When it comes to acquiring a business jet, the choice between buying and leasing isn't just about preference, it's about strategic capital deployment.
It’s a common misconception that ultra-high-net-worth individuals and corporations only pay cash for their aircraft. While the liquidity may exist, locking up millions in a depreciating asset often doesn’t make financial sense. Instead, more operators are turning to third-party financing to keep their capital working elsewhere.
Understanding the Value of Liquidity
Aircraft values tend to decline over time. Operators increasingly recognize that cash used to purchase an aircraft outright could often be better deployed in higher-yield opportunities and ways to reinvest in their business or portfolio.
That’s why many look to third-party capital solutions to fund their acquisition, preserving liquidity while gaining access to the aircraft they need.
The Case for Leasing
An operating lease offers operators access to a jet without the long-term burden of ownership. Under this structure, the lessor owns the aircraft and the lessee simply pays to use it.
Key advantages of a Global Jet Capital Operating Lease include:
- Predictable Fixed Costs – Lease payments remain stable, insulating operators from future volatility.
- Conservation of Capital – Operators can unlock up to 100% of the aircraft’s value, freeing capital for more strategic investments or more profitable ventures.
- Disposition Certainty – The “end-of-lease return option” provides a built-in “buyer” for your aircraft at lease-end for eventual ease of disposition. This enables a smooth transition into your next aircraft avoiding remarketing costs, time on market delays and hassle typically associated with aircraft sales.
- More Efficient Tax Efficiency – Operating lease rent payments can be a tax-deductible expense throughout the life of the contract.
- Operational Flexibility – Leases can adapt to evolving needs, enabling upgrades or early exits under certain conditions.
- Greater Privacy – Your lessor takes title to the aircraft, allowing you to enjoy use of the aircraft with privacy and anonymity. Professional aircraft management adds additional privacy.
- Keep Your Bank for Banking – An operating lease provides substantial funding for this high value asset and keeps your other bank lines and facilities available to fund your business.
The tradeoff? The lessee doesn’t benefit from ownership-based tax benefits. Operational restrictions, such as hours or aircraft modification limits, may also apply, depending on your specific lease terms.
The Case for Buying with Financing
Alternatively, aircraft ownership with financing can deliver maximum control and potential tax advantages. Financing structures, such as senior secured loans or finance leases, enable operators to retain title while spreading payments over time.
This approach may be ideal for those seeking:
- Full Ownership and Potential Tax Advantages
- Maximum Flexibility – From modifications to operational use, ownership allows for fewer restrictions.
- Long-Term Investment Strategy – For operators with consistent needs and desire the ability to lock in long term fixed rate financing.
However, ownership also means bearing full exposure to residual value risk and market volatility. A sudden drop in resale value can lead to unexpected financial consequences.
Making the Right Choice
There’s no one-size-fits-all answer. The decision to lease or buy depends on an operator’s financial profile, tax position, operational preferences and long-term plans. What’s clear is that preserving capital and reducing risk are top priorities for today’s aircraft users.
If you’re exploring acquiring an aircraft, a customized approach with the right financial partner can help ensure your strategy and approach to financing aligns with your overall business or finance goals.
Explore smarter financing options for your aircraft with our experts.