Charter management companies

[tawilliams]

Hello, I'm a long time lurker and have spent many (too many!) hours reading lots of the forum.

Our business uses charters quite a bit within Europe, typically small jets like Citation CJ2/XLS. We've been wondering about the whole economics of it, driven in part by frustrations with the opaque way brokers seem to operate. (We have tried quite a few, including some of the new 'online' brokers like Victor, PrivateFly, Stratajet.)

With charter management companies, there are some quite big ones like Gama and LEA/Lux who have large fleets available and I think own some of the fleet themselves. What I wonder is if they have two XLS (for example) on the fleet, one that they own themselves, another they operate for the owner, surely they will always choose their XLS in preference so it operates more hours per annum?

Along the same lines, I assume they wouldn't own an XLS if it was losing them money. If we bought an XLS and gave it to someone to manage 24/7/365 (so we didn't use it at all) would we typically expect to have any return? Or do the charter management companies only own aircraft because they don't in effect charge themselves a management fee for the aircraft, and they can get the operational hours up.

I'd be very interested in your thoughts on the above... we are coming at this from the point of view whether we continue to charter or purchase.

[Phil Brockwell]

Good morning,

I help run a boutique aircraft management company with 9 aircraft from Citation CJ to Falcon 2000LXS.

We have a number of financial models for aircraft management over a number of airframe types.

I would be happy to share some financial information with you, I just need some more details as follows.

Tax Domicile of Beneficial Owner.
Number of flying days / layovers away from base.
Typical routes and passenger numbers
Any airframe purchases.
Aircraft base.

We are pretty realistic about the "investment" potential, it will not show much of a return, but in most cases is more cost effective than chartering depending on how charterable the aircraft type is.

Phil

[tawilliams]

Thanks everyone for their responses. Although there's only been one public post, I've had quite a few replies in private.

The range of private replies has been quite varied and all were welcome, in summary they were:

"We have an Citation ABC we can charter to you."

"We are a management company, get in touch with us."

"Don't attempt to run it yourself, getting AOC would be too prohibitive. Get a charter management company to do it, they'll charge a few thousand a month. You will definitely lose money."

"If you do more than 180-200 hours/year, it might be worth it. Otherwise you're better off chartering."

"Buy a 1/3rd share in something, don't run on an AOC as most cost effective way."

"The Gamas and LEAs of this world tend not to own their aircraft, but have them on leases."

"Online brokers are not always what they seem, and you can get a raw deal."

Phil, to get back to you with specifics:


Tax Domicile of Beneficial Owner.
>> Channel Islands

Number of flying days / layovers away from base.
Typical routes and passenger numbers
>> Most trips are 500-1000nm, 3-6 people. Normally either there and back in a day, or else one night stay. ~20 of these/year.

Any airframe purchases.
>> Not yet.

Aircraft base.
>> Ideally FAB - I imagine this is not the cheapest option but location suits us well.

[victormikecharlie]

Have sent you an e-mail. happy to discuss VMC

[Global_Global]

In general if the question is: If we bought an XLS and gave it to someone to manage 24/7/365 (so we didn't use it at all) would we typically expect to have any return?The answer is NO unless you don't use it yourselves... and that defies the purposes of owning in the first place. And I am happy to challenge the claims that most of the cowboys that will be PMing you to join their outfit.... :ugh:

There is no money in this business for 95% of the owners... Charter is only a means to make your losses smaller.... :rolleyes:

If there is one person who can make you SOME money (depending on the model he/you agree upon) it is Phil I guess plus he is one of the few honest operators out there with a proper track record.. :8

[victormikecharlie]

Agree with you Global Global - re the losses being made smaller but the value you gain from owning and using it depends on the value you place on the passengers time? However, Phil not the only honest operator out there with a proper track record. :=

[LGW Vulture]

I've reckoned with the flying you do you will average some 100 hours per year - unless my calculations are off!

Nowhere near needing your own aircraft - don't be silly!

Double your amount of flying - then think about it.

[Booglebox]

>> Most trips are 500-1000nm, 3-6 people. Normally either there and back in a day, or else one night stay. ~20 of these/year.

Are they last-minute or planned months ahead? Knowing about owner trips well in advance can make it much easier to sell charter flights on a jet.

[Albus_Dumbledore]

tawilliams,

Having previous experience managing a VIP operation with several A/C, it really does come down to what your business needs. Feel free to ask me any questions.

I can also recommend Phil Brockwell. The Centreline Team are a good bunch, and have vast Commercial and Private operations experience. As rightly said, there are others with a good track record too. PB tends to give a very honest and realistic view of all aspects, so he's definitely worth talking too, even if its just to get some guidance of where to go for your business. They've helped me on several occasions.

It never hurts to talk! Best of luck with your project.

AD

[Jetscream 32]

Netjets

Let someone else have the hassle :8

[Jetscream 32]

TAWilliams,

Also - the purchasing, owning, operating even when given to management co's is one thing, but when it comes to crewing it that is another as often pilots will not just fly your aircraft they will fly others belonging to the management co....and some of the management co's have a fairly big churn rate on crews because of pay / leave, roster, FTL, sense of humour etc....and choice characters that are controlling the shots that shouldn't be in charge of a restaurant menu let alone valuable aircrew or a business........ but the bit no-one has mentioned is that when you come to sell or upgrade the aircraft...... let me tell you......:O:O:O the owner will be very, very underwhelmed - as he's likely to pay over the odds on purchase, pay massive commissions as they all come out the wood work for a slice when a new kid is town with a pot of money to burn... and then depending on world events, models and how many other aircraft are on the market and how long they have been on the market for, when it comes to selling he may not get anywhere close to the "book value" - and either way should budget 30% below what market prices for the make / model depending on age / spec etc.

Also to clarify - most successful businessman completely lose their brain when they buy:
A. Boats
B. Planes

As the saying goes........if you can't take a joke..... don't buy one
And the other saying..... if it flies, floats or f..$..... RENT IT!!

Sorry, but maybe I'm a bit long in the tooth now after 25 years doing it :ooh::E

[Global_Global]

I've reckoned with the flying you do you will average some 100 hours per year - unless my calculations are off!

Unlike LGW I did not do my homework.... Agree with Jetstream if 100 hours per annum: go NetJets...