PPRuNe Forums - View Single Post - Toying with the idea of biz jet ownership...
Old 30th Apr 2014, 12:32
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silverknapper
 
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Lot of opinions here, particularly people defending their corner.

I've no axe to grind, not involved in either part of the market. In my day job for an OEM however I was involved in discussions with prospective and current owners about which route to go down so over the years I have formed some opinions.

Phil.
You previously said 'as previously demonstrated'. You didn't demonstrate anything. Just put up a couple of numbers which mean nothing. You could well be correct. However on first glance I'm not sure I agree with you, particularly regarding the depreciation figure. You can depreciate an aircraft at any rate you like, but ultimately what it sells for and how quickly it sells are the deciding factors. After 5 years your example aircraft will have flown 1500 hrs more. That is a lot of depreciation. Also much closer to HSI's, overhaul, timed maintenance. There is an actual example on the market just now. Two serial numbers apart but one has double the hours of the other, and a similar proportion of cycles. The higher houred one just won't sell as too many similar aged aircraft with much lower hours are on the market. I do stand by my original post on this topic. I've seen dry rates which don't even cover engine and maintenance program payments never mind anything else.

In saying that though to balance the argument. A lot of pilots like to think they can manage aircraft, and many do a fine job. But a lot just don't have the patience, knowledge or contacts. Particularly on a new type. They then get railroaded by 'experts' who invariably have a finger in a pie with someone. This applies to the acquisition stage as much as the subsequent management phase. Mistakes in this business are expensive so it pays to weed out the Walter Mittys. A quick google of aircraft management companies shows so many vague and wooly websites where I doubt they've even seen a real aircraft in some cases. But that hasn't stopped them paintshopping their logo along the side of one they downloaded from the web.And remember if it's going to be vastly under-utilised that does more harm than flying the bottom out of it.

Flynowpaylater hit the nail on the head on one point. It's the management of the asset which is crucial here. It really doesn't matter who files an fpl. And there are plenty of third party providers out there who do a great job for very small money.

Which then begs the question what to do?

It depends a lot on the type, age and how the owner is disposed to aviation.

An old aircraft which had already racked up the hours may be better suited to charter than a brand new one. The depreciation has levelled out, any snags have been worked out and depending on the inspection state it may well need any income possible just to replace gear legs, overhaul engines etc. Also with the best will in the world charter aircraft do get knocked about so a new cabin will age very quickly.

The type determines just how often maintenance occurs. Is it an Phenom which from what I gather can go for ages or is it something shall we say more maintenance intensive.

Is the owner disinterested completely and just wants a turnkey solution. Or do they prefer to have an interest in their machine, what is being billed for and how it's being used.

Answering all these honestly may be the first stage in at least determining which road to go down.

And the type of operation is also critical. There are private operators who contract CAMO out to third parties who are excellent at it and also objective due to having no internal influence. This is crucial in my opinion. And bizarrely the most important aspect of the whole thing can be bought in at a competitive rate. Ask any potential operator who does this. Also how are their pilots trained? I would be looking for simulator at least annually. Preferably a full recurrent at a training organisation. Where is maintenance done? Get quotes individually on this to make sure you're seeing this 'purchasing power'.

On brand new aircraft the best setups I've seen are private. Usually on the M registry.

I'll certainly say that from what I hear Phil is exceptionally reputable, and if the original poster (who has probably stopped reading this by now!) were to go down the AOC route on a CJ, well worthy of consideration.
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