Business Aviation Advisor May/June 2016 by Business Aviation Advisor Magazine

MAY / JUNE 2016

Hop On

Prop Consider a Turboprop for Shorter Trips

Keep Your Business Your Business Protect Yourself With A Confidentiality Agreement THE MOD SQUAD MAKING YOUR IN-FLIGHT CONNECTION DO YOU NEED A FULL-TIME MECHANIC? SIMPLIFYING FRACTIONAL EQUATIONS MINIMIZING YOUR TRAVEL PROFILE A Business Aviation Media, Inc. Publication

W W W . B I Z AVA D V I S O R . C O M

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• Volume 3 / I s sue 3

Simplifying Fractional Equations

Hop On Prop

by K E ITH N A D OL S K I & J IM HOLCO M B E

The Mod Squad

F E AT U R E S Consider a turboprop for shorter trips

Making Your In-Flight Connection

Keep Your Business Your Business

Protect yourself with a confidentiality agreement

by AR TOUS H VARS HOSA Z

Do You Need a Full-Time Mechanic?

by C H AR LIE HUG H E S

Does whole ownership make sense for you? by LE E ROH D E

Improve safety and value with after-market modifications by ANTHONY K IOUS S IS

3 things to consider when installing onboard internet

by J OHN WA D E

Maintenance technicians do much more than turn wrenches

D E PA R T M E N T S Publisher’s Message

Beware the Invisible Broker

by G IL WOLIN

Washington Report

by DAVI D COLLOG AN

Minimizing Your Travel Profile

The Business of Business Aviation The Information You Need, From Experts You Can Trust Aircraft owners and charterers now have a resource to help you make the most effective use of your investments in business aviation. Business Aviation Advisor provides the information you need, without technical jargon, on the business of owning and flying business aircraft – from operations to acquisition, to management and finance.

Business Aviation Advisor: the Business of Business Aviation

Subscribe to our digital edition at www.bizavadvisor.com/subscribe

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Ma y/Ju n e 2 016 B U S I N E S S AV I AT I O N A DV I S O R 3

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PUBLISHER’S MESSAGE ■ PUBLISHER Gil Wolin gwolin@bizavadvisor.com CRE ATIVE DIRECTOR Raymond F. Ringston rringston@bizavadvisor.com MANAGING EDITOR G.R. Shapiro gshapiro@bizavadvisor.com EDITORIAL ASSISTANT Michael B. Murphy mmurphy@bizavadvisor.com WASHINGTON EDITOR David Collogan dlcollogan@gmail.com CONTRIBUTORS Jim Holcombe M² Performance Group jim@msquaredpg.com Charlie Hughes Priester Aviation charlie.hughes@priesterav.com Anthony Kioussis Asset Insight, LLC akioussis@assetinsightinc.com Keith Nadolski M² Performance Group keith@msquaredpg.com Lee Rohde Essex Aviation Group lrohde@essexaviation.com Artoush Varshosaz K&L Gates LLP artoush.varshosaz@klgates.com John Wade Gogo Business Aviation jwade@gogoair.com BUSINESS MANAGER JoAnn O’Keefe jokeefe@bizavadvisor.com BUSINESS AVIATION MEDIA , INC . PO Box 5512 • Wayland, MA 01778 Tel: (800) 655-8496 • Fax: (508) 499-2172 info@bizavadvisor.com www.bizavadvisor.com Editorial contributions should be addressed to: Business Aviation Advisor, PO Box 5512, Wayland, MA 01778, and must be accompanied by return postage. Publisher assumes no responsibility for safety of artwork, photographs, or manuscripts. Permissions: Material in this publication may not be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of the publisher. The views and opinions expressed in Business Aviation Advisor are those of the authors and advertisers, and do not necessarily reflect the policy or position of Business Aviation Media, Inc. Articles presented in this publication are for general information and educational purposes and do not constitute legal or financial advice. Postmaster: Please send address changes to: Business Aviation Media, Inc., PO Box 5512 • Wayland, MA 01778, USA ©Copyright 2016 by Business Aviation Media, Inc. All rights reserved Printed in the USA

