What a $75 Million Airplane Actually Costs to Own

[00:00] Not flying blind. My name is Israel Slotowicz. I'm the founder and CEO of Craft. Open AI just announced that they're going to be public. We're seeing like not just insane wealth creation moment, probably the largest we've seen in the history of humankind, but we're also seeing shift in how people spend their wealth. The most sought after thing once you make some money is start flying private. It's like the one thing everybody looks to do. It's a truly unique rule that nothing else replaces. What does like a Jeff Bezos have?

What does Elon Musk have? So when you [00:30] like the Jeff Bezos of the world and Larry Page and Sergey Brin, they're typically G700, global 8000 category. That's like the top of the line. If you buy a $10 million airplane, you can take a $10 million business deduction the year you bought the plane. This is why people are buying $75 million airplanes. That's exactly what people are buying. There's no other good reason. [00:58] Izzy, welcome to Sorcery. It's a beer, thank you. What are we doing right now? Where are we?

[01:03] We're sitting on a Challenger 350. [01:06] This is a super mid-aircraft. [01:08] That's... [01:10] You can fly coast to coast. [01:11] New York to... [01:12] California, you can fly California to Hawaii or to Europe. [01:16] This is one of the aircraft that we operate in our charter company. I operate a [01:20] a part 135 charter company that I started [01:23] six years ago while I was still in college [01:25] We now operate a fleet of these. We have pilots and we fly them all year round. We do a lot of supplemental flights for net jets and flux jet and,

[01:32] wheels up and all the large providers [01:34] And I'm excited to talk to you about [01:37] what we're building and about the industry. I'm excited. I... [01:41] Came across you guys through LinkedIn and these posts. You were doing some collaborative posts with some of the interviews that we've done. I did this amazing series with Michelle Delbuono of A16Z Perennial, which is... [01:53] Mark and Ben's multifamily office. We did two episodes so far, and it's all centered on [01:59] the major wealth creation event that's happening right now, [02:02] We're about to have more millionaires and billionaires minted than ever before with the OpenAI...

[02:09] SpaceX IPO, Anthropic IPO, the Cerebris one that just happened, and all the secondaries and tenders that are going on also behind the surface. But right now we're in this crazy period of time where... [02:21] A lot of people are going to be making a lot of money. And so... [02:24] With these conversations, I've been trying to get down to, okay, [02:29] What do you do once you have that wealth? How do you manage it? [02:34] And one of the topics in the conversation on wealth management [02:37] is private aviation.

So I'm really excited for [02:41] to talk about this today. And I'm just really curious. So [02:45] Are we seeing more private jets? What's the state of the market? [02:49] Yeah, I mean, so it's, like you said, it's absolutely insane. [02:52] what's going on right now. We're sitting here on a Sunday, [02:55] SpaceX is supposed to IPO this Thursday. So some of our clients and a lot of our investors are going to be in New York for this [03:02] iconic [03:03] IPO probably the [03:05] largest IPO by... [03:08] twice as much as the last one and [03:10] This is just the first of many, right?

OpenAI just announced that they're going to be going public. [03:15] And we're seeing, like, not just insane... [03:19] wealth creation, [03:21] moment probably [03:23] the largest we've seen in the history of [03:26] humankind, but we're also seeing a shift in how [03:31] people spend their wealth and their priorities and also the type of wealth that they are generating. It's not the same wealth that was generated. [03:38] historically where people kind of built a business over many, many years and they slowly diversified. New money. It was just like completely new money.

[03:45] So there's like this massive tsunami that's hitting and we're seeing it. [03:49] In our business, we're seeing it in the preferences of what people are choosing, how they're accessing private aviation. And of course, like. [03:56] Of course, the most... [03:58] sought after thing once you make some money is to start flying private. It's like the one thing everybody [04:03] looks to do. It's truly a unique tool that [04:07] Nothing else replaces. So how is that changing? Who's buying jets versus who's chartering them? What is the difference? [04:14] First of all, we're seeing people entering the market buying...

[04:19] bigger airplanes [04:20] So this airplane, for example, this is a Challenger [04:23] $3.50. [04:24] It's considered a super mid. It's considered what I like to call a proper jet. It has a flat floor. Normally people would sort of enter the market by starting to charter or they would start with getting a light jet. [04:35] And people are now going straight for the super mids, straight for the heavys. [04:39] They're going straight towards buying or even chartering the... [04:44] latest and greatest so we're just seeing like this [04:47] big sort of skipping of steps.

[04:49] that we are accustomed to [04:52] in our industry. The other thing that I'll say about our industry is [04:56] If there's almost 8 billion people in the world [04:58] If 0.0001% of them are flying private today, and that doubles, which I think it's going to more than double. [05:05] 0002. [05:07] That has like a... [05:09] huge cataclysmic effect on our industry. - Why, what do you mean? - So our industry is just not really built for the manufacturers, the OEMs, the supply chain, [05:20] engines, parts, the speed at which these factories are able to build airplanes, the speed at which you can train pilots.

Are we going to have a shortage? There's going to be a huge shortage. Yeah. I mean, these are obviously depreciating assets. These airplanes, you know, airplanes are equipment. Right. They don't go up in value normally, but we're seeing them go up in value for the first time almost ever, especially in the. [05:39] higher end of the market. [05:41] So that like small little change in wealth, which I think is actually huge, [05:45] is something this industry is not at all ready for. And I think there's going to be a lot of adjustment and [05:52] price.

[05:53] fluctuation and uncertainty until, until like the, the new, the new wave sort of takes effect. I guess to give more of like the one-on-one behind all the sizes and pricings and that kind of thing, could you walk through, you mentioned it before, but like, can you walk through all the sizes and then up to like, okay, what is like, [06:11] Jeff Bezos have? What does Elon Musk have? Drake has a very weird plane, but that's just him, and that was a deal. But I'm curious, could you like walk through all the different [06:22] planes and like when you should start at which one and then obviously we can talk about the different kinds of [06:28] financing options for those.

