Essex Aviation

  • NAFA Administrator posted an article
    How to Rent a Private Jet: Everything You Need to Know About Private Jet Charter Services see more

    NAFA member, H. Lee Rohde, III, President and CEO of Essex Aviation, discusses private jet charter services. 

    Wouldn’t it be great to be able to just rent a jet? Well, with private jet charter services, you can.

    Private aircraft charter is an on-demand service that enables passengers to select the aircraft model that most closely meets their travel needs and book a flight in much the same way they’d book a seat on a commercial flight.

    Read on to explore private aircraft charter options, expenses, safety considerations and more.

    Table of Contents

    Different Types of Private Jet Charter Services

    Private jet charter services typically fall into one of two broad categories: private jets for business and private jets for leisure.

    Private aircraft charter is an attractive option to businesses because it enables them to:

    • Arrange flights to multiple cities within a single day according to your schedule, rather than a commercial airline’s
    • Bypass long check-in and security lines by boarding through private terminals
    • Arrive on-time to important meetings by flying to an airport closer to their final destination
    • Access airports often having less ground and air traffic, thereby reducing the potential for delays
    • Transport larger groups at a potentially lower overall cost than commercial airfare
    • Avoid costly downtime associated with commercial flight delays, layovers and connecting flights
    • Support in-flight productivity by eliminating unnecessary distractions and increasing overall travel efficiency
    • Conduct onboard business meetings without having to worry about other passengers listening in on sensitive conversations
    • Enable team members to travel in a comfortable, inviting atmosphere so that they arrive to their final destination refreshed and prepared

    Private air charter is similarly appealing to those who fly primarily for leisure purposes. Private aviation enables such individuals to effectively extend their holiday experience by flying aboard aircraft appointed with the finest luxury amenities, including full-service kitchens, state-of-the-art in-flight entertainment systems and dedicated bedrooms. Private terminals at commercial airports offer a secure, comfortable and relaxed environment, far from the hustle and bustle of the main commercial airport concourse. Local, non-commercially serviced airports enable travelers to arrive closer to their final destination, so they can start their holiday that much sooner. Ultimately, private jet charter can make even the longest haul flightfeel like an escape.

    Private Aircraft Charter Amenities

    We’ve already touched upon some of the amenities that travelers can expect when they charter a private jet aircraft, but let’s take a closer look at some of the comforts and conveniences passengers enjoy while onboard:

    • Open spaces designed with legroom, storage space and aesthetics in mind
    • Private lounges featuring plush seating arrangements upholstered with high-end materials
    • Personal flight attendant crew members ready to tend to each individual passenger’s needs
    • Full-service galleys stocked with a variety of fine foods and beverages
    • In-flight food and drink services, including meal catering or onboard personal chef services
    • State-of-the-art in-flight entertainment systems featuring cutting-edge audio and visual equipment
    • Full-size lavatories, including mirrors, storage and, depending on the aircraft, shower facilities
    • Depending on the aircraft, dedicated bedrooms replete with full master suite
    • Private conference rooms fitted with built-in video systems, surround sound and Wi-Fi access
    • Special accommodations for passengers who wish to fly with pets

    Every aspect of the private jet charter experience is designed to accommodate the passenger’s unique needs.

    When Does It Makes Sense to Rent a Jet?

    Private jet charter services have long been popular amongst travelers who want the experience of private aviation without the long-term commitment associated with dedicated or fractional aircraft ownership. It’s an especially practical option for those who are dealing with a smaller number of trips, or who require flexibility in terms of aircraft size and destination. Interest in private aircraft charter has also increased significantly in light of COVID-19, as travelers seek to find safer alternatives to commercial flights. Travelers who are curious about the prospect of chartering a private aircraft but unsure whether it makes the most sense based on their needs are encouraged to discuss their operations with a private aviation consultant.

    How Much Does It Cost to Charter an Airplane?

    Unfortunately, there is no one simple answer to this question — the expense of chartering a private aircraft varies substantially based on a number of factors:

    • Number of Passengers: This dictates the size of the aircraft (light jet, midsize jet, long range or ultra-long range) and, therefore, available aircraft models from which to choose.
    • Dates of Travel and Scheduling: If you primarily charter on holidays and during peak travel times, this can affect your cost. General limited availability and the location of available aircraft can also affect your ability to travel on your desired dates, so it’s best practice to book charter flights as far in advance as possible.
    • Flight Route and Destination: More distant destinations with longer flight routes require long range or ultra-long range aircraft models; longer journeys may also require stops to refuel and change crew if required per the Federal Aviation Administration’s (FAA) Pilot Fatigue Rules.
    • Length of Time on the Ground: Most private jet charter service providers require an equivalent of two hours per day of flight time. That said, it does not matter how this time is spread out. For example, if a traveler were to depart on a four day trip, they would be required to fly a minimum of eight hours during that trip; however, they could divvy this up by flying two hours each day of the trip, or four hours each during the first and last days of the trip with the aircraft parked during days two and three.
    • Round-trip vs. One-way: Round-trip flights are generally more cost effective than one-way trips. The reason for this is that a one-way trip typically requires the aircraft to complete additional flights in order to support a one-way trip request. As a result, most charter providers will actually quote the cost of a round-trip flight, even for a one-way trip. Charter providers that quote a one-way trip will effectively quote, in some form or another, the cost for the flight time of repositioning the aircraft back to its home base. For travelers interested in booking either a one-way or round-trip flight, a private aviation consultant is an invaluable resource because they can help you better understand pricing.
    • One-way Options: Although it’s certainly possible to request a one-way trip, from a traditional charter perspective, the cost will likely compare to the cost of a round-trip flight. Therefore, travelers who frequently make one-way trips would probably be best served by looking into a jet card program as opposed to chartering because jet cards tend to cater more to one-way requirements.

    That said, some charter providers offer one-way options in which the traveler can take advantage of a positioning flight (that has no passengers) required by another client’s scheduled trip. These opportunities utilize what are referred to as “deadhead flights,” while positioning the aircraft to its primary departure point or returning it to its home base at the end of a primary charter trip. Should your travel needs coincide with a deadhead flight — also known as an “empty leg flight” — this can be a good option, one that is often offered at a discounted rate. It’s important to note, though, that the cost savings associated with deadhead flights pose risks in terms of flexibility because these flights have a predetermined departure date, time and schedule, all based on the schedule — and sometimes changing needs — of the primary charter customer.

    On the whole, private jet charter services are less expensive than most other private aviation options because they’re booked on a trip-by-trip basis with no ongoing ownership or program costs.

    For private jet charter cost estimates, please refer to the chart below:

    Charter Operators vs. Charter Brokers 

    There are a few different ways to charter a private jet aircraft, including working directly with a charter operator or going through a charter broker.

    Charter operators are FAA Part 135 Certified Air Carriers who are directly responsible for the ongoing management and operation of the aircraft on their charter certificate, including staffing, and require FAA certification. Charter brokers are third-party agents that act as liaisons between a client and the FAA Part 135 charter operator chosen to be utilized for the trip. A charter broker will work with their client to secure representation for the booking of the trip and then work with different charter operators to determine which option they believe best meets the trip requirements.

    It’s important to note that, unlike Part 135 charter operators, charter brokers are not required to be FAA certified and operate with limited regulatory oversight. That isn’t to say that there aren’t reputable brokers in the market, rather that it’s important to thoroughly vet brokers before choosing to partner with one; a private aviation consultant can prove to be a valuable asset in this review and selection process.

    For a more detailed explanation of the difference between charter operators and charter brokers, please refer to our blog post on the subject.

    How to Identify a Private Jet to Charter

    When determining which type of private jet aircraft model to reserve for a trip, travelers are advised to consider the following:

    • How many passengers will be on the flight?
    • Do any of those passengers require special accommodations? (For example, a passenger with a wheelchair may need additional space.)
    • How much total luggage needs to carried?
    • Are there any larger luggage items (golf clubs, skis, bikes, etc.)?
    • What is the desired departure airport or location?
    • What is the desired arrival airport or destination?
    • What is the length of the trip?
    • Will the aircraft be repositioned on certain days during the trip? If so, where and for how long?
    • Do the passengers require any special amenities (internet service, certain floorplan seating options, etc.)?

    Each of these factors plays an important role in determining the necessary size, equipment capability and performance capabilities of the aircraft.

    Private Aircraft Charter Safety Considerations

    In addition to FAA regulations, there are numerous other industry standards and ratings designed to audit the safety of private aviation companies. The three most well-known are the International Standard for Business Aircraft Operations (IS-BAO), the Aviation Research Group/US (ARGUS) rating system and the Wyvern Wingman Certification program.

    IS-BAO was founded by the International Business Aviation Council in an effort to “build a culture that continuously strives for a better, safer way of operating by identifying areas where better risk management will improve safety.” The IS-BAO auditing process consists of three stages designed to verify that safety management activities are appropriately targeted and integrated within an operator’s business. IS-BAO was developed by operators, for operators and is based on the standards outlined by the Standards and Recommended Practices outlined by the International Civil Aviation Organization.

    Developed by ARGUS International, the ARGUS rating system is designed to confirm the legitimacy of a charter operator based on their safety record, whether they have liability insurance, pilot training, experience and certifications, pilot background checks and more.

    ARGUS ratings break down into four categories, shown in the table below:

    Some private jet charter providers will claim that they’re “ARGUS Rated,” but there’s a significant difference between being an ARGUS Gold Rated and ARGUS Platinum Rated operator, so it’s in the travelers’ best interest to partner with a private aviation consultant who can help them understand the difference.