Beware the Invisible Broker

o much of life is about risk management: keeping safe your family, yourself, and your business. You vet each prospective investment of time, energy, and dollars against your own established measures for risk and reward before proceeding. To help quantify flight risk, business aviation has depended on the International Organization for Standardization’s (ISO) established guidelines since 2009. They provide an independent safety standard against which to measure the safety procedures in place at any flight department, management company, or charter operator. To insure that your flight department personnel operate to industry-accepted “best practices,” most of you use an independent aviation consulting group to perform regular onsite audits. Most auditors, including Argus, Wyvern, VanAllen, Essex, AMS, and Baldwin, likely go beyond the ISO standard, using a form of the International Business Aviation Council IS-BAO certification program. Business-aircraft specific, it is designed to insure optimal safety for you and your passengers. Just as Consumer Reports and Underwriters Laboratory do for consumer products, auditors issue a rating to charter operators that meet its safety standards in flight operations, maintenance, and record keeping. Only those operators passing that onsite audit can display that rating. More than 2,000 turbine aircraft charter companies in the U.S. alone operate more than 5,500 aircraft. Because not all operate to the same high standards, the better ones proudly display those ratings, to assure you that your safety is their primary concern. Those ratings help you make an informed decision as to which charter operator to use to best manage your risk. That’s why it’s curious that so many otherwise careful and knowledgeable folks are willing to risk using a virtually invisible broker to make their charter arrangements: an app which provides less information than you’ll find on a new restaurant. Using such an app is simple. Just enter your trip time(s) and date(s), the departure and arrival cities, and the folks behind the app, using their contacts and tracking software, do the rest. But “simple” does not equal “safe.” Effective risk management requires more information than just the final price. A broker’s profitability depends on his/her ability to buy low and sell high. While many questionable charter brokers and apps claim to offer “only the safest, highest-rated aircraft,” these unsubstantiated claims may escape the notice of the customer seeking a low price. There are many excellent charter brokers in the industry, companies led by experienced individuals with long histories of delivering safe and superior travel. Their detailed backgrounds can be found quickly and easily on their websites – information never in evidence in a faceless app. When the time comes to use charter, make sure you take a hard look behind the curtain before booking your trips.

Gil Wolin — Publisher gwolin@bizavadvisor.com Ma y/Ju n e 2 016 B U S I N E S S AV I AT I O N A DV I S O R 5

■ FLIGHT OPERATIONS

Hop On Prop Consider a Turboprop for Shorter Trips

lying LA to San Diego, Rome to Milan, or similar short hops on a regular basis? Based in NYC, and building a plant outside Harrisburg, requiring daily site visits? Or do you own several properties in one region, and want to keep a regular close watch on them all? A turboprop may be your most convenient and most economically feasible travel option, whether as your only aircraft, or to complement your current business jet flight operations. Although some perceive the turboprop as the “kid brother” to the larger cabin-class business jet aircraft, today’s turboprop aircraft are just as comfortable, safe, quiet, and technologically sophisticated as a jet, whether single-engine aircraft like the Pilatus PC-12, Piper Meridian, or Daher TBM; or twin-engine like the Beechcraft King Air, Nextant G90XT, or Piaggio Avanti EVO. They come equipped with the very latest advances in avionics, communications, and navigational equipment. Characteristically, both twin- and single-engine turboprops offer performance traits that make these aircraft the ideal form of air transportation for many business aviation users. Turboprop aircraft offer you several compelling benefits:

Convenience and Flexibility

Although a turboprop’s range can be greater than 2,300 miles, turboprop aircraft are best suited for trips where the average flight segment length is 575 miles or fewer. In fact, the average time required for a turboprop to complete this type of trip is 6 B U S I N E S S AV I AT I O N A DV I S O R Ma y/Ju n e 2 016

within minutes of that of a business jet. Additionally, and perhaps of more importance, a turboprop’s intrinsic ability to land and take off from shorter runways enables the use of many more airports – often much closer and more convenient to your destination – than a jet can access. This may provide a significant reduction in your overall travel time. If your destination is a remote job site, or a client in a rural area, a turboprop may be your best option to avoid lengthy ground transport to your final destination. Properly equipped turboprops regularly land on grass strips and unprepared surfaces. For those truly isolated destinations, turboprop aircraft such as a Cessna Caravan or a Quest Kodiak routinely land and take off from very short grass strips of 1,200 feet or less. These durable utility airplanes also can be outfitted with floats, turning any open water, lake, or waterway into a landing strip. Many owners justifiably think of their turboprop as an SUV that flies. Depending upon the type or model of turboprop flown, the aircraft is capable of carrying all the baggage and equipment – more than 1,000 pounds is common – required for your travel. As an added convenience, many models of aircraft can be equipped with a cargo door ideal for loading bulky items. This feature has become so popular it is standard on some aircraft models.

Efficiency and Cost Effectiveness

Compared with business jet aircraft, turboprops offer significantly lower direct operating costs and upkeep: those costs incurred while the aircraft is flying, such as fuel burn, fuel additives, lubricants, maintenance parts and labor, major periodic maintenance, landing and parking fees, crew expenses, and reserves for engine, propeller, and APU overhaul. A twin-engine turboprop w w w. B i z AvA d v i s o r. c o m

Pila tus A ircr a f t Ltd.

