The case for a managed aircraft relationship
At some point, you’ve likely considered whether to charter out your aircraft when you’re not using it. And unless you already use your aircraft more than 200 to 300 hours a year, there likely is room to do so.
With the high fixed costs of aircraft ownership, such as capital costs, crew, hangar, insurance and regularly scheduled maintenance, spreading these costs over a greater number of hours reduces your own effective hourly cost. Many of today’s newer generation of business aircraft are designed for higher levels of use. Given these two factors, plus the higher demand for charter aircraft in the “sharing economy,” it may make sense to place your aircraft on a charter certificate.
But is charter right for you? Two factors largely will inform your decision: can you share, and will you save?
CAN YOU SHARE?
First, ask yourself:
1. Do I want somebody else on my aircraft?
If the idea of someone else sitting in your seat bothers you, charter is not for you.
2. How often do I want/need my airplane?
The question is more one of days available, rather than hours. The more frequently you can make the aircraft available, the more charter it can generate.
3. How predictable is my schedule?
Do you know your schedule weeks ahead, or do you have frequent pop-up trips? The more set your schedule, the more revenue your operator can generate.
4. Am I willing to give up my airplane during popular travel time?
Fractional and charter operators have defined “peak days,” restricting access to meet all demand. If you’ll definitely want your aircraft at holidays and the same time everyone else does, you will forgo revenue.
5. Are you going to restrict use?
Long flights only, daily minimums, no rock bands, and other restrictions will reduce potential revenue.
WILL YOU SAVE?
To operate for compensation or hire in the U.S., your aircraft must be on a Part 135 commercial operating certificate (Part 135 of the Federal Aviation Regulations governs most business aircraft for hire). As the certificate holding entity, the operator must comply with numerous FAA requirements for flight operations, maintenance, training, and the administrative infrastructure to oversee all these activities, making it impractical for an individual owner to set up his or her own certificate for just one aircraft. So if you want to charter out your aircraft, you’ll use an existing certificate holder: a charter operator or management company.
You May Also Like
- CUSTOM CONTENT: Four Tax Issues Driven by Organic Growth
- CFO Awards 2018 Nominees: Key Items of Tax Reform Law that Will Affect You
- Restriction Zones May Give Fishermen the Hook
- The Business of Accounting: A Roundtable Discussion
- New FAA Rules Offer Lift to Drone Businesses
- 100 Fastest Growing Private Companies 2017: Four Tax Issues Driven by Organic Growth