But I guess first let's start with the sizes and the prices on them. - Yeah, so typically like the entry level [06:37] what was the entry level [06:39] would be something like a [06:41] Maybe a light shot. [06:42] So like a phenom... [06:45] 100 or a phenom 300 [06:48] It seats about [06:49] Six, you can fly about an hour, two-hour flight. [06:52] Step above that, you go into the midsize category. Citation XLS or Latitude are like the popular ones. [07:02] Step above that we go into the super mid category. This is like, as I call it, the proper jet, which is what we're in today.

[07:08] Super mid category, you have the Challenger 350 that we're in today, and then there's the Praetor 600. [07:15] Also a phenomenal airplane. [07:17] Um, [07:19] Above that we go into the heavy jet category. [07:21] So think of like a Gulfstream G450, [07:25] People are flying these... [07:27] heavy jets quite frequently, even on short missions. [07:30] So we're seeing people who have large families, [07:33] that want to travel, that they're like, we don't even want the... [07:36] light or [07:38] super mad, like they're going straight for the heavy even on a two or three hour flight.

[07:41] And then of course, [07:43] If you want to go to Europe, [07:45] you would do something called an ultra long range. [07:48] something like a Global 8000 is like the... [07:50] Top of the line, [07:51] So when you think about like, [07:53] the Jeff Bezos of the world and the Larry and Sergey Brin or Larry Page and Sergey Brin, you're, you're, they're typically G700, you're, [08:03] Global 8,000 category. That's like the... [08:06] Top of the line. And you fly too. [08:09] I'm a pilot as well. I'm a certified pilot.

I only mostly fly for fun now. I have a full company to manage and keeps me quite busy. [08:16] I am certified in this airplane actually. - You're flying today. - I'm not gonna be flying today. Yeah, yeah, we have two great pilots on board, but I'll be flying from back here. - So walking through all of those different options, when does it make sense to buy a plane versus charter? - So the... [08:34] Traditional logic is... [08:37] somewhere between 150 hours a year [08:39] to 250 hours a year is when you want to start thinking about owning a plane.

[08:43] But I think it's important to really understand why [08:46] And it's important to understand what are the reasons you really want to own a plate. [08:50] The first reason is... [08:53] The flexibility. So when you charter or when you even own a fraction of an airplane, there's usually like long call out, usually at least a 24 hour notice call out. [09:04] and they're not very flexible on changing your time when you wanna leave. So I have an example of a customer of ours that [09:11] Flew to he had a bunch of warehouses in the Reno area.

He lived in San Francisco and [09:16] And he owns a plane. He flew his plane to... [09:20] to Reno to go visit his factories. And initially his scheduled return was supposed to be for 6, but by 1 m. he was done his [09:27] Tor [09:28] So he decided, hey, text my pilots and... [09:31] see if they're ready to go. And by the time you got to the airport, the plane was all buttoned up and they were out four hours early. When you're chartering [09:38] Or when you look at like a fraction of ownership, it's a lot more difficult to do that.

[09:41] So there's like some flexibility, I think, in owning a plane. And even if you're flying less than 150 hours, [09:47] you might want to consider [09:49] owning [09:50] Just because if you need that, like, [09:51] for our less sort of call out. [09:54] On the other side of the spectrum, [09:57] Owning a plane is extremely complex. [10:00] it's basically running a little mini airline. You're dealing with pilots, you're dealing with maintenance, [10:03] Do you have to put that in an LLC? Like, how do you... [10:07] actually make that like tax advantage.

Yeah, I mean, typically all aircraft are in a single purpose LLC, like an SPV, and they'll usually be like under the business. So an LLC, it's owned by the business, and then the LLC will have a lease agreement in place. [10:21] with the business for tax efficiency. [10:23] But... [10:24] Yeah, so I think like on the other side of the spectrum, owning an airplane is complicated. There's a lot that goes into it. We'll talk more about that. [10:30] So we're seeing people that are even flying 300 hours a year. They're like, I don't want to deal with owning a plane.

[10:36] And I think actually that's one of the big differences in this new generation of wealth. [10:40] These people don't want complexity. Most of them [10:43] are able to book well in advance they're not last-minute people they're they are willing to book [10:48] seven days in advance, two weeks in advance. They don't need that four hour call out most of the time. [10:52] If they do, they can... [10:53] find other options. And [10:56] Those people would rather simplicity, ease of use. They don't want to deal with the complexity of owning a plane.

So in some cases, even above 300 hours, it doesn't always make sense to own. But typically, [11:07] you know, in that sort of range. The second reason you own a plane is for cost efficiency. So once you start [11:11] hitting the 250 hour range, the cost of [11:15] owning and spreading the pilot costs and all the fixed costs around [11:19] around one aircraft flying $300 a year starts to make much more sense. [11:24] Okay, let's go through a scenario. [11:26] You just bought a global 8000. [11:28] Walk through the financing of that and the maintenance.

So this is an extreme example. I'm aware. It's an extreme example. But like, let's shock the people. Yeah, well, I think like, first of all, Global 8000 is like a $75 million airplane, right? Just to put things into perspective. [11:41] So that's like extremely expensive airplane to buy. It's really like you're going for the top of the line. [11:48] Most people don't actually buy [11:51] Brand new. [11:52] Even if they can, they don't. [11:54] So the maintenance for a brand new airplane looks very different than a maintenance on a used airplane.

Most people tend to buy equipment. [12:01] used aircraft, aircraft that are pre-owned, [12:04] That's what it's called. Whereas a new aircraft, you'll have like warranties and all sorts of – the manufacturer will give you all sorts of stuff like that, make the maintenance costs – [12:12] a little bit less expensive. [12:14] But, [12:15] Say you bought a global 8,000. [12:18] $75 million. [12:21] Typically, the first thing you have to think about is [12:24] depreciation costs. [12:25] So the aircraft do generally go down in value. [12:29] They generally do not go up in value.

