Family office insights this week:

• The lowdown on flying private

• Why family businesses should raise from family offices

• Mind-blowing numbers from the latest global family office report

• A great read on commercial aviation’s champagne era

• The ultimate family office Spotify playlist

Private Jets: The Good, the Bad and the Ugly

What you need to know if you’re thinking about joining the PJ club

The idea of the world’s biggest movie stars, celebrities or presidents flying commercial is in itself unusual these days.

But this wasn’t always the case as these vintage photos of stars on commercial flights shows.

Private jets first emerged in the late 1950’s, but it wasn’t until the 60’s after the US Air Force had called for smaller jet aircraft that manufacturers started developing them for private use.

Fast forward to today and there are almost 25,000 private or corporate jets in operation globally - almost as many as the number of commercial airplanes in service worldwide. 

Unsurprisingly, 63% of all private jets are in operation in the United States. 

If you’re in the market for a private jet, or just interested to know more about this niche industry, today’s newsletter is for you.

Types of private jets

The 10-seater Lockheed JetStar was the first commercially successful private jet, but Learjet changed the game with its first truly light jet, the 1963 6-to-8 seater Learjet 23.

Today, private jets can be as large as small airliners (think Trump Force One), some are actually converted commercial planes. 

They broadly fit into six categories, from Very Light Jets (4 seats) through to Light, then Midsize (8 seats), Super Midsize and then Heavy and Ultra Heavy jets, that can carry more than 18 passengers and are easily capable of flying London to New York.

What do they cost? And how far will they take me? 

The costs of private jets start at around $2 million for a very light jet and go on upwards of $100 million. 

Best-selling private jets are the midsize Cessna Citation XLS and the large Gulfstream G650.

Fastest private jet? That’s the Bombardier Global 8000 that can clock Mach 0.94. Most commercial airliners cruise at Mach 0.7.

The longest range private jet is the Boeing Business Jet 777X that can travel over 12,000 miles.

The Good

Speed 

Nothing beats the efficiency of rolling up to the private terminal and hopping on a private plane,  without the crowds and chaos of the busy commercial passenger terminals. 

It’s that simple really, and once you’ve done it, it’s hard to go back.

Comfort and privacy 

Is there anything more luxurious than flying private? Aside from the spaciousness and quality fittings most jets offer, there’s the knowledge that you’ll be in complete privacy rather than a thin curtain away from prying eyes and ears.

Oh, and no more oversize baggage issues ever again.

Charitable use 

Not as well documented, but private planes play a vital role in medivacs and delivery of organ transplants - a lot of the time this use is donated by the PJ owners.

Some also make theirs available for immediate assistance when humanitarian disasters strike, or when emergency repatriation operations are underway.

The Bad

Ownership costs

Obviously buying a private jet isn’t for everyone. If you fly more than 250-300 hours in a year and money isn’t an issue, dropping millions for a new jet that will likely lose 15% of its value in the first year might not bother you. 

And you won’t be alone: the global private jet market last year was valued at almost $44 billion.

There are other options though, buying a used jet the obvious one. Fractional ownership is another option that has gained in popularity. 

And if you don’t want to own anything, leasing, private jet charters and charter membership clubs now make it easier than ever to fly private. 

Most offer annual subscriptions (expect to pay $250,000 and upwards) that provide short-notice access to a fleet of aircraft with hourly rates. 

The largest, NetJet, offers everything from shared ownership, leasing and private flight travel club membership.

Operating costs

Private jet owners, whether full or fractional, will quickly learn that with the status and price of the plane come other expenses. 

Pilot and flight crew, maintenance costs, hangar rental and insurance are just a few.

The reality is owning a plan costs you, even when you’re not using it (the opposite of earning while you sleep!).

Carbon footprint 

The elephant in the room, no? Or is it. 

Global aviation accounts for 2.5% of all CO2 emissions. And private aviation likely accounts for less than 5% of aviation emissions, which doesn’t sound so bad?

But if you consider that private planes are up to 14 times more polluting, per passenger, than commercial planes, it does shift the perspective. 

And when it’s all collated into legible figures it all reads rather awfully. 

That said, private flyers do have ways to offset their carbon footprint - and the emerging potential of electric/hydrogen/biofuel aircraft looks promising.