    As the first private aircraft safety auditing firm in the country, WYVERN Consulting has garnered a great deal of respect, and its WYVERN Wingman Certification is considered one of the most reputable in the industry. WYVERN audits are governed by six principles: integrity, fair presentation, due professional care, confidentiality, independence and an evidence-based approach. Wingman Certified operators gain an exclusive listing on The Wingman Report, WYVERN’s directory of premier operators, access to WYVERN’s safety data platform and round-the-clock support from the WYVERN team.

    Any private aircraft charter company that boasts one or more of these ratings or certifications in addition to meeting FAA regulations would be a preferred option to consider, though it doesn’t hurt to consult a private aviation expert for peace of mind.

    Private Jet Charter Alternatives

    For those who aren’t sure whether renting a jet is right for them, there’s a world of other private aviation options in store, including:

    • Membership Programs: With a membership program, members agree to a fixed cost per hour charter rate at the start of the contract and are billed after each flight. Members typically pay either a monthly management or annual membership fee in addition to the cost per flight.
    • Jet Card Program: Jet card program members have their pick of a dedicated service with a predetermined number of hours on a specific aircraft type or size category or a debit card service in which they establish a travel fund account and pay on a trip-by-trip basis using that account.
    • Fractional Aircraft Ownership: Fractional owners purchase a share of a specific aircraft type and agree to an annual number of allotted flight hours. Most fractional aircraft ownership programs require a minimum size share of 50 hours of flight time per year, though this can vary depending on the provider.
    • Pre-Owned Aircraft Acquisition: Travelers who for a variety of reasons want their own private aircraft without the capital investment of a new aircraft acquisition are advised to consider purchasing pre-owned and investing in aircraft refurbishment services to breathe new life into an existing aircraft.
    • New Aircraft Acquisition: The ultimate in luxury, travelers can purchase a new aircraft tailored to their exact requirements and specifications.

    If you’re considering private jet charter services or evaluating alternatives, talk to the experts first — specifically, the experts at Essex Aviation Group. With a combined 95 years of aviation experience, we have longstanding private aviation industry connections that we can leverage to your advantage. We’re also intimately familiar with different private aircraft charter companies’ vetting processes, so we can help ensure that every flight you take is a safe flight.

    Ready to get started? Contact us today to let us know your unique travel requirements and we’ll help you determine whether private air charter services are right for you.

    This article was originally published by Essex Aviation on August 13, 2020.

  • NAFA Administrator posted an article
    Everything You Need to Know About Aircraft Pre-Purchase Inspections see more

    NAFA member, Thomas Mitchell, Executive Vice President of Essex Aviation, discusses aircraft pre-purchase inspections.

    An aircraft pre-buy inspection refers to the process by which a qualified entity or inspector examines an aircraft during a potential sale or transaction. During this process, the inspector aims to identify any preexisting damage, potential maintenance issues, Airworthiness Directives, and so on in order to protect the buyer’s interests.

    The Importance of an Aircraft Pre-Buy Inspection

    Purchasing private aircraft is an expensive investment, even when the asset in question is in perfect working order. Minor issues with an aircraft can incur major expenses, so it’s in a buyer’s best interest to conduct a pre-purchase inspection as part of your acquisition process.

    The fact of the matter is that it’s not unusual for the current owner to believe that their aircraft is in pristine condition, especially if they’ve recently invested in upgrades to the aircraft or have files of expensive maintenance receipts to show for it. Even with all the effort and support provided by the current owner, certain items or areas of the aircraft can only be sufficiently reviewed during an aircraft pre-buy inspection.

    Therefore, it’s wise for a buyer to request an aircraft pre-purchase inspection, rather than find out after the fact that there’s an issue with the aircraft. Depending on the severity of the issue (or issues) identified during the inspection, the buyer may elect to negotiate with the current owner to lower the purchase price or to cover the cost of repairs and or the implications to the aircraft value. Depending upon the structure of the transaction, the buyer could also have the option to reject the aircraft and terminate the transaction.

    Even if money is of no object, an aircraft pre-purchase inspection is a pragmatic move because it often saves the buyer valuable time — time that the aircraft could spend flying rather than sitting in a repair facility. Identifying and addressing potential issues prior to purchase is an excellent way for a buyer to help ensure that they’re able to fly the aircraft worry-free for some time after the purchase is complete.

    A Note on COVID-19

    In light of the COVID-19 pandemic, there has been an increase in sellers pushing for quick sales, often at an attractive discount, on the condition that the buyer limit or bypass entirely the aircraft pre-purchase inspection process. Although, in this scenario, a discounted sale price can be appealing, it often comes with risk of unexpected costs after closing — costs that would have otherwise been identified during an aircraft pre-buy inspection. To that end, COVID-19 should have no influence on buyers when weighing the benefits of and protection afforded by a pre-purchase inspection, even if it increases the overall timeline of the transaction.

    Potential Issues an Aircraft Pre-Purchase Inspection Can Reveal

    To illustrate the importance of an aircraft pre-purchase inspection, let’s look at some of the possible issues that could come to light during the inspection process:

    • Although inoperative cabin systems — such as cabin entertainment, window shade controls, and galley equipment — might appear to be minor, they are actually certified as systems that need to function properly in order to meet delivery conditions. Costs can increase exponentially if replacement parts or components for that system are obsolete or difficult to source. If discovered during the aircraft pre-buy inspection, this issue would fall upon the seller to correct.
    • Aircraft are designed under strict certification. During the aircraft pre-buy inspection process, it’s not unusual to discover that certain refurbishments or upgrades made to the aircraft were not properly certified or approved — an issue that can take a long and costly process to rectify. If identified, this issue would fall under the seller’s purview.
    • Any aircraft that has been repaired or modified has an extensive list of required documents, including instructions for continued airworthiness. During the inspection process, it is not uncommon for an inspector to find that these key regulatory documents have either been ignored or are missing completely.
    • An aircraft that was subject to damage and subsequently repaired might now require ongoing inspections that are out-of-phase with its normal scheduled inspections. This issue could cause a new owner to experience unexpected downtime and costs.
    • The type of inspection program for aircraft can vary based on its current operator and utilization. In cases of very high or very low utilization, there is a necessary process to transition the aircraft back to the normal manufacturer’s inspection program — a process that is costly, and that should come at the seller’s expense.

    Why You Really Need a Pre-Purchase Inspection

    Some buyers make the mistake of assuming that, since the aircraft recently underwent a major inspection, there’s no need for an aircraft pre-buy inspection. Although it’s true that a major inspection might turn up some useful information about the aircraft, that inspection is only a snapshot of the aircraft’s current condition based on a predetermined checklist. Aircraft pre-purchase inspections are uniquely designed to specifically examine and target the areas of greatest concern and have been proven to reveal trouble spots within an aircraft model that are most at risk for a buyer.

    Another common misconception is that an aircraft pre-buy inspection report is unnecessary for an aircraft that’s only a few years old. Newer aircraft models naturally command a higher selling price than older models, which means any issues discovered with a newer model could have a greater monetary impact on the presumed and assigned value of the aircraft than with an older one. The fact is that even after just a few years of operation, an aircraft’s environment and operating history can be detrimental to its presumed condition and market value. Furthermore, if the aircraft is still under warranty, any issues discovered during the aircraft pre-purchase inspection may still be covered under warranty programs.

    Finally, buyers often assume that an aircraft pre-buy inspection is unnecessary when the aircraft in question has a strong maintenance pedigree — for example, if the aircraft were previously owned and operated by a Fortune 100 company. Although a corporation’s assumed reputation for high standards would suggest that the aircraft was kept in mint condition, this isn’t always the case. Some corporations may have limited their aviation department budgets, which could result in the deferral of planned upgrades, refurbishments, and, in some cases, even improvements by way of recommended service bulletins.

    For all of the reasons outlined here and in the previous section, the importance of aircraft pre-purchase inspection services really can’t be overstated.

    Aircraft Pre-Purchase Inspection Tips

    • Set realistic expectations. When purchasing a pre-owned aircraft, there are bound to be some slight imperfections, many of which the buyer can easily fix on their own. For example, cosmetic issues could be the result of normal wear and tear and have no bearing on safety or airworthiness, therefore, the seller might not be required to repair these issues in order to meet the defined delivery conditions. In this instance, it would make more sense for the buyer to make those minor improvements on their own.

    In any case, it’s important that buyers not go into the process fixated on the idea of the “perfect plane,” and that they decide well in advance which imperfections they’re willing to accept and handle on their own. That said, it would be wise for a buyer to look for an advisor who can provide guidance on whether a minor issue is truly minor, whether it affects how the aircraft is certified, and whether that inoperative item might actually affect the value or safety of the aircraft.

    • Work with a qualified source. Buyers should always insist on using their own, third-party resource inspector rather than allow the maintenance provider who currently services the aircraft to perform the aircraft pre-purchase inspection. This is because, having history with the aircraft, the current maintenance provider might be biased, and therefore possibly less apt or inclined to catch things during their evaluation. Buyers should look for an inspector who specializes in the particular aircraft model that they intend to buy — for example, small or especially vintage aircraft would require a different skillset and experience than a newer corporate jet or helicopter.

    It’s recommended that any prospective buyer partner with a private aviation consultant to exclusively represent them, as opposed to someone who represents both the buyer and the seller. The latter might be inclined to recommend a pre-buy geared to incur the least friction for completing the transaction. A private aviation consultant can help the buyer steer clear of such risks by leveraging their knowledge of industry options to identify which resources are most appropriate and why.

