Aviation Portfolio’s Craig Ross on how to avoid the costly and frustrating mistake of choosing the wrong private jet management company.
Managing your aircraft management company may seem like an unusual layer or service. When Craig Ross first told me about this service, it reminded me of how hotel owners hire asset managers to work with their management companies – Marriott, Hyatt, Hilton, Auberge, and so forth. The asset manager’s expertise ensures the owner receives the best service from the operator and protects the operator from unrealistic expectations and disappointments that come with any large-scale venture. To kick off our Expert Contributor series, I’ve asked Craig to provide some tips on selecting the right management company and how Aviation Portfolio works between aircraft owners and management companies. You can find out more about the Aviation Portfolio and Craig here.
By Craig Ross
Our private jet owner clients tell us owning a private jet is one of the best decisions they made.
However, they tell us, and we often see that ownership usually comes with expensive and painful mistakes.
The mistake we often see is choosing the wrong company to manage your aircraft.
That’s because just like you spent time assessing which aircraft type was best for your mission, management companies also work best for different client profiles.
It’s something that can be very hard to spot.
When choosing an operator for your aircraft, your ideal provider should have experience handling your mission profile.
This includes familiarity with the same make/model of aircraft for flight logistics, maintenance, and crewing, as well as the flying you typically engage in (long-haul international, multi-leg domestic day trips, etc.).
Some operators are better suited to midsize or lighter aircraft and focus on domestic operations, while others are more adept at handling large-cabin and ultra-long-range missions.
Fleet size and location can also significantly affect your relationship with your management company. Large, nationally spread fleet operators may not be as personalized as some owners would prefer. At the same time, more boutique operations can be much more hands-on but may not have as much operating experience or purchasing power.
The management company, at its core, is a service provider, and to provide top-tier service, they need to understand what matters most to you; for some, it’s operating efficiency and receiving multiple options on how to minimize costs, and for others, the budget is on the back burner while trip execution for very specific timetables is at the forefront.
Being clear with your operator only helps your mission succeed.
Having a neutral third-party advisor to manage expectations and provide experienced guidance (one of the services we offer through Aviation Portfolio) helps both sides achieve their shared goal.
During aircraft onboarding, the operator should schedule a launch meeting with all parties present to review key priorities, points of contact, and best practices for operating the aircraft and working with the operator.
Some aircraft owners delegate this to representatives. We encourage clients to be active participants.
READ: Private Jet Owners speak about the good and bad of ownership
Owning an aircraft provides the ultimate flexibility for global travel. Even the newest aircraft with the latest technology can experience AOG (aircraft on ground) situations, where flights are interrupted, nd expenses begin to mount
An AOG in the middle of a trip may require supplemental lift (charter, fractional program, jet card, etc.) to continue the flight; your operator and maintenance team will be busy fixing the aircraft wherever the AOG occurred.
There will be costs to repair the aircraft, which may or may not be covered by a warranty program, in addition to the costs of supplemental lift to get you to where you need to go, and parking the aircraft and crew until the repairs are complete.
Such occurrences, while unpleasant and (hopefully) infrequent, will happen, and your operator should do everything in their power to manage the damage and return your aircraft to service safely and efficiently.
Encouraging regular updates from them should be done professionally; they are already feeling pressure to fix the situation, and constantly looking over their shoulder may only slow the process.
Using an aviation advisor to work with the operator to troubleshoot the problem, identify solutions, and manage the return-to-service process helps remove you from the headache of project management while the necessary repairs are made.
Yes, that’s what we do. However, we can also help you best understand the correct expectations.
It’s not uncommon to wait days – and in some cases, weeks or longer – for specific parts.
Yes, it’s frustrating to have spent the money to buy an aircraft and then pay for the ongoing cost of ownership.
Like in your business, it’s important when things go wrong, you have somebody who can provide creative solutions – and provide you with an assessment of how well the service provider is doing.
READ: Overpromising, lack of education, hurting the private jet industry
The capital outlay to acquire an aircraft can be substantial, but the annual operating costs can shock first-time owners and even exceed the initial purchase price in a given year.
In nearly every facet of aviation, we face a severe talent shortage, from maintenance technicians to pilots to dispatchers.
This has caused crew salaries and operating costs to rise considerably over the last decade and is not projected to ease any time soon.
Aircraft that could have subsisted on a two-person crew now have to consider a three-person rotation, in addition to contract pilot usage, to keep the existing crew. Not only do salaries continue to increase, but pilot schedules have become a focal point, leading to expanded crew rosters.
Fuel prices have remained relatively stable, but they still account for a large share of your annual budget. Ideally, your operator should have fuel contracts that closely match your frequent destinations and competitive home-based pricing.
While management companies may like to show you the financial benefit of offsetting your costs through charter, keep in mind their forecasts tend to be for best-case scenarios and don’t include potential downtime for AOGs or other maintenance that reduces your charter hours.
The increased flying on your aircraft may also affect residual values; your annual expenses may look attractive now, while you see charter revenue offset, but you may end up paying even more when you go to sell your aircraft and have a higher-time aircraft that’s harder to sell and at a lower value.
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