jet charter

  • Tracey Cheek posted an article
    Supplemental Lift for Your Business Jet: What's Best for You? (Pt 1) see more

    NAFA member David Wyndham, Vice President with Conklin & de Decker, discusses whether Charter, Jet Card or Fractional Ownership is better option for your supplemental lift. 

    Are there some business travel needs your aircraft can’t fulfill? David Wyndham explores the option of supplemental lift. What is supplemental lift, and how can you use it as an appropriate add-on in your current aircraft operations?

    Supplemental lift may be a logical alternative to your current aircraft. As the term implies, supplemental lift is an add-on to your current operation – it is not a replacement for your current aircraft. What it does is to achieve a means of expanding your operation without adding another aircraft, extra crew, and support.

    It may be that you have a specific need for short-term lift if an aircraft in your operation is undergoing a major maintenance event. Or you may need extra flight hours beyond what your current aircraft can support.

    Alternatively, there may be several unique missions on the horizon for which your current aircraft is unsuitable. Perhaps you simply wish to bridge the gap before acquiring another aircraft as your flight operation grows.

    Thankfully, there is a range of supplemental lift options available that offer a modest number of additional flight hours without the costs associated with actually owning an extra aircraft.

    Within this article, we will consider the following questions:

    • What are aircraft charter, jet cards and fractional ownership?
    • When does supplemental lift make sense?

    What are Aircraft Charter, Jet Cards & Fractional Ownership?

    Aircraft charter enables you to rent an aircraft for a trip. With charter, you pay the entire time the aircraft is flying (including any unoccupied i.e. ‘deadhead’ legs without you aboard). Therefore, charter costs are minimized with round-trip travel. Aircraft charter tends to work particularly well if one or more well-qualified providers operate the aircraft type you need close to your location.

    Jet cards are a form of pre-purchased charter. Some jet card programs are aligned with a major fractional ownership company (such as NetJets). Other providers offer a broker arrangement where they sell you the time and find the qualified operator for you. Most jet card providers offer both one-way and round-trip pricing.

    Fractional ownership enables you to purchase or lease a share of an aircraft in proportion to the additional flying that you plan to do. This may be a good way to bridge the gap between insufficient current aircraft availability and developing sufficient need to justify buying an additional aircraft outright. Operators who purchase a fractional share can choose to sell it back to the provider at the end of the contract.

    When Does Supplemental Lift Make Sense?

    As highlighted through the different options, supplemental lift can be a short- or long-term solution. The hours can vary with your needs. To illustrate, and also highlight how and when supplemental lift makes sense, following are some real-life examples.

    Extended Downtime: One operator I work with has an aircraft that’s almost 12 years old. They fly regularly and the aircraft is fast approaching a major maintenance check and engine overhauls. The avionics suite is outdated and the principal wants to add in-flight cabin connectivity. Additionally, the paint and interior are in need of a refresh.

    Having conducted a financial analysis, the operator concluded that the aircraft value prior to the work being done is lower than they would sell it for. Moreover, the cost of a newer replacement aircraft is more than they wish to spend. The plan, therefore, is for them to complete the overhauls and upgrades at the same time, with an expected downtime of at least four months.

    This means a temporary solution is required that effectively replaces their aircraft for the time it will take to complete the maintenance and upgrades.

    An estimated 120 flight hours will be needed over those four months, and the operator has chosen aircraft charter as the right option to fulfil this demand.

    Fortunately, they’re located in a city with several large charter operators nearby and were able to negotiate a block of hours with a local provider with a top safety rating.

    Expanding Mission Need: A different corporate client recently expanded operations to a distant city and their current aircraft cannot make that trip non-stop. The client estimates flying one trip per month for approximately eight flight hours, representing a 20% increase in their flying activity. To upsize to a larger aircraft would increase the operating budget by almost 90%.

    The cost to buy the larger business jet is nearly three times what their current jet is worth. Over the course of a year, the client would need less than 100 hours flying a longer-range jet and their demand analysis indicates this utilization is likely to remain steady and long-term.

    In addition, avoiding a fuel stop on 20% of the trips wouldn’t be worth the added investment in a new, larger jet. But what if the client were to supplement their operations with added lift?

    The client was able to find a fractional ownership solution to meet their needs at a fraction of the cost of replacing their current aircraft. When they near the end of their current contract, they will reassess their need and budget, revisiting the question of acquiring a larger business jet.

    Growing Operation: One last example is of a flight operation growing at 15% per year. Corporate projections indicate that this rate of growth will continue and there are new departments asking for use of the aircraft.

    In their analysis, the client’s aviation department estimates that they can meet the additional demand for the next 18–24 months by hiring a new pilot and combining a few trips each month. Acquiring another aircraft may take between six and nine months.

    The company hired a consultant who performed an aircraft needs analysis. The report confirmed the aviation department’s internal findings and recommended that a second aircraft be purchased within the year. The report also recommended adding supplemental lift within the next six months to maintain the department’s ability to meet trip requests without any disruption.