    • Look closely at the history of the aircraft. An aircraft’s maintenance logbook or other permanent records can reveal unseen issues. This is another instance in which it’s beneficial for a buyer to work with a private aviation consultant because an experienced consultant will know exactly which red flags to look for. At Essex Aviation, any time we work with a client to review an aircraft’s logbooks, some flags we look for are:
      1. Gaps in time that indicate that the aircraft sat unused for a period of time and was perhaps not properly preserved.
      2. Periods of time in which the aircraft recorded significant flight time, but with no corresponding maintenance records.
      3. Records that support the traceability of replacement parts or components; these certifications should be readily available and complete.
    • Review all applicable Airworthiness Directives. Airworthiness Directives (AD) are “legally enforceable regulations issued by the FAA in accordance with 14 CFR Part 39 to correct an unsafe condition in a product.” Similar to a recall notice for an automobile, an AD denotes a safety matter with the aircraft that, if the seller fails to comply with, would be cause within the Purchase Agreement for the buyer to reject the aircraft.
    • Perform a test flight. Certain issues will only come to light when the aircraft is in use, so it’s best to request test flights at the beginning of the aircraft pre-buy inspection, when the aircraft is returned to service, and prior to the final closing.
    • Ask the right questions. Buyers should be actively involved in the inspection process and should ask the following questions:

    – Where has the aircraft been maintained?

    – In what geographical environment has the aircraft been based?

    – Has the aircraft been hangared consistently?

    – Has the aircraft sustained any damage?

    – If the aircraft was out of use for a period of time, was it properly preserved?

    These questions not only enable buyers to stay informed throughout the process, but also to avoid any potential financial implications.

    • Don’t rush the process. Depending on the size of the aircraft, a pre-buy inspection can range from 1–2 days for a small piston aircraft to 2–3 weeks for a mid-size corporate jet. Note that these timeline estimates are only for the completion of the inspection and delivery of the final aircraft pre-buy inspection report; additional time will be required in order to rectify approved discrepancies. Therefore, it’s recommended that buyers budget enough time in their schedule prior to completing the transaction for a thorough pre-buy evaluation — after all, the more comprehensive the inspection, the better the outcome for the buyer.

    Start Your Pre-Purchase Inspection Today

    With nearly 100 years of combined aviation experience, the executive team at Essex Aviation Group has the expertise and resources to assist clients with any of their private aviation needs — including aircraft pre-purchase inspection services. Our in-house experience and vast network of industry connections includes qualified aircraft-specific inspectors capable of identifying any hidden issues, and each of our advisors have the necessary experience to walk you through the entire aircraft purchase process.

    This article was originally published by Essex Aviation

     

  • NAFA Administrator posted an article
    Your Private Air Transportation Options – Making An Informed Decision and Executing It Correctly see more

    NAFA member, Anthony Kioussis with Asset Insight, hosts their latest podcast "Aircraft Ownership Lifecycle Podcast" featuring NAFA member, Lee Rohde President and CEO of Essex Aviation Group.  

    Lee Rohde discusses how the consulting company he founded advises aviation-related entities on a wide range of aircraft acquisition, strategic planning, financial, operational and management matters. Specifically, Lee covers:

    • Private Air Transportation options – what should prospective users consider in reviewing their options for meeting their travel requirements?
    • In the event an entity determines they want to acquire an aircraft, how should they go about identifying the best model to meet their travel requirements?
    • What factors have the greatest influence on the decision to acquire a new vs. a pre-owned aircraft?
    • The issues and complexities associated with refurbishing or upgrading a pre-owned aircraft.
    • The expertise an entity should secure if they are planning an aircraft acquisition.
    • The factors to be considered when determining an Offer Price for an aircraft.
    • What a pre-purchase inspection entails and why it is such an important part of acquisition process.

    Listen to the podcast here.  

    This podcast was originally published by Asset Insight.

  • NAFA Administrator posted an article
    Aircraft Share Options Explained: Fractional Jet Ownership vs. Charter vs. Jet Card see more

    NAFA member, H. Lee Rohde, III, President and CEO of Essex Aviation, discusses discusses private jet share options.  

    Flying private has long been a popular alternative to flying commercial due to the luxury, privacy, and convenience it affords — but now, in these uncertain times, flying private also provides a much-needed sense of security and peace of mind. As a result, a growing number of individuals are starting to explore private jet share options, particularly fractional ownership, charter programs, and jet card programs, each of which offer the same amenities as outright acquisition with less of a commitment.

    In this blog post, we’ll compare fractional jet ownership vs. charter program vs. jet card program to help you find the private jet share option that best meets your unique travel needs.

    Table of Contents

    • What is a Private Jet Share?
    • What is Fractional Jet Ownership?
    • When Does Fractional Jet Ownership Make Sense?
    • What is Private Jet Chartering?
    • When Does Private Jet Chartering Make Sense?
    • What Are Membership & Jet Card Programs?
    • When Do Membership & Jet Card Programs Make Sense?
    • At a Glance: Fractional Jet Ownership vs. Charter vs. Jet Card Programs
    • Fly Safer with Essex Aviation

    What is a Private Jet Share?

    As implied by its name, a private jet share refers to any private aviation program in which you own or lease a share of an aircraft rather than own it outright. There are multiple private jet share options to choose from, including fractional aircraft ownership, private jet membership or card programs and private jet chartering. How a private jet share is structured depends entirely on the program, aircraft model, and number of hours utilized.

    What is Fractional Jet Ownership?

    Those interested in fractional ownership purchase a share of a specific aircraft type and agree to an annual amount of allotted flight hours. Most fractional ownership programs require a minimum size share of 50 hours of flight time per year, though this can vary depending on the provider. The maximum share size is 800 hours of flight time per year, which is roughly equivalent to ownership of an entire aircraft.

    Fractional ownership shares are acquired from the company that operates the aircraft and that has a designed shared ownership program and services agreement in which all share owners participate. This company also employs pilots, cabin crew and flight operations coordinators, administers maintenance and covers airport and hangar fees and insurance, which can be attractive to individuals who want the benefits of aircraft ownership without the responsibility. Some fractional ownership programs even provide the option to upgrade or downgrade the size of the aircraft depending on your trip requirements.

    When Does Fractional Jet Ownership Make Sense?

    Although the total cost, including the share acquisition or lease, is more expensive than other alternatives, fractional ownership doesn’t require you to pay a “deadhead cost” — that is, any costs incurred from positioning the aircraft at your departure point. Additionally, it’s possible to sell fractional shares back to the program provider, though these shares tend to depreciate more due to their high level of annual utilization, resulting in lower residual values.

    Fractional ownership is a popular option among those who frequently travel for business-related reasons because it offers tax benefits. Frequent fliers also appreciate the consistency and continuity that fractional ownership offers. Most groups that operate fractional programs, such as NetJetsFlexJet and AirShare are highly reputable and have well-documented, standardized procedures for everything from how they vet operators to how they sanitize aircraft between one flight and the next.

    Fractional aircraft ownership is ideal for individuals who want the experience of flying with an organization with a dedicated fleet of aircraft, pilots, and crew, and who require the flexibility to avoid duty times and other restrictions.

    What is Private Jet Chartering?

    Private jet chartering is an on-demand service that enables you to compare pricing and amenities for various aircraft types and book the one that best meets your travel needs in much the same way as you’d book a seat on a commercial flight. Those interested in chartering have the option of working with either a charter operator or a charter broker, though it’s best practice to work with a private aviation consultant before considering either option.

    When Does Private Jet Chartering Make Sense?

    Of the three types of private jet share presented in article — fractional jet ownership vs. charter vs. jet card — private jet chartering requires the least commitment, both in terms of time and expense.

    In fact, chartering is the most popular private aviation option due to the fact that it doesn’t require a significant capital cost upfront or fixed costs associated with maintenance and staff salaries — all you have to pay for is the utilization of the aircraft on a trip-by-trip basis. This makes chartering ideal for anyone who wants the private aviation experience without any of the responsibility. It’s important to note, though, that what you save on chartering, you’ll make up for in terms of non-guaranteed availability in a specific aircraft type: It can sometimes be challenging to find an aircraft that meets both your specific needs and your schedule, so you may be forced to choose between one and the other.

    What Are Membership & Jet Card Programs?

    Membership and jet card programs, though often referred to interchangeably, are structurally unique. With a membership program, you agree to a fixed cost per hour at the start of the contract and are billed after each flight. You’re also typically subjected to either monthly management or annual membership fees.

    There are two types of jet card programs: a dedicated service with a predetermined number of hours on a specific aircraft type or size category, and a debit card service that enables you to fund an established travel account and select the aircraft category on a trip-by-trip basis with agreed-to hourly rates. Depending on the program, the provider will either quote you for a certain number of hours during booking and bill actual time upon completion of the trip or deduct the final total cost of the trip from your balance after it is completed.

    When Do Membership & Jet Card Programs Make Sense?

    Much like chartering, membership and jet card programs are best suited for individuals who want a short-term commitment and require a much lower investment than fractional ownership. Jet card programs, in particular, are appealing because they come at a fixed rate. There’s no need to negotiate the price for each flight — just add money to your jet card account and go. In some cases, you can even cancel your membership and get a refund for unused hours if you’re dissatisfied with your service, which makes jet card programs one of the most accessible points of entry to the private aviation market.

    Another compelling reason to consider a membership or jet card program is because most major private aviation companies offer them, making them a reliable option. When evaluating either membership or jet card programs, be sure to work with an experienced private aviation consultant who can steer you toward a reputable company and help you understand the relationship between the program provider and the aircraft you intend to utilize.

    If you’re interested in joining a membership or jet card program, keep in mind that they often come with a longer advance notice requirement to schedule an aircraft. This is less of an issue if you’re the type of traveler who books their trips well in advance but can be challenging if you frequently make last-minute travel arrangements, especially during peak periods such as holidays.

