January 24, 2022
Even to a seasoned owner, the number of unknowns and complexities of operating a jet can drain your time and budget. An aircraft management company can handle everything for you, so you can focus on your priorities and make the best use of your time, people and resources.
Deciding on an aircraft management company is more complex than comparing monthly management costs. After all, operating a jet requires an expert team. A private jet management company builds that team for you, with trustworthy, experienced professionals to handle the aircraft from tip to tail. They work in the background to provide a turnkey ownership experience.
So, how do you choose the right aircraft management company for you and your jet? Here are three crucial questions to answer that will help you compare competing companies and make an informed decision.
1. Does safety always come first?
The company that manages and operates your jet must have a rigorous commitment to safety. Ask to see their Safety Management System (SMS) and understand how they operate with safety as a top priority.
Beyond the FAA’s safety regulations, find if the company is certified by independent industry safety auditors such as the International Standard for Business Aircraft Operations (IS-BAO), ARGUS and WYVERN. This proves that they go above and beyond with their training and operational practices.
2. Are financial management and reporting transparent?
Focus on partnering with people you trust. An aircraft management company will oversee all finances relating to the jet. It is important that the company has earned the respect of the industry and provides total financial transparency.
Also, ensure you are not going to be stuck with additional fees throughout the onboarding and management of the aircraft. The larger management companies charge a monthly management fee and a charter revenue split. Some operations may discount the monthly management fee to get you in the door, however ongoing expenses will be higher due to markups.
In the contract language, make sure that there are no markups on invoices, such as training or fuel. A major red flag is when non-vendor invoices are passed along to the owner.
Quality reporting is a must. Does the company have the necessary financial software to deliver concise reports with vendor invoice backups? The reports should include monthly costs, charter revenue and additional information such as trips accomplished and hours flown.
At the end of the year ask to meet with your aircraft manager to review the yearly budget. Make sure the initial budget presented throughout the sales process is similar to the actuals. Any deviations from the budget should be accompanied by a realistic explanation.
3. Do they provide proven operational savings?
A good jet management company delivers immense customer value over the lifetime of operation. It is important to dive into the details during the vetting process and find the line-items that can save you thousands a year.
Monthly management costs will be relativity similar and will range based on the size of aircraft and complexity of the operation. It is better to focus on the differences in estimated costs for crew training, subscriptions, programs and insurance.
There is rarely a reason to rush. Spend a good amount of time with the budget, understanding what is included in the estimated costs. Companies looking for a quick sale may place a light operating budget that does not include the necessary detail or forethought in front of you. Understand what actual savings they can offer and if they have a dedicated team overseeing procurement.
Fuel is one of the largest line items in your budget. The director of procurement will be focused on lowering the cost to the owner. Here you will see a significant amount of savings by partnering with a larger management company. This can reduce your fuel costs by 20% or more.
Making your decision.
With everything checking out, it will come down to a personality fit. You will be partnering with the management company’s team and communicating with them often. Make sure these are people you feel you can trust and who will provide you with an enjoyable and seamless experience. The aircraft management professionals at Clay Lacy Aviation will be happy to share more resources and answer any questions you may have. Contact one of our aircraft managers.