You’ve picked out the make and model of your new airplane, perhaps even the paint and interior, and closed the deal. Your very next decision is whether to create your own flight department or to enroll the aircraft in a management program.
Weigh Your Options Carefully
You’ve picked out the make and model of your new airplane, perhaps even the paint and interior, and closed the deal. Your very next decision is whether to create your own flight department or to enroll the aircraft in a management program.
Some factors to consider are:
- How frequently will you be flying?
- Should your aircraft be earning revenue when you’re not flying it?
- How involved do you want to be? Do you want to handle or outsource hiring crew, payroll and accounting, FAA interface, and maintenance?
Having your aircraft managed can be very appealing, in terms of both time savings and cost. Aircraft management companies offer many different programs and services, from simply planning trips and managing the crew, to a guarantee of monthly revenue-producing hours. Some of the more common types of programs are:
Turn-Key Management: Also known as Full Management, this option provides the benefits of owning an aircraft without most of the associated tasks, coupled with the benefit of fleet-negotiated discounts. Administrative, regulatory, and operational details such as crew hiring, management, and training; maintenance; and trip planning are handled for you. You may have the dedicated use of your aircraft, or you can elect to place it on the management company’s charter certificate in the Charter Management variation of Turn-Key Management.
Charter Management: If you fly less than 200 hours per year, consider a charter management program, which offers the optimal mix of owner aircraft accessibility and charter revenue production to offset some of your expenses when you’re not flying. Some companies guarantee a certain number of charter hours per month.
Charter Ally: Some companies allow owners to enroll their own flight department in the management company’s charter operation. Your aircraft is leased with crew to the charter company for each specific charter trip.
Ownership Assist and Fleet Deployment Programs: Specific to Delta Private Jets, these programs are designed for those flying less than 100 hours per year. The aircraft essentially is dedicated to charter flying, with created revenue covering nearly all aircraft operating expenses and helping to offset asset ownership costs. While both programs cover most fixed expenses (crew salaries, insurance, etc.), Ownership Assist, which is limited to specific aircraft makes and models, guarantees an income stream.
Once you decide on the type of management program you’d like, consider the company itself. Some key questions to ask are:
- Is the company independently-audited by a third party such as ARGUS or Wyvern? What are its safety ratings?
- How long has it been in business?
- Does the company outsource maintenance or have an in-house facility? In-house maintenance may offer preferred rates and accessibility. However, if your aircraft is not based at that facility, you will incur costs to ferry it back and forth.
- Where will your aircraft be based? Some companies have central locations and will ferry your aircraft to you as needed. Others will base your aircraft wherever there’s enough runway and a reliable source of jet fuel.
- If you’re not providing your own pilots, what are the company’s standards for pilots’ experience and training?
- Are these standards acceptable to you?
- What discounts are available, such as on fuel, insurance, training, and maintenance?
When choosing a management company, find a company with versatile management options. Since your needs may change over time, you’ll want the flexibility to change programs without having to change companies. For example, if you decide to sell this aircraft and buy another, you’ll want a company that can accommodate different makes and models of aircraft. Your management company should be able to work with you to accommodate your specific travel needs while meeting your desired expense and revenue objectives. BAA
Erik Snell, President of Delta Private Jets and Delta Global Services, joined Delta Air Lines in 2005. He previously held senior positions in Airport Customer Service and in Delta TechOps and Operations Analysis and Performance.
