March 11, 2026
There are four common legal structures for acquiring an aircraft: (1) asset purchase, where a buyer directly acquires title to the aircraft, typically through an LLC; (2) fractional ownership, where multiple parties each own a percentage share and receive a set number of flight hours annually; (3) joint or co-ownership, where two or more parties jointly buy and operate an aircraft outside a formal fractional program; and (4) leasing, either an operating lease or a finance/lease-to-own arrangement. The right structure depends on intended use, financing, tax planning goals, regulatory compliance, liability exposure, and long-term exit strategy. Aviation counsel can help buyers and sellers choose and document the structure that best fits their needs.
Key Facts:
Acquiring an aircraft—whether for business, personal travel, or investment purposes—can be structured in several different ways. Each structure carries its own legal, financial, tax, and operational implications. For potential buyers, selecting the right structure is just as important as choosing the right aircraft. As aviation counsel, we frequently advise clients on the various transaction structures for acquiring an aircraft.
The optimal transaction structure depends on several factors, including:
Below is an overview of the most common transaction structures used when acquiring an aircraft (or an interest in an aircraft), along with key considerations for each.
1. Asset Purchase
The most straightforward structure is a direct asset purchase, in which the buyer acquires the aircraft itself from the seller through an aircraft purchase agreement.
How this Structure Works:
Key Benefits:
Key Considerations & Risks:
This structure is most common when acquiring a single aircraft from a private seller, broker, or operator.
2. Fractional Ownership
Fractional ownership allows multiple parties to purchase a percentage interest in an aircraft, rather than the entire aircraft.
How this Structure Works:
Key Benefits:
Key Considerations & Risks:
Fractional ownership is often attractive to businesses or individuals who want regular access to private aviation but do not need the utilization level that justifies full ownership.
3. Joint Ownership or Co-Ownership
In a co-ownership structure, two or more parties jointly acquire and operate an aircraft outside of a formal fractional program.
How this Structure Works:
Key Benefits:
Key Considerations & Risks:
Co-ownership arrangements are common among business partners or companies with similar travel needs.
4. Leasing Structures
Another common structure is acquiring an interest in an aircraft through a lease rather than direct ownership.
Types of Leases:
Key Benefits:
Key Considerations & Risks:
Leasing structures are particularly common in corporate aviation and fleet operations.
The Importance of Structuring the Transaction Correctly - Final Thoughts
An improperly structured acquisition can create unnecessary tax exposure, operational restrictions, regulatory noncompliance, or liability risks. Whether acquiring an aircraft outright, purchasing an ownership interest, or participating in a shared-use arrangement, the structure of the transaction will significantly impact both the economics and the legal obligations of the parties involved. Careful planning at the outset can help ensure that the structure aligns with your operational needs, financial goals, and risk tolerance—while positioning you for flexibility as your aviation requirements evolve. McGrath North’s Aviation Team has extensive experience in aircraft acquisitions and is equipped to guide buyers and sellers through every step of an aircraft transaction.
Frequently Asked Questions
What is the most common way to buy an aircraft? The most common and straightforward method is a direct asset purchase, where the buyer acquires title to the aircraft through a purchase agreement, bill of sale, and related closing documents — usually holding title through an LLC.
What is fractional aircraft ownership? Fractional ownership is a structure where multiple parties each buy a percentage share of an aircraft (such as 1/8 or 1/16) and receive a corresponding number of flight hours per year, with a program manager handling scheduling, maintenance, and crew.
What's the difference between fractional ownership and co-ownership? Fractional ownership operates within a formal program run by a management company with set shares and flight-hour allocations. Co-ownership (joint ownership) is a more informal arrangement between two or more parties who jointly buy and operate an aircraft themselves, governed by a custom joint ownership agreement.
Should I buy or lease an aircraft? It depends on capital availability, tax planning goals, and how long you need the aircraft. Leasing (operating lease or finance/lease-to-own) reduces upfront capital requirements and offers fleet flexibility, while an asset purchase provides full ownership and control. The right choice depends on intended use, financing, tax objectives, and exit strategy.
