Private jet management is something that many have heard of but there are often questions surrounding it.
Questions such as the benefits of management, the costs involved and whether it is necessary are all common.
All these questions and more will be answered in this comprehensive overview of private jet management.
What is Private Jet Management?
Private jet management is an optional but highly common aspect to private jet ownership.
A private jet management company will be hired to look after and schedule your aircraft. These are the people that will make sure that your aircraft has pilots to fly it, is properly maintained, and organize your trips.
Therefore, private jet management (or aircraft management) refers to all the duties and services offered through an aircraft management company.
Essentially there are two kinds of private jet management services that are provided – charter aircraft management and turnkey aircraft management.
Charter aircraft management is when you (the aircraft owner) enlists the services of the company to charter out your aircraft when not in use. This, therefore, reduces the costs of aircraft ownership as it is generating income when you aren’t using it.
A charter aircraft management company will arrange for appropriate charter certifications and take care of scheduling.
Turnkey aircraft management, on the other hand, is a complete management package. This kind of management will look after all day-to-day activities. Activities such as maintenance, repairs, crew hiring, crew payment, training, security, and certification are all handled by the aircraft management company.
Typically, a turnkey private jet management company will also be able to arrange the chartering of your aircraft. Therefore, even if you wish to charter out your aircraft, you will only need to deal with one company.
Why Do I Need Private Jet Management?
As you would expect, looking after and maintaining a private jet is a far more complex procedure than something like a car.
When it comes to aviation, the paramount concern is and should always be safety. Therefore, using pilots who aren’t suitably trained or flying an aircraft that hasn’t been properly maintained is not a good idea.
Looking after a private jet involves many tasks. Additionally, it requires cooperation with many other parties, such as FBOs (Fixed Base Operator), mechanics, and crew networks. Therefore, utilizing the contacts and experience of a management company is a good choice.
Having a private jet management company look after your aircraft makes your life far easier. It simplifies the whole process and ensures that you don’t lie awake at night wondering if you missed your aircraft’s latest inspection.
However, many owners like to consider the idea of self-management. This is the idea where the flight crew can take care of all aspects of the aircraft.
The theory goes that if the crew and aircraft are only flying say 400 hours per year, then the crew (who you pay for annually), will have plenty of time to manage all aspects of the aircraft. This, therefore, cuts out a significant annual ownership cost.
This is very much a possibility. Naturally, there are some disadvantages to this, such as less experience managing aircraft. Additionally, using a private jet management company often results in bulk discounts, such as fuel and maintenance.
Important to note, fuel is a substantial cost when it comes to private jet ownership. Therefore, being able to access discounted fuel will dramatically reduce your operating costs.
However, it is important to calculate whether the bulk discount on variable costs would result in increased savings over the cost of the management company.
Therefore, it is impossible to say which method is preferable as it is highly situational dependant. However, just note that there always remains the option to self-manage. In the same way that you have the option to complete your own taxes while you also have the option to hire an accountant to do them for you.
Typical Private Jet Management Services
While the services and tasks performed will vary slightly from private jet management company to company, there are some baseline tasks that all perform.
The tasks carried out by private jet management companies are:
- Flight planning
- Flight booking
- Crew sourcing, hiring, and training
- Crew management and payroll (effectively HR)
- Aircraft airworthiness and certification
- Aircraft maintenance and repairs
- Invoice management (e.g. fuel, crew expenses)
- Post-flight cleaning, laundry, and restocking
- Ground transportation arrangement
- Charter operation (if desired)
Additionally, there are a myriad of small tasks that private jet management companies will perform.
Most private jet management companies are available 24/7, ensuring that you can plan a mission at anytime.
Benefits of Private Jet Management
The primary benefit of using a private jet management company to look after your aircraft is simplicity.
Owning an aircraft becomes as simple as chartering one. Make a phone call, say where you want to go, get on the aircraft.
Private jet management companies will let you be as involved or distant as you like. If you wish to be in the room interviewing crew, you can be there. If you want to be presented with a range of maintenance options and upgrades, all from different providers and costs, you can have those options.
Additionally, ensuring that you choose a legitimate management company, you can be fly knowing that your aircraft has been safely maintained, is being flown by a qualified crew, and has all the appropriate paperwork.
And finally, one of the key benefits of using a private jet management company is discounts. Due to looking after large fleets, these management companies are able to negotiate significant bulk discounts with various providers.
For example, Executive Jet Management claim that, on average, customers save 25% on fuel, 35% on crew training, and 30% on maintenance. This is all thanks to bulk discounts.
Drawbacks of Private Jet Management
Of course, nothing is perfect, and private jet management is certainly no exception.
The disadvantage of using a private jet management company is cost.
Paying for an aircraft management company is yet another expense associated with owning a private jet. However, in comparison with many other aspects of ownership, it is relatively low.
