To buy, or not to buy, that is the question. An aircraft may be a luxury item or a workhorse; either way, flying inspires great passion. But really, why would anyone want to own one? They are expensive to buy, expensive to maintain and subject to extreme depreciation over time. With that in mind, EBAN spoke to some of the region's operators about the background to their purchase decisions and how ownership compares to charter or lease operations.

Maintaining the work-life balance

"I chartered before I owned, purely from a capital perspective," says Sweden-based sales and acquisitions company Wingform co-founder Andrew Gratton. "We didn't have the money to purchase an aircraft initially. If I could I would have purchased first."

Flexibility was his key driver to owning the asset. His family was growing; he had small children at home and if flying scheduled he would be 'missing' for two or three days of their lives thanks to connecting flights, running the risk of cancellations and the consequent frustration and stress. "In that sense the cost became justified," he says.

In reality he acknowledges that it can be difficult to justify the cost of owning and operating an aircraft. "It is a question of putting monetary value on time," he says. "You yourself have to decide what stage of life you are at and what your direction is, in order to justify it. For me, being at home with my small kids and my wife was very much worth the financial setback."

He started off with a Navajo twin piston and moved on to a Citation, which has a greater range. He says that there is no value in owning an aircraft where flight hours are low. When he was chartering to go on business meetings he could see that, if it was a two-day charter, he was still paying for the aircraft to stand on the apron for the minimum amount of hours, and that became a tipping point.

There are many facets to finding the perfect fit of an aircraft. Some people will try to sell you what is in their inventory. But ultimately there are some very simple questions that need to be answered: can the aircraft complete the missions you need; does it fit your budget and, lastly, is it comfortable? He suggests a prospective owner charter several different types of aircraft, and trial charter management companies, in order to form an opinion. But most importantly, do not rush into it.

The tipping point from charter to ownership can be 50 flight hours a year

According to UAE-headquartered Empire Aviation Group (EAG) executive director Paras Dhamecha, chartering an aircraft provides a client with direct access to private aviation through a straightforward transaction without the need to invest in the infrastructure required for aircraft ownership. Neither are there worries about overhead or maintenance expenditures. Charter clients can select their aircraft type to meet the demands of the mission, whether this is a long-haul inter-continental trip to a major global business destination or a regional flight to a luxury leisure destination in the Indian Ocean.

With ownership comes comfort and familiarity he says; you hire your own pilots, it is your aircraft and access is easy to arrange. EAG can mobilise an aircraft for an owner with three hours' notice. The interior can be individually customised and main-tained to the standard desired. The decision to travel is as simple as calling the crew or management company and telling them when and where to go; it is the ultimate in personalised international travel. Choosing the right aircraft is the key, and then a professional aircraft management company that will protect the value of the aircraft asset.

Dhamecha suggests that if a client is flying more than 50 hours a year on a private aircraft, then it is time to look into various ownership structures and options. Of course, there are exceptions to this rule but it serves as a data point. Aircraft charter is a great option but you pay for the convenience, and it is important to remember that the charter rate also covers the aircraft broker fees. So there comes a point when it makes sense to take a closer look at the advantage, and real pleasures, of aircraft ownership as a realistic option versus paying the premium for chartering.

"If aircraft ownership and charter are the two main pillars of private aviation there are subset groups within both categories," Dhamecha continues. Within the ownership category there are whole ownership, partnerships and fractional ownership options. Within the charter category there will be one-off trips, block charter or charter cards, country club style memberships and time-shares. There are so many options available to the prospective owner, and indeed charter, client that he would strongly recommend consulting a private aviation specialist for help with the decision.

Chartering brings diversity and flexibility

"If you have regular flying commitments of about 150 hours a year or more it starts to make sense to look at owning your own aircraft," says Luxaviation UK CEO Patrick Margetson-Rushmore. "It may be more costly, but you get the same aircraft each time, your own crew who will be with you on every flight, and you know that, subject to maintenance, the aircraft is always going to be available to you."

If you don't own an aircraft and only charter he says you will more than likely have a different aircraft, different crew, different operator and a different experience depending on flying requirements. Put quite simply, a lot of people own an aircraft because of the exclusivity and privacy benefits, as well as the ability to have more control over their own time.

