Ownership 3.qxp_Finance 21/12/2021 16:13 Page 1
OWNERSHIP
Flight Department or Management Company: Which is Best? Is it better to have your aircraft operated by an Aircraft Management company, or should you have an in-house flight department structure? The option that works best for you will typically be determined by a variety of factors, says René Armas Maes… he factors that determine whether you should use an aircraft management company or establish an in-house flight department for your aircraft’s operations are many, and include the projected number of annual flight hours, your requirement for privacy, economies of scale, asset control, team expertise, and more. If you fly more than 225 hours annually, having an inhouse flight department to operate your business jet can make financial and operational sense under the right circumstances. If you fly between 150 hours and 200 hours per year, the economics will tend to favor a management company. This creates a gray area for those with annual utilization between 200 and 225 hours per year. Either option could make sense, based on individual criteria including service level and asset control needs. With this in mind, we’ll consider the pros and cons of each option…
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The Aircraft Management Company Option
The Pros: Owning and managing a business aircraft is logistically complex. Perhaps the biggest value an Aircraft Management company offers an aircraft owner is its ability to handle these complexities, relieving the owner of the burden of managing their own business aircraft. Management companies also offer operational flexibility in terms of sourcing flight crews, aircraft maintenance, flight planning, and more. The use of an Aircraft Management company will also increase flexibility in terms of supplemental lift, and provision of 76 Vol 26 Issue 1 2022 AVBUYER MAGAZINE
aircraft on ground (AOG) support. If your aircraft becomes unavailable (due, for example to a maintenance event), an Aircraft Management company can provide a replacement jet, since they typically have a large fleet of aircraft available to them. Likewise, if an aircraft owner occasionally requires the use of multiple aircraft on a single day, the management company will be able to accommodate the need. And then there are the ‘economies of scale’ to consider. Larger Aircraft Management companies buy in larger quantities than individual aircraft owners, so their buying-power is stronger and cost savings can be leveraged. An Aircraft Management company can pre-screen and hire dedicated personnel to operate your aircraft, and many will also involve you in shortlisting and recruiting dedicated flight and cabin crew personnel. Operating under strict policies and procedures – including risk management, safety, and standard operational procedures – an Aircraft Management company may well raise the bar on safety and operational readiness for the aircraft owner. Ultimately, an Aircraft Management company offers the possibility of a turn-key solution, bringing peace of mind to the aircraft owner, whether payroll-related, record-keeping, regulatory oversight, aircraft planning, scheduling, maintenance, or concierge services. And an Aircraft Management company can assist owners with offsetting the cost of owning a business aircraft by marketing the aircraft for charter flights under an FAA Part 135 charter certificate (see ‘Is it Worth Chartering Out My Jet’, p62 of this issue). They will bring www.AVBUYER.com