So if you factor in [12:34] a 10% a year reduction in value, [12:37] the [12:39] when you go to sell the play and you're not gonna be able to get as much money back. [12:41] So a lot of people kind of ignore that, but you really want to bake that into the [12:46] cost of running the plane. [12:48] Then you need to hire pilots. [12:50] So you'll have to go out and find pilots. Typically... [12:54] You'll want at least three pilots. [12:56] especially if you're gonna fly longer missions. [12:58] Pilots get sick.

Pilots need to go to training twice a year. So you'll need a higher... [13:03] three to four pilots. [13:05] That might run you... [13:06] one to 2 million a year. There's insurance costs, there's hanger costs, [13:09] And then there's maintenance costs, of course, right? And maintenance costs is kind of where everybody gets... [13:13] They buy the plane. They think it's like, it's great investment. And then they're like, [13:17] Now the plane's down for six months because... [13:19] the windshield breaks or they can't get a part for the engine. So maintenance is like another area.

And this is kind of where people maybe try it out and then swear off after doing it for some time. [13:30] Go through the different prices of citation... [13:33] G, $450. We obviously just went through global $8,000, but maybe just talk through the starter kind of prices. [13:42] First of all, there's a journalist called Doug Golan who has a – [13:47] website called private jet card comparisons. He does a great job. If you are very serious about flying private and you do want to get like the latest information, [13:54] pricing on jet cards and different aircraft categories [13:58] Highly recommend looking into Doug Golan.

But I think the pricing is somewhere around... [14:05] $7,500 for entry level light jet per hour to fly, about $9,500 an hour for a midsize. So most people are actually, you know, buying, it's not that they can't buy new, [14:16] the [14:17] Don't buy new. [14:18] Because buying new is like very, very expensive. [14:20] But if you're buying sort of pre-owned airplane, [14:24] A light jet will run you [14:26] around [14:27] three to five million bucks. [14:30] A mid-size something like this. [14:32] will be [14:33] anywhere from [14:34] 10 to 20.

[14:35] and a heavy jet maybe 20 to 30. [14:38] million dollars. Just the sticker price, just to get into the airplane. Buying the plane is just the beginning of the journey, right? That's the cheapest part of owning a plane. Then you have [14:48] the pilots, the fixed cost, the mains cost, the fuel cost, you're probably looking at anywhere from [14:52] two to four million bucks a year to run the plane. Just... [14:55] Just to keep it running for you. So as you can see, it's very expensive. And unless you really have a need for it or a real business need for it, it's something that a lot of people will do and then they'll swear off of it.

Since we just went through what full ownership looks like, let's get more to what most people actually do. And so there's a couple different options. [15:18] where you can charter, you can get a jet card, and then you can also do fractional ownership. What can you just define for people who don't know? Define what each one of those are and then how the pricing changes. Yeah, so... [15:31] typically the way people [15:33] First experience, private aviation is [15:36] maybe they've heard of like an empty leg, right? They've jumped on an empty leg.

What an empty leg is, is where [15:41] The plane maybe... [15:43] has one trip landing in LA, [15:45] Another trip the next day is departing out of San Francisco. [15:48] So the plane will need to move reposition between LA and San Francisco. And sometimes companies will sell that as an empty leg. [15:56] and for a significantly reduced price, because they have to go anyways. [16:00] So sometimes people get experience with private aviation through these empty legs, but I think it's [16:05] probably worth glossing over because it's not really the utility and the reason people would fly private, right?

Like an empty leg is more of a luxurious, more of an experiential type of transaction. Um, [16:16] People buy airplanes or people fly private. They typically do it as a utility, as a way to... [16:21] conduct business or, [16:22] for ease of comfort with her family. [16:25] And they want to be able to go on their schedule. They don't want to be flying on someone else's schedule. [16:30] So typically the way somebody will enter the market is through charter. [16:35] Usually the first taste they'll have in private aviation. We operate a charter company.

We charter our airplanes out. [16:41] Chartering a plane can be great because you don't have all the commitments, but you really have to be careful of like... [16:49] Safety. [16:50] it's very hard to know what you're going to get, and the prices can fluctuate quite a bit. [16:55] drastically. [16:56] So, [16:57] One day it might cost you life. [16:59] $12,000, the next day it's costing you $24,000 for the exact same flight. [17:04] Right. So a lot of times people will charter and then [17:07] Why are the prices fluctuating so much?

[17:11] they'll upgrade to what's called Jacquard. [17:14] I'll explain to you what a jet card is. [17:15] A jacquard is essentially [17:18] Prepaid charter. [17:19] So you're giving a deposit to somebody, [17:22] and [17:24] They are essentially sourcing charter for you at a fixed price. [17:28] So rather than one day paying [17:30] $12,000 the next day paying [17:31] $24,000, they'll charge you $18,999. [17:35] and you'll pay for both flights $18,900. So actually you're actually paying a little bit more than you would have paid. [17:41] during charter. [17:42] But you at least know...

[17:44] When you want to fly, it's going to cost you $18,999. So you're really getting... [17:49] essentially more expensive charter. So it's, and also, Jackard is typically like where you'll first... [17:56] Maybe get a taste of a net jets or a flex jet. [17:59] type of experience, because they offered JetCard services as well. [18:03] So that's typically where you'll maybe first enter into the [18:06] the bigger leagues of flying private. [18:08] Then where does fractional come in? So fractional comes in really at the next... [18:11] the next. [18:12] step right so fractional so you maybe maybe you flew some charters and [18:17] Didn't like that you kept getting different airplanes and different prices.

You got a jack hard. [18:21] And you just... [18:23] gave him a massive deposit, and you realize it wasn't that much better than charter. So you decide, okay, now I want to maybe... [18:29] move to the ownership side of the aisle. [18:31] And fractional is really on the ownership side of the aisle. So the main difference between the two is that on the fractional side, [18:37] you know, you're, you are carrying the residual risks of the plane. [18:41] So if the airplane depreciates, [18:43] um, [18:44] the, that the cost of depreciation, the cost of capital is essentially on your dime, not on the charter company's dime.

