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4 Things You Need to Know About Your Aircraft Lease Before Signing on the Dotted Line

Posted by GJC Insider on 9/14/15 10:42 AM

GJC_Blog_PhotoPrivate jet leasing is a very attractive upgrade from flying commercially, because it offers several significant advantages. Whether you are a senior leader in a corporation or are a high net worth individual, a leased jet allows you to fly on your own schedule and take control over your travel itineraries for improved productivity and efficiency. And of course, the services offered in flight can be custom tailored to meet your every need.

Types of Aircraft Leases

Aviation leasing companies typically offer two types of private jet lease – a capital lease and an operating lease. In a capital lease, the lessee actually becomes the owner of the aircraft after having made all the payments punctually, so in truth this ‘lease’ amounts to a capital purchase. The operating lease is one of the more common types of leases, granting the aircraft lessor all the rights and entitlements to the aircraft while merely transfering possession temporarily to the lessee. At the end of the leasing period, if all the terms & conditions are met, a lessee has the option to either return, renew or upgrade their aircraft based on their needs.

Tax Considerations

In an operating lease, asset-related tax benefits such as depreciation accrue to the lessor and not the lessee.  An operating lease can be beneficial when your company is not in a position to take advantage of depreciation and other tax benefits.  As with all capital equipment acquisitions, it is recommended that you consult with your tax advisors to determine the best approach for your particular situation.

Lease Valuation

Before you sign any leasing agreement, make sure you have all the facts on your side before signing on the dotted line. Many aircraft lessees align themselves with a business aviation broker or consultant to help them navigate through the complexities of business jet financing. A quality broker will be able to use their knowledge and insider information to ensure the economics of your transaction are appropriate value for the aircraft you are leasing.

Leasing Periods

Prior to signing your aircraft leasing agreement, make sure that the period you are leasing for is the actual period you expect to need the aircraft. At the expiration of that time, you will then have the option to either return the aircraft to the lessor and upgrade to a newer model, or extend your lease on the current aircraft.

One area to consider is what kind of penalties are written into the agreement if you should need to terminate the lease arrangement prior to its stated expiration date. If your need for the aircraft is suddenly eliminated, make sure that the penalties for early termination of the lease are acceptable and manageable. 

If you think private aircraft leasing is a good fit for your specific needs, get in touch with the management team at Global Jet Capital. With over 100 years of collective experience in the aircraft industry, our team knows just what it takes to create flexible financing solutions tailored to your individual need. For all your private aircraft needs, contact Global Jet Capital today by calling +1 (844) 436-8200.