However, chartering may bring with it a greater diversity in terms of the aircraft available on the market. Perhaps one day you need a small aircraft to go from Paris to Luton or Geneva, another time you may have a long range requirement. Perhaps a particular aircraft may not be available on the day it is needed. If you own your own aircraft you have complete familiarity and more control, but it may only be suited to either short or long range flights which means you have less flexibility compared to chartering. It makes little financial sense to fly short hops on a large jet, and several fuel stops may be needed for a longer journey on a smaller jet.

"When it comes to charter, your PA makes a phone call, you get a price, you pay, you fly, and then you forget all about it," Margetson-Rushmore continues. This process alleviates the issues associated with aircraft ownership such as the financial question of price depreciation, dealing with crew, maintenance and planning. And an operator tends to deal with all these things so an owner doesn't necessarily need to worry about them. However, the responsibility in terms of running an aircraft is still to an extent shared.

Luxaviation UK advises owner clients that, depending on the availability of the aircraft for charter and whether it is suited to the trip in question, they can offset a material amount of the running costs. On a business jet fixed per annum costs can amount to around £250,000 to £300,000, which is a substantial amount of money if you are only flying once a week for short distances; the average cost per hour is going to be very high. The cost is justifiable if flights are regular and the aircraft is continuously available.

Margetson-Rushmore says an aircraft owner won't ever really recover the depreciation and capital costs of purchase; instead it is all about trying to reduce fixed direct costs. The plus side of owning and then chartering out an aircraft is that it generates income for owner and operator, which represents a contribution towards things like hangarage costs, management fees, crew, insurance and the fixed direct costs.

Despite this he says, owners have to be realistic about several factors, including the wear and tear the aircraft will go through. "If other people use the aircraft you can expect that the odd seat will get scuffed or a drink will be spilled on the carpet. People don't deliberately damage the aircraft but it will happen and it is something of which an owner should be mindful."

So ownership is not for everyone. A company that owns a jet may have two or three employees who are required to fly privately across different distances, perhaps at the same time. With one aircraft, it is only possible to do one mission at a time, and the aircraft may not be fit for all the missions or number of people flying. This is fine if there are only one or two executives who either fly solo or together at the same time, but charter is the better option if flights are less regular and to various locations.

An under-utilised aircraft can be extremely expensive. Research recently carried out by a large airframe manufacturer found that an average sector was 2.7 or 2.8 hours, yet the aircraft it manufactures are designed to travel for 10 or 12 hours. When considering purchasing a jet, it is essential that you buy an aircraft that suits your requirements, he says.

One thing that does justify flying on larger aircraft over short distances is the increased cabin space, where passengers can stand up and walk around. A Citation Excel's cabin is about 5' 7" tall so most passengers have to crouch, whereas the six foot headroom on a Legacy 650 makes it much easier to walk around in. Bombardiers tend to be quite wide and have cabin heights of around 6' 2", as do Gulfstreams and Falcons.

Margetson-Rushmore says the rotary market is very much the same as the fixed-wing market, in that when flying sporadically on short distances people tend to charter. Helicopters are best used over 200-300 nm radiuses, so in the UK that would be far enough to get you from the garden to the racetrack, or to a factory up in Cumbria.

Before the financial crash of 2008 Luxaviation had one Excel, five Mustangs, two Citation IIs and two King Airs. All of them, except for the Mustangs, were bought second-hand. Because the aircraft were owned they needed to be in the air as much as possible in order to make money; according to Margetson-Rushmore the break-even point of the Citation Mustang is about 520 hours a year. WingX data suggests the light jet sector gives value when flying on average 550 hours, but it seems to him like a small return for a lot of effort. Since the market fall when pricing became difficult the company has sold its aircraft, in fact it has just sold the last Mustang. It still has an Excel and two Citations IIs, and they do make money, but they were bought second-hand and are still very suitable for charter.

TAG's mature customer base looks to lease and charter solutions

UK-headquartered TAG Aviation provides a full range of management services for around 65 aircraft in the European fleet. A number of its clients are looking to generate revenue to offset costs and this covers a wide range of aircraft capacity such as the Airbus ACJ, Global Express, Gulfstream, Embraer Legacy 650 and a number of Dassault Falcon 7X.

On the to-do list of president Graham Williamson is the develop-ment of a leasing product for a fixed term with fixed amounts granting full access through a long-term charter agreement. An individual or corporation can enjoy the benefits of ownership but this removes the uncertainty of maintenance and depreciation; at the end of the term they can walk away or, of course, sign up for a new aircraft. "We think there is a market for the certainty and predictability of this product because you can have the aircraft but without all the associated risks and volatility of full ownership," he says.