So, [18:52] You're getting a more consistent experience. [18:54] You're getting an ownership type of experience. So you're getting a premium sort of product. [19:00] But... [19:01] You're also paying a premium for it because you hold essentially the residual risk of the aircraft. So fractional and the two largest providers is NetJets and then second largest is [19:11] Flex chat. [19:12] do a phenomenal job and you can essentially [19:15] fire [19:16] 1/8th or 1/16th of a plane, they'll manage all the operations, the pilots, you'll never have to worry about maintenance. [19:22] plane will be there at [19:24] hours or 24 hours notice [19:26] and [19:27] you're sort of getting a taste of [19:30] You run a charter business.

How is it different? [19:33] Basically, there's two sides to craft. There's like our operating business, which is like somewhere in between the fractional and the Jacquard, where mostly like a B2B. [19:41] company we sell to all these other larger companies which are brokers on these platforms [19:44] But what makes it interesting is that we actually... [19:47] Because it's an operating business and we generate [19:49] cash, we are able to run this exchange fund, which is a completely separate financial [19:55] Product. [19:56] that's designed for people that have low basis stock.

[19:59] Exchange funds, are you familiar with exchange funds at all? Yeah, so exchange funds, you know, a simple way to explain it is like, you know, [20:06] 10 people come together with 10 different stocks. [20:08] and they all [20:09] contribute the stock into a fund and they all get [20:12] the benefit of owning. What people don't realize is that [20:15] Unless you have an operating business to run it through, like you have a business, right? You have income, you have cashflow, right? So you have a business you're running, you're running everything through.

Unless you have an operating business to run it through. [20:26] You're [20:27] there aren't really any tax benefits. If you're like a SpaceX employee and you have a lot of stock, [20:31] You don't have a business to run this airplane through. So not only are you paying sticker price, [20:37] for the flights [20:39] But you're actually paying almost double that because you have to sell stock [20:42] to fund it. [20:44] Right? [20:46] This is, I think, one of the problems with this sort of new... [20:50] massive [20:51] wealth [20:53] creation.

And just the onslaught of Silicon Valley becoming so big and all these people with huge equity values. Yeah. It's insane. And the legacy models of putting your [21:06] buying an airplane, running it through your business and taking tax it right off. Like it doesn't quite work for these people. They're, um, [21:12] net worth is in capital gains, not in ordinary income. So we actually built an exchange fund [21:18] Which is a [21:19] very old [21:20] financial product or financial structure where people can diversify people, a bunch of people can contribute their stock [21:27] into a fun pool together.

[21:29] Kind of like a potluck. [21:31] Right. Where [21:33] Everybody comes with a dish and they walk away with a meal. [21:36] and, um, and [21:38] One of the requirements, one of the rules for these funds to exist is that there needs to be an operating business in the fund as well. [21:43] and historically exchanged funds have used [21:45] real estate and public storage units in Albuquerque, right? And like self-storage, like things that people don't care about. And what we did was we took an already existing business, [21:53] thriving operating cash flow business.

[21:56] and we basically layered an exchange fund on top of that. [22:00] And what that allows us to do is it allows us to offer the members in the fund [22:05] access premium access to these planes they wouldn't be able to get otherwise [22:09] Wow. You have VCs on your website. Did you raise venture capital? Like, how did this start? Well, it actually just started by understanding that [22:21] My problem was their problem. [22:23] My problem was that I realized that when I had a single airplane, [22:27] I had a very...

[22:29] volatile... [22:30] Uh, [22:31] p l profit and loss statement right so like one month we had like very profitable the next month it was like very unprofitable because there was some sort of maintenance issue or a pilot left and [22:41] And what I realized is like as I started adding more airplanes to my fleet, [22:45] I realized that the volatility started to calm down. And then while one airplane was down, four airplanes were flying. And when one airplane was down, six airplanes were flying. [22:54] And I realized that the customers that I was flying had the exact same issue.

They didn't really have a private aviation issue. [23:01] There are many options when it comes to private aviation, all very good ones. But what they did have was a stock problem. [23:07] right, big part of their net worth. [23:09] was [23:10] concentrated in a single company. [23:13] They were one article, one news report away from losing 13, 14% of their net worth in a day. [23:20] Right. [23:21] IBM lost 13% of its value in a single day. [23:24] I think Broadcom just now, just this past week, lost like 10% in one day on...

[23:29] a single earnings call or a single article that Anthropic is building some sort of software, right? [23:36] People who have now built this sort of generational... [23:39] wealth for the first time. [23:41] also had a volatility issue. And I realized that [23:45] I had the same problem my customers had. [23:47] And that's when I started to learn about exchange funds and understand how they work and their mechanics and do deep dive and ultimately like. [23:54] came to my customers and said, "Hey, this is what I'm building." And they were immediately very interested.

And that's kind of how we pivoted into this exchange fund model. [24:03] Sorcery is brought to you by Brex, the financial stack trusted by more than 30,000 companies, including one in three venture-backed startups in the S. Nearly 40% of startups bail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, chipping away at it with fees, Brex is designed to help you spend smarter and move faster. [24:33] powerful account. You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one.

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We're in air. It's actually not that loud. [25:39] I was really worried about that. [25:40] It's pretty quiet. There's pilots in the cockpit. [25:43] You just walk through. [25:45] the different types of financing [25:48] and we used to [25:50] fly private. [25:51] But what is the most... [25:52] economical way to fly private. [25:55] On a friend's airplane. Okay. It's free. [26:00] How do you find these friends? That's the key question. I think the truth is flying private is not economical. There is no... [26:09] real economical way to do it. It's a very expensive...