    At a Glance: Fractional Jet Ownership vs. Charter vs. Jet Card Programs

    Fly Safer with Essex Aviation

    If you’re in need of private aviation assistance, Essex Aviation Group is here for you. From private jet charter consulting to new aircraft acquisition to aircraft completion management, we offer a wide variety of services tailored to support the travel needs of each and every customer. Contact us today to let us know how we can help you find the private jet share option that’s right for you.

    This article was originally published by Essex Aviation.  

  • NAFA Administrator posted an article
    Private Aviation Tax Considerations for Prospective Aircraft Buyers see more

    NAFA member, H. Lee Rohde, III, President & CEO of Essex Aviation Group, Inc., discusses tax considerations when purchasing an aircraft. 

    Acquiring a private aircraft for personal use is an exciting experience, one that opens innumerable doors for frequent travelers — however, to ultimately realize the benefits of your investment, you must first ensure that you’ve fully accounted for all financial considerations, especially aviation taxes.

    Too often, private aircraft owners aren’t fully informed of certain taxes that are involved in the ownership and operation of the aircraft; which are important as it relates to their operating budget and the overall aircraft ownership experience. That’s because tax considerations should be structured not only during the initial transaction, but throughout the ownership lifecycle, and can affect how you decide to utilize your aircraft.

    Read the recommendations below to avoid being blindsided by private aviation taxes.

    Location, Location, Location

    You might be surprised to learn just how many soon-to-be private aircraft owners ignore the opportunity to create even the most basic tax plan in advance of a transaction. Generally speaking, this isn’t for lack of interest but, rather, lack of understanding. Many buyers simply lack the awareness and experience to appreciate how seemingly minor factors, such as the physical location of the aircraft at closing or the location of the hangar where they intend to house their aircraft, can affect taxes.

    For example, some states place a substantial sales tax on aircraft, while others have fly-away exemptions with strict timelines and requirements. Certain states also apply use and property taxes to aircraft purchases or transactions, which can vary and are affected by a number of factors. As federal and state tax laws change over time, working with an experienced aviation advisory team during your transaction will only become more valuable and necessary.

    Plan in Advance

    It’s unreasonable to expect potential buyers to automatically be familiar with state aviation tax regulations and laws, especially as they pertain to private aircraft, which is why it’s important to work with a qualified aircraft consultant and aviation tax advisory firm. Although private aviation consultants aren’t able to provide complete tax advice, they can help you determine the following in advance of your purchase date:

    • What your regular usage will be
    • Where you intend to fly (and for how long)
    • Where you intend to store your aircraft
    • How tax considerations affect your ownership structure
    • How to identify aviation tax counsel

    Your consultant can also act as a liaison between you and the seller, representing you throughout the transaction, as well as managing the process of positioning your aircraft at the right location during the time of closing for tax purposes.

    Consult a Tax Attorney

    In addition to determining your private aircraft usage and handling your acquisition, an aviation consultant can set you up with experienced aviation tax advisors and tax attorneys to round out your team. Aviation tax advisors and tax attorneys are well-versed in aircraft-specific tax codes and have the expertise to identify possible deductions or opportunities to maximize your tax savings by reducing the amount you pay for sales, property and ongoing use taxes. It’s impossible to emphasize enough just how important it is to work with aviation-experienced tax advisors and attorneys — only professionals with extensive industry experience will have the unique knowledge to properly address all of your tax considerations.

    Your private aviation consultant should work closely with your tax team every step of the way. Even if you do your due diligence from a tax perspective, there’s a possibility that, at some point, you’ll be audited. Should this occur, your consultant, tax advisor and aviation attorney will collaborate and help represent you during the audit.

    The right aviation advisory team will consistently go above and beyond for its clients, whether that entails figuring out which private aviation travel option best meets their unique needs, helping them understand how tax considerations affect their cost of ownership and operation, or tirelessly advocating on their behalf. With a collective 70 years of experience in the aviation industry under their belt and a vast network of connections, the consultants at Essex Aviation Group are uniquely qualified to usher clients through every step of the private aircraft acquisition process, as well as put them in touch with some of the best aviation tax advisors and attorneys in the industry.

    This article was originally published by Essex Aviation.  

  • NAFA Administrator posted an article
    Everything You Need to Know About Aircraft Pre-Purchase Inspections see more

    NAFA member, Thomas W. Mitchell, Executive Vice President of Essex Aviation, discusses aircraft pre-purchase inspections and what you need to know.

    An aircraft pre-buy inspection refers to the process by which a qualified entity or inspector examines an aircraft during a potential sale or transaction. During this process, the inspector aims to identify any preexisting damage, potential maintenance issues, Airworthiness Directives, and so on in order to protect the buyer’s interests.

    The Importance of an Aircraft Pre-Buy Inspection

    Purchasing private aircraft is an expensive investment, even when the asset in question is in perfect working order. Minor issues with an aircraft can incur major expenses, so it’s in a buyer’s best interest to conduct a pre-purchase inspection as part of your acquisition process.

    The fact of the matter is that it’s not unusual for the current owner to believe that their aircraft is in pristine condition, especially if they’ve recently invested in upgrades to the aircraft or have files of expensive maintenance receipts to show for it. Even with all the effort and support provided by the current owner, certain items or areas of the aircraft can only be sufficiently reviewed during an aircraft pre-buy inspection.

    Therefore, it’s wise for a buyer to request an aircraft pre-purchase inspection, rather than find out after the fact that there’s an issue with the aircraft. Depending on the severity of the issue (or issues) identified during the inspection, the buyer may elect to negotiate with the current owner to lower the purchase price or to cover the cost of repairs and or the implications to the aircraft value. Depending upon the structure of the transaction, the buyer could also have the option to reject the aircraft and terminate the transaction.

    Even if money is of no object, an aircraft pre-purchase inspection is a pragmatic move because it often saves the buyer valuable time — time that the aircraft could spend flying rather than sitting in a repair facility. Identifying and addressing potential issues prior to purchase is an excellent way for a buyer to help ensure that they’re able to fly the aircraft worry-free for some time after the purchase is complete.

    A Note on COVID-19

    In light of the COVID-19 pandemic, there has been an increase in sellers pushing for quick sales, often at an attractive discount, on the condition that the buyer limit or bypass entirely the aircraft pre-purchase inspection process. Although, in this scenario, a discounted sale price can be appealing, it often comes with risk of unexpected costs after closing — costs that would have otherwise been identified during an aircraft pre-buy inspection. To that end, COVID-19 should have no influence on buyers when weighing the benefits of and protection afforded by a pre-purchase inspection, even if it increases the overall timeline of the transaction.

    Potential Issues an Aircraft Pre-Purchase Inspection Can Reveal

    To illustrate the importance of an aircraft pre-purchase inspection, let’s look at some of the possible issues that could come to light during the inspection process:

    • Although inoperative cabin systems — such as cabin entertainment, window shade controls, and galley equipment — might appear to be minor, they are actually certified as systems that need to function properly in order to meet delivery conditions. Costs can increase exponentially if replacement parts or components for that system are obsolete or difficult to source. If discovered during the aircraft pre-buy inspection, this issue would fall upon the seller to correct.
    • Aircraft are designed under strict certification. During the aircraft pre-buy inspection process, it’s not unusual to discover that certain refurbishments or upgrades made to the aircraft were not properly certified or approved — an issue that can take a long and costly process to rectify. If identified, this issue would fall under the seller’s purview.
    • Any aircraft that has been repaired or modified has an extensive list of required documents, including instructions for continued airworthiness. During the inspection process, it is not uncommon for an inspector to find that these key regulatory documents have either been ignored or are missing completely.
    • An aircraft that was subject to damage and subsequently repaired might now require ongoing inspections that are out-of-phase with its normal scheduled inspections. This issue could cause a new owner to experience unexpected downtime and costs.
    • The type of inspection program for aircraft can vary based on its current operator and utilization. In cases of very high or very low utilization, there is a necessary process to transition the aircraft back to the normal manufacturer’s inspection program — a process that is costly, and that should come at the seller’s expense.

    Why You Really Need a Pre-Purchase Inspection

    Some buyers make the mistake of assuming that, since the aircraft recently underwent a major inspection, there’s no need for an aircraft pre-buy inspection. Although it’s true that a major inspection might turn up some useful information about the aircraft, that inspection is only a snapshot of the aircraft’s current condition based on a predetermined checklist. Aircraft pre-purchase inspections are uniquely designed to specifically examine and target the areas of greatest concern and have been proven to reveal trouble spots within an aircraft model that are most at risk for a buyer.

    Another common misconception is that an aircraft pre-buy inspection report is unnecessary for an aircraft that’s only a few years old. Newer aircraft models naturally command a higher selling price than older models, which means any issues discovered with a newer model could have a greater monetary impact on the presumed and assigned value of the aircraft than with an older one. The fact is that even after just a few years of operation, an aircraft’s environment and operating history can be detrimental to its presumed condition and market value. Furthermore, if the aircraft is still under warranty, any issues discovered during the aircraft pre-purchase inspection may still be covered under warranty programs.

    Finally, buyers often assume that an aircraft pre-buy inspection is unnecessary when the aircraft in question has a strong maintenance pedigree — for example, if the aircraft were previously owned and operated by a Fortune 100 company. Although a corporation’s assumed reputation for high standards would suggest that the aircraft was kept in mint condition, this isn’t always the case. Some corporations may have limited their aviation department budgets, which could result in the deferral of planned upgrades, refurbishments, and, in some cases, even improvements by way of recommended service bulletins.

    For all of the reasons outlined here and in the previous section, the importance of aircraft pre-purchase inspection services really can’t be overstated.

