More and more companies and individuals are realizing the efficiency and productivity benefits of private jet aviation. They are gaining time, controlling their own schedules, exploiting more opportunities, traveling safely and securely, and achieving crucial face-to-face interaction with customers and prospects nationally and internationally. They are enjoying a better balance between their business and personal commitments. Private jets have access to more than 5,000 airports in the U.S. and Europe alone. Therefore, when flying for business or pleasure, private aviation users have the additional advantage of avoiding congested airline hubs by flying into smaller “reliever” or “general aviation” airports (most) often located closer to their final destinations. In short, they are opting for the comfort, service, security and privacy provided by customer-oriented aviation companies while avoiding the hassles, inconvenience, and concerns of commercial travel. Most of all, they are saving their most precious commodity – time.
- Time Savings
- Convenience
- Personal Security
- Cost Efficient
- Cost Effective
- Tax Savings through tax deductions and depreciation
- A strategic tool to grow your business
- Studies show that companies using business aircraft outperform those that don’t.
- Among the S&P 500, aircraft operators earned 146% more in cumulative returns than non-operators
Why Do Companies Rely on Business Aviation?
While companies that rely on business aviation represent many different professions and locations, they all have one thing in common - the need for fast, flexible, safe, secure and cost-effective access to destinations across the country and around the world. In many instances, business aviation is the best, or only, transportation solution - opening the door to global commerce for small-community and rural populations by linking them directly to population centers and manufacturing facilities. Studies have also shown that business aviation contributes greatly to local economies across the country.
Business aircraft allow employees to make a trip involving stops at several locations, then return to headquarters the same day. Hundreds or thousands of dollars can be saved on hotel rooms, rental cars, meals and other expenses that would be needed to make the same trip over several days via auto, train or airline transport. And because employees can meet, plan and work with each other aboard business aircraft, productivity en route is also greatly enhanced.
Is your aircraft ownership and operational structure correct?
You may be responsible for Federal Excise Taxes and not know it.
For example, if your aircraft and pilots are operated through a single LLC, and payments are made between the members of the affiliated group for transportation services... The operating company may be responsible for collecting and paying Federal Excise Tax (FET).
The most common practice to combat this is to place the aircraft in one entity and then dry-lease the aircraft to a second entity which furnishes the pilots, or to contract with an independent management company which furnishes pilots and provides other services.
The FET is 7.5% of the total cost of transportation plus a segment fee for each individual on board. The sum of these fees and taxes can therefore be quite significant.
Also... if your aircraft and pilots are in the special purpose entity (SPE) together, and the parent is paying the SPE for travel services it provides(...), the SPE may be wrongfully acting as a charter company under FAR 135. This may be a serious infraction.
This can again be easily avoided by keeping the aircraft within the SPE and hiring an independent management company to oversee operational control.
Xanadu Jet can help your company avoid these, and other, tax problems.