[26:12] thing and [26:13] It's really a matter of priorities, if it's something that is important to you, if you see the... [26:17] utility of it as important to you in life. [26:19] Um, but flying private isn't cheap. There is no, there is no cheap way to do it. [26:23] Yeah, last year in 2025, I think it was... [26:27] Publicly reported that Alex Karp... [26:29] spent around $17 million on flying and it, [26:33] if you kind of like do some of the math on... [26:37] the price and the per hour [26:39] It came out to around three months in the air.

Yeah, yeah. I think I saw that report, and it's probably like, I think they have like two airplanes. I think maybe the way they leased it back to the company, they did some... [26:53] They probably structured it as like a dry lease or something. But yeah, it sounds like they're in there a lot. I mean, you see like SpaceX, Elon Musk, like he's flying. I mean, I'm sure you've seen that clip of like... [27:03] you know, one year of his flights like you just there's just things. [27:06] you can't do without private aviation.

You just can't do it. [27:10] Like what we're doing today, just being able to go to San Francisco, [27:12] for the night [27:14] have a few meetings tomorrow and then come back when we're done. You just can't do that. [27:18] LA is the best commuter place for people in San Francisco. [27:22] You don't live in LA, you don't get it, but it's very beautiful. Okay, I have a really fun question. Who do you think flies more? Elon Musk... [27:31] Alex Karp, Jeff Bezos, Taylor Swift, [27:35] Or Jensen Wong? I think the answer is easy, Elon Musk.

[27:39] Elon. Absolutely. Even though it's mostly domestic. [27:42] Yeah, but I mean, I think, first of all, he flies international as well. But like, I mean, he's running, what, how many companies? [27:47] Going between each company and he like goes in office and [27:51] and is there in person [27:52] I remember when I was just starting to fly out of Hawthorne Airport, I'd see his plane come in and land and see him get off and on. It was just very inspiring. Yeah. [28:01] - So Preston makes a lot of content around the financing of private aviation.

[28:06] What does he mostly cover? What should people be reading? [28:10] Preston Holland, he has a podcast. He talks about aviation finance in general. He's a broker. So if you're looking to buy a plane, you're looking for a loan, [28:19] He'll help you find a bank. [28:21] Financing a plane is kind of like [28:24] financing the car. [28:25] A bank will want to securitize the aircraft, the file lien on the airplane. [28:30] And then they'll also want to look at your personal [28:33] financials and make sure you have the ability to repay [28:36] Alone.

[28:38] Financing fractional is a little bit more difficult. [28:40] So if you go to like NetJets, for an example, they have their own... [28:43] in-house financing departments so you can get a loan there but most other fractionals there's only a select few banks that will [28:49] that will do finance. Actually, a fun fact is that only 30% of aircraft have [28:55] Loans on them. [28:56] Really? Yeah. 70% of people are closing cash. [28:59] And a lot of it has to do, it's just very difficult. [29:02] to go through the process, get a load.

A lot of people don't want to like [29:05] Personally guaranteed. [29:07] these loans and how are they just closing cash don't want to deal with the hassle. I'm working on a company right now called Radar which is focused on [29:14] providing financing [29:16] for people who want to do asset back, like, [29:20] no PG, non-recourse type loans for aircraft, because they are really good assets to finance against. [29:25] So what are the biggest mistakes people make when they're buying a plane? [29:31] It's a great question. [29:33] A lot of times people think that they'll find a better price on the market for a plane, so...

[29:38] Sometimes people won't sign an exclusive with a broker. [29:41] like a reputable broker, though they won't sign an exclusive, they won't sign an exclusive, [29:44] And they'll say, you know what, whoever brings me the best. [29:46] best price, I'll buy their plane. And what ends up happening is you have all these sort of like back-to-back shady transactions that happen sometimes where somebody will bring you an airplane and they buy it for much cheaper and they flip it to you and you don't really know what's going on. [30:00] When you have a reputable broker that you have an exclusive you sign with, [30:05] They will...

[30:06] they will tell you if you're overpaying for the plane, right? Because their interest is making sure you get the best airplane for the best price. So a lot of times people think that they're going to save some money and they're going to find some good airplane. They find some off-market airplane they think is a really good deal. They buy it and they realize there was like, [30:20] four transactions before. So I think that's like a pretty big mistake people make. What questions should they be asking in any of these processes from chartering, [30:28] to buying, whether it's the year of the plane, what kind of inspections they should be looking for, insurance, that kind of stuff.

[30:34] I think corrosion is like really the big thing. [30:37] thing that gets you when it comes to buying airplanes. There's nothing that would be more expensive than corrosion because- That sounds terrifying. It is very terrifying, financially terrifying. [30:46] Because if you discover corrosion in an airplane, [30:50] Sometimes they will have to re-engineer an entire component. [30:54] for an actual part of the plane that could take months and cost like hundreds of thousands of dollars. There's probably nothing [31:00] That will cost... [31:01] you more money on an airplane [31:03] than a problem with regard to corrosion, especially with regard to the engines.

[31:07] What about insurance? Like what are you or inspections and that kind of stuff? Like, what are you? [31:11] Yeah, I mean, aircraft have engine insurance. It's called engine programs, is what they're called, where the manufacturers insure the engine. [31:19] I've heard stories of people not [31:21] enrolling in these programs. I think David Sachs said that he wasn't [31:24] enrolling his aircraft in engine programs. I guess if you have the balance sheet and you're willing to withstand, you can afford a pretty... [31:31] big event if something happens and you're willing to afford a few months of downtime, [31:37] You could do that, but really, you know, these engine manufacturers, they really have a monopoly on...

[31:43] the supply chain [31:44] of the engines. [31:46] so [31:47] If you're not on a program... [31:49] and something happens, you go to the bottom of the list for the parts. It is a big issue. [31:54] and [31:55] The companies like us and other companies that can get together and they have some negotiating power can go to these companies. [32:00] these manufacturers and get some leverage. But if you're a single person buying an airplane on your own, a single airplane, you don't have a lot of leverage. [32:08] And things can get very expensive.