    Aircraft Pre-Purchase Inspection Tips

    • Set realistic expectations. When purchasing a pre-owned aircraft, there are bound to be some slight imperfections, many of which the buyer can easily fix on their own. For example, cosmetic issues could be the result of normal wear and tear and have no bearing on safety or airworthiness, therefore, the seller might not be required to repair these issues in order to meet the defined delivery conditions. In this instance, it would make more sense for the buyer to make those minor improvements on their own.

    In any case, it’s important that buyers not go into the process fixated on the idea of the “perfect plane,” and that they decide well in advance which imperfections they’re willing to accept and handle on their own. That said, it would be wise for a buyer to look for an advisor who can provide guidance on whether a minor issue is truly minor, whether it affects how the aircraft is certified, and whether that inoperative item might actually affect the value or safety of the aircraft.

    • Work with a qualified source. Buyers should always insist on using their own, third-party resource inspector rather than allow the maintenance provider who currently services the aircraft to perform the aircraft pre-purchase inspection. This is because, having history with the aircraft, the current maintenance provider might be biased, and therefore possibly less apt or inclined to catch things during their evaluation. Buyers should look for an inspector who specializes in the particular aircraft model that they intend to buy — for example, small or especially vintage aircraft would require a different skillset and experience than a newer corporate jet or helicopter.

    It’s recommended that any prospective buyer partner with a private aviation consultant to exclusively represent them, as opposed to someone who represents both the buyer and the seller. The latter might be inclined to recommend a pre-buy geared to incur the least friction for completing the transaction. A private aviation consultant can help the buyer steer clear of such risks by leveraging their knowledge of industry options to identify which resources are most appropriate and why.

    • Look closely at the history of the aircraft. An aircraft’s maintenance logbook or other permanent records can reveal unseen issues. This is another instance in which it’s beneficial for a buyer to work with a private aviation consultant because an experienced consultant will know exactly which red flags to look for. At Essex Aviation, any time we work with a client to review an aircraft’s logbooks, some flags we look for are:
      1. Gaps in time that indicate that the aircraft sat unused for a period of time and was perhaps not properly preserved.
      2. Periods of time in which the aircraft recorded significant flight time, but with no corresponding maintenance records.
      3. Records that support the traceability of replacement parts or components; these certifications should be readily available and complete.
    • Review all applicable Airworthiness Directives. Airworthiness Directives (AD) are “legally enforceable regulations issued by the FAA in accordance with 14 CFR Part 39 to correct an unsafe condition in a product.” Similar to a recall notice for an automobile, an AD denotes a safety matter with the aircraft that, if the seller fails to comply with, would be cause within the Purchase Agreement for the buyer to reject the aircraft.
    • Perform a test flight. Certain issues will only come to light when the aircraft is in use, so it’s best to request test flights at the beginning of the aircraft pre-buy inspection, when the aircraft is returned to service, and prior to the final closing.
    • Ask the right questions. Buyers should be actively involved in the inspection process and should ask the following questions:

    – Where has the aircraft been maintained?

    – In what geographical environment has the aircraft been based?

    – Has the aircraft been hangared consistently?

    – Has the aircraft sustained any damage?

    – If the aircraft was out of use for a period of time, was it properly preserved?

    These questions not only enable buyers to stay informed throughout the process, but also to avoid any potential financial implications.

    • Don’t rush the process. Depending on the size of the aircraft, a pre-buy inspection can range from 1–2 days for a small piston aircraft to 2–3 weeks for a mid-size corporate jet. Note that these timeline estimates are only for the completion of the inspection and delivery of the final aircraft pre-buy inspection report; additional time will be required in order to rectify approved discrepancies. Therefore, it’s recommended that buyers budget enough time in their schedule prior to completing the transaction for a thorough pre-buy evaluation — after all, the more comprehensive the inspection, the better the outcome for the buyer.

    This article was originally published by Essex Aviation on May 28, 2020.

     

  • NAFA Administrator posted an article
    Webinar: Ready to Buy & Fly? see more

    Educational Webinar Covers Best Practices & Acquisition Strategies Teaming Strategies

    Are you thinking about purchasing an aircraft? It can be an overwhelming experience, especially if you’re a first-time buyer, but there are experienced industry professionals who are ready to help.

    In a free educational webinar on May 28 2020, Essex Aviation President and CEO Lee Rohde joined GKG Law Principal Chris Younger to talk about everything you need to know when it comes to purchasing an aircraft.

    The webinar, Ready to Buy & Fly? Best Practices & Teaming Strategies for a Successful Aircraft Acquisition, includes resources, tips, and information on the following topics:

    • Steps to a successful aircraft transaction (including a week-by-week timeline!)
    • The necessary parties you should include when it comes to purchasing a plane, including:
      • CFO, CEO, and the COO
      • Corporate general counsel
      • An aircraft technical consultant
      • Commercial lender
      • And many more
    • Key closing checklist items
    • Potential post-closing issues
    • Net operating loss (NOL) carrybacks and The Coronavirus Aid, Relief, and Economic Security (CARES) Act

    Essex Aviation handles everything from new and pre-owned aircraft acquisitions to private jet charter counseling and membership. GKG Law works with purchase and sale transactions, aircraft ownership, federal and state tax planning, aircraft ownership trusts, and more.

    To find out more about purchasing an aircraft or to ask our industry experts any questions, contact Essex Aviation today.

    View Webinar Here

    This webinar hosted by Essex Aviation and GKG Law originally aired on May 28, 2020.

     

  • Tracey Cheek posted an article
    The Aircraft Buyer’s Guide to Private Jet Financing see more

    NAFA member, H. Lee Rohde, III, founder, President and CEO of Essex Aviation Group, Inc., shares tips on private jet financing.

    Even for high-net-worth individuals, whether to purchase a private aircraft might rank as one of the most expensive — and, potentially, lifestyle-changing — decisions they’ll ever make. From upfront costs to the ongoing costs of maintenance, hangarage and direct operating costs, private aircraft ownership requires a significant capital investment but, for those who frequently fly for business or personal reasons, it provides unparalleled travel experiences.

    The fact of the matter is that the comfort, convenience, luxury and freedom that private aviation offers would be compelling to just about anyone and considered well worth the cost by those who can afford it — so let’s talk about the options to best structure it through private jet financing.

    Let’s Talk Costs

    Before a buyer kickstarts their search for a private aviation lender, they’ll first want to thoroughly consider the costs of purchasing a private jet. Conservative estimates place the cost of a brand-new private jet between $7 million and $75 million, while the most expensive private aircraft in the world — those of commercial size but modified for private use — cost well above that range.

    For those buyers hoping to minimize their capital investment in an aircraft, acquiring a pre-owned aircraft can offer many of the same benefits as a new model with a reduced capital cost. However, for the following new aircraft, current industry data included in the VREF Aircraft Value Reference Guide offers some perspective on pricing and just how expansive the private jet financing industry is.

     

    Aircraft Manufacturer Model & Retail Price in Millions
    Bombardier • Lear 75: $13.8m
    • Challenger 650: $32.4m
    • Global 5000: $50.4m
    • Global 6000: $62.3m
    • Global 7500: $72.8m
    Cessna • Citation M2: $5m
    • Citation CJ3+: $8.6m
    • Citation CJ4: $9.6m
    • Citation XLS+: $13.6m
    • Citation Latitude: $17.3m
    • Citation Sovereign 680+: $18.8m
    Embraer • Phenom 100 EV: $4.5m
    • Phenom 300: $9m
    • Legacy 450: $16.6m
    • Praetor 500: $17m
    • Praetor 600: $21m
    • Legacy 650E: $26m
    • Lineage: $50m
    Dassault • Falcon 2000S: $30m
    • Falcon 2000LXS: $35.1m
    • Falcon 900LX: $44.8m
    • Falcon 7X: $53.8m
    • Falcon 8X: $59.3m
    Gulfstream • G500: $46.5m
    • G600: $57.9m
    • G650: $69.5m
    Pilatus • PC-24: $9.5m

    Choosing the Right Lender

    The road to private aircraft ownership should begin with the decision to retain the services of an aviation consultant or a jet financing broker. It is the responsibility of an aviation consultant to understand the buyer’s needs and situation to direct them to an appropriate tax attorney and, ultimately viable lenders and financing structures. Once the consultant has completed these steps, the process of researching lenders, requesting and reviewing lender proposals and working with the client or the client’s team is fairly straightforward. A consultant’s primary contribution is to apply their knowledge and considerable network of industry connections to facilitate the financing solution that best serves the client’s unique needs and requirements.

    High-net-worth individuals often partner with aviation consultants and finance brokers through their private wealth advisors or in-house finance team in order to identify the best options available. Clients in different segments of the market who might not have the same level of in-house financing staff to support their needs can also benefit from assembling a team of third-party experts within the private aviation industry. Whether they’re working with an in-house finance team, a third-party private aviation consultant or an aircraft finance broker to evaluate lenders, buyers have three private jet financing options from which to choose:

    1. Traditional Banks: For most buyers, utilizing their current bank can be the most efficient choice for jet financing due to their existing relationship. The bank already has a complete portfolio of the buyer’s finances, which can make the loan process that much more efficient.
    2. Banks With Aircraft Finance Groups: In the event that a buyer’s current bank cannot provide jet financing, it may still be able to use its industry connections to put the buyer in touch with a different bank that has a dedicated aircraft finance group. These institutions specifically have a vested interest in private jet financing and already manage a large aircraft portfolio and would therefore be more inclined to offer private jet financing to a buyer without an existing relationship.
    3. Private Lending Groups: This type of lender is able to provide private jet financing by raising capital within equity markets to support their portfolio growth. Though private aircraft lenders are less common than their traditional banking counterparts, they are a viable option for buyers who, for whatever reason, wish to avoid securing a loan with their primary bank or a traditional bank. Buyers who choose to pursue this private jet financing option are still advised to work with a private aviation consultant and tax attorney to confirm the lender’s position in the market and whether it’s a suitable option for the buyer in question.

