Private air travel offers comfort, privacy, and convenience with the benefit of no security screenings, no crowded commercial flights, no lost luggage, and fewer flight delays.
In this briefing we’ll discuss the benefits and option of purchasing a helicopter. The ownership and management of helicopters is very complex, so it is important to always work with tax and legal counsel before making final decisions.
At what cost?
Owning a helicopter can be complicated, time-consuming, and expensive. It is important to understand the pre-tax and post-tax cost implications; besides the sizable initial investment owners need to hire pilots, provide for ongoing maintenance, manage scheduling and pay for deadheading (or repositioning) of the helicopter (making sure it is always where you need it at any given point in time). These functions can be outsourced to a third-party flight management company, but whether they are handled in-house or outsourced to a third-party provider the costs are significant. Full ownership can also decrease flexibility for owners if they need different size aircraft at different times.
Helicopter ownership options are quite varied and you might find you may not need to actually buy a helicopter to fly privately. The costs and responsibilities of such a large purchase may not match the investment. For the majority of those who need private helicopters, there are attractive partial ownership options available as well.
Leasing options
There are a number of ownership options including outright ownership, fractional, joint, and charter.
How often you’ll use a private helicopter is an important consideration. In situations where it is difficult to predict usage, it usually makes sense to start out by chartering a helicopter or purchasing a flight card until you have a better understanding of how often, how far, and how many people will be flying. Especially if passenger loads will tend to vary widely from trip to trip, the flexibility of charter and flight cards may be advantageous, as they allow you to size the aircraft to meet each flight’s requirements.
With full ownership, you have complete control over the helicopter and crew. You know where the helicopter has flown, who has been on it, how many hours it has logged, and when it was last inspected and maintained. You have control over whom you hire to fly the helicopter and what their experience level is in that particular type of aircraft. You can equip the helicopter any way you wish, and you can be certain it is maintained up to your personal standards.
Every helicopter owner is looking for the most efficient way to fly at the best possible price. Whether you are a wealthy individual, a business owner, an entrepreneur or any other type of aircraft user, the issues involved in flying private are complex. If you are ready to move forward, the discussion needs to take into account numerous factors so don’t be surprised at the amount of questions you will be expected to answer. Understanding the tax implications of flying and owning a helicopter either privately or commercially can help you choose the ownership structure that appropriately addresses your specific needs and circumstances.
Responsibility
With ownership of a helicopter comes greater liability compared to other forms of private flying. Under normal circumstances, you as the owner are generally deemed to be in operational control of the aircraft, which carries with it greater responsibility and potential liability. This can be contrasted with a charter flight, where the charter operator is deemed to be in operational control. An owner also has the economic risk of depreciation on the aircraft, resulting in a higher or lower residual value at the end of the period of use. This residual value depends on such factors as general economic conditions, the make and model of the helicopter, and the supply of used helicopter on the market at the time of sale. Variable operating costs can be defrayed by making the helicopter available for charter to third parties; however, doing so typically reduces flexibility, not to mention the wear and tear on the aircraft and its engines.
Finally, full ownership may be the most expensive option, but depending on your usage, it can be the cheapest option in cost-per-mile terms if you use it heavily. It is important to examine each variable to make a final choice that is a good fit for your specific needs.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect on any particular issue.
