00:05:25 · Molly O'Shea, Israel Slodowitz
[00:05:25] S1: Are we gonna have a shortage [00:05:26] S0: of There's gonna be a huge shortage. I mean, these are obviously depreciating assets. These airplanes you know, airplanes are equipment. They don't go up in value normally, but we're seeing them go up in value for the first time almost ever, especially in the higher end of the market. So that small little change in wealth, which I think is actually huge, is something this industry is not at all ready for. And and and I think we're gonna there's gonna be a lot of adjustment and price fluctuation and uncertainty until until, like, the the new the new wave sort of takes effect. [00:05:59] S1: I guess to give more of, like, the one zero one behind all the sizes and pricings and that kind of thing, could you walk through you mentioned it before, but, like, can you walk through all the sizes and then up to, like, okay. What does, like, a Jeff Bezos have? What does Elon Musk have? Drake has a very weird plane, but that's just him, and that was a deal. But I'm curious, could you, like, walk through all the different planes and, like, when you should start at which one? And then, obviously, we can talk about the different kinds of financing options for those. But I guess first, let's start with the sizes and the prices on them.
00:06:33 · Israel Slodowitz, Molly O'Shea
[00:06:33] S0: Yeah, so typically, the entry level what was the entry level would be something like maybe a light check. So like a Phenom 100 or a Phenom 300, it seats about six. You can fly about an hour, two hour flight. Step above that, you go into the midsize category, Citation XLS or Latitude are like the popular ones. Step above that, we go into the super mid category. This is like, as I call it, the proper jet, which is what we're in today. Super mid category, you have like the Challenger three fifty like we're in today, and then there's the Praetor 600, also phenomenal airplane. Above that, we go into the heavy jet category. So think of like a Gulfstream g four fifty. People are flying these heavy jets quite frequently even on short missions. So we're seeing people who have large families that wanna travel that they're like, don't even want the light or super mid. Like, they're going straight for the heavy even on a two or three hour flight. And then, of course, if you wanna go to Europe, you would need something called an ultra long range. Something like a Global 8,000 is like the top of the line. So when you think about like the Jeff Bezos of the world and the Larry Page and Sergey Brin, they're typically G700 Global 8,000 category. That's like the top of the line. [00:08:08] S1: And you fly too? I'm a pilot as well.
00:08:08 · Molly O'Shea, Israel Slodowitz
[00:08:08] S1: And you fly too? I'm a pilot as well. [00:08:10] S0: I'm a certified pilot. I only mostly fly for fun now. Have a full company to manage and keeps me quite busy, but I am certified in this airplane actually. You're flying today? I'm not going to be flying today. Yeah, yeah, we have two great pilots on board, but I'll be flying from back here. [00:08:25] S1: So walking through all of those different options, when does it make sense to buy a plane versus charter? So the traditional logic is somewhere between one hundred and fifty hours a year to two fifty hours a
00:08:41 · Israel Slodowitz, Molly O'Shea
[00:08:41] S0: year is when you want to start thinking about owning a plane. But I think it's important to really understand why and it's important to understand what are the reasons you really want to own a plane. The first reason is the flexibility. So when you charter or when you even own a fraction of an airplane, there's usually long call out, usually at least a twenty four hour notice call out. And they're not very flexible on changing your time when you wanna leave. So I have an example of a customer of ours that flew to He had a bunch of warehouses in the Reno area. He lived in San Francisco and he owns a plane. He flew his plane to Reno to go visit his factories. Initially his scheduled return was supposed to be for 6PM, but by 1PM he was done his tour. So he decided, hey, text my pilots and see if they're ready to go. By the time he got to the airport, the plane was all buttoned up and they were out four hours early. When you're chartering or when you look at like a fractional ownership, it's a lot more difficult to do that. So there's like some flexibility, I think, in owning a plane. Even if you're flying less than one hundred and fifty hours, you might want to consider owning, just because if you need that, like, four hour less sort of call out. On the other side of the spectrum, owning a plane is extremely complex. It's basically running a little mini airline. You're dealing with pilots. You're dealing with maintenance. [00:10:03] S1: Do you have to put that in an LLC? How do you actually make that tax advantaged?
00:10:03 · Molly O'Shea, Israel Slodowitz
[00:10:03] S1: Do you have to put that in an LLC? How do you actually make that tax advantaged? [00:10:09] S0: Yeah, typically all aircraft are in a single purpose LLC, like an SPV, and they'll usually be under the business. So an LLC is owned by the business, and then the LLC will have a lease agreement in place with the business for tax efficiency. But yeah, so I think on the other side of the spectrum, owning an airplane's complicated. There's a lot that goes into it. We'll talk more about that. So we're seeing people that are even flying three hundred hours a year. They're like, don't wanna deal with owning a plane. And I think actually, like, that's one of the big differences in this new generation of wealth. These people don't want complexity. Most of them are able to book well in advance. They're not last minute people. Are willing to book seven days in advance, two weeks in advance. They don't need that four hour call out most of the time. If they do, they can find other options. And those people would rather simplicity, ease of use. They don't want to deal with the complexity of owning a plane. So in some cases, even above three hundred hours doesn't always make sense to own. But typically, you know, in that sort of range the second reason you own a plane is for cost efficiency. So once you start hitting the two hundred and fifty hour range, the cost of owning and spreading the pilot costs and all the fixed costs around around one aircraft flying three hundred hours a year starts to make much more sense.
00:11:24 · Molly O'Shea, Israel Slodowitz
[00:11:24] S1: Okay. Let's go through a scenario. You just bought a Global 8,000. Walk through the financing of that and the maintenance. This is an extreme example, I'm aware. [00:11:33] S0: It's an extreme example. [00:11:34] S1: But let's shock the people.