    Criteria for Private Jet Financing Evaluation

    It is, understandably, in a lender’s best interest to be highly discerning about who it grants private jet financing to and how much it lends. Therefore, similar to home mortgage lenders, private aircraft lenders have strict criteria for evaluating potential borrowers, as well as additional portfolio parameters based on the age and models of aircraft they’re able to finance.

    For buyers who want a better understanding of this criteria, look no further than the “5 Cs” of credit: character, capital, capacity, collateral and conditions.

    • Character refers to the borrower’s reputation and the stability of their credit.
    • Capital refers to the borrower’s net worth and the types of capital assets they currently own.
    • Capacity refers to the borrower’s ability to pay on the loan, as well as their current debt-to-income ratio.
    • Collateral refers to the assets that the borrower is able to pledge to secure the loan.
    • And, finally, conditions refer to how the borrower intends to use the aircraft, as well as external factors such as pending legislation that could affect the loan and the current state of the economy.

    Buyers should be aware that most lenders have specific loan covenants, and that their lender of choice might require periodic reviews of the aircraft’s market value and also organize third-party inspections to determine whether the aircraft is being kept in the proper condition.

    Alternatives to Private Jet Ownership

    For individuals who want to replicate the experience of owning their own aircraft without having to worry about securing private jet financing, there are multiple alternatives to outright ownership:

    • Private Jet Lease: The individual leases an aircraft from the owner for a specified period of time and assumes full operational control — similar to direct ownership — without transferring the aircraft title. Private jet leasing offers similar operational benefits, which can make it a viable option for buyers who are not able to take advantage of the tax benefits that direct ownership can provide. In some cases, however, private jet leasing agreements preclude the lessee from using the aircraft for third-party charter (FAR Part 135).
    • Fractional Aircraft Ownership: The individual invests in partial ownership by purchasing a share of a specific aircraft type and agrees to an annual amount of flight hours depending on their specific travel needs. Fractional ownership often comes with significant upfront acquisition and monthly operational costs, but fractional owners save on deadhead costs.
    • Private Jet Membership: The individual agrees to a fixed cost per hour at the start of the contract and is billed after each flight. Members are also expected to pay monthly management or annual membership fees.
    • Jet Card Program: The individual either agrees to a predetermined number of hours on a specific aircraft type or size category (dedicated service) or funds an established travel account and chooses the aircraft category on a trip-by-trip basis, after which the cost of trip is calculated and deducted from the account’s balance (debit card service).
    • Private Jet Charter: The individual charters — that is, rents — an aircraft for each specific trip they wish to take. Private jet chartering can be well-suited for individuals with relatively low annual travel requirements, but who fly to areas that cannot be easily reached by scheduled airline service.

    A Final Note

    Buyers interested in purchasing a private jet should assemble a team of professionals to assist them at every step of the process. From sorting out aircraft-specific tax considerationsto hiring an aircraft management company to handle day-to-day operations and support once the purchase is complete, buyers will want to have qualified and capable industry experts on their side — starting with a private aviation consultant.

    At Essex Aviation, we have a combined 70 years of aviation experience; in that time, we’ve had the opportunity to learn the ins and outs of the private aviation industry, as well as develop strong relationships with service providers and other vendors. We’re able to leverage this knowledge and our vast network of industry connections in order to ensure that our clients’ unique private aviation requirements are met with unbiased guidance and that they have a quality client experience, from start to finish.

    This article was originally published by Essex Aviation Group, Inc.

  • Tracey Cheek posted an article
    Finding the Right Lender to Finance a Private Aircraft Purchase see more

    NAFA member, Lee Rohde, President and CEO of Essex Aviation, discusses finding the right lender when financing a private jet purchase.

    It is a truth universally acknowledged that private aircraft are expensive. Even those exploring part-time ownership options enter their search knowing that it will require a significant upfront investment. But for frequent fliers with the means to afford it, private aviation is the obvious choice.

    Before taking the first steps toward private aircraft ownership, potential buyers should take the time to carefully evaluate all of the financing options available to them.

    Something to Consider

    Before deciding which financing option to pursue, buyers should consider whether they want to contact lenders directly — a process that typically involves researching lenders, requesting and reviewing lender proposals and assembling a loan due diligence package — or to work with a third-party aviation consultant or aircraft finance broker. Although most high-net-worth individuals have a finance team capable of handling these responsibilities, individuals on the mid-to-lower end of the market might find it useful to partner with an aviation consultant or aircraft finance broker because they have the necessary industry relationships to simplify the financing process and to connect with the most appropriate lender candidates depending upon the buyer’s needs and requirements.

    Finding a Lender

    When seeking financing for a private aircraft purchase, buyers have two main options: traditional banks and non-banking aircraft financing lenders. In most cases, high-net-worth individuals will elect to first work with their existing bank — that way, the buyer can take advantage of their existing business relationship with the bank, which already has a comprehensive understanding of their financial situation.

    If a buyer’s bank is unable to finance the purchase, the next option would be to contact one of the major financial institutions that has an established aircraft finance group. These financial institutions manage a large aircraft portfolio and would be willing to work with a buyer to finance the aircraft even if the buyer does not have an existing relationship with the institution.

    The benefit to this option is that the bank already has an established aircraft financing team capable of working with the buyer to obtain the necessary information to evaluate the loan. 

    The downside to this option is that the buyer will need to prepare and provide the bank with a full package of information on the aircraft, as well as a full set of financial documents and disclosures for the lender to provide a formal proposal. 

    The third option is to finance the aircraft purchase through a non-banking aviation lender. There are decidedly fewer non-banking aviation lenders in the market than there are banking lenders. Currently, there are a few major non-bank lenders in the market that actively provide aircraft financing. These lenders will usually raise their capital in equity markets to support portfolio growth. When choosing a non-banking aviation lender, be sure to contact a private aviation consultant or aircraft finance broker to confirm the lender’s position in the market and whether they’re a viable option to consider.  

    Bear in mind that all aircraft lenders have portfolio parameters and requirements that they must follow and, in some cases, are limited by the age and types of aircraft they can finance. First and foremost, all lenders evaluate potential borrowers based on the “5 Cs” of credit: 

    • Character: What is their reputation as a borrower? Is their credit history stable?

    • Capital: What is the borrower’s net worth? What type of capital assets do they own?

    • Capacity: Does the borrower have sufficient cash flow to repay the loan? What is their debt-to-income ratio?

    • Collateral: What assets can the borrower pledge to secure the loan?

    • Conditions: How does the borrower intend to use the aircraft? What is the current state of the economy? Is there pending legislation that would affect this loan?

    Note that all lenders use the same criteria to evaluate individual borrowers who are looking to purchase private aircraft for personal reasons as they do corporate borrowers — at the end of the day, credit is credit and collateral is collateral. In either case, the selected lender will have specific loan covenants that the buyer must be aware of. In some cases, the lender might require periodic reviews of the aircraft market value or third-party inspections to ensure that the aircraft is being properly utilized and maintained.

    Whether they work with their existing bank, an aircraft financing bank or a non-bank lender, buyers who are able to secure financing to purchase a private aircraft are opening the door to a world of luxury, comfort and convenience. And for those who are still interested in private aviation but want to avoid the extra legwork with financing, there are plenty of viable alternatives to outright ownership to explore. 

    This article was originally published by AvBuyer on August 23, 2019.

     

  • Tracey Cheek posted an article
    Understanding Popular Private Jet Share Options see more

    NAFA member, H. Lee Rohde, III, President and CEO of Essex Aviation, discusses Private Jet Share options.

    Private jet shares are a popular alternative for frequent fliers who want to enjoy the benefits of private aircraft ownership without the longer-term commitment or larger financial investment typical of purchasing a whole aircraft. In this blog, we’ll take a look at some popular private jet share options, as well as pros and cons for each.

    What is a Private Jet Share?

    As implied by its name, a private jet share refers to any private aviation program in which you own or lease a share of an aircraft rather than own it outright. There are multiple private jet share options to choose from, including fractional aircraft ownership, private jet membership or card programs and private jet chartering.

    How Are Private Jet Shares Structured?

    The private jet share structure depends entirely on which program, aircraft model and hours of utilization you require.

    Fractional Ownership
    Those interested in fractional ownership purchase a private jet share of a specific aircraft type and agree to an annual amount of allotted flight hours. Most fractional ownership programs require a minimum share size of 50 hours of flight time per year; the maximum share size is 800 hours of flight time per year, which is equivalent to ownership of the entire aircraft.

    Fractional ownership shares are acquired from the company that operates the aircraft and has a designed shared ownership program and services agreement that all share owners participate in. This company is also responsible for employing pilots and flight attendants, administering maintenance, airport and hangar fees and insurance, which can be attractive to individuals who want to avoid managing the details of full aircraft ownership. Some fractional ownership programs also provide the option to upgrade or downgrade the aircraft size depending on your trip requirements.

    Compared to other private jet share models, fractional ownership doesn’t require you to pay for the hours flown to position the aircraft to your departure point — also known as a deadhead cost. However, though you’ll save on certain costs and repositioning fees, the private jet share model comes with significant upfront acquisition and monthly operational costs. Fractional ownership can be the most expensive private jet share model because it closely replicates outright ownership and involves acquiring a portion of an aircraft. Additionally, although it’s possible to sell fractional shares back to the program provider, these shares tend to depreciate more due to their high level of annual utilization, resulting in lower residual values.