BY KEITH NADOLSKI & JIM HOLCOMBE M² Performance Group / keith@msquaredpg.com / jim@msquaredpg.com

Tex tron Avia tion

Beechcraft King Air 350ER

Cessna Grand Caravan EX

usually can save more than $150 per flight hour on fuel alone at today’s prices versus comparable light- to mid-size business jet aircraft. Not surprisingly, single-engine turboprops are even more economical. Virtually every turboprop flying today is certified for single-pilot operation, offering the potential of further cost savings over larger business jet aircraft that may require a two-pilot flight crew. Finally, the acquisition cost of a turboprop can be substantially less than a business jet aircraft of comparable cabin size.

Comfort

In terms of cabin amenities, in recent years turboprop manufacturers have upgraded cabin comfort without sacrificing the flexibility, capability, and utility inherent in the aircraft. Ergonomic seating, high quality fabrics and leathers, carpeting, noise dampening technologies, state-of-the-art cabin climate control, cabin power outlets, advanced communications technologies such as Wi-Fi and wireless in-flight phones, and private lavatories all are features now found on turboprop aircraft. The result is that passengers can travel in comfort and arrive at the destination feeling energized with little or no travel-related fatigue.

A Turboprop Might Make Sense for You When: ■■ A

significant amount of your travel is regional;

■■ You

travel regularly to business facilities or clients where the nearest, most convenient landing site has short runways or an unimproved (grass, gravel, or dirt) landing strip; ■■ Your

missions require flexible interiors to carry passengers, equipment, or large amounts of baggage, or combinations thereof; ■■ You

want a rugged, reliable, “load and go” aircraft without sacrificing cabin comfort or amenities; ■■ You

need a “state-of-the art” aircraft, not restricted in its ability to take you where you want to go; and/or ■■ You

want a safe, efficient, cost-effective way to transport you, your employees, or your customers. If these conditions apply to your travel, consider the many benefits a turboprop can offer.

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Reliability

Since turboprops are “working” aircraft that are purpose-built to perform a variety of missions, they benefit from their rugged construction and extremely dependable engines. This innate reliability contributes to the lower operating costs, extremely high mission readiness (flights are very rarely cancelled due to aircraft malfunctions), and overall aircraft safety. In addition to business and general aviation applications, turboprops are used by government agencies and military forces worldwide. They are selected for their stable platform and their durability and flexibility. The C-12 (the U.S. military version of the Beechcraft King Air) has the highest dispatch reliability of any aircraft in the U.S. military inventory. The two engine manufacturers most often represented on turboprop aircraft are Pratt & Whitney Canada (P&WC) and General Electric (GE). P&WC’s PT6 engine is one of the most popular – more than 55,000 have been built – and reliable turbine aircraft engines, and is renowned for its unparalleled dependability, powering some of the industry’s most cost effective charter and fractional aircraft. P&WC recently introduced two new models of PT6 engines, including the PT6A-140A, which further increases engine power and efficiency with 15% more power and 5% lower fuel consumption. GE also has invested in the development of a new Advanced Turboprop engine (ATP), currently scheduled to have its first run in 2018. The ATP has been selected by Textron Aviation as the engine to power its new single-engine turboprop, currently under development. GE is promising that the new ATP power plants will achieve up to 20% lower fuel burn and 10% higher cruise power compared to competitor offerings. The intense competition between GE and P&WC is a sign of the turboprop aircraft’s enduring popularity based on its utility, reliability, and cost effectiveness, and further ensures that technology for these aircraft will continue to evolve. BAA KEITH NADOLSKI , President, M² Performance Group,

formerly held senior sales/general management positions with Beechcraft, Raytheon, and Gulfstream. Before joining M², Managing Partner JIM HOLCOMBE held senior marketing/sales positions with Beechcraft, Piaggio, and Gulfstream.

