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Charter, Fractional, Ownership, Managed: Which Is Right For You?

| Business & Commercial Aviation

Today’s market for private aviation offers a dizzying array of choices. What benchmarks do advisors use when guiding customers among them?

In a simple world, the expected number of flight hours for the year would dictate the choice of charter, jet card, fractional or “full” or managed ownership. But there is substantial overlap among the options because of the needs and wants of customers.

So, while acknowledging the flaws of benchmarking choices by flight hours, here are overlapping ranges:

0-25 Hr.                  Trip-by-Trip Charter

25-100 Hr.              Jet Card

25-250 Hr.             Fractional

150-400 Hr.           Ownership

Trip-by-Trip Charter: Do you only use private aircraft occasionally? Do you know what you need/want for aircraft size and capability? Charter companies were the original charter brokers. They forged relationships with the local businesses that used charter, and they built informal networks to cover the need for substitutes and larger aircraft — i.e. “You need a Gulfstream for the next trip? Don’t worry. I know a guy.”

As the industry grew, charter companies hired people whose sole job was to build these customer and charter network relationships. And then those people began to leave (with their lists) and become brokers.

So, if you want to book trip-by-trip charter, build a relationship with a charter company or a broker. And as your usage increases, they will tell you about jet cards.

Jet Card: What is it? Jet cards grew out of an older business model called “block charter.” Commit to buying 50 flight hours from your local charter company and receive a nice discount. Today, there are hundreds of choices. In fact, the only common denominator is a discount for a block charter commitment.

Many, if not most, of the offerings are made by brokers, not charter companies themselves. Don’t be fooled by a low hourly rate: The devil is in the details, and the details are a maze of fuel surcharges, daily flight minimums, service area limitations and dozens of other factors. 

Before deciding on a jet card, decide what matters most. Long-time readers of Cause & Circumstance don’t view operator safety as a given. Yet some customers assume that any and all operators are safe, and, therefore, why not seek out the lowest price? Price should never be the sole factor in any aviation decision.

Is there a real company that you will be trusting with your funds and your safety? What is its criteria for selecting operators? Talk to other customers before committing.

Fractional: Fractional aircraft ownership programs officially date back to the inception of NetJets in 1987. That is when the N-numbers ending in QS began. Now ubiquitous on FBO ramps, “QS” stands for “quarter-share.”

Although FAR Part 91, Subpart K was created just for fractional ownership operations, today many of the flights are operated under Part 135, either because the customer bought or leased less than the minimum interest required for fractional operations, or simply because the customer elected not to share operational control with the program manager.

Fractional programs helped spawn the growth of jet cards with the Marquis Jet Card, which allowed customers to purchase 25 flight hours in the NetJets program. Today, fractional and at least some jet cards are very similar. Do you sometimes need two jets on the same day? No problem. Heavy jet today, light jet tomorrow? Sure. Because of the flexibility of fractional, some companies buy more than 400 hr. a year, even though they could easily justify “whole” aircraft ownership.

Management Company: There is a step between owning a fractional aircraft share and having your very own flight department. Own your own aircraft, but have it managed by a charter/management company.

You can have the aircraft managed by a charter company, and still have your trusted crew. And the aircraft can be chartered to others when you are not using it if you want to offset overhead. Most companies give you the choice of being the direct (W-2) employer of the crew, or the management company will manage payroll and benefits.

However, if your W-2 crew is to fly for the charter company under Part 135, then those pilots will need to sign “agency agreements” to acknowledge that they are under the operational control of the charter company on Part 135 flights.

But how do you choose a management company? Price should not be the first criteria. Talk to other owners that use the company. Typically, the choice is between a large national operation, such as Executive Jet Management, sister company to NetJets, or a local charter company. Many owners prefer the local touch and having a private facility at their home base. Jet Linx is a national company that provides numerous local bases, so that the aircraft owners can have the private facility experience at each base.

To charter, or not to charter: Done right, chartering out your aircraft when you are not using it offsets your cost of ownership. Done wrong, additional maintenance costs eat up the income, and wear and tear reduces the resale value of the aircraft. Where is the happy medium? There isn’t a simple hour benchmark answer.

You will need spreadsheets and specific operating costs to find the balance that works for you. On the plus side, the charter market today is ravenous for additional aircraft. If you want charter hours for your aircraft, you will get them.

Ownership: For those who need, or can simply afford to own an aircraft and employ their own flight department, the satisfaction that comes with trusted people and custom, trusted equipment is still the ultimate in private aviation. There are a number of flight departments today that operate less than 200 flight hours per year. Conventional wisdom would dictate that these users would be better served by fractional ownership or charter. The owners know that. They just don’t care.

