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.
00:11:35 · Israel Slodowitz
[00:11:35] S0: Yeah, well I think, first of all, Global 8,000 is like a $75,000,000 airplane, just to put things into perspective. So that's like extremely expensive airplane to buy. It's really like you're going for the top of the line. Most people don't actually buy brand new. Even if they can, they don't. So the maintenance for a brand new airplane looks very different than a maintenance on a used airplane. Most people tend to buy used aircraft, aircraft that are pre owned, that's what it's called. Whereas a new aircraft, you'll have warranties and all sorts of, the manufacturer will give you all sorts of stuff like that, make the maintenance costs a little bit less expensive. But say you bought a global 8,075 million dollars. Typically, the first thing you have to think about is depreciation costs. So the aircraft do generally go down in value. They generally do not go up in value. So if you factor in a 10% a year reduction in value, when you go to sell the plane, you're not gonna be able to get as much money back. So a lot of people kind of ignore that, but you really wanna bake that into the cost of running the plane. Then you need to hire pilots. So you'll have to go out and find pilots. Typically, you'll want at least three pilots, especially if you're gonna fly longer missions. Pilots get sick. Pilots need to go on go to training twice a year. So you'll need to hire three to four pilots. That might run you 1 to 2,000,000 a year. There's insurance costs, there's hangar costs, and then there's maintenance costs, of course. And maintenance costs is kind of where everybody gets, they buy the plane, they think it's like it's a great investment, and then they're like, now the plane's down for six months because the windshield breaks or they can't get a part for the engine. So maintenance is like another area. This is kind of where people maybe try it out and then swear off after doing it for some time.