Ma y/Ju n e 2 016 B U S I N E S S AV I AT I O N A DV I S O R 7

■ CABIN OPERATIONS

Making Your In-Flight Connection 3 Things to Consider When Installing Onboard Internet BY JOHN WADE Gogo Business Aviation / jwade@gogoair.com

8 B U S I N E S S AV I AT I O N A DV I S O R Ma y/Ju n e 2 016

streamed in-flight – so be sure to monitor that closely. Video is by far the biggest driver of data consumption. Since a few minutes of video can be comparable to hundreds of emails with attachments, just because streaming video is easily available, it doesn’t mean it’s easily affordable. For example, if you’re spending $2 per megabyte for video, and an average movie is 2,000 megabytes when streamed, you could spend up to $4,000 to watch a single movie. You also can do some simple things to manage costs like turning off unneeded devices, ensuring you’re connected to the least-expensive system, and setting usage alerts. ■■ Set Passenger Expectations – Let your passengers know that in-flight connectivity is great for email, web surfing, file transfer, and voice and texting, but some high-bandwidth applications like streaming video or VoIP may not work reliably or be supported at all. Successfully managing your business life today depends on maintaining uninterrupted connectivity. Ask your in-flight connectivity provider for guidance, based on your specific needs, so that you can avoid an in-flight communication breakdown. BAA JOHN WADE is the executive vice president and general

manager for Gogo Business Aviation and has more than 20 years of experience in avionics and in-flight communications.

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ISTO CKPHOTO

our smartphone today has more computing power than NASA did in 1969, with far more functions than just allowing talk and text. Because our lives are so interconnected through the devices we use and “the Internet of Things” in our homes, cars, and workplaces, from your phone you now can control the temperature in your home, start your car, unlock your front door, send messages, and conduct live video chats. Today you and your passengers expect those same capabilities to be available in-flight, which means the connected plane is no longer a luxury in business aviation. Onboard Wi-Fi, along with voice and text capabilities, are now mandatory. Connectivity is almost as essential as a pilot and propulsion, and those on board expect to be able to use their personal phone and other devices just like they do when sitting in their office or in a coffee shop. Connectivity has become virtually a standard factory installation in most varieties of business aircraft, with jets, light jets, and even turboprops being manufactured with the necessary equipment for connectivity. However, if your aircraft does not provide connectivity in-flight, it’s now easier, and more affordable, than ever before to add the necessary equipment to enable voice, text, and internet capabilities. There’s a lot of talk in the business aviation marketplace about network speeds. Connectivity in business aviation has evolved quickly, and as a result, most passengers have come to expect the same level of reliability and speed as they experience on the ground. While speed is important, it’s not the only consideration. Other factors must be weighed such as service coverage area (or the coverage map), network reliability, the cost of the service, and customer service when issues arise. With those factors in mind, choose your in-flight connectivity provider carefully, weighing the risks of an attractive but unproven newcomer against a company with a proven track record of delivering results. Once you decide to install connectivity equipment, consider the following factors: ■■ Choose the Right Monthly Plan – History is by far the best indicator, so review your usage history to help decide. Then, examine those patterns and trends against available airtime plans. Monitor your usage and you’ll quickly see patterns emerge within a couple of months. Also, be sure to talk to your airtime provider if adjustments are needed. ■■ Manage Usage Costs – Balance your desired experience with the costs incurred. Data always will cost more in the air than on the ground, and video usage quickly can get out of hand when

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■ AVIATION LAW

Keep Your Business Your Business

Protect Yourself With a Confidentiality Agreement

BY ARTOUSH VARSHOSAZ K&L Gates LLP / artoush.varshosaz@klgates.com

Pilots talk.

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a dress code. Whatever unique provisions you may require, a confidentiality agreement can be a good tool to supplement any existing agreement. Improve Enforcement – Monetary damages can be an insufficient remedy for disclosing confidential information. The award may be comparatively negligible and the legal process to obtain that award can take years. A well-drafted confidentiality agreement can provide for injunctive relief in the event a crew member improperly discloses confidential information. Injunctive relief can be quick and inexpensive, and it results in a court order enjoining further disclosures, the violation of which is contempt of court. Define Standards and Expectations – Many pilots and other crewmembers welcome a confidentiality agreement because it clearly sets forth their client’s expectations and parameters. There are fewer opportunities for miscommunications and misunderstandings as to what information can or cannot be disclosed. And with the significant down time a crew often experiences between flights, clearly identifying the “dos and don’ts” in writing can help manage your relationship. By providing the flight crew with specific guidelines on confidentiality, you help them better serve you. Whether you have your own flight crew for your aircraft, own a fractional share, or use a turn-key charter service, a confidentiality agreement can help ensure that what happens on board, on the ground, or in the air, stays there. BAA

4 5

ARTOUSH VARSHOSA Z is an attorney with the global law

firm K&L Gates LLP. He handles commercial matters, including preparing and litigating business agreements for clients ranging from Fortune 500 companies to High Net Worth Individuals.

