The private aviation glossary
104 terms explained in plain English — from ACMI to wet lease.
B
Bonus depreciation finance
Bonus depreciation is a US tax provision that lets a business deduct a large share of an aircraft's cost in the year it is placed in service rather than over the normal recovery period. The 2017 tax law allowed 100% for new and used aircraft, which was phasing down to 40% for 2025 before legislation in 2025 restored 100% bonus depreciation for property acquired after 19 January 2025. The catch is that the aircraft must be used predominantly for qualified business purposes, personal use is recaptured, and hobby-loss and passive-activity rules apply. It changes the timing of deductions rather than the total, but for a profitable company buying a $20 million jet the cash-flow effect can be enormous.
D
Depreciation finance
Depreciation has two meanings for aircraft owners. Market depreciation is the loss in resale value, historically 5–10% a year for a new business jet in normal conditions, faster in the first few years and slower once the aircraft is a decade old, with occasional periods, such as 2021–2023, when used prices actually rose. Tax depreciation is the deduction a business can claim for the cost of an aircraft used in its trade, spread over five to seven years in the United States under MACRS. Buyers should model both: the tax benefit is real but conditional on business use and documentation, while the market loss is the largest single cost of owning a new aircraft.
F
Federal excise tax (FET) finance
Federal excise tax is the US tax on commercial air transportation: 7.5% of the amount paid for domestic charter flights, plus a per-passenger domestic segment fee ($5.30 per segment in 2026). It applies to Part 135 charter, jet card and most fractional flights, but not to owner-flown Part 91 trips, and it is charged on the whole fare including positioning and catering that the operator bills. Flights that begin or end outside the US pay the international facilities fee ($23.40 per passenger in 2026) instead of the 7.5%, which is why a Miami–Bahamas trip can carry less tax than Miami–New York. Brokers and operators must collect and remit it; quotes should state whether it is included.
I
International segment fee finance
The international segment fee, formally the international facilities tax or head tax, is the flat per-passenger US tax charged on charter flights that begin or end outside the United States, set at $23.40 per person in 2026 (a lower rate applies to flights between the US mainland and Alaska or Hawaii). It replaces the 7.5% federal excise tax on those sectors. On a $60,000 transatlantic charter for six passengers the fee is a rounding error, whereas the domestic 7.5% on a $60,000 trip would be $4,500, so the choice between a domestic and an international routing has a real tax effect. Other countries levy their own passenger taxes, such as the UK Air Passenger Duty, which is charged at its highest band on business jets.
T
Temporary admission finance
Temporary admission is a customs procedure that lets a non-EU-registered aircraft, owned and used by a non-EU resident, fly within the European Union for up to six months without paying import VAT and duty. It is the legal basis on which a US- or Cayman-registered private jet can tour Europe all summer. The conditions are strict: the aircraft must not be used commercially in the EU, EU-resident passengers create risk unless the owner is on board or specific exemptions apply, and the six-month clock resets only after the aircraft leaves. Owners who base an aircraft in Europe or lend it to EU-resident friends can lose the relief and face full VAT.
V
VAT importation finance
When an aircraft is brought into the European Union or the United Kingdom for use there, it is treated as an import and value added tax at the local rate, 17–27% in the EU and 20% in the UK, becomes chargeable on its value unless a relief applies. Commercial operators on an AOC can usually import free of VAT or recover it; private owners generally cannot, which is why so many privately used jets are imported through jurisdictions with favourable procedures or structured as leases through VAT-registered companies. Getting this wrong can mean a tax bill of several million euros when customs officers ramp-check an aircraft, so tax advice should come before the purchase, not after.