[32:10] We're in a cockpit. Okay. You were talking about... Or as we call it nowadays, a flight deck. You were talking about... Wait, really? Yeah, they changed it. They changed it? Well, I guess. Why'd they change it? I don't know. Maybe it's like a little bit more... [32:23] Politically correct. [32:24] I don't understand. Why? Why? [32:26] Well, that's not politically correct. I don't know. It's they also changed. [32:31] It used to be called... [32:33] airmen [32:34] A pilot was considered an airman. [32:37] And now it's maybe air person. I don't know.

Yeah. So, yeah, pilots have to go every... [32:43] every six months into simulator training. [32:46] It's about a week long. [32:48] and you sit into something that looks just like this, so everything's about the same. [32:51] It's full motion, so you feel turns and everything, and you go over all sorts of emergencies and different sort of stuff. [32:59] I think something interesting that I found going from being a pilot to being a founder, [33:04] that's really helped me as a pilot. You know, when you're flying the plane, maybe over Las Vegas, [33:08] and you're [33:09] you know, an hour out from

A. [33:12] you're already starting to think ahead about the landing in LA. You're thinking about what the weather's like there, what runway you're going to be using, what the sort of arrival is going to look like. So even though you're still over Las Vegas, you're kind of really thinking, thinking, [33:26] an hour ahead of time um and i think that running a business is very similar right like you're you're even though there's [33:31] stuff you're dealing with today, you're dealing with [33:34] things that are happening on the day to day, you're also [33:37] thinking ahead and making sure that you're planning for the arrival.

So I think that's something that just [33:44] the training of being a pilot helps in some ways with being a founder. [33:48] What's been your favorite part? [33:50] of being a pilot. [33:52] Getting to meet very incredible people. Really? Yeah, absolutely. [33:55] How many people have you flown? - I've flown quite a bit of people. I think it's like, you know, there's the celebrities and everybody wants to hear about the people we fly, but I think that really, [34:07] getting to know on an intimate level [34:10] people [34:11] that, um, [34:12] like building like these good relationships with, with,

[34:15] the businessmen, the venture capitalists, people that really see private aviation as a utility and a tool for them, [34:21] Um, [34:22] getting to spend time with them, getting to talk to them, talking about my business, like [34:26] These are just like an incredible experience that someone like me who, um, [34:30] dropped out of high school, would never otherwise... [34:34] gets a Dracula. So I just think like [34:36] Meeting some really incredible people, I would say. What do you think the biggest misconception is about private aviation and the glamour about it?

[34:45] That's a great question. Um, and I have a great answer for you. Okay. Um, [34:50] People think it's a luxury. [34:52] People think of it, they sort of, they compare it to like a yacht. [34:54] right but like [34:56] you know [34:57] You cannot... [34:58] You go on a yacht for, you can spend a week on a yacht. You don't spend a week on a private jet. [35:02] They think that a private jet is a luxury [35:06] And in reality, this is a tool. [35:08] to allow people more time [35:11] to do more...

[35:13] Today, we're going to go to San Francisco. We've got some meetings. We're going to come back tomorrow, right? Like, we wouldn't be able to... [35:18] leave on our schedule, come back on our schedule and, um, [35:22] and get so much done, [35:23] without private aviation. I think that there's a common misconception that it's a luxury and it really isn't. [35:28] And I think that a lot of times private aviation companies tend to mask [35:33] what they're doing with luxury because of how opaque the pricing is, because of how [35:38] expensive it is and it's very expensive to fly private.

There is no cheap way to fly private. People like to mask that with this idea of luxury when it really isn't. It's just a tool. [35:48] How big of a difference did it make on the business or at least the experience when you guys got Starlink? [35:54] A huge difference. [35:55] We've been operating Starlink from basically the moment that they came out. We started off with the Starlink minis and then eventually when they got the full certification, we installed the full certification right away. [36:05] But it is a... [36:07] The only way to describe it is it's a game changer.

Like, people today won't fly if you don't have Starlink. They won't get on the plane. To be able to continue what you're doing, like, if you have Zoom calls, just be able to... [36:18] have that continuity you know these other the other the other systems out there like they're they have good [36:24] when you're in the, [36:25] But. [36:26] They have lags. They work and they stop working. They work and they stop working. Starlink is just like... [36:30] an absolute game changer and all of our aircraft have Starlink. [36:34] And I think there's a [36:35] A dish right there.

Oh, my God. Yeah, yeah. There's literally... It's just a dish. No, no. We have an actual Starlink on top of the... Oh, this is just an extra one? This is like a backup, yeah. This is a backup. It's a backup. They've got backup Starlink. Yeah, yeah. Wow. We fly... [36:48] Lots of fintech companies, founders of fintech companies that are [36:52] Need to be on the market? They don't take their head out of their computer from the moment they get on the plane to the moment they get off. So having... [37:01] The best of the best.

[37:02] I have a hard question for you. That's very important. [37:06] How long and what is the process like for installing Starlink? And why are the commercial... [37:12] planes taking forever because [37:15] I think majority of planes, their Wi-Fi is a scam. So like what is the actual truth there? [37:20] Yeah, well, I mean, it's good. We're seeing some airlines now say they're going to install Starling. I think United and American both signed an agreement to further hopefully. I'm not sure why Delta didn't do that. [37:30] I suspect you're probably going to lose some customers because of that.

[37:33] I think right now Starlink is changing their whole assembly line. [37:38] for their new version of the disc. [37:40] which has the ability to download much more, like it has higher bandwidth. [37:45] than the current dish that we have right now. [37:47] It's almost double. So I think that they've decided that they were going to stop production. [37:51] um, [37:52] upgrade the production line and then now they're starting to roll out with the new one so i think um [37:58] I think we're going to see it start to roll out quickly.