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ISTO CKPHOTO

Besides paperwork, there’s not a lot else to do when they’re required to remain onsite at the FBO – often for an unpredictable length of time – ready and on call for wheels up at a moment’s notice. So when a former colleague or military buddy walks in, it’s natural to want to shoot the breeze: “Where’re you flying?” “Where’ve you been?” or “Who’s on board?” These may seem like innocuous questions – except when you’re in town to negotiate a highly sensitive deal, cement an acquisition, or your passenger is a high-profile individual who requires absolute anonymity. When hiring a flight crew, buying a fractional share, or chartering a flight, business aircraft owners usually focus primarily on the important provisions of the employment or charter agreement relating to costs, access, regulatory compliance, and, of course, safety. But one more clause can prove vital to your business, privacy, and reputation: a signed, comprehensive confidentiality agreement. Every business aircraft owner or user should have such an agreement in place. Here’s why: Protect Business and Personal Information – Use a confidentiality agreement to protect from disclosure any information your crew may learn about you, your business, or the people with whom you travel. Whether you want to shield the identities of fellow passengers, locations where and the frequency at which you travel, and any business or proprietary information, a well-drafted confidentiality agreement will protect any information learned before, during, and after any flight. Limit Flight-Related Disclosures – By law, a flight crew must make certain flight-related disclosures to comply with applicable regulations. However, you can use a confidentiality agreement to limit and define flight-related information so that only such information as is necessary for safe and legal operation is disclosed. Failure to properly define permitted disclosures may lead to leaks of potentially sensitive information such as destination airports, passenger manifests, and stops. Amend Existing Agreements – Your own full-time crew members, or those who work for your management company, already may be subject to an employment or other agreement. If so, you can use a confidentiality agreement to add both protections and also other duties and obligations. For example, you may want to include more stringent drug and alcohol testing than what is already required. Or you may want to implement

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■ AIRCRAFT MAINTENANCE

Do You Need A Full-Time Mechanic? Maintenance Technicians Do Much More Than Turn Wrenches BY CHARLIE HUGHES Priester Aviation / charlie.hughes@priesterav.com

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This includes monitoring any hourly cost maintenance programs covering your engine, airframe, and auxiliary power unit (APU) (See “Hourly Cost Maintenance Programs,” BAA Sept/Oct 2014). ■■ When it’s time to sell or trade your aircraft, the attention provided by a full-time mechanic helps ensure that you get the best price for your asset. That price will depend largely on the aircraft’s total condition: all mechanical parts (engines, APU, airframe, avionics); exterior paint; the interior; as well as the detailed aircraft records (logbooks, repair invoices and documentation, and service bulletins). ■■ A dedicated mechanic will take full “ownership” of your aircraft, just as your flight crew does, ensuring a willingness to work long into the night if necessary to be sure your airplane is ready for an early morning departure. There’s much more involved in maintaining a corporate jet then simply turning wrenches. If: ■■ you fly more than 100 hours each year, ■■ having your aircraft ready to go and on call 24/7 is a high priority, and/or ■■ you are concerned with preserving the value of your asset as well as helping to ensure safety and dispatch reliability, then a dedicated mechanic will provide you with the most reliable and cost effective means to meet your travel requirements – and a better value for your aircraft when it’s time to sell. BAA CHARLIE HUGHE S is SVP, Aircraft Management Sales for

Priester Aviation. He has more than 20 years of aviation experience, having held executive-level positions in charter sales and client relations, as well as management sales.

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ISTO CKPHOTO

hen it comes to controlling aircraft costs, there’s only so much your flight crew can do: enroll in contract fuel programs, select FBOs offering the best fuel price, and fly at the most fuel-efficient speeds and altitudes. It’s maintenance where the most significant cost control occurs. To ensure both operational safety and asset preservation, your aircraft requires regular maintenance performed by properly trained, qualified, and experienced technicians. Two ways to accomplish this are using outside maintenance services, or engaging your own full time aircraft technician (mechanic). You may be able to support your aircraft properly using an outside maintenance provider if: ■■ You use the airplane an average of once a week, ■■ You fly fewer than 100 hours/year, ■■ Your schedule is planned well in advance, with very few “pop up” trips, ■■ You rarely, if ever, fly to remote locations, ■■ There is an authorized repair center or mechanic qualified and trained on your make/model at or close to your home base, ■■ AND if your pilots are qualified and willing to assist in the planning of scheduled maintenance events as well as handling the unscheduled, and are capable of maintaining the required aircraft records to remain compliant with all regulations. If this profile does not match yours, consider hiring your own mechanic. Here’s why: ■■ Dedicated mechanics do more than simply fix a problem once it’s identified. They work proactively to keep your airplane in pristine condition so it’s always “dispatch ready” – able to depart at a moment’s notice. Doing so requires both superior technical skills and open communication between mechanic and pilots. ■■ By reviewing the aircraft’s condition after each mission, a dedicated aircraft mechanic develops and maintains detailed knowledge of the aircraft’s own unique peculiarities. This enables him/ her to quickly diagnose any problem encountered during any flight segment, and/or respond to those reported by your flight crew. ■■ If an event occurs during the trip, the mechanic diagnoses the problem and makes arrangements to have the problem resolved either onsite or, if it’s beyond the repair capabilities of the local facility, to secure authorization to ferry the aircraft to the nearest authorized service repair facility. Such events can include anything from an intermittent avionics problem, to an indication of poor engine performance, to a problem with the passenger-comfort systems. ■■ The mechanic will verify that any parts or services purchased for your airplane are needed and correct, and priced correctly.

