A typical cash flow analysis for full aircraft ownership as might be supplied by an aircraft manufacturer as adapted from a Raytheon Aircraft cashflow study. In fact, with most aircraft, the loss in real market value with age and use is the single greatest cost in operation and ownership of an aircraft. Hence, our available depreciation on the new aircraft is reduced. But the important point to realize here is that the effects of the reduced base for depreciation is spread out over the next five years and additionally we don't have to come up with as much cash to purchase the new aircraft. Clearly, any purchaser of an aircraft that is in any way concerned about its cost of operation and ownership should pay a great deal of attention to how that particular model of aircraft, and the way it is used, affects its loss in real market value with use and age.
Some aircraft models hold their value better than others do.
In general, jets hold their value much better than turboprops, for example. And very importantly, as we shall see later, aircraft that are employed in commercial operations for hire and which are flown a high number of hours each year, tend to lose market value far more rapidly than aircraft flying typical corporate profiles of 500-800 hrs a year in private service. Cost often overlooked Herein lies one of the great misunderstandings about the costs of fractional ownership. A company buys a fractional share and gets to depreciate it for tax purposes at the same rate as a full owner. Remember, even for the full aircraft owner, the greatest single cost of aircraft ownership is the loss in the market value of the aircraft with age and use.