New Jet or Used Jet?

For those who can afford a new jet, there is nothing quite like the experience of acquiring and operating a new jet plane.  Having sold predominately new planes for 26 of my over 30 years in aviation, I can attest to the many visible and some of the less visible benefits to the new jet.
I started this article with the comment “for those who can afford”.  This is perhaps one of the larger issues that often is misunderstood.  There are categories in any purchase that simply changes the parameters and results in influencing the purchase price.  Capital constraints and the need for a larger aircraft for your missions is an influencer.  There are others as well. 
However, for those who have the capital, the issues become more complex than the simple “I can buy a lot of maintenance for the extra capital, or upgrades” or whatever the comments are.  It is important to understand how the age of an aircraft can impact your reliability and availability limiting the available hours you can fly a particular aircraft.  How your mission profiles might dictate a more modern aircraft etc.
Since aircraft have long economic lives, you really don’t own a $50M asset as much as you rent it for the period of ownership.  Figuring the life cycle costs can definitely influence what constitutes the best value for your ownership requirements.  Looking at only one parameter is similar to the first day in statistics class, more people die in hospitals, therefore don’t go to a hospital because your chances of dying are much higher.  Looking carefully at all of the purchase and operating elements will allow you to make a better decision.
A good analysis will include an in-depth life cycle cost analysis and development of a strategic plan for acquisition and disposal.  It is an involved process and takes time with your finance and executive team.  Various scenarios need to be run similar to other business decisions.
Once a direction is agreed on, then a well thought out acquisition plan can be implemented making sure that you are getting the best value in the marketplace.  
Mike McCracken
Phone 727 796 0903

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