodes well for this market."Find yourself or your business a new private jet on GlobalAir.com
Another survey showed that 85 percent of U.S.-based BizAv financiers and brokers say they expect to see an increase in large, heavy BizJet buys over the next five years. About 99 percent of those interviewed said there is a growing demand for large and midsize jets, a demand which is increasing at a faster rate than other categories due to the range and capacity offered. Those surveyed also reported that manufacturers are driving interest in these categories with the introduction of newer models that boost the sector's appeal. There are about 1,021 business jets for sale in the U.S. and 96 are large, long-range jets.
According to a report by the International Air Transport Association, aging can be defined into three categories, technical aging, economic aging and financial aging. Technical aging applies to the effect of age on the aircraft over time, economic aging applies to the inherent effect of age on the aircraft over time factored by economic data, and financial aging accounts for the maintenance costs over time. IATA reports that maintenance costs can increase with the age of the aircraft, as required maintenance incurs large costs and non-routine maintenance becomes more frequent as materials weaken due to age or environmental factors. Over time, warranties expire and maintenance becomes a more regular occurrence, drastically raising operational costs to maintain a safe plane.
The AOPA reports that financing rates are primarily based on the amount being borrowed and creditworthiness, and since older aircraft usually sell for less, the rates trend higher. Lenders will determine things differently, but older aircraft likely require more down. An aircraft manufactured before 1960 requires at least 20 percent down as opposed to only 15 percent for a newer piston-single. While most businesses are not looking to buy a 50-year-old plane to fly their employees, the same concerns remain as an aircraft hits that 20-year mark.
Falcona Private Jets said that while an interior can be changed and redesigned, an airframe cannot. Maintenance and routine inspections are crucial to both new and old planes, but there is more to look out for with an older plane. Older aircraft have older technology and interiors can be worn out, but refurbishments and retrofits can be costly. Planes are all built to last, and with regular care, many do.
For the businesses flying jets old enough to remember the fall of the Berlin wall, there are many benefits to finding a newer, younger model.