Private Jet Investing: Direct vs Fractional Exit Paths, Tax Games, and the Only Liquidity That Actually Matters
- Mitt Chen
- Jan 17
- 5 min read
Partners. Fellow allocators. Frequent flyers who read balance sheets at 41,000 feet.
Let’s skip the aviation porn and start with the offense:
Most people who think they “invested” in a private jet actually pre-paid for convenience and called it strategy.
Jets are not toys. They are not businesses. They are capital-intensive mobility instruments that punish delusion and reward structure. The ultra-wealthy understand this. Everyone else is buying aluminum with emotions and then acting shocked when depreciation shows up like turbulence over Denver. This letter is about how serious capital touches aviation — not how influencers lease status.
The three-sentence confession
Private jets are not investments — they are capital structures with exit constraints, and the difference between direct ownership and fractional programs is not lifestyle, it’s tax timing, liquidity illusion, and balance-sheet hygiene.
Direct ownership is a depreciation and control play disguised as freedom; fractional ownership is a prepaid service contract dressed up as asset exposure. And the only people who consistently “win” in private aviation are those who understand when the jet leaves the balance sheet — and under what tax regime. Everything else is runway noise.
Market posture (the part the sales deck hides)
The private aviation market has exploded post-2020 — not because people discovered flight, but because time risk became visible. Commercial aviation revealed its fragility. Executives, families, and operators priced certainty for the first time.
But certainty is not alpha.
Jets deliver:
speed
privacy
jurisdictional flexibility
They do not deliver appreciation. Anyone telling you otherwise is selling hours.
The real market numbers (no romance, just physics)
A few hard truths:
New long-range jets (Gulfstream / Bombardier class) cost $60M–$80M+ new.
First-year depreciation alone can run 8–12%, even in strong demand cycles.
Operating costs (crew, maintenance, insurance, hangar, management) often run $5M–$8M annually for heavy jets.
Secondary market liquidity exists — but it is thin, cyclical, and buyer-specific.
Manufacturers don’t talk about exits. Operators don’t talk about residual risk. Allocators should talk about nothing else.
Direct ownership: control, depreciation, and the tax chessboard
Let’s start with the “alpha” everyone thinks they’re buying.
What direct ownership actually gives you
Full scheduling control
Tail-specific customization
Charter revenue optionality (if structured correctly)
Accelerated depreciation leverage
This is where the tax conversation gets interesting.
In the U.S., properly structured aircraft ownership can unlock:
Bonus depreciation (subject to current-year rules)
Business-use deductions
State tax arbitrage depending on basing
Estate planning flexibility (via LLC / trust ownership)
But here’s the part people miss: You’re not buying a jet. You’re buying a depreciation engine that happens to fly.
If you don’t have:
sufficient active income
real business use
competent aviation tax counsel
Then congratulations — you just bought a very loud liability.
The exit problem (where fantasies go to die)
Jets do not have a “market.”They have buyers.
Exit depends on:
airframe age
engine hours
maintenance programs
avionics relevance
geopolitical demand cycles
A well-maintained jet can sell in months. A poorly timed sale can take years. And unlike real estate, you cannot “wait it out” cheaply. Carrying costs are relentless. This is why sophisticated owners pre-plan exit before delivery.
Fractional ownership: not an investment, a subscription with paperwork
Now let’s dismantle the most misunderstood structure in aviation. Fractional programs — think NetJets or Flexjet — are not asset ownership in any meaningful allocator sense.
They are:
long-term service agreements
with capital prepayment
and controlled exit terms
You buy a share. They manage the asset. You get guaranteed hours.
What you don’t get:
control over resale timing
meaningful residual upside
tax optimization flexibility
Your “asset” exits when they allow it, at their formula, under their market assumptions.
Which is fine — if you understand what you’re buying.
Why fractionals still exist (and thrive)
Let’s be fair.
Fractionals solve three problems extremely well:
Predictable access
Fixed budgeting
No operational headache
For operators who value:
convenience over control
time over balance-sheet efficiency
simplicity over tax engineering
Fractionals are rational.
They are just not investments.
Confusing utility with return is how people feel misled later.
A field case (real, quiet, instructive)
A U.S.-based operating family acquired a long-range jet outright through an LLC tied to active businesses.
They:
optimized bonus depreciation in Year 1
chartered selectively to offset operating costs
pre-negotiated a resale window with brokers before taking delivery
After five years:
jet sold into strong international demand
depreciation shield already harvested
net cost significantly lower than equivalent fractional usage
The patriarch summed it up cleanly:
“We didn’t make money on the jet. We avoided wasting it.”
That’s the correct benchmark.
Behind the curtain (what aviation salespeople won’t say)
1. Jets are jurisdictional tools
They matter less for travel and more for mobility across regulatory, tax, and time zones.
2. Manufacturers don’t optimize for your exit
They optimize for new deliveries. Residuals are your problem.
3. Fractionals internalize your upside
You trade optionality for predictability. That’s the deal.
4. Charter revenue is not passive
It introduces compliance, wear, scheduling conflicts, and brand risk.
5. The best jet owners talk more to tax lawyers than pilots
As they should.
OEM reality check (names matter)
Aircraft choice impacts exit more than owners admit.
Gulfstream jets historically hold residual value due to range and brand trust.
Bombardier competes aggressively on cabin and performance.
Fleet standardization matters more than aesthetics.
Buy what brokers can sell — not what looks best on Instagram.
Tax strategy (where the real game is played)
Jets interact with:
depreciation regimes
business-use tests
state sales/use tax
estate planning
cross-border structuring
A poorly structured jet amplifies scrutiny. A well-structured one absorbs income legally.
This is not DIY territory. Jets are audit magnets. Structure accordingly.
How sophisticated capital actually plays aviation
Again — observation, not advice.
Common patterns:
Direct ownership for high-utilization operators with real tax capacity
Fractionals for lifestyle certainty, not balance-sheet games
Sale-leasebacks in niche cases
No emotional attachment to the tail number
Jets are tools. Tools are replaced when inefficient.
Risks (because gravity still applies)
Let’s be clear:
Depreciation is real.
Regulation shifts.
Fuel volatility matters.
Public optics can change fast.
Liquidity dries up in downturns.
And the biggest risk?
Believing a jet validates success.
It doesn’t. It only exposes structure.
Allocation thought experiment (purely academic)
If someone insisted on aviation exposure purely as infrastructure:
0% expecting appreciation
100% focused on tax efficiency, time value, and optionality
Exit planned on Day 1
Emotion removed entirely
Anything else is cosplay.
Closing shot
Private jets don’t make you rich. They reveal whether you already understand capital.
Fly wrong, and you bleed quietly at altitude.Fly right, and the jet disappears from the balance sheet exactly when you want it to. Supporting files exist — for those who know where to look.
…and that’s all I’ll say until we’re off this channel.
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