One client has had an aircraft for a number of years. Their usage requirement had reduced and since the flying hours were predicted to be less than 200 a year, fixed costs and overheads meant keeping it was getting very expensive. Williamson was asked what he would advise.

He did a study of the real cost per hour for those 200 hours, factoring in depreciation, borrowing and so on, and the cost was significant. He gave the client a model that said the net cost would come down considerably, spreading fixed costs, if it did another 300 hours of charter. However the cost of the 200 hours would still not fall below the charter rate for a similar aircraft in the open market.

"Although I'd love to manage their aircraft and gain 300 hours of charter with it, the honest answer was that they should sell the aircraft," he says. "This they did." While TAG did not benefit from the advice it was the right thing for the client. Fortunately the company has many other owner clients who see the benefits of ownership beyond a simple economic calculation in terms of flexibility, security and access to destinations when they choose.

"I never believe it when someone tells me they are going to buy a jet and do lots of charter and make money," Williamson adds. "It just isn't possible." Looking to the future he thinks there has been a change in the key drivers for aircraft ownership and people will be more cautious and seek more lease and charter solutions. There will always be high net worth individuals and corporations who see the benefit of ownership, but he thinks that people under 40 are not interested in having such assets anymore. "They are happy to rent, or develop more bespoke solutions, and the status symbol of ownership is not a key motivation," he adds.

TAG has focused on charter for the last two or three years and rather than just being a supplier of capacity on the fleet it operates, it is looking to be more bespoke. Its new TAG One account, which will compete with traditional jet cards, enables people to buy advance hours and have the simplicity of making a single call. TAG will take care of everything.

Overall, says Williamson, a jet is a means of transportation and there are many ways to get access to the benefits. "Ownership, lease, fractional, one-way and round-trip charter will all have a place in the future and it is our job to provide these options, working collaboratively as an industry and as a vital part of the global economy."

You can't charter on a lease basis

UK-based Nova Systems started out selling flight test services. Chief of strategy and marketing Simon Sparkes says: "We needed to make sure that we could keep our pilots current and have the right level of assurance to enable us to sell properly." When the company started looking at chartering aircraft it became clear that a lot of the owners and private operators weren't properly enabled. "That was when we started to get our own aircraft," he says. But ownership needs a degree of management overhead and, from an accountable manager perspective, Nova Systems didn't have this. However it was able to lease UK training aircraft, which is quite limited from a 135 perspective, and then identified a broader charter market to tap into – that of aerial work. The company then looked for someone that could support it with an AOC.

"If I'm honest I don't think you can charter on a lease basis," says Sparkes. The monthly lease rates demand too high a level of utilisation, around 50 hours and more, so the company was forced to purchase; aircraft mortgage costs are lower than lease rates. Charter may be reasonably consistent but there will be a seasonal element. "You are always going to be busy with an aircraft between April and October compared with the winter period, although a big part of the reason for us having a twin is so that it can operate after dark," he says. "One of the things that drove us towards having an IFR-capable aircraft was to make sure that we weren't limiting usage on the basis that it couldn't go in to controlled airspace or it couldn't operate at night or IFR." This, certainly in the winter months, is an important charter attribute. It drives up costs, but there have been many incidents with charter operations in poor weather and it was important to the company to have an aircraft that could do IFR when needed. "You don't want to take the risk of cancelling flights if you can avoid it safely," he adds.

Does safety have a premium price attached to it? "Sometimes the charter market can forget that," he says, "and there are some regulatory hurdles to cross over the next few years, especially with regards to GPS approaches that will demand much higher levels of equipment than that currently attached to most aircraft."

So while there is very definitely a feeling that, for some, ownership is the preferred option, there is another school of thought from the manage-ment companies that supports a different approach. It really does depend upon which side of the fence you are sitting, and the tipping point seems to be the number of hours flown per year. We took a look at the pros and cons from their points of view.

Flying is in the blood

There are some who purchase an aircraft to support a career as well as a passion for flying. Sometimes the economics are not the overriding factor in a purchase decision. The aircraft enables the achievement of something more personal, and EBAN heard stories from adventurers and entrepreneurs for whom the dream of ownership has steered their path through life.

Harare-based Executive Air managing director Eduardt Mordt had always had a passion for flying. At night as a child he dreamed of swimming through the air on nightly adventures, but that all stopped when he gained his PPL in 1982. Those dreams became his reality and he tells us how that happened.