    Membership and Jet Card Programs
    Membership and jet card programs, though often lumped in the same category, are structurally unique. With a membership program, you agree to a fixed cost per hour at the start of the contract and are billed after each flight. You’re also often subjected to either monthly management or annual membership fees. There are two types of jet card programs: a dedicated service with a predetermined number of hours on a specific aircraft type or size category, and a debit card service that enables you to fund an established travel account and select the aircraft category on a trip-by-trip basis with agreed-to hourly rates. For the debit card program, the cost of the trip is calculated after the completion of your trip and deducted from your card program balance.

    Unlike fractional ownership, which operates under FAA Part 91K regulations, membership and jet card programs are purchased through a variety of companies that may or may not have a direct ownership and operate under Part 135 regulations. When evaluating various programs, make sure you understand the relationship between the program provider and the aircraft you intend to utilize. Membership and jet card programs are often better suited for individuals interested in a short-term commitment and require a much lower investment than fractional ownership. Membership and jet card programs can be appealing because they come at a fixed rate, so there’s no need to negotiate the price for each flight.

    One of the drawbacks to membership and jet card programs is that there’s often a longer advance notice requirement to schedule an aircraft. This is less of an issue if you’re the kind of traveler who books their trips well in advance but can be challenging if you often make last-minute travel arrangements, especially during peak periods such as holidays. Membership and jet card programs can also come with additional fees, such as repositioning fees, and the total cost of your trip might include taxi time as well as flight time.

    Private Jet Chartering
    Private jet chartering is an on-demand service that enables you to compare pricing and amenities for various aircraft types and book the one that best meets your travel needs in much the same way as you’d book a seat on a commercial flight. Those interested in chartering a private jet have the option of working with a charter operator or a charter broker, though it’s best practice to work with a private aviation consultant before considering either option. Like membership and jet card programs, this option can be well-suited for those looking for a short-term commitment.

    Chartering is the most popular private aviation option due to the fact that it doesn’t require a significant capital cost upfront or fixed costs that contribute to maintenance and staff salaries — all you have to pay for is the utilization of the aircraft on a trip-by-trip basis. What you save on cost with chartering, however, you may need to trade for non-guaranteed availability and some due-diligence of the provider. It can sometimes be challenging to find an aircraft that meets both your specific needs and your schedule, so you might be forced to choose between one or the other.

    Private Jet Share Models: A Breakdown

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    This article was originally published by Essex Aviation Group on their blog.  

  • Tracey Cheek posted an article
    Private Aviation Case Study: Finding the Right Combination of Services see more

    NAFA member, H. Lee Rohde, III, President & CEO of Essex Aviation, shares a private aviation case study on finding the right combination of services for your aviation needs..

    The Client

    The client, an executive in the venture capital division of a global asset management firm, spends a significant amount of time traveling, for both professional and personal reasons. A longtime private flyer, the client also frequently makes use of private aviation services for his family.

    Prior to working with a dedicated private aviation consultancy, the client utilized the services of a number of different jet carriers on a charter basis, quoting and scheduling each flight individually with help from his executive assistant.

    The Challenge

    Following a move from Massachusetts to Vermont, the client saw a significant increase in his volume of travel, both personally and professionally. Since the client continued to work in Boston, he began to use small light jet charters to commute from Vermont to Massachusetts on a weekly basis. As the number of charters began to add up, the client realized he needed a more practical solution to his private aviation needs.

    In addition to an increased volume of travel, the client also increased his use of other charter aircraft instead of his charter provider’s fleet of aircraft; this prompted the client to look at alternative or supplemental lift options for his ongoing travel.

    The Solution

    Based on a referral from his wealth management firm, which has worked with Essex in the past to handle other clients’ travel requirements, the client turned to Essex Aviation Group for dedicated private aviation consulting services.

    The consultants at Essex immediately set to work conducting a comprehensive flight history analysis for the client, examining key metrics such as the average duration of the client’s flights, mileage, frequency, aircraft type, etc. Based on the results of this analysis, Lee Rohde, President and CEO of Essex Aviation, crafted a multiple service provider program that would best meet the client’s various business and personal travel needs. The program Lee developed included a combination of a membership program, card program and fractional share provider, which reduced some of the overall flight costs by as much as 50 percent.

    By working with Essex Aviation the client was able to reduce some of the overall flight costs by as much as 50%

    The Conclusion

    Essex Aviation’s ability to adapt to the client’s changing private aviation needs has contributed to a positive, ongoing relationship.

    Recently, Essex facilitated the sale of the client’s shares in the fractional share program, processed renewals with his business aviation services provider and re-evaluated his usage, helping him shift from a 25-hour jet travel card to a 50-hour renewal. According to the client’s executive assistant, the client continues to rely on Essex for tracking analysis and fully intends to engage Essex’s services in the future for an updated usage analysis.

    “Lee’s always ready with the next step and the next idea — he often points out options I might not think of or see,” said the client’s executive assistant. “He’s also patient with us as our needs change, especially since we don’t always have time to delve into things ourselves.”

    Together, the client and the team at Essex have developed an efficient system for exchanging and updating information, as well as demarcating professional and personal usage, all of which allow for more in-depth ongoing usage analysis.

    Said the client’s executive assistant, “It’s been a pleasure all along to work with Lee. He’s extremely responsive and has been able to provide a quick turnaround on everything we’ve asked for. Everything’s running like a well-oiled machine.”

    To download the full case study, click here.

    This article was originally published on Essex Aviation's blog.

     

  • Tracey Cheek posted an article
    Private Aviation Case Study: Transitioning from a Business to Personal Fractional Share see more NAFA member, H. Lee Rohde, III, President and CEO of Essex Aviation, shares a private aviation case study.

    The Client

    As a privately held, family-run company with a substantial global footprint, the client had realized some time ago that relying on commercial airlines was an impractical way to conduct business.

    For more than 15 years, the family-run business enjoyed the benefits of fractional aircraft shares for their business travel requirements. They started with a small executive aircraft, which made business travel so efficient that they found themselves increasing their fractional shares. With four family members utilizing the aircraft, 75% of their fractional ownership travel hours went towards business while the remaining 25% was spent on personal use.

    The Challenge

    In 2017, the family sold their business to a group of investment companies. While they no longer needed to travel for business, the family decided they would like to continue flying privately for their personal needs. As part of the acquisition of the business, the buyers also purchased the fractional share the company owned as part of the transaction.

    Although the family had a decade-long relationship with their fractional provider for business use, transitioning to personal fractional share required a different strategy to meet their future travel requirements.

    The Solution

    The family’s attorney recommended they consult with Essex Aviation to evaluate their options. As a qualified aviation consulting firm, Essex performed a full analysis of the transition, which included:

    • Identifying the type of aircraft that would satisfy their aviation needs.
    • Determining any potential conflicts in scheduling.
    • Helping the family understand the financial benefits of each option.

    The family worked with Essex to review the options available from their then current fractional provider and also received proposals from other providers. Essex worked with the family to review and identify their best options and, for a variety of reasons selected, to go with a new provider.

    The family started with a 75-hour fractional share which they leased and later transitioned into a 150-hour share per year to accommodate their increased personal travel requirements.

    The Conclusion

    Essex was able to use their expertise and industry knowledge to perform an initial evaluation and holistic review of all the available options for the family. They also assisted the client with navigating through all of the necessary negotiations and final contract process.

    Essex continues to provide thorough aviation consulting services to assist the family whenever they need to add more hours to their contract, explore new options or negotiate the most practical solution.

    To download the full case study, click here.

    This case study was originally published on Essex Aviation's blog.

  • Tracey Cheek posted an article
    FAQ: What is a Flight Department Review, and How Does It Work? see more

    NAFA member, Lee Rohde, Founder, President and CEO of Essex Aviation Group, Inc., discusses what a flight department review is and how it works.

    “Get a second opinion.” 

    It’s a phrase most commonly heard after a trip to the doctor’s office, but it’s applicable to almost all aspects of life. A second opinion provides fresh perspective, which can be valuable when figuring out what to do or how to improve. This is especially true for private business aviation when considering your aircraft management company or internal flight department.

    Whether applying due diligence or requesting information from your management company or flight department that might require mediation by a third party, a flight department review is an excellent way to ensure that your aircraft and the team that supports it are operating at optimal levels.

    H: What is a Flight Department?

    A flight department is the people and processes responsible for the ongoing management, maintenance and operations of an aircraft on behalf of its owner. A flight department’s responsibilities include, but are not limited to, trip analysis, ongoing maintenance, overall operations, aircraft scheduling, flight planning, crew management and so on. A flight department can range anywhere from a single pilot to an entire facility with an organization staffed by a wide range of aviation experts. 

    Although many aircraft owners choose to outsource their flight department to a third-party aircraft management company, it is possible — and common — to rely on an in-house flight department. There are, naturally, pros and cons to both options. First-time aircraft owners often utilize an aircraft management company in order to take advantage of its existing organizational structure, human resources, vendor relationships and regulatory knowledge. In-house flight departments will need to manage all of these aspects, often with the help of outside resources and the existing support available through their primary business organization. 

    Aircraft owners need to consider their overall goals and objectives in order to evaluate which option will best meet their needs. Most owners who are interested in chartering their aircraft will choose to work with a third-party aircraft management company and operate under its existing Part 135 certificate.

    H: What is a Flight Department Review? 