Do I need an LLC to buy an aircraft? In a typical asset purchase, buyers commonly form an LLC to hold title to the aircraft. This can help with liability protection and registration, though the specific approach depends on individual circumstances and should be reviewed with aviation counsel.
What factors determine the best aircraft acquisition structure? Six main factors typically drive the decision: intended use of the aircraft, financing arrangements, tax planning objectives, regulatory compliance, liability exposure, and long-term exit strategy.
What are the risks of an improperly structured aircraft acquisition? An improperly structured deal can lead to unnecessary tax exposure, operational restrictions, regulatory noncompliance, and increased liability risk — which is why careful upfront planning with aviation counsel is important.
What is a finance lease vs. an operating lease for aircraft? An operating lease lets the lessee operate the aircraft for a set period without acquiring ownership. A finance lease (or lease-to-own) has payments that function like loan payments, with the lessee potentially obtaining ownership at the end of the lease term.
Understanding Transaction Structures for Acquiring an Aircraft
Quick SummaryThere are four common legal structures for acquiring an aircraft: (1) asset purchase, where a buyer directly acquires title to the aircraft, typically through an LLC; (2) fractional ownership, where multiple parties each own a percentage share and receive a set number of flight hours annually; (3) joint or co-ownership, where two or more parties jointly buy and operate an aircraft outside a formal fractional program; and (4) leasing, either an operating lease or a finance/lease-to-own arrangement. The right structure depends on intended use, financing, tax planning goals, regulatory compliance, liability exposure, and long-term exit strategy. Aviation counsel can help buyers and sellers choose and document the structure that best fits their needs.
Key Facts:
- 4 main aircraft acquisition structures: asset purchase, fractional ownership, co-ownership, and leasing.
- Asset purchase buyers typically hold title through an LLC.
- Fractional shares are commonly sold in increments like 1/8 or 1/16 of an aircraft.
- Leasing options include operating leases and finance (lease-to-own) leases.
- 6 key factors drive the right structure: intended use, financing, tax planning, regulatory compliance, liability exposure, and exit strategy.
Acquiring an aircraft—whether for business, personal travel, or investment purposes—can be structured in several different ways. Each structure carries its own legal, financial, tax, and operational implications. For potential buyers, selecting the right structure is just as important as choosing the right aircraft. As aviation counsel, we frequently advise clients on the various transaction structures for acquiring an aircraft.
The optimal transaction structure depends on several factors, including:
- Intended use of the aircraft
- Financing arrangements
- Tax planning objectives
- Regulatory compliance
- Liability exposure
- Long-term exit strategy
Below is an overview of the most common transaction structures used when acquiring an aircraft (or an interest in an aircraft), along with key considerations for each.
1. Asset Purchase
The most straightforward structure is a direct asset purchase, in which the buyer acquires the aircraft itself from the seller through an aircraft purchase agreement.
How this Structure Works:
- Title to the aircraft transfers directly from seller to buyer.
- The buyer typically forms an entity, often an LLC, to hold title to the aircraft.
- The transaction is documented through a purchase agreement, bill of sale, and related closing documents.
Key Benefits:
- Clear chain of title and ownership.
- Buyer avoids assuming most of the seller’s liabilities.
- Simplified due diligence focused primarily on the aircraft and its records.
Key Considerations & Risks:
- Proper title searches and lien releases.
- Registration with the FAA or applicable aviation authority.
- Sales/use tax implications depending on jurisdiction and operational structure.
This structure is most common when acquiring a single aircraft from a private seller, broker, or operator.
2. Fractional Ownership
Fractional ownership allows multiple parties to purchase a percentage interest in an aircraft, rather than the entire aircraft.
How this Structure Works:
- Each owner acquires a defined share (for example, 1/8 or 1/16).
- Owners receive a corresponding number of flight hours annually.
- A program manager typically handles scheduling, maintenance, and crew.
Key Benefits:
- Lower capital commitment.
- Predictable operating costs.
- Professional management of the aircraft.
Key Considerations & Risks:
- Limited scheduling flexibility compared to full ownership.
- Long-term program agreements with management providers.
- Exit and resale restrictions on fractional shares.