    Accordingly, they purchased a jet card offering them the additional projected flight hours. The card program includes price guarantees for 12 months with the initial purchase.

    Simultaneous Travel Needs: One more consideration might be the scenario where you occasionally need simultaneous aircraft. If you anticipate multiple overlapping requests for the aircraft, a supplemental option, such as a charter, jet card or fractional ownership might make sense.

    Next month we will continue our discussion with consideration of how to choose the right aircraft, and then manage the supplemental lift as you grow into another aircraft.

    This article was originally published on AvBuyer on June 21, 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
    Are you looking to offer your private jet for charter, read more here! see more

    NAFA member Joe Barber, Vice President of Fleet Development at Clay Lacy Aviation, discusses the best way to offer your private jet for charter.

    A growing number of private jet owners are chartering their aircraft when not in use to reduce the cost of ownership. Before a jet can be chartered, it must conform to a specific set of rules set forth by the FAA (known as Part 135) and be listed on an FAA air carrier certificate. The best way to offer your private jet for charter is through an aircraft management company who holds a Part 135 air carrier certificate.

    The process

    Once a private jet is acquired, a series of steps, both practical and regulatory in nature, must be addressed before the aircraft can conduct its first charter flight. The most effective way to conform a private jet for charter is with an aircraft management company who holds a Part 135 certificate. Within the aviation industry, the process of adding a jet to an air carrier certificate is termed conformity. This refers to the time after purchase, close of escrow, but before the first revenue producing charter flight.

    The conformity process typically takes between thirty and ninety days and includes a long list of deliverables. From hiring and training of crew members, reviewing of maintenance records, conducting FAA inspections and more. To avoid delays or complications, the team managing the conformity process should be one with deep experience, a detailed organizational structure, and one who remains in regular communication with the aircraft owner (as well as communicating with the other aviation specialists involved). Here is a look at three critical elements to a smooth conformity process— experience, organization, and communication. 

    Experience

    Not all air carrier certificates are equal, so before you select a management company, it’s important that an aircraft owner ask a few questions. Consider that an air carrier certificate is a security pass to a building with twenty floors. The pass is customizable to allow or authorize access to a particular set of floors. The security pass may authorize access to the lobby and first three floors, but not to the remaining fifteen floors. In the same way, the FAA issues an Air Carrier Certificate with certain “authorizations” that are increasing in their complexity and freedoms. Here are a few examples of such authorizations:

    • Area of Operation
      • The operator may be limited to conducting charters in the domestic United States, Canada, and Mexico vs. worldwide authority. Even flying to Hawaii requires special authorizations.
    • Size of Aircraft as defined by number of seats
      • Nine or fewer seats is one category vs. ten or more seats.

    These are only two examples of authorizations. There are many more to consider when choosing to charter a jet. The management company selected should already have the proper authorizations and experience to charter the type of plane under ownership. If the jet operator does not have the prior experience with that aircraft type, the aircraft may be restricted on the particular charters. There is also a possibility that an aircraft owner introducing a new aircraft type to a management company will become a test case for the organization; which will most likely result in delays and unnecessary complications.

    Organization

    Experienced aircraft management companies understand that efficiency and streamlining operations is built upon exceptional organization. Due to the sheer number of tasks and wide-ranging topics addressed during conformity, it is impossible for one person to have the necessary experience and time to accomplish all tasks in an expedited manner. Therefore, a team of specialists must be employed. This team is led by the aircraft manager who acts as a central point of contact to keep the conformity process on schedule, while specialized software is utilized to digitally manage, categorize, and organize the varied tasks required to conform the aircraft to Part 135.

    The aviation team surrounding an aircraft owner and set in place throughout private jet ownership. An aircraft manager acts as the focal point for the aircraft owner. 

    Communication

    An experienced and organized team with state-of-the-art tools is great but without effective and timely communication, the conformity process can be difficult. Here again, the aircraft manager plays an essential role as the single point of contact for the aircraft owner. The aircraft manager acts as a leader and liaison to inform a private jet owner of key milestones and discussing options without burdening them with the intricate details and idiosyncrasies of the conformity process.

    In addition to the communication that exists between an aircraft owner and an aircraft manager, the aircraft manager advocates for the aircraft owner during meetings with the rest of the management company team. Communication with the conformity team should be occurring multiple times a day to ensure everything is on schedule. “At Clay Lacy, our conformity team meets twice a week. During these meetings, we discuss what tasks have been completed, are being completed, and must be completed to reach current and future goals,” says Joe Barber, Director of Aircraft Management at Clay Lacy Aviation. “We keep the owner informed of what is being accomplished, so they have peace-of-mind that their aircraft will be conformed on schedule.”

    This article was originally published by Clay Lacy Aviation on their Insights Blog.