Luckily For Bizjet-makers, China Is Not Asia’s Only Market

and | Aviation Week & Space Technology

It is a case of Southeast Asia to the rescue. As demand for business jets slumped last year in China, the countries to the south stepped up. The overall Asia-Pacific fleet has barely grown, though trade in secondhand aircraft looks brisk. Notably, quite a few business jets have left China.

The Chinese industry can at least look forward to the easing of its worst operational restriction next year, with the opening of a ground facility at the new airport at Daxing by state-owned Capital Jet.

Southeast Asian countries collectively added a net 14 aircraft to their fleets in 2018, a 6% increase, according to a comprehensive annual report compiled by Hong Kong consultancy Asian Sky Group. Mainland China, Hong Kong, Macau and Taiwan—counted together as Greater China—stagnated. Far from soaking up ever larger numbers of personal aircraft, as manufacturers once expected, Greater China’s fleet shrank by...

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Piper Meridian: Cheapest High-Performance Single-Engine Turboprop

| Business & Commercial Aviation

Piper’s PA-46-500TP Meridian, rebadged as M500 in 2015, made its debut in September 2000 as a 2001 model. It has been the lowest-priced pressurized, single-engine turboprop offered by an airframe manufacturer for nearly two decades. Piper created the Meridian by modifying a Malibu Mirage to handle and additional 500+ lb. of weight and higher cruise speeds and then replacing its 350-hp piston engine with a 500-shp Pratt & Whitney Canada PT6A turboprop. Meridian most assuredly was a design-to-cost development program as reflected in the final product.

The Malibu, launched almost three decades ago, was the product of Jim Griswold, head of Piper engineering in the early 1980s. The aircraft was a near-perfect, clean-sheet, pressurized cabin-class piston single, one with clean aerodynamics, a high aspect-ratio wing and low empty weight. It was the first single to offer cabin-class twin comfort and speed with much lower operating costs. But Malibu’s turbocharged Continental engine and succeeding Mirage’s boosted Lycoming piston engine both failed to...

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From Africa To U.S., Drone Deliveries Taking Off

| Aviation Week & Space Technology

Two days and 5,400 mi. apart, delivery by drone took significant steps toward everyday reality. On April 23, the first air carrier certificate for a commercial drone delivery service in the U.S. was awarded by the FAA to Wing, the subsidiary of Google parent company Alphabet. A day later, Ghana formally launched the world’s largest medical drone delivery service, operated by Zipline and covering the entire country. Armed with its Part 135 operator’s certificate, Wing plans to engage with communities and businesses in Blacksburg and Christiansburg in southwest Virginia, close to where it has been trialing its delivery drones with...

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Yes, Business Aviation Flights To Moscow Are Expensive

Business & Commercial Aviation

It sure is, and we are talking about the fees assessed against operators visiting Moscow’s three principal international airports for landings, ground services, parking and related services: Vnukovo (UUWW), Domodedovo (UUDD) and Sheremetyevo (UUEE). BCA has come into possession of invoices from visits of business aircraft to each airport during late 2018 and early 2019. Here’s what we found.

In September 2018, one Gulfstream operator visited Vnukovo for three days. Among (but not all of) the charges were the landing fee of $588, a “terminal passenger fee” of $1,925, parking fee of $1,844, aircraft “guarding fee” of $335, passenger luggage clearance fee of $314, lav purging fee of $376, “traffic handling” fee of $530, towing charge of $333, ramp handling fee of $567, a catering bill of $541 and passenger transport charge of $379. Along with miscellaneous ancillary charges, this visit totaled $9,544.14.

Over at Domodedovo in November 2018, another Gulfstream, again visiting for three days, racked up a $1,004 landing fee and security charge, $1,080 for parking, a $2,392 passenger arrival and departure fee, a $3,947 hangar fee (which must have supplemented parking for one night), handling fees of $2,057, a single airside pass for $155, a $753 towing bill, a catering (one expensive meal) fee of $868, and a crew visa charge of $835. This and other charges came to a total of $14,898.

Finally, in January this year, a Bombardier Global Express visited Sheremetyevo, remaining for five days. This operator was docked $2,985 for parking, passenger (four) fees totaling $2,225, $796 for “airdrome security,” $1,220 for “traffic handling” (possibly, a navigation charge), $482 for ramp services, a $1,115 charge for handling, $1,366 for deicing fluid, $772 for one crew visa, a $542 “commercial fee,” $277 for crew transportation, an “urgent landing permit” fee of $355, plus a $114 “permit revision.” All this plus ancillary fees totaled $15,527.