Fractional ownership is often attractive to businesses or individuals who want regular access to private aviation but do not need the utilization level that justifies full ownership.
3. Joint Ownership or Co-Ownership
In a co-ownership structure, two or more parties jointly acquire and operate an aircraft outside of a formal fractional program.
How this Structure Works:
- A joint ownership agreement governing scheduling, expenses, and maintenance.
- Shared operating costs based on usage or ownership percentage.
- One owner or a third-party manager overseeing operations.
Key Benefits:
- Shared capital and operating costs.
- Greater control than in many fractional programs.
Key Considerations & Risks:
- Detailed agreements are essential to prevent disputes.
- Allocation of liability among owners must be clearly addressed.
- Regulatory compliance may vary depending on how the aircraft is operated.
Co-ownership arrangements are common among business partners or companies with similar travel needs.
4. Leasing Structures
Another common structure is acquiring an interest in an aircraft through a lease rather than direct ownership.
Types of Leases:
- Operating Lease: The lessee operates the aircraft for a defined period without acquiring ownership.
- Finance Lease / Lease-to-Own: Payments function similarly to loan payments, and the lessee may obtain ownership at the end of the term.
Key Benefits:
- Reduced upfront capital requirements.
- Potential tax and accounting benefits.
- Flexibility in fleet management.
Key Considerations & Risks:
- Lease restrictions on aircraft use.
- Maintenance and return conditions.
- Lender or lessor approval requirements.
Leasing structures are particularly common in corporate aviation and fleet operations.
The Importance of Structuring the Transaction Correctly - Final Thoughts
An improperly structured acquisition can create unnecessary tax exposure, operational restrictions, regulatory noncompliance, or liability risks. Whether acquiring an aircraft outright, purchasing an ownership interest, or participating in a shared-use arrangement, the structure of the transaction will significantly impact both the economics and the legal obligations of the parties involved. Careful planning at the outset can help ensure that the structure aligns with your operational needs, financial goals, and risk tolerance—while positioning you for flexibility as your aviation requirements evolve. McGrath North’s Aviation Team has extensive experience in aircraft acquisitions and is equipped to guide buyers and sellers through every step of an aircraft transaction.
Frequently Asked Questions
What is the most common way to buy an aircraft? The most common and straightforward method is a direct asset purchase, where the buyer acquires title to the aircraft through a purchase agreement, bill of sale, and related closing documents — usually holding title through an LLC.
What is fractional aircraft ownership? Fractional ownership is a structure where multiple parties each buy a percentage share of an aircraft (such as 1/8 or 1/16) and receive a corresponding number of flight hours per year, with a program manager handling scheduling, maintenance, and crew.
What's the difference between fractional ownership and co-ownership? Fractional ownership operates within a formal program run by a management company with set shares and flight-hour allocations. Co-ownership (joint ownership) is a more informal arrangement between two or more parties who jointly buy and operate an aircraft themselves, governed by a custom joint ownership agreement.
Should I buy or lease an aircraft? It depends on capital availability, tax planning goals, and how long you need the aircraft. Leasing (operating lease or finance/lease-to-own) reduces upfront capital requirements and offers fleet flexibility, while an asset purchase provides full ownership and control. The right choice depends on intended use, financing, tax objectives, and exit strategy.
Do I need an LLC to buy an aircraft? In a typical asset purchase, buyers commonly form an LLC to hold title to the aircraft. This can help with liability protection and registration, though the specific approach depends on individual circumstances and should be reviewed with aviation counsel.
What factors determine the best aircraft acquisition structure? Six main factors typically drive the decision: intended use of the aircraft, financing arrangements, tax planning objectives, regulatory compliance, liability exposure, and long-term exit strategy.
What are the risks of an improperly structured aircraft acquisition? An improperly structured deal can lead to unnecessary tax exposure, operational restrictions, regulatory noncompliance, and increased liability risk — which is why careful upfront planning with aviation counsel is important.
What is a finance lease vs. an operating lease for aircraft? An operating lease lets the lessee operate the aircraft for a set period without acquiring ownership. A finance lease (or lease-to-own) has payments that function like loan payments, with the lessee potentially obtaining ownership at the end of the lease term.
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