■ AIRCRAFT SALES AND ACQUISITIONS

Simplifying Fractional Equations Does Whole Ownership Make Sense for You? BY LEE ROHDE

Essex Aviation Group / lrohde@essexaviation.com

re you one of the more than 4,300 fractional share owners who have experienced those programs’ convenience and predictable cost? Yet do you sometimes wonder whether owning a whole aircraft is now right for you? Since fractional programs and whole aircraft ownership each has pros and cons, a first step in making this decision is a thorough analysis of your specific travel needs. When does whole aircraft ownership make sense for you? Consider these operational and cost factors: ■■ Increase in hours flown – While there is no specific number of hours that makes sense for all, a general rule is to consider whole aircraft ownership when your flying increases to about 250 hours per year, with an expectation of maintaining or exceeding that time in the future. ■■ Change in your travel profile – If most of your flights now

are structured so that you depart from a home base, fly multiple legs over a period of a few days, and then return home; or if you frequently fly to remote locations that are outside fractional programs’ standard service areas; whole aircraft ownership may be preferable. If, however, you do most of your flying to one location, remaining there for an extended period of time, and then returning, fractional may continue to be the better option. ■■ Need for more flexibility and fewer limits – You now may want your own dedicated aircraft and crew without the limitations fractional programs need to impose in order to make their programs operate effectively. ■■ Less predictable travel – Fractional operators guarantee aircraft availability anywhere within a specified service area of operation and number of hours: usually eight to fourteen. But now you may need 24/7 access, or availability in fewer hours than fractional programs can guarantee.

O ptimizing Y Our AviAtiOn i nvestment

With over a half-century of experience managing and maintaining all types of aircraft, we have the expertise to optimize your aviation investment. Our unwavering commitment to provide the highest standards of safety and service excellence continues to raise the level of expectation within the private aviation industry. We are dedicated to providing you with an incomparable aviation experience, and we welcome the opportunity to be of service.

PentastarAviation.com | 800-662-9612 | ©2016 Pentastar Aviation®. Air charter transportation services are provided by Pentastar Aviation Charter, Inc., a U.S. FAR Part 135 on-demand air carrier, or by other U.S. FAR Part 135 certificated on-demand air carriers arranged by Pentastar Aviation, LLC.

and variable costs – A great advantage of fractional programs is they offer a fixed cost per occupied hour, with no positioning fee, no matter where your point of origin or destination within a defined service area for the annual allotted hours you have to fly. Plus, your portion of crew, insurance, and maintenance are covered by a fixed monthly management fee, therefore your costs of operation are consistent and easy to understand. Conversely, owners of whole aircraft normally enjoy a lower average cost per hour, as fixed costs are allocated over a greater number of total hours flown. However, you then would be responsible for all direct and indirect costs of all hours flown, including unscheduled maintenance. ■■ Resale value – When you sell your fractional share, you are selling a share in an airplane that has flown an average of 1,000 hours per year, which is three times the average annual utilization of comparable wholly owned aircraft. BAA ■■ Fixed

Making the Transition If both the operational and cost analyses point to whole aircraft ownership, plan ahead. Avoid having your fractional program expire before your dedicated aircraft enters service, by beginning the acquisition process several months before your contract termination date or the scheduled repurchase date of your fractional share. Most fractional programs require a 90-day notice period to complete the repurchase process. You also may consider retaining a smaller fractional share to supplement your flying when your aircraft is down for maintenance or another executive needs lift. Your business aircraft travel requirements may well have changed since you purchased your fractional share. Determine which option is right for you now by using these tools. for a different kind of aircraft – If you currently own a share on an airplane with a range of 1,500 miles, and you’re now frequently flying across the country or the world, you may prefer a longer-range aircraft to save time by avoiding the fuel stop en route. While you could opt to upgrade your fractional share, you may find greater cost savings with your own whole aircraft. ■■ Requirement

LEE ROHDE , President and CEO of Essex Aviation Group, has

25+ years’ experience in financial and operational analysis and corporate business development. He advises clients on aircraft acquisition, strategic planning, financial, operational, and management matters.

