Aircraft Sales Insights

Any aircraft owner will tell you that the primary motivation for aircraft ownership is the ability to do more in less time.

One of our clients, an oil and gas professional in the United States, recently had a day like this:

• Left Fort Worth in the morning for a work site in Williston, ND.
• Attended meetings in Bismarck, ND.
• Changed plans when the last meeting at Bismarck was cancelled, used the time to stop in to resolve a problem in Oklahoma City.
• Arrived home in Fort Worth in time for dinner with the family.

Day in the Life of an Airplane Owner – Click to enlarge the map

Benefits to the Aircraft Owner

Besides the unequaled schedule flexibility that aircraft ownership provides, there are other benefits that may not be as obvious but can be equally valuable.

• The airplane becomes a mobile office, complete with needed electronics, communications equipment, a luxurious conference room, and a secured place to keep files and equipment.
• You can collaborate with your flight crew to safely adapt to changing business and weather situations.  A resourceful corporate pilot has more flexibility than airline pilots, can find ways to get you where you need to be, getting around weather and high traffic situations.
• The crew can be vetted and have confidentiality agreements in place.  The only people on board are those that you approve.
• Luggage and equipment can be left on the airplane so you’re ready to go at a moment’s notice. Many aircraft owners keep business and personal items on board for the flexibility to stay an extra day (or several days) if they encounter a situation that requires it.
• Luggage can be accessed in flight (rather than checked or shipped.)

You can certainly put a price on aircraft ownership. We specialize in creating cost-effective solutions for your specific needs.

You cannot put a price on time, flexibility, confidentiality and safety.

Give us a call today at 817-328-2900 and let’s talk about how aircraft ownership can simplify your business life.

Brad Harris

FOUNDER AND CEO, Dallas Jet International
As founder of Dallas Jet International, Mr. Harris has established an esteemed 23-year aviation career.  He holds of Bachelor of Science Degree in Professional Aviation and Airway Science and and a Masters Degree in Industrial Organization Psychology from Louisiana Tech University.   Mr. Harris entered the aviation industry in 1992 as a corporate pilot for a Fortune 500 corporation and soon started a successful aircraft leasing and renting company.

In 1993, Mr. Harris began his aircraft sales career and became one of the most highly respected aircraft brokers in the world. In 2002, Dallas Jet International began offering aircraft sales, consulting, and brokerage services. Mr. Harris is a current airline transport pilot who is type-­rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker, Falcon, Citation, Beechjet, Lockheed JetStar II, Diamond Jet and King Air 300 / 350. Mr. Harris parlays extensive hands-­on knowledge and experience into clear results for his clientele. His firm has set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets, for several clients. Mr. Harris also possesses significant entrepreneurial experience in real estate and commercial insurance. This knowledge, combined with unparalleled experience in all facets of corporate aviation, is the foundation of success for Dallas Jet International. He often speaks to groups of aviation professionals, publishes monthly blog articles and sits on the Advisory Board for GE Capital Corporate Aircraft and Finance, and CAE Simulflite. He currently sits on the board of Directors at NARA (National Aircraft Resale Association) as Chairman.

Is it cost effective to sell your older, less expensive aircraft and upgrade to a newer aircraft with a higher acquisition cost, but with a lower operating cost? Our jet sales analysis may reveal that it is.

At some point, the acquisition cost of a new aircraft can be offset by operational costs that are less than your older, less efficient airplane in our jet sales analysis

Depending on the situation, yes!

A real-world example can be very helpful in understanding the importance of balancing acquisition cost with operational cost.

A client approached us with this very question several months ago.  He owns a 1990 Bombardier Challenger 601 for the last 10 years. The operational costs seemed high, and the aircraft was not serving his needs as well as it used to.

Jet Sales Analysis

DJI performed an analysis of his current aircraft value and recent sales of comparable aircraft.  We also performed our usual process for analyzing his current needs, including, among many other factors:

• Budget for the acquisition
• Annual budget for operational costs
• Usual range of travel
• Passengers/Luggage
• Conditions of typical destinations (high, hot, short runways, other considerations)
• City Pairs
• Domestic/International travel needs
• Cabin and amenity preferences and requirements

Based on our client’s needs, we provided a short list including a (newer) Bombardier Challenger 300, a Citation Sovereign, or a Falcon 2000.  We provided information and discussed the particulars, and decided upon a Citation Sovereign as the ideal solution for their needs.

Together, we determined that a Citation Sovereign was the ideal aircraft. Our client requested that DJI begin looking for on- and off-market Citation Sovereigns available to acquire.

Here’s a simplified breakdown of the numbers:

So far, it certainly seems as though our client is spending considerably more money.  But the “rest of the story,” as Paul Harvey used to put it, is this:

Our client flies approximately 300 hours per year.  At that rate, they save about $720,000.00 per year in operating costs.

If our client keeps the airplane for nine years, he has saved more than enough to cover the additional outlay in acquisition cost, including the interest or opportunity cost of using that money.

