Managing Business Aircraft as an Asset: Strategies for Acquisition and Replacement

Jan. 12, 2017

Do you manage your aircraft as an asset, ensuring its greatest value upon resale? Proper strategy requires careful consideration through the entire ownership cycle – from purchase through replacement.

“We think of aircraft as assets in a portfolio,” said Don Dwyer of Guardian Jet, an industry-recognized expert in fleet planning and aircraft acquisition. “An aircraft may not be as nimble as stock, but it needs to be as nimble as possible. If you have an asset that is always prepared to sell, you’ll sell it faster and for more money.”

Configuration, condition and appropriate model for the current market are keys to keeping an aircraft asset in top shape for resale. For example, Dwyer discourages clients from configuring an aircraft with unusual seating arrangements or inadequate lavatory or galley facilities, emphasizing the importance of smart configurations consistent with market expectations.

Maintaining the condition of your aircraft, and being familiar with the residual value of the model, can also help owners take advantage of market fluctuations and opportunities.

“You should always know what your aircraft is worth. You should always know what’s going on in the market,” said Dwyer. “Further, you should have a constant understanding of your aircraft’s value to avoid a surprise recapture [of depreciation deductions],” since depreciation recapture is taxed at ordinary income tax rates and could result in an expensive tax bill upon sale of the aircraft, if not properly managed during ownership.

Proper acquisition planning requires coordination of a team, including representatives from the main business unit and finance, legal and tax departments, as well as pilots and maintenance professionals.

“The aircraft manager is an asset manager, and this adds value to your company,” said Dwyer. “The aircraft manager needs to be a good steward of the asset and know how to protect it financially.”

Dwyer will discuss this issue in greater detail during an education session on Jan. 26 at the NBAA West Palm Beach Regional Forum. Learn more about the forum.