After leaving school he tried to join the Rhodesian Air Force. He passed all the preliminary tests but failed the final part of the pilot selection process because his upper leg was too long. He was told that he would not survive ejection from the Vampire Jets operated by the Air Force, were that to be necessary.

But life carried on; he served time in the military and then, after the Rhodesian Bush war, he became an assistant to a tobacco farmer. As soon as he earned enough money he was able to get his PPL with the local flight school, after which time he borrowed more money to buy his first plane, a Partenavia P64B. However, once he'd bought it he couldn't afford to fly regularly and had to let others rent it from him. "My friend flew my plane a lot more than me," he says.

He lived too far away from the flying clubs that might have made flying cheaper for him, but after working for a few more years he was able to upgrade to a Seneca II. He bought the aircraft in South Africa, and in order to import it without having to pay duties and VAT he did his commercial pilot licence and registered as a charter business.

Things did not go smoothly. Before he took delivery of the Seneca it was destroyed in a crash by a pilot who had hired it to perform aerobatics. Mordt lost everything, including his insurance claim, but he was determined to start again.

He had a share in a Reims Rocket (Cessna 172) and continued to enjoy flying while 'keeping the wolves at bay' by farming. After a couple more good years he was able to buy a Saratoga that he flew all over southern Africa until 2002, when the Zimbabwe government took away his farm, and those of many others, without compensation. "It was devastating," he says.

However, he was fortunate that a good friend had bought a poultry business to which was attached a struggling charter business, Executive Air. Mordt was asked to manage the business and not long after became a partner. And that is how he got into charter. "I was thrown in at the deep end and had to learn the ropes on the run," he says. 'We have had to stay afloat through all the tough times in Zimbabwe since the land reform programme that effectively destroyed the Zimbabwean economy. We had to employ very creative methods to keep our heads above water." But he always wanted to own his own aircraft and he is still flying.

Executive Air now owns a fleet of aircraft ranging from the Cessna 206 to the King Air. It undertakes medevac ops and is a training school as well as conducting maintenance work for private individuals from Zimbabwe, Zambia, South Africa and Malawi. Its charter clients include large businesses, embassies and travel agents.

Another who went straight into aircraft purchase is Dorin Ivascu, president of Romania-based Regional Air Services, which undertakes a broad range of aviation activities from its base in Tuzla on the shores of the Black Sea. Ivascu buys aircraft to meet the needs of the company's flying school. It also owns Tuzla airport, whose coastal position enables the company to carry out sea survival training for helicopter and aircraft crews as authorised by EASA and OPITO, the energy industry skills body. "We went directly to ownership," says Ivascu. "Although we do have some aircraft on a financial leasing basis. Whatever aircraft I own in private, I put to commercial use via my investment in the company."

Africa's ageing machinery

In 1995 Henley Air started operations at Rand airport in Johannesburg with two JetRangers, but over time the fleet grew to include leased aircraft. CEO Andre Coetzee remem-bers how the fleet ratio was adjusted from 100 per cent owned to one that was weighted 80 or 90 per cent in favour of leased aircraft, but now the company has rebalanced so that it is in a position where it owns half the fleet, and the other half is leased.

"With ownership comes huge liabilities, but with leasing you don't have to look after those overheads, the maintenance and so on," he says. "From that point of view it makes sense not to own the machine, and a lot of South African corporations, and those elsewhere on the continent, don't own a single aircraft. They only lease." But as an operator he feels that there must be a mix of owned and leased aircraft to mitigate the disparity in charter rates. "Otherwise you find yourself flying mainly for aircraft owners and then charter rates tend to be quite poor," he adds.

Business travellers in South Africa will typically lease an aircraft, but whereas lease aircraft may be light on years in the rest of the world, Coetzee has a rapidly ageing fleet. There has been a tendency over the years for African operators to purchase US and European aircraft once they have become too old for operations in those regions. "We buy them and extract every last little bit out of them before they are reduced to spare parts," he says. "It is a common phenomenon here in South Africa, and I imagine it is even worse north of our borders." Henley Air has worked in some of those countries bordering South Africa and Coetzee says that while Mozambique, for example, is only around two hours away from Johannesburg, it is like being in a completely different world with nowhere near the level of consistency that South Africa enjoys.

