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Aircraft Management

Aircraft management is a well-established niche in the world of private jet chartering. It is a business model which allows the management company the best financial return without the huge investment involved in jet purchases. Here's how it works:

A company purchases a fleet of planes with the goal of leasing them, yet doesn't want the extra burden or costs of setting up a complete aviation department. They would turn around and hire an aircraft management company to do the business of renting the jets. The original owners get a cut from the leases while the management company keeps the rest. To help clarify, a similar business model involves municipal stadiums. Just like the jet owner, municipalities may own a public stadium but are not equipped to be the managers thereof. A management company takes over all daily operations of the stadium and in turn, pays a fee to the municipality.

Aircraft management companies gain almost total control of the aircraft they manage, but they also take on all the responsibility. They must handle all the labour and expense of maintenance and upkeep. They are responsible to government agencies for making sure the aircraft meets current regulations. They handle all the leasing operations including advertising, promotion, contract execution, customer relations, and so in. For all intents and purposes, when an aircraft management company enters the picture, the original owners become invisible.

In all but a few rare cases, aircraft management companies usually act as charter operators as well. It only makes sense for them, if they are already handling the rest of the details, to be involved in the chartering activity. When they are not involved another layer is added between jet owner and user.

While aircraft management is a positive thing in most aspects, changes in U.S. regulations a few years back have caused a dilemma for American jet owners. A 2007 addition to part 135, the section of aviation regulation used to govern the private jet industry, was meant to clarify the question of jet certification. At question was whether the certificate holder of a jet had to be the same entity operating it on a daily basis. This relates to aircraft management companies in the fact that they may be certificate holders of a plane whose operational control has been turned over to a chartering client. Likewise, a jet owner might be the certificate holder while employing the aircraft management company to control flight operations.

The addition to part 135 never really answered the question, but it did imply that the certificate holder had to also hire pilots and pay all associated expenses. This takes pilot preference out of the hands of the customer, and in the case of the aircraft management company who is also the certificate holder, it strips the plane owner of any real control over who flies his aircraft. Similar rule changes may be in the works governing foreign jets who fly into the U.S.

This issue aside, using an aircraft management service tends to be beneficial to both jet owners and clients. The management company takes care of all the daily fleet operations, maintains the aircraft, services the clients, and earns profits for the owners. It seems to be a win-win for everyone involved.

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