[38:01] Of course, commercial aviation seems to get a priority over private aviation sometimes. Really? I feel like none of them even have it on any of their planes. So I interviewed Jake Paul. [38:10] He just got a beautiful new plane, and I asked him if he had Starlink, and I think he said he doesn't yet, and it takes three months to get it installed, so you have to ground it and that kind of thing. Yeah, well, not to ground the plane. That's a little extreme, but maybe there's something else going on there.

But we have orders for Starlink kits all the way through, like, end of next year, all the way through end of 2027. So, yeah, you have to put down... [38:31] put it on the closet [38:32] And, you know, [38:33] Then they, they start, they come about three, three months apart. So we, yeah, so we have like all throughout next year, uh, Starlink, uh, [38:40] kits being sent. It's about a $300,000 cost to install on an aircraft like this. [38:46] very slightly on a bigger aircraft or small aircraft. But to me, [38:49] If you're flying private and you don't have Starlink, why are you flying private?

[38:54] Exactly. [38:55] It's a good place to leave it. [38:57] Anything else we should talk about while we're in the cockpit? No. Or the people pit or whatever you call it now? The cockpit? The people pit? The flight deck. The flight deck. [39:06] Anything else? Do you have a favorite button? Are you going to put that one in? Yeah. Absolutely. We're keeping that in. Oh, no. Do you have a favorite button? Yeah, what's the favorite button? What? [39:16] Well, this is the autopilot disconnect button. [39:18] Okay. Just right about in here.

And this is when you actually start to pan fly it yourself. [39:22] So it's always nice to every once in a while take over and, [39:24] and fly. I try to stay away from the buttons that have red on them. [39:28] In general. [39:29] Matt. [39:30] quite sure why. [39:31] They just they say don't touch. They scare you. Yeah, don't don't touch the right buttons. Okay. [39:36] This is like our power lever. So this is like when you're ready for takeoff, you push that forward. [39:42] That's like hitting the gas pedal in your car.

And you can just touch that while we're on the ground? Well, right now the engines are not running. Oh, okay. That's good to know. But when the engines are running, this will produce all the power. So you can watch on takeoff as the... [39:55] the pilots advance this. [39:56] This is the lever of where we put the landing gear up. So once the airplane's in the air and we have a safe distance from the ground, the pilots put the landing gear up and these three gears, this is the left gear, the right gear and the nose gear.

[40:09] will come up. [40:10] My favorite button is probably this button, the autopilot button. I feel like I shouldn't have asked you this question because I'm being so nervous whenever you touch anything. [40:19] Yeah, so my favorite button is the autopilot button. It's when once we get in the plane and [40:23] Once we're off the ground, especially autopilot and chill. [40:28] So one of my friends got their pilot's license a couple of years ago and I, [40:35] I asked, I was like, [40:36] When you got your pilot's license, was it like getting your driver's license and like feeling the freedom?

And he was like... [40:42] thousand times more than that. Yeah. Did you like is that how you feel? I got my pilot's license before I got my driver's license. Really? Yeah. [40:50] I got a college license on my 17th birthday. Okay. Okay. [40:53] which is the legal age to get it. [40:55] Actually at this airport right here, Van Nuys Airport. [40:57] And I got my permit maybe when I was 16 and a half, but I think I got my driver's license at 17 and a half. [41:04] So I was flying airplanes...

[41:06] by myself, before I was driving a car by myself. [41:10] And it is... [41:11] one of the [41:13] greatest... [41:16] feelings of [41:17] agency [41:19] that you can have, especially as a 17-year-old. [41:22] to [41:23] flying aircraft on your own. [41:25] And I think that that maybe is another thing that has... [41:29] led me towards [41:31] continuous agency in my life and continuously... [41:35] wanting to build and do more things. [41:38] More pilots. We need more pilots. [41:40] Well, you need more pilots. [41:41] Okay? [41:42] Cool. What do you think of the cockpit?

[41:43] I think this is really fun. It's very intimidating. What's your favorite button? I feel like I shouldn't be sitting here. [41:50] I don't have a favorite button because I don't really know what any of them do. [41:56] You can... [41:57] Push this button in if you want. [41:59] Why? [42:00] Just to see what it does. I push it? Yeah, I just push it down. [42:03] No, I don't want to. Too scary. Is that going to make a plane? [42:06] Oh. [42:08] *whistling* [42:10] I have to get out of here.

What's the most common cause of downtime and not being able to use the aircraft? Because I know people who have [42:20] bought recent aircrafts, I don't know the model or the year or anything like that, but [42:25] then they're all of a sudden... [42:26] stock servicing it or the plane's been down for like, [42:30] a year or more and that kind of thing. Like, so what are the most common causes and how do you avoid that? [42:36] I mean, an airplane like this, there's... [42:39] tens of thousands of individual parts on the plane.

[42:43] 80% of the parts, if they're broken... [42:46] The plane's down. You can't fly. [42:48] So there is like 20% of them that we get exceptions that we can fly. [42:52] certain amount of flights until it can get fixed. [42:55] But... [42:56] Almost the vast majority of the parts on this plane, if they fail, if these components fail... [43:02] Plains Grounded [43:03] And sometimes, like we were talking earlier about the supply chain, [43:07] um in this industry because of all the demand of all the aircraft coming in these manufacturers are trying to build as many airplanes as they can as quickly as possible and their priority [43:15] is.

[43:16] the newer airplanes that they can sell [43:19] to brand new customers, right? So their priority is not supporting the existing fleet. It's more on delivering as many new airplanes as quickly as possible. So... [43:28] You can sometimes find yourself down for several months. [43:31] because of [43:32] A windshield that breaks. [43:34] We just replaced... [43:36] a lav panel for the toilet in the back of the plane. [43:39] $25,000. No. Yeah, just for like a little lav paddle. [43:43] Um, uh, [43:45] set of brakes on this aircraft, over $100,000. What is the deal with people talking about the [43:50] windows popping out.