Logistic issues

You won’t hear this often, but flying private is not always perfect.

Private terminals can sometimes get overcrowded around peak events (think the Super Bowl). 

Other problems can include being taken to the wrong private terminal (large airports often have several), the crew not arriving or catering going missing before lengthy flights.

With hundreds of charter companies and minimal feet on the ground for support, there’s surprising room for error.

The Ugly (there’s always ugly) 

PJ trackers

Flying private doesn’t help with privacy or security concerns if someone decides to broadcast your every flight on social media, as was the case with Elon Musk and @ElonJet. 

Some say he purchased Twitter just to close the account, which was taken down but quickly returned with a 24 hours delay. 

There have been others too, and aside from security concerns, there can sometimes be a financial interest: when a prominent private jet flies in from Omaha, Nebraska, you know who’s making moves.

Dodgy entrants 

Like any sizeable industry that works with UHNWIs, there are always challengers out to try disrupt it.

They don’t always work and can cost customers dearly, as the $40 million Aerovanti disaster showed. And likewise Jet It and its issues that caused it to stay grounded. 

Basic mistakes

Likewise, for those who take the plunge and buy that private jet, there’s a minefield of things that can go wrong there. Being sold on a badly suited jet is an obvious one, as is being duped into buying a used plane in less than stellar condition.

Failing to understand the human resources required or maintenance costs are other commonalities (your broker is unlikely to highlight these). Remember, if you’re flying your jet to the Bahamas for the week, the crew need to be accommodated too or sent home, each with their own costs.

For some private jet owners, it’s a bit like the boat analogy: the two best days in a private jet owner’s life are the day they buy a plane, and the day they sell it.

To Jet or not to Jet

Private jets aren’t going anywhere, and with the world getting wealthier, they are becoming more affordable to more people.

Hopefully progress in battery technology and sustainable aviation fuel can reduce the carbon footprint in the future.

But ultimately the question of whether to own, lease or charter a PJ comes down the value of your time.

Warren Buffett nicknames his jet “The Indefensible”, but he does have a defense and that defense sums up the main reason people buy PJs:

“Money has no utility to me, time has utility to me”

This newsletter is sponsored by eHoldings

eHoldings is a privately held Canadian corporation that exclusively manages its founder Mike Cautillo’s proprietary capital and assets. It was created to satisfy its own niche, to grow and preserve wealth over the distant future via its unique position trading investment strategy that leverages actionable price action behaviors and fundamental market trends.

eHoldings has over the years made its insights available to accredited investors, which included facilitating exposure to Bitcoin. The company is now particularly focused on bringing its strategy to family offices through bespoke collaboration. See e-holdings.com for more.

𝕏 highlights

Some fascinating insights from Deloitte Private.

Why family businesses should raise from family offices.

Millionaire growth… and decline.

 💼 where to work

Three notable family office job opportunities currently open…

Family Office Tax Partner - Sports & Entertainment Business (Tennessee / Family Office)

Family Office Advisor - Blue Trust Advisors (Georgia / Service Provider)

Chief Administrative Officer - Tomcat Family Office (Florida / Family Office)

📚 what to read

Jet Set by William Stadiem takes you on a first-class ride through commercial aviation’s golden era, where Champagne and gossip flowed freely. Packed with larger-than-life personalities - from Hollywood stars to oil tycoons - this book is a cocktail of glamour, excess, nostalgia and intrigue.

📻 what to listen to

I’m putting together the Ultimate Family Office Spotify playlist. 10 tracks, 4.5 hours of family office gold… more on that next week.

📺 what to watch

A murder mystery unravels within a fifth-generation, ultra-wealthy family, set against the breathtaking backdrop of Nantucket... I’m only an episode in, but it’s bingeable!

And finally…

I’ve had a few people contact me recently looking for positions in family offices. I’m looking into putting together a monthly newsletter where candidates can share their resumes and where family offices or recruitment companies can advertise open positions.

This will of course include some tips and good stuff around family office careers.

If this sounds interesting, hit reply!

Family Office Buzz will be back on Monday (here’s the last edition if you missed it) with more of the best content on family offices and beyond.

Until next week, see you on 𝕏 or LinkedIn

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