Of Henley Air's single engine fleet he says the JetRangers are fantastic; the backbone of the work he does. But the company has also repositioned itself in the twin market with a fleet of ageing Bell 222s. "I don't think we'll ever revert back to where we once were in terms of the owner/lease ratio, unless the charter market takes a dramatic turn," he adds. "There is no way you can run an operation of our size based on leased aircraft only, especially with the guarantees that owners want on a weekly or monthly basis. It is very difficult to generate enough charter work given the low hourly rate."

His advice to business aviation travellers would be to make use of local expertise and established operators who work on a local AOC. He says that whereas operating conditions in South Africa are pretty similar to the rest of the world, further north in Africa the situation is drastically different. "It takes a lot of local know-how and patience to get the desired result and a lot of networking to make it worthwhile," he says. "Otherwise you'll definitely burn your fingers and pay sky-high fees."

In Lagos, Nigeria, religious leader Pastor Leke Adeboye bought a Gulfstream G550 through his company Emmanuel Aviation to repleace his ageing GIV. He says he uses it to undertake his numerous missionary works across the globe. Why has he bought a jet? "It's simple," he says. "I started out using first class air transport through regular airports but moved to charter, and then to ownership. It gives me total control and complete freedom, but it comes at a very high cost." Crew, fuel and maintenance aside, what he says he misses is the interaction with fellow travellers. "Apart from that time is not money, time is life. Owning allows you to do more with your time," he concludes.

Aircraft purchase for a very specific business

East Africa-based safari leader Mark C Ross moved to Kenya in 1977 in order to finish his university study. He had always wanted to be flying and guiding wildlife safaris, so for him the Cessna 206 was the logical choice. Nineteen years later he found a Caravan for sale and was told it would suit him better. It looked good, and although he didn't really want to spend the money he realised that he could carry twice as many people, plus their luggage, and go much further and faster.

So after two decades flying the 206 he switched to a Caravan, and then he beefed up the Caravan by putting a Blackhawk engine in it along with a four-blade prop. "Then it was flawless," he says. "I could cover Botswana, Mozambique, Rwanda, Uganda, even Madagascar and Ethiopia, and still do all my safaris. Plus I could still land the STOL Caravan anywhere that I could land the STOL 206, if I had the wing space. My home airstrip is at 5,500 feet elevation and I'm on the equator so density at altitude there is really an issue."

Ross bought another Caravan 208 which is on lease in South Sudan doing relief work. The one he keeps with him is purely for the safari business and for flying safari guests around eastern Africa. He also flies skydivers with the aircraft, jumping out of it himself at times, and is booked up with work from now until next June.

In a world where there are few safari guides who are either wildlife biologists or commercial pilots, he is both. While he has considered expanding the business, getting pilots to fly for him, he acknowledges that flying is the easiest part of his job. Teaching and knowing all about the wildlife is the difficult part. "Lots of pilots tell me they would like to fly for me but I don't need a pilot, I need a biologist who is also a commercial pilot," he says. So he doesn't plan to expand the business; it has done extremely well. He thinks he will probably sell off the Caravan and buy a TBM to fly around Africa to complete some photographic projects. He also wants to take it for a lap around the world with a friend.

His Caravan has a sky diving rail, a wind deflector and he has installed Aspen avionics complete with angle of attack and ground proximity warning. He can get Jet A anywhere whereas petrol or Avgas is harder to find. He says its strength is its short field capabilities, and to be able to cruise at between 175 and 190 kts with up to 12 people on board is fantastic. "What I do is very much bush flying," he says. "Once you leave Nairobi you are on your own, which is great. It's all dirt strips and short runways, but the modified Caravan is ideal for that. The Blackhawk does really well."

So, what is ultimately behind the purchase decision? It is costs versus flying hours certainly, and there is a tipping point at which the need for flexibility adversely affects the pricing of charter trips, but also there is the question of efficiency. Wingform's Gratton can be meeting with up to five different clients in three different countries within the same day. This is far easier to organise now that the aircraft is his own. He chartered in the early days as there was much to consider before finding his perfect fit. "People will try to sell you what's in their inventory and steer you based on individual experience with certain types of aircraft. Their advice is important, but ultimately it comes down to some very simple questions: can the aircraft complete the missions I need now and in the future; what fits my budget; and lastly, taking into account cabin space, amenities, noise and speed, does it feel comfortable? He chartered several different types of aircraft and talked to several different charter management companies in order to build his own perspective and says that most importantly, the decision should not be rushed.