Private Jet Management Cost
Speaking of cost, how much do you have to pay to have your private jet managed?
Naturally, as with everything to do with aviation, it depends.
Factors such as region, management company, and aircraft type will all affect the cost. Additionally, the way that you use the aircraft will affect the cost.
The typical pricing structure for an aircraft management company is to have a base fee that covers all fixed costs – such as all regulatory and logistical requirements.
This fee typically ranges from $5,000 to $15,000 per month. However, there are some management companies that will look after your aircraft for ‘free’.
However, these companies will typically try to make up the cost somewhere else. Whether this is through commission fees (such as a percentage of handling fees), or inflated ForEx fees.
In addition to this cost, you will typically then pay additional fees for variable and direct operating costs. These include things like aircraft catering, crew travel, handling fees, and fuel.
Choosing a Private Jet Management Company
Searching for “private jet management” on Google will result in over 73 million results being returned. Of course, there are not 73 million private jet management companies in the world.
However, there are many to choose from. And, as you would expect, some are better than others. Some are bigger than others. Some provide more services than others. Standards vary from company to company.
Therefore, there are some considerations that one should make when trying to deicide on the best company for you.
Here is a great article written about choosing the right private jet management company.
However, here is an overview of important considerations to make when choosing a private jet management company.
The first is the specialty of the company. Some companies specialize in certain aircraft. There are companies that are fantastic at looking after turboprops but not international heavy jets.
Some companies are better at chartering out your aircraft than others.
Experience & Finance
Another factor to consider is experience within the industry. In simple terms, the longer the company has been around, the safer the choice. Additionally, the larger the company, the less likely it is to go out of business due to financial limitations. Therefore, have a quick look at the companies financials before making a choice.
Bills will run up quickly with a private jet. Therefore, you need to make sure that your aircraft management company is able to cover these costs while they are preparing the invoice for you.
Furthermore, check to see if the company is ARGUS or WYVERN certified. These badges are a great way to make sure that you are in safe hands. Of course, there are plenty of reputable management companies that don’t have these badges. However, it is a simple way to narrow down your choices in a safe manner.
Big or Small?
Additionally, owners often wonder whether they should go with a big or small company. Of course, each one has its own benefits.
Big companies are more likely to have big, bulk discounts on things like fuel and training.
However, small companies are more likely to have greater ‘personal’ service.
In reality, if unsure, a big company is a safer play due to the previously mentioned potential cashflow issues. Moreover, the risk of a disastrous experience is lower with a larger company – however, not always avoidable.
However, all things being equal, a big company isn’t necessarily a better choice than a small one and vice versa.
And, keep in mind, that at a bigger company you will have your own dedicated service representative anyway.
Additionally, when evaluating management companies be sure to consider your mission type over a number of hours, along with identifying where the costs lie.
Firstly, no two missions are the same. When you use the aircraft you will be flying from point A to point B. You will not be calling up saying the number of hours you wish to fly.
Moreover, a flight to Moscow in winter will cost more than the same flight in summer. Just de-icing an aircraft can run up thousands of dollars in cost.
Therefore, knowing the route type and mission profile will help the management company to properly assess your costs.
What Are You Paying For?
Next up, it is important for you to know where the management costs actually lie. Not only do you need to know your monthly costs to the company, but you also need to know how much the company will charge for things like training and fuel.
Where can each company save you money and where will they cost you.
Should I Charter Out My Aircraft?
And finally, a common question among owners – should you charter out your aircraft?
The benefit of chartering your aircraft out is that you can generate revenue from the charter flights to offset your ownership costs.
However, chartering out your aircraft is a double edged sword.
Firstly, owners must realize that they will not make a profit. Owning an aircraft will still cost them. With very few exceptions, the revenue from chartering will not exceed all ownership costs.
Additionally, the aircraft will suffer greater wear and tear. Consequently, for example, the aircraft will need to be refurbished at shorter intervals. Additionally, the aircraft will require greater maintenance due to the increased hours that it is flying.
Furthermore, the aircraft will depreciate at a greater rate due to the increased number of hours flown. Like with cars, the less an aircraft has been used, the better it retains its value.
And finally – the biggest drawback to chartering your aircraft out – you cannot fly when you want.
The great benefit of owning your own private jet is that you can essentially guarantee its availability. However, when chartering, you will have to give priority to the charters.
Additionally, in order to maximise revenue, you will likely be unable to use your aircraft at peak times due to greater charter demand.
Ultimately, some owners do choose to charter their aircraft out. For them, the revenue to offset some costs is worth it. However, if the charter revenue is essential for you in order to justify owning the aircraft then being a charter customer yourself may make more sense.
Therefore, due to the charter margin being so slim, many owners opt to not charter out their aircraft. Although, if you are considering this it is worthwhile discussing with your management company to get accurate forecast figures.