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■ AIRCRAFT SALES AND ACQUISITIONS

The Mod Squad Improve Safety and Value with After-Market Modifications BY ANTHONY KIOUSSIS usiness aircraft – manufactured to the same specifications as commercial airliners – are a good investment, built to last 20 to 30 years. When it comes time to upgrade your aircraft, you can buy new, or you can consider aftermarket modifications. During the past decade, the range of modification options has increased dramatically, including more powerful and/or efficient engines, advanced propeller designs, cameras to view the aircraft’s exterior while it is airborne, and performance enhancers, such as winglets, which are vertical extensions added to the tip of the aircraft wing, designed to reduce drag and increase aerodynamic efficiency. More than a decade ago, an OEM representative was asked why his company had elected not to incorporate winglets on their new aircraft models. “We believe if the wing is designed correctly, winglets are unnecessary,” he said. Today, winglets on new production airframes are the norm – including his own company’s models. The primary drivers of today’s aftermarket modifications are operating efficiency and/or cost savings, safety, and a perceived increase in the aircraft’s residual value. Research shows that some modifications do indeed improve aircraft performance and operating costs. For example, the performance enhancements offered by winglets was tested by several airlines, which determined that the fuel savings made it worthwhile to so equip their fleets. Bizav original equipment manufacturers (OEMs) conducted similar tests, proving that, when properly designed for a specific model aircraft, winglets offer varying levels of enhanced performance and operating and cost efficiency. According to Joe Clark, founder and CEO of Aviation Partners, Inc., his company’s winglet design for the Dassault Falcon 900EX adds between 300 and 375 miles to the aircraft’s range while reducing fuel burn by 5% (assuming a Mach 0.85 average cruise speed). Similarly, Raisbeck Engineering says that its 4-Blade Swept Propeller for the King Air 350 improves the aircraft’s takeoff acceleration, single-engine climb, twin-engine climb to altitude, and deceleration after landing, while cruise speeds are two knots faster at 28,000 feet than the OEM propellers they replace. Options perceived to improve safety include externally mounted cameras. These permit the crew to view the aircraft’s surface and surrounding area from various angles – viewpoints not available from the cockpit windows – and can be valuable in avoiding debris during taxi, or to determine if a gear door warning light might be generating a faulty indication. Another perceived safety option is a flashing landing light 16 B U S I N E S S AV I AT I O N A DV I S O R Ma y/Ju n e 2 016

Avia tion Par tner s, Inc.

Asset Insight, LLC / akioussis@assetinsightinc.com

API Blended Winglets are now flying on more than 45% of all Falcon 2000 series, and 25% of all 900 series airplanes in service.

system that helps make aircraft more visible to the tower and nearby traffic. Safety-related modifications may be viewed as cheap or expensive – depending on your view of risk. However, the other important question is: what are they worth at time of sale? John Spoor, CEO of SAI Valuations, one the nation’s largest aircraft appraisal firms, explains how aircraft appraisers view the value of aftermarket options: “One should not expect a dollar-fordollar addition to an aircraft’s value when it comes to most standard upgrades and aftermarket modifications. Conversely, aircraft may incur a value deduction for lacking modifications or upgrades readily installed on that model fleet.” Whenever “for sale” inventories are high, modifications and upgrades may be installed on aircraft to act as “motivational selling points.” However, Mr. Spoor explains, the three primary valuation drivers, with respect to a specific modification or upgrade are: ■■ market demand, ■■ the percentage of upgraded aircraft listed “for sale,” and ■■ the total number of upgraded aircraft within a model fleet. The “appraised value peak” usually occurs when a new upgrade is introduced. Once a large percent of the fleet has been modified, the upgrade becomes the norm and these drivers apply. While some modifications can add substantial value, most simply make the asset more appealing at time of sale. Those resulting in operating efficiency, cost savings, increased safety, and some residual enhancement may provide sufficient value for you to upgrade your aircraft. BAA ANTHONY KIOUSSIS is president of Asset Insight, Inc.,

which provides an Asset Grading System Process for evaluating an aircraft’s maintenance condition. His 36+ years in aviation includes stints with GE Capital, Jet Aviation, JSSI, and British Aerospace.