    A flight department review is, as its name implies, an evaluation of an aircraft owner’s flight department conducted by a third-party entity — usually a private aviation consulting firm

    During a review, a consultant will familiarize themselves with the company’s internal policies, as well as policies that ensure compliance with the FAA or other foreign aviation administration under which the aircraft operates. The primary objective of a review should be to determine whether a flight department is performing according to the standards outlined in their operating manuals, which are often contained within, but not limited to, flight operation and general maintenance manuals and safety management systems. In addition, the review should include an extensive study of maintenance records, personnel training, general organization and the level of care and custody extended to the aircraft.

    The results of this evaluation are presented in a written report to the client. More often than not, consultants have limited findings or concerns. The report will outline any findings, as well as potential solutions or options to correct existing issues. The owner is the sole recipient of this report unless they decide to authorize its release to any third parties.

    An experienced private aviation consulting firm will also share best practices and enhancements proven to be successful by other flight departments they’ve reviewed. Most flight departments are eager to share their experiences and solutions with others in the industry. Among other things, sharing best practices contributes to safety enrichment, costs savings and general efficiencies with flight operations.

    H: Who Can Request a Flight Department Review?

    A flight department review is typically requested by an aircraft owner or their direct advisor (such as a family office) as a measure of due diligence to ensure that their aircraft is being managed properly. However, an aircraft owner or advisor might also request a review if they have issues with personnel management or with certain aspects of their management company and its management of the aircraft. 

    In some cases, a management company will even request a flight department review in order to resolve a dispute with an aircraft owner. In situations like this, both parties look to the consultant to provide an unbiased review and information concerning industry best practices and procedures so that both parties can reach an amicable solution and move forward. 

    On occasion, an aircraft financial institution might request a flight department or management company review to ensure that their assets are being properly managed and operated and to confirm the aircraft records are properly maintained and up-to-date. 

    By getting a second opinion in the form of a flight department review, it’s possible for aircraft owners to ensure that they’re receiving the best service possible, be it from their management company or an in-house flight operation, and that they have a quality private aviation experience.


    Lee Rohde, Founder, President and CEO of Essex Aviation, a business and private aviation aircraft acquisition and consulting firm, has 30+ years of experience in financial and operational analysis, manufacturing, distribution and corporate business development.


    This article was originally published by Essex Aviation

     

  • Tracey Cheek posted an article
    Aircraft Leasing: The Types of Leases & Your Lessor Options see more

    NAFA member, H. Lee Rohde, III, President and CEO of Essex Aviation, shares new options available in aircraft leasing.

    Similar to leasing an automobile, an aircraft lease involves the use of an aircraft for a specified period of time without transferring the title. The owner of the aircraft (the lessor) maintains legal ownership but the lessee holds possession of it through the duration of the lease.

    Leasing can be a more attractive option than purchasing depending on the utilization of the aircraft and how it impacts the ability to take advantage of any available tax benefits. Many people choose to lease an aircraft because they are not able to take advantage of the tax benefits that ownership can provide. Aircraft used for business purposes can provide tax benefits, but personal use does not. Understanding how the aircraft will be utilized can often be one of the primary driving forces in the decision to lease or purchase an aircraft.

    The Types of Aircraft Leases

    Aircraft leases are regulated by the Federal Aviation Administration (FAA) under the Federal Aviation Regulations (FARs).

    There are several ways to lease an aircraft, all with their own unique advantages and disadvantages. We recommend consulting with an aviation advisor to determine the lease type that is best for you.

    In the event damage was to occur to the aircraft during the lease, unexpected obligations may apply to the lessee. To avoid any uncertainty, a well-drafted lease should clearly outline each party’s responsibilities in the event the aircraft does sustain physical damage during the lease term. Another important area is to understand the terms for the lease return process. Consulting with an aviation advisor can help you answer any questions you may have about a lease agreement.

    Leasing vs. Chartering

    Aircraft leasing and chartering are both practical and flexible alternatives to flying on commercial airlines. Both certainly offer a more comfortable flying experience on a more reliable and convenient schedule. Similar to deciding to purchase, the option to lease an aircraft becomes more attractive when your annual travel needs exceed a certain level or when availability of charter aircraft might be an issue. Leasing provides the ability to have direct control over the aircraft and its availability while also assuming the responsibilities of operational control.

    With private aircraft charter services, you essentially have access to an aircraft on a trip-by-trip basis but availability is not guaranteed. The decision to lease involves a long-term commitment and allows the lessee to have full utilization and operational control of the aircraft. The advantage to private charter is the ability to access a variety of aircraft models and sizes, so you can select the aircraft that best meets the requirements of each individual trip.

    Lessor Options

    With more than 70 years of combined aviation experience, Essex Aviation has worked with a variety of financial institutions, banks and other companies to provide their clients with aviation financing options for both private owners and public or private corporations.

    The various types of lessors available in the market today include:

    • Traditional banks
    • Financial institutions that provide capital through private equity markets
    • Third-party service providers who facilitate the lease between an aircraft owner and a third-party lessee, but they do not actually take ownership of the aircraft

    The new options available in the aircraft leasing market today can provide certain benefits that were not historically available under traditional leasing structures. Consulting with an aviation advisor will allow you to review all the options available and determine which may best meet your needs and desires for the aircraft you are considering.

    Returning a Lease

    Aircraft leases should have specific terms and conditions detailed in the lease agreement that will outline the requirements and processes to be followed by all parties upon the return of the aircraft at the end of the lease. It’s recommended that you consult with an aviation advisor as you’re negotiating lease terms and conditions when entering into the lease and also having them work with you when going through the lease return process.

    An aviation advisor will be able to assist and advise you during negotiations concerning the lease return inspection requirements. Additionally, during the final aircraft lease return process, the expertise of an aviation advisor can often provide alternative or cost-effective ways to resolve certain issues while also satisfying the provisions and terms of the lease return process. These advisory services can greatly reduce your organization’s cost burden of unexpected return condition requirements or issues raised at that time with the aircraft.

    Essex Aviation Group, Inc. specializes in advising and representing clients with various aviation services including new and pre-owned aircraft acquisitions, new aircraft completion management, aircraft leasing and more. For more information about any of our services, please contact us.

    This article was originally published by Essex Aviation's blog on January 23, 2019. 

  • Tracey Cheek posted an article
    What to Consider When Selecting Your Aircraft Management Company see more

    NAFA member, Tom Mitchell, Executive Vice President of Essex Aviation Group, Inc. highlights what to consider when selecting your aircraft management company.

    When acquiring your first aircraft, one of your first decisions will be how the aircraft will be managed and operated. Some owners opt to run their own flight department, but many seek out a third-party aviation management company. These companies have decades of experience managing aircraft of all types and sizes and their purpose is to make your ownership as seamless as possible.

    When considering the various management company options available, you can be certain that they are all quite different as to what they can offer. Depending upon your specific needs and requirements, you will find many of the options may not be the best fit for your specific needs and requirements.

    Types of Aviation Management Companies

    In the private aircraft management industry, there are three (3) primary types of aircraft management companies:

     

     

     

     

     

     

     

     

     

     

     

     

     

    Within each category are differences in the scope of resources offered, and several factors should be considered and evaluated to determine which type of organization is best for your needs. Always assess each management company’s safety culture, research their incident and accident history and learn about and understand their operational experience and reputation.

    Aircraft Management Services

    Although every aircraft management company offers different management services, there are certain basic services you should expect to receive such as crew recruitment, accounting, flight coordination, and a well-organized charter department. We recommend that clients who are evaluating a management company consider the following:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Things to look for: Make sure you understand the aircraft management company’s key operations, maintenance, crew management and administrative functions. All of these factors will directly impact your relationship with the company and your use of the aircraft.

    Also, keep in mind the geographic location where you intend to base your aircraft. Some aircraft management companies may base all the aircraft they manage at one central location requiring that your aircraft be positioned to your desired departure airport for your trips or for maintenance. Other management companies are able to support your aircraft based at any airport you choose that supports your aircraft’s operational requirements.

    Your Requirements for an Aircraft Management Company

    A good first step is to outline and prioritize your goals as a private aircraft owner, in order to define what would make an ideal relationship. Be sure to allow sufficient time to review and receive proposals from a range of aircraft management companies and compare their differences. If you begin the selection process with an honest self-assessment, the relationship you build with your aviation management company will be that much better.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Things to look for: Chartering your aircraft to third parties can be a way to generate revenue when you aren’t using your aircraft. If you plan to charter, there are many things you’ll require from your aircraft management company. First and foremost, make sure your management company can operate your aircraft under their own Federal Aviation Regulation (FAR) Part 135 charter certificate.

    Charter Capabilities

    Allowing your aircraft to be utilized for third-party charter can generate revenue to reduce the owner’s overall operating costs and can also make your aircraft attractive to outside aviation management companies. You should, however, not get false hopes about covering your overall operating costs. “There’s almost never a break-even point,” said Kyle Slover, COO of Volo Aviation “The better way to think of it is, ‘what does it do to my (the owner’s) occupied hourly rate?’ Discuss with your management provider what the financial metrics are that you are trying to reach.”

    If internal or third-party Part 135 charter is one of your goals it is prudent to engage the assistance of an independent and knowledgeable industry consultant or advisor to facilitate the ownership structure.

    Private aircraft management companies of varying sizes will provide certain advantages and limitations when it comes to chartering. Regardless of who you choose, you’ll want to be sure they’re equipped to handle all aspects of chartering and aviation management.

    • Supporting varying flight destinations and times of travel
    • Managing all ground services, details and security
    • Negotiating discounts on your behalf

    As you make your final selection, be sure to choose a private aircraft management company that can meet not only your current but also your future needs. Whichever company you choose, you can and should expect it to partner with you to meet your travel needs, your budget and any charter revenue requirements.

    The original article was published in Business Aviation Magazine and on the Essex Aviation blog, June 29, 2018.