Toying with the idea of biz jet ownership...
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Toying with the idea of biz jet ownership...
Hopefully someone can help me out a bit on this one...
Toying with the idea of getting a small biz jet, probably one of the small to medium sized Citations but want to get a rough idea of annual costs etc. for private use from time to time.
Would likely be procured through a management company (assuming that is easiest way) and then operated for us out to their customers. What I'm wondering is does using a jet management company make financial sense compared to simple private ownership?
I'm thinking yes since our utilisation would be quite low.
Toying with the idea of getting a small biz jet, probably one of the small to medium sized Citations but want to get a rough idea of annual costs etc. for private use from time to time.
Would likely be procured through a management company (assuming that is easiest way) and then operated for us out to their customers. What I'm wondering is does using a jet management company make financial sense compared to simple private ownership?
I'm thinking yes since our utilisation would be quite low.
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jet buyer
visit Welcome to Xclusive Jet Charter and Management, worth a contact and its local to you
I think, in a nutshell, if you are going to operate a private aircraft, then there are things that need managing. You will need some sort of operations manual, someone to monitor all the legalities such as RVSM, radio licenses and so on. You will need someone to manage the continuing airworthiness and finally, a provider for all of the flight planning necessities. You can, and many people do, get your chief pilot to do this for you. But a management company offer all of this under one roof, with economies of scale and also experience! If the company have an AOC, there is also the option of offering the aircraft to charter in order to recover some of the costs, although there are additional costs associated with this!
I hope this helps!
I hope this helps!
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But a management company offer all of this under one roof, with economies of scale and also experience!
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I've never actually seen these so called 'economies of scale' that big management companies proclaim benefit the owner. It could well be different in the large cabin market. But in the small over saturated end of it the owner doesn't seem to benefit at all. And as for the magical 'put it on our AOC and make you a profit' line. The dry rates that I've seen paid to owners over the last few years are poor. If the owner had a firm grasp on their costs and were honest with themselves(which is difficult as said management companies do their best to hide it) they would realise the rates they're getting don't even cover the hourly costs never mind the depreciation all these hours are incurring.
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Silverknapper has a point.
Yep and you need a 'chief pilot' to check what the management companies charge. There are management companies out there that I would not trust farther than I can throw them.
Lets face it: if you give an airplane into management, you give it to a company that wants to make a profit - which is fair. But the same company possesses and processes all the invoices etc. and as an owner - if you´re not familiar with aviation - there is a lot that you just can´t control and really check.
Naturally there a good ones as well but given the sums at stake I´d be very careful and I´d try to get a good 'chief pilot' (or however you want to call him/her) with expertise to check what I´m charged and what the 'managers' tell me...
If you want to go down the AOC path, then things are different, but the revenue one can generate at todays oversaturated market is IMO rather slim (see silverknappers post).... we have tried this route not long ago and the numbers we had offered by 3 different companies were so low that the airplane would have generated a loss everytime it would have been flying a charter.
You would have to pay someone to do the work, even if it was the chief pilot!!
Lets face it: if you give an airplane into management, you give it to a company that wants to make a profit - which is fair. But the same company possesses and processes all the invoices etc. and as an owner - if you´re not familiar with aviation - there is a lot that you just can´t control and really check.
Naturally there a good ones as well but given the sums at stake I´d be very careful and I´d try to get a good 'chief pilot' (or however you want to call him/her) with expertise to check what I´m charged and what the 'managers' tell me...
If you want to go down the AOC path, then things are different, but the revenue one can generate at todays oversaturated market is IMO rather slim (see silverknappers post).... we have tried this route not long ago and the numbers we had offered by 3 different companies were so low that the airplane would have generated a loss everytime it would have been flying a charter.
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I agree with a lot of the posters above, but there are some decent management outfits in existence. Try Horizon Aviation at Kemble 
Making money with a small jet on an AOC is tricky. You need to fly the pants off it to make a dent in the fixed costs, but you can only do this if you have a low enough hourly rate to make it competitive, and a good charter sales team with plenty of direct customers. It's possible though. One of our Citations is doing 4 sectors / 5 hours of flying today - this summer is going to be busy
Making money with a small jet on an AOC is tricky. You need to fly the pants off it to make a dent in the fixed costs, but you can only do this if you have a low enough hourly rate to make it competitive, and a good charter sales team with plenty of direct customers. It's possible though. One of our Citations is doing 4 sectors / 5 hours of flying today - this summer is going to be busy
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try it
So perhaps you should experience it?
I guess you drive an expensive car?
Why not let the local Taxi company run it 24/7 when you are not using it?
Think if the money it might bring in!
Sure you might get a few cigarette burns in the leather, perhaps some kid might draw on the fabric?
But still it's a great idea?
So is the Aircraft different?
I guess you drive an expensive car?
Why not let the local Taxi company run it 24/7 when you are not using it?
Think if the money it might bring in!
Sure you might get a few cigarette burns in the leather, perhaps some kid might draw on the fabric?
But still it's a great idea?
So is the Aircraft different?
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I'm just working on a proposal for a client who is buying a brand new light jet, him flying 200 hours a year, topped up with 300 of charter revenue which is a conservative target for us.
The cost of him running this particular aircraft for 200 hours privately including All costs is £298K. If he puts it on charter then his costs for all his flying offset against the revenue of charter is £130k cheaper, plus any VAT advantage including a provision for the increased depreciation of a higher houred aircraft after 5 years.
Some clients may choose to spend the £130k and have it all to themselves, some would choose to reduce their cost, I've given up trying to second guess the thriftiness or otherwise of the wealthy.
Although I have no real experience of the heavy jet market, my gut feel is that this level of saving is only experienced in light / mid jets and is often more about saving the 20% VAT bill on purchase.
Contacttower - happy to share my workings if it is of interest.
Phil
The cost of him running this particular aircraft for 200 hours privately including All costs is £298K. If he puts it on charter then his costs for all his flying offset against the revenue of charter is £130k cheaper, plus any VAT advantage including a provision for the increased depreciation of a higher houred aircraft after 5 years.
Some clients may choose to spend the £130k and have it all to themselves, some would choose to reduce their cost, I've given up trying to second guess the thriftiness or otherwise of the wealthy.
Although I have no real experience of the heavy jet market, my gut feel is that this level of saving is only experienced in light / mid jets and is often more about saving the 20% VAT bill on purchase.
Contacttower - happy to share my workings if it is of interest.
Phil
Phil, those workings don't look far out. I agree, an owner will only ever achieve a contribution towards operating costs , and never actually make money by offering it for charter. It is all down to what an individual is trying to achieve in owning a private aircraft.