[43:52] What do you mean? [43:53] I've heard from a couple of people, like there were stories that the windows will pop out and people will... [43:59] get crushed lungs [44:01] I've never seen that. You've never heard that? No. [44:03] I've heard it. [44:04] And now they're making planes without windows. [44:06] Well, I think the plans without windows is actually a very interesting idea. And that has more to do with, like, the airframe shape, right? They're, like... [44:12] There's one company, I think, that's building a newer design. These airplanes are supposed to be more efficient.

[44:20] I don't know much about it, but it sounds pretty interesting. And they're like, hey, I don't know why we use Windows. They can just do... [44:25] Screens on the side. [44:26] But I don't think that has to do with windows being crushed in. That's like not, like the whole fun about- Is looking outside, right? Is looking out the window. Like right now we're looking at like beautiful- [44:34] California. California. Best place on earth. There's farms down there. There's lots of mountains. [44:39] You can't see it, sorry, but it's beautiful.

Yeah, I don't know. I think I would want to have windows in my plane. [44:44] seems to me like uh we'll have to put up a poll yeah how many people i would be curious to see what they're what people will [44:54] - So I wanna, I guess like this is an interesting point, 'cause you mentioned that there's gonna be a shortage [44:59] of planes and everything as more demand increases, right? [45:04] As more demand increases, I assume all the prices are going to go up. [45:08] Behind the Plane is really just the beginning of the...

[45:10] torture, right? It's everything that comes after buying the plane that really makes you [45:15] maybe regret your decision. So are you going to like, like are net jets, flex jets, are you, are like, is arrow, like, are they, they're just all going to increase their prices substantially? [45:25] Like, how does that work? [45:26] Yeah, I mean, I think we're already seeing, like, massive wait lists at these fractional programs. Like, the... [45:32] The line to get into an aircraft is... [45:37] maybe two, three years at a time. If you wanted to order a plane right now, a brand new plane from Bombardier, they'll probably take you three to four years until like, I think they're delivering now into 2030.

[45:45] You can always find, you can actually buy [45:48] a slot from somebody. So somebody else who got, was in line, people are actually like reselling these slots. [45:53] because people want to play sooner. So there's already... [45:56] like a huge... [45:57] huge demand for these aircraft. [46:00] And we are seeing the market price of them trade a little higher. [46:03] over time. But again, like at the end of the day, they do depreciate. It's not, the aircraft are not like real estate, right? They do depreciate over time. [46:12] They get wear and tear, they get fatigue.

And then at some point there's a newer airplane with a better [46:17] a better sound system or something that people like. - Zero. [46:23] Windows. Zero windows. Yeah, and... [46:26] Over time, the value of airplanes will go down. But we have been seeing in the last couple of years a very weird phenomenon where the price is like, we bought this airplane and now it's worth more than... [46:34] Then we paid for it. Really? Yeah. Like almost $2 million more. What? Yeah. Yeah. [46:39] Why? [46:40] because there's such a lack of [46:43] supply of good airplanes.

[46:45] That's crazy. Yes. Another thing that's worth talking about is like, [46:49] There's just... [46:49] Different types of aircraft are different. [46:51] Some are better than others, right? So like sometimes people think, okay, I'm going to buy this airplane. It's cheaper. [46:56] But [46:57] We're on like the challenger at 350. This is like. [47:00] One of the most sought after airplanes. This was the first airplane when I started my company seven years ago. I started with the Challenger 300 and we still have that Challenger in our fleet today flying just as much as it was flying back then.

[47:11] Certain airplanes have better parts availability, better pilot training, engines, if you need to put on rental engines on the plane, [47:19] So it does matter what type of aircraft you buy, especially if you think you're going to start flying like heavy volume. [47:25] Have you seen people make the wrong decision in buying a plane by buying [47:29] buying too small of a plane? Like, at what point do you realize that [47:32] Yeah, so... [47:33] I know the trend now is buying heavy and buying really large, but do you see, like, [47:39] you obviously come across people extremely wealthy that probably buy, [47:44] tiny planes too.

And you're like, what are you doing? So, so I, I know someone who, um, who just recently had a liquidity event. Um, [47:50] And he exited about $500 million. [47:53] And he decided first thing he's going to do is... [47:56] spend [47:57] 400K on a global 8,000 or 7,500. [48:00] charter to Europe. [48:02] And so he spent $400K, but $400K is still significantly less than $75 million, which is what it would cost to buy that plane, right? And he did a flight, and he's like, you know, that was nice, but I don't know if I need this airplane.

Maybe I'll go one step down. So my advice to people is really... [48:21] maybe charter a couple times [48:23] the plane you think you might want, [48:25] to see if it's really what you want because the cost [48:27] to have to [48:29] buy a plane and realize it's too small or too big [48:32] and then you have to sell it, it could be very expensive. It's much cheaper to charter a couple of times [48:38] See how it goes. [48:39] And then if you like it, [48:42] and you really want to buy the plan, you can buy the plan.

We haven't talked about this yet, but it's a huge deal. It's actually a very big, beautiful deal, the big, beautiful bill. But can you talk about... I think they renamed it. Did they really? I think so. I don't know what they renamed it to. Well, that's what I know about. Yeah, yeah. But can you talk about how the government is now helping... [49:04] right off [49:05] Aviation. [49:07] It's really... [49:08] writing it off in a huge way. The Big Beautiful Bill is not the first time we've seen this. [49:14] In 2017...

[49:16] Trump announced [49:17] the Tax Cuts and Jobs Act, which was the first bill that introduced [49:21] bonus appreciation. [49:23] And then it phased down over time. [49:25] And it was reintroduced. [49:28] in 2025 with the Big Beautiful Bill. [49:30] But essentially what bonus depreciation is, is it allows you, [49:33] to expense the entire... [49:36] value of the plane. [49:38] the year you buy it. [49:40] So if you buy a $10 million airplane, [49:42] You can take a $10 million dollar, [49:45] Business deduction. [49:47] the year you bought the plane, even if you financed [49:50] 80% of it's maybe you only put down