In addition to the cost savings realized over time, our client also enjoys many benefits of an aircraft that is seventeen years newer:

• Faster, easier and less frequent required maintenance
• Better dispatch reliability
• A safer, more reliable airplane
• More advanced avionics
• A much newer, more luxurious interior

As always, it’s our objective to find the best outcome for each client’s individual situation. A newer, more expensive airplane may NOT be the best choice for you.  But if you’re flying an older aircraft, you fly a lot, and you find that your airplane is becoming less reliable and potentially facing expensive repairs, please give us a call and let’s talk about your situation and options.

Brad Harris

Brad Harris is founder and CEO of Dallas Jet International. Mr. Harris holds a Bachelor of Science Degree in Professional Aviation and Airway Science and a Masters Degree in human resources from Louisiana Tech University. Mr. Harris entered the aviation industry in 1989 as a corporate pilot for a Fortune 500 corporation. In 1993, he started a successful aircraft leasing and renting company which expanded to a successful aircraft management company in 1995. In 1993, Mr. Harris began his aircraft sales career and, in a very rapid fashion, became one of the most highly respected aircraft brokers in the World. In 1998, Mr. Harris started an aircraft sales, consulting, and brokerage company that is known today as Dallas Jet International. Mr. Harris is a current airline transport pilot who is type-rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker 125, Falcon 10, Citation 550/500, Beechjet 400, 400A, Lockheed Jetstar II, Diamond Jet and King Air 300/350. In the many different aircraft markets, Mr. Harris parlays extensive hands-on knowledge and experience into clear results for his clientele. In addition to Mr. Harris maintaining a career focus on jet sales, he also has extensive experience in aviation consulting and management. Included on his client list are several clients for whom Mr. Harris and his firm have set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets. He and the firm are currently managing a Gulfstream V, a Gulfstream IV, a Falcon 50, a Citation II, a Citation ISP, a Citation Mustang, a Hawker 400XP, and two King Air 350’s.What most people do not know about Mr. Harris is that he possesses significant entrepreneurial experience in real estate and commercial insurance. This business experience, combined with his unparalleled experience in all facets of corporate aviation, has been the foundation of success for Dallas Jet International and its clients.

Operating costs are a key factor in determining the best aircraft for your needs. This Hawker 850XP has moderate estimated operating costs.

When DJI consults with a client about the ideal aircraft, we need to thoroughly understand the clients’ transportation needs in order to help them select the best aircraft.

Not surprisingly, acquisition cost is usually the most important factor. Of course, major considerations also include speed, range, cabin size and dispatch reliability of the aircraft.

But what sometimes surprises clients is the difference that operating costs can make to the total financial picture.

In some cases, operational costs can have such a significant impact on the total investment profile of an airplane that it becomes a financially sound decision to purchase a newer, larger, or otherwise more expensive plane that has lower operating costs.  We will illustrate this as a case study in a future article.

What follows is a discussion of the key factors we consider as we guide our customers through the aircraft selection process.

Operational Costs

Operational costs include all of the expenses required to own and operate the airplane, including fuel, pilots and crew, scheduled and unscheduled maintenance, hangar, insurance and many other factors.

Operational costs are further divided into variable costs and fixed annual costs.

Understanding Variable Costs

Variable costs are linked to the number of hours the aircraft is flown.

Fuel is the largest operational expense.  Just as smaller, lighter cars get better fuel economy than large SUVs and RVs; smaller, lighter aircraft are usually more fuel efficient.  Smaller, simpler airplanes may have lower crew and maintenance requirements. Landing and parking expenses are also lower for smaller airplanes.

The table below lists the estimated cost per hour for five popular business jets.

Cost data in this chart is intended as a benchmark for illustrative purposes only.

Understanding Annual Fixed Costs

Whether the aircraft is flown or not, annual fixed costs accrue.  Crew salaries, required training costs, hangar, insurance, avionics software updates, and many other expenses must be paid to keep the airplane ready to fly when you need it.

While some maintenance requirements are based on the number of hours flown, there are also maintenance requirements that are based on the age of the aircraft.   These time-based maintenance items are counted as annual fixed costs.

The chart below illustrates the difference in annual fixed costs across these airplanes.

Cost data in this chart is intended as a benchmark for illustrative purposes only.

The Best Solution for You

Of course your situation is unique.  Most of our clients have a budget for their transportation needs, and finding the right balance of variable and fixed annual costs is just as important as the acquisition cost.  In fact, the right mix of operational costs can be even more important to a successful ownership experience because they reoccur over time.

At DJI, we understand that it is our responsibility to ensure that you understand all of the factors that are important to you, including the variable and annual fixed operational costs. Our goal is to ensure your airplane buying experience is a positive one.

