How to Spend a Million Dollars
To set some ground rules for today’s thought exercise, I want to start with a disclaimer: this does not take personal preferences into consideration whatsoever.
This is also not an exhaustive list of ways to spend $500K or $1M in private aviation—there are probably thousands of variations on this exercise. Additionally, I am not factoring in tax deductions or real asset depreciation when determining how to spend the money.
For simplicity, I’m using a straightforward cash-out-of-pocket number. This is mostly for my own sake or else this newsletter might take me 20 hours to write.
Now that we have the rules, let's begin.
$500,000 Per Year: Skip the Aventador
You might be surprised by this, but $500,000 can go a long way in private aviation. I'm going to break down three options for you at this price point, and I think the last one will surprise you.
Jet Cards: Predictable!
You’ve probably sensed that I don’t like jet cards. That’s not entirely true. I just don’t like companies being reckless with customer deposits, using the cash to grow, and leaving people out to dry.
There are some good jet card programs out there, and maybe one day I’ll do a roundup of them. If you want to go in depth, I suggest subscribing to Private Jet Card Comparisons (not an affiliate link).
The screenshot below is from an analysis I did for a newsletter subscriber evaluating a jet card they were considering. This is the advertised price adjusted for Federal Excise Tax. You can see in the right column, “Hours Bought,” how many hours $500,000 buys.
This is a predictable way to spend $500,000 without being exposed to market fluctuations from on-demand charter through a broker or a direct operator.
Fractional PC-12
I know I said that I wasn't going to count taxes, but this one is so close to $500,000 per year that I figured we'll squint and count it.
For $562,120 per year, you can fly 100 hours on a fractional PC12 with Planesense. This is assuming $75,540 in annual loan payments (15 year amortization at a 7% interest rate and putting 20% down). With 100% bonus depreciation, often times the down payment becomes a wash with the tax savings in the first year (not tax advice).
Now, PC-12 is not for everyone. It is a single engine turboprop. Its not quite as fast as a jet, can be louder than a jet, and technically its a jet powered propeller airplane so your friends won't say "oh that's a jet." If you can get past that, the PC-12 is a fantastic airplane and Planesense only flies with two pilots, increasing the safety redundancy.
Co-Owned Vision Jet
While it’s neither the fastest nor the longest-range option, the Vision Jet with a co-owner can be achieved for under $500,000 per year in cash flow. I used Aviacost to determine the annual expense at 300 hours per year (150 hours per partner), which came out to $620,950, or $310,475 per person.
The loan would be about $112,000 per partner per year, assuming a $3 million purchase price for a slightly used aircraft.
With the autoland feature and parachute, single-pilot operation is well within most people's safety comfort zone. This is likely your best bet for whole aircraft ownership—just make sure you like your partner before buying a plane together!
Spending $1,000,000 Per Year: Options Opening
When looking at a $1m annual spend, the options open up depending on your preference and how much you're going to travel.
Jet Cards: No More Commercial Terminals
When you’re buying $1 million worth of jet card time, you often unlock the steepest discounts and the most bonus credits within that program. Looking at a different program than the one above, it’s safe to assume you won’t see the inside of a terminal all year based on the number of hours you’re able to purchase.
As you can see, the amount of hours on a Midsize jet (think, Citation XLS or similar) will far exceed most people's travel schedules. Even with 72 hours on a Heavy Jet (Challenger 605, Gulfstream 450/550, etc.) is enough to satisfy most travel via private aviation in a given year.
Own Your Own PC-12
For around $1 million in annual cash flow, you can own your own PC-12 and have it professionally operated by a single pilot. AviaCost estimates the annual budget for 300 hours of flying at $647,375.
Assuming a $5 million purchase price, annual loan payments would be $431,160, based on 7% interest, a 15-year amortization, and 80% loan-to-value.
Luckily, the PC-12 holds its residual value well, so depreciation will be minimal.
That brings our total cash flow to $1,078,535. Technically, you could fly 231 hours to stay under the $1 million threshold, but even 231 is a lot of hours. That’s 19.25 hours per month—a lot of nights sleeping in your own bed if you’re only doing regional travel!
Fractional: You've Got Options
When looking at fractional ownership, how far your $1 million in annual cash flow goes will depend on the provider you choose. With a top-tier provider like NetJets or Flexjet, you’re looking at around 75 hours per year on a super-midsize jet like a Praetor 500 after factoring in the monthly payments on the buy-in, which is around $1.7 million.
If you go with a smaller fractional provider, you can likely stretch the $1 million further, but the experience may be less consistent, and the aircraft may not be as nice.
Co-Owned Citation XLS
Co-ownership is the secret hack for private aviation fliers. By dividing fixed costs among multiple owners, you can still fly at cost without shouldering the full financial burden alone. Some friends of mine have built an entire business around this—it's called Partners in Aviation.
Recently, I ran an analysis for a client. If two partners each flew 125 hours in their Citation XLS, their annual expenses would be $666,805, with loan payments of $225,120. That brings the total to $891,925 per partner for 125 hours of flight time.
The Point
The point of this article isn’t to take you back to the ’90s when music was good and artists like the Barenaked Ladies were on top. It’s to remind you that private aviation is achievable at different levels and that there are multiple ways to make your budget stretch further than you might think.
And that’s the entire point of this newsletter—to help you understand what’s possible.
Until next week,
Preston Holland
P.s. Send this to a friend that you want to partner with on a plane. Let them know its much more achievable than they may have thought!