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[ discover ]

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■ WASHINGTON REPORT

Minimizing Your Travel Profile Strategies To Keep You and Your Flight Itinerary Below the Radar In a World Filled With Intrusive Technology BY DAVID COLLOGAN dlcollogan@gmail.com

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But none of those steps will do much good if you are carrying a GPS-enabled smart phone that allows people to track your movements. Engaging with the various social media platforms is also a wonderfully effective way to let millions of strangers know when and where you’re traveling. Unfortunately, even if you follow all the industry “best practices,” technology still provides a way for the curious to monitor your travels. One of the key elements of FAA’s NextGen ATC system is Automatic Dependent Surveillance-Broadcast (ADS-B), which enables an aircraft to automatically broadcast its position to other aircraft and the ADS-B ground network. Using the aircraft’s own onboard navigation equipment, the ADS-B system updates the plane’s position every second. Those updates provide precise tracking information for air traffic controllers, and let other aircraft know where your plane is. But the unencrypted signals also can be accessed and displayed in real time by anyone with a relatively inexpensive receiver. NBAA has repeatedly called on FAA to find ways to protect the privacy and security of business aircraft users, perhaps by encrypting ADS-B signals to prevent unauthorized individuals from accessing them. But given the technical challenges, costs, FAA budget constraints, etc. of such an effort – and congressional pressure on FAA to accelerate the pace of the NextGen program – ADSB encryption appears unlikely in the foreseeable future. BAA DAVID COLLOGAN has covered aviation in Washington, DC

for more than four decades. This award-wining journalist is known as one of the most knowledgeable, balanced, wary, and trusted journalists in the aviation community.

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ISTO CKPHOTO

raveling in a business aircraft saves time, provides comfort, in-flight privacy, and makes lost luggage unlikely. But using your own airplane doesn’t guarantee others won’t learn when and where you are flying. If you’re off to attend a Hollywood movie premiere, or to help cut the ribbon at a shiny new office building, you may not care who knows you’re arriving at a certain airport at a particular time. But what if you are flying to a meeting with the board of a company you plan to acquire? You wouldn’t want your competitors – or the news media – to discover your intentions until you had a deal in place. There are dozens of reasons to keep your travels out of the public domain – personal and business security, a disdain for media snooping, a desire for privacy while attending to a sensitive family matter, etc. Traveling in your own aircraft is great. But if the corporate logo is emblazoned on the tail remaining anonymous will be almost impossible. Similarly, an FAA aircraft registration (N-number) (See “Covering Your Tail,” BAA Jan/Feb 2016) that incorporates your initials or those of your company makes it easy to connect a particular airplane to you. (N-numbers can be easily accessed on FAA’s web site, which lists the registered owner along with additional information. Many owners establish separate corporate entities to house their aviation assets as a way to protect their privacy). Another good idea is enrolling in the program formerly known as Block Aircraft Registration Request (BARR). To help manage air traffic in the U.S., FAA has the ability to display all aircraft in controlled airspace. Beginning in the late 1990s, FAA began providing the Aircraft Situation Display to Industry (ASDI) data feed, so the airlines and other operators could have real-time access to air traffic movements to monitor and expedite their own flight operations. Companies that sign up to receive the ASDI data feed must sign an agreement with FAA agreeing to block the aircraft registration numbers of aircraft whose owners/operators request that information not be displayed. The BARR program was established at the request of the National Business Aviation Association and other industry groups, and for many years NBAA helped administer BARR requests from operators. While FAA now processes those requests directly, the program still functions in the same way, permitting operators to block widespread dissemination of their aircraft movements.

MAX SPEED: MACH 0.88 • MAX RANGE: 4,350 NM • MAX ALTITUDE: 45,000 FT

PROVEN LEADERSHIP Growing an international business demands reliability and peak performance. That’s what the Gulfstream G450™ delivers. This aircraft is part of the top-selling platform in business aviation history and consistently earns NBAA reliability ratings above 99 percent. Take the guesswork out of success. Put yourself in a G450. SCOTT NEAL | +1 912 965 6023 | scott.neal@gulfstream.com | GULFSTREAMG450.COM Theoretical max range shown is based on cruise at Mach 0.80 with eight passengers, three crew and NBAA IFR fuel reserves. Actual range will be affected by ATC routing, operating speed, weather, outfitting options and other factors.

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Barring the immutable laws of science, Embraer designers and engineers enjoy a unique freedom to create our executive aircraft. To reshape a fuselage that slips through the air while providing unrivaled cabin roominess. Or tweak the delicate balance of lift and thrust to increase efficiency. Or create control systems that help pilots always perform at their very best. All are a product of unconventional thinking at its finest. With all deference to pioneers like Newton, Galileo and Einsteinâ&#x20AC;&#x201D;we simply donâ&#x20AC;&#x2122;t think their good work is finished.

Rethink Convention.

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