Brad Harris

Brad Harris is founder and CEO of Dallas Jet International. Mr. Harris holds a Bachelor of Science Degree in Professional Aviation and Airway Science and a Masters Degree in human resources from Louisiana Tech University. Mr. Harris entered the aviation industry in 1989 as a corporate pilot for a Fortune 500 corporation. In 1993, he started a successful aircraft leasing and renting company which expanded to a successful aircraft management company in 1995. In 1993, Mr. Harris began his aircraft sales career and, in a very rapid fashion, became one of the most highly respected aircraft brokers in the World. In 1998, Mr. Harris started an aircraft sales, consulting, and brokerage company that is known today as Dallas Jet International. Mr. Harris is a current airline transport pilot who is type-rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker 125, Falcon 10, Citation 550/500, Beechjet 400, 400A, Lockheed Jetstar II, Diamond Jet and King Air 300/350. In the many different aircraft markets, Mr. Harris parlays extensive hands-on knowledge and experience into clear results for his clientele. In addition to Mr. Harris maintaining a career focus on aircraft sales, he also has extensive experience in aviation consulting and management. Included on his client list are several clients for whom Mr. Harris and his firm have set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets. He and the firm are currently managing a Gulfstream V, a Gulfstream IV, a Falcon 50, a Citation II, a Citation ISP, a Citation Mustang, a Hawker 400XP, and two King Air 350’s.What most people do not know about Mr. Harris is that he possesses significant entrepreneurial experience in real estate and commercial insurance. This business experience, combined with his unparalleled experience in all facets of corporate aviation, has been the foundation of success for Dallas Jet International and its clients.

As an aircraft owner, part owner or fleet manager, your primary concern is usually getting where you want to go efficiently.  You probably leave decisions and calculations about weather and density altitude to your pilots. There is a point where such decisions and calculations do need to be considered, so that you don’t encounter unnecessary delay or expense.   If your business or vacations take you frequently to places that are considered “hot and high,” it’s important to factor that into your aircraft choice and management.

Dallas Jet International has an extensive process that we use every time we acquire an aircraft for a client.  During the first two steps of that process, we become acquainted with your transportation needs and expectations.  Do your itineraries include Denver, Calgary, or Las Vegas, or other hot and/or high destinations?  Will you want to take off from these airports in the middle of the day?

Based on your responses, we select the aircraft type that will provide the most reliable, efficient transportation to the places you need to go.

Temperatures are frequently over 100 degrees during a Denver summer day.
It requires more power to take off – engine performance suffers due to the high density altitude.

Some of the considerations we need to make for “hot and high” flying conditions include the following:

• Airplanes require a longer takeoff run, potentially exceeding the amount of available runway. (This may impact your ability to land and take off from some smaller, more remote airports.)
• Low air density hampers an aircraft’s ability to climb. In some cases, an aircraft may be unable to climb rapidly enough to clear terrain surrounding a mountain airport.
• In some cases, aircraft have landed at high-altitude airports by taking advantage of cold temperatures only to become stranded as temperatures warmed and air density decreased.
• At many airports and locations, there are other specific FAA regulations and guidelines that impact the ability to take off or land at specific times.

FAA regulations require that planes departing Aspen during inclement weather have the ability to clear nearby mountain tops with one engine inoperative.
This leaves some private planes grounded.
Photo by Mark Fox, The Aspen Times

As an example, a client who has business or home in Aspen Colorado has a unique issue – FAA regulations require that departures during inclement weather (instrument flying conditions) the aircraft must be able to clear nearby mountaintops with one inoperative engine. This requirement keeps many private jets grounded at Aspen during cloudy weather. There are several aircraft that are better suited to perform out of high and hot airports.  We at Dallas Jet International try to analyze our clients’ needs before deciding on a certain model of aircraft.

Hot and high airports

Notable examples of hot and high airports include:

• Aspen, Colorado – Aspen-Pitkin County Airport
• Addis Ababa – Bole Airport
• Brasília – Brasília Airport
• Bogotá – El Dorado Airport
• Calgary – Calgary International Airport, especially from late spring to early autumn
• Denver – Denver International Airport, especially from late spring to early autumn
• Edwards Air Force Base
• Harare – Harare Airport
• Johannesburg – OR Tambo International Airport
• Kabul – Kabul Airport
• La Paz – El Alto International Airport (not generally a “hot” airport, as average high temperatures are never more than 15 °C (59 °F) throughout the year, but one of the world’s highest commercial airports at 13,325 feet (4,061.5 m))
• Madrid – Madrid-Barajas International Airport
• Mexico City – Mexico City International Airport
• Phoenix – Phoenix Sky Harbor International Airport (altitude of 1,135 feet (346 m) is not extreme, but the area’s hot desert climate gives it “hot and high” characteristics for most of the year)
• Quito – Mariscal Sucre Airport
• Salt Lake City – Salt Lake City International Airport, especially from late spring to early autumn
• Telluride– Telluride Regional Airport
• Yerevan – Zvartnots International Airport

Your Situation, DJI’s Experience

DJI understands that our success in this business depends on trusted long-term and newly created relationships. Those come from listening carefully to our customers’ needs, asking questions to ensure we understand their situation and priorities, and judiciously applying our experience to ensure that every customer is completely satisfied the aircraft we collectively choose and the aircraft best suited to their needs.