One of the most fundamental decisions in business jet acquisition is whether to lease or buy. Both approaches have genuine merit - the right answer depends on your tax position, cash flow, intended use and how long you plan to keep the aircraft.
Outright purchase
Buying outright gives you full ownership, the simplest possible legal structure and no ongoing residual value risk. You keep all the upside if the aircraft holds its value well. The downside is the full capital requirement upfront and the concentration of asset risk on your balance sheet.
Finance lease
A finance lease is economically similar to a loan - you have use of the aircraft for the full lease term, bear the residual value risk, and typically have an option to purchase at the end. Payments are structured to cover the full cost of the aircraft over time. For accounting purposes (under IFRS 16), finance leases appear on the balance sheet.
Operating lease
An operating lease is closer to a rental - you have use of the aircraft for a defined period, then return it. The lessor retains residual value risk. Monthly payments are typically lower than a finance lease, and the asset may be off-balance-sheet under certain accounting standards. Global Jet Capital and a small number of other specialist lessors offer operating leases on business jets.
Hire purchase / secured loan
The most common structure for business jet finance in the UK. You take title to the aircraft from day one (or on final payment under HP), and the lender takes a first charge over the aircraft as security. Simple, flexible and well-understood by lenders, insurers and maintenance organisations.