Executive air travel
Which option is right for you?
Gone are the days when meeting your private and executive aviation needs was a simple choice between owning your own aircraft or chartering one. Now there is a multitude of options, ranging from leasing and chartering to shared or full ownership and management. So how do you determine which is best suited to you or your business? Jonathan Gordon, Managing Director of commercial and business aviation specialists the Atlantic Bridge Aviation Group (ABA), considers the options…
“There can be little doubt that flying in an executive aircraft has major benefits for today’s busy executives and for frequent flyers. It offers you the flexibility to work to your own schedule, enables you to fly in and out of smaller airports which may be much closer to where you need to be and, perhaps most important of all, it can save a lot of precious time.
Using an executive aircraft can also be extremely cost-effective if you go for the right package – but given the multitude of choices, it’s not surprising that there’s a lot of confusion about what’s best for your business or personal transport.
If your time is worth money, or you’re wealthy enough to value your time, use of an executive aircraft may work for you. The question then is which method works best.
There are four main options, each of which has its merits: • Ad-hoc on-demand charter: Fully flexible but the most expensive • Block-hours purchase: Flexible and less expensive • Fractional ownership: Still flexible, more commitment, many advantages • Full ownership: Maximum commitment, maximum benefits
If you’re looking for the option with the least commitment then ad-hoc on-demand charter is the way to go, since there’s no need to purchase or maintain an aircraft, or enter into a long-term contract.
It gives you the freedom to choose the aircraft that suits your trip but it’s by far the most expensive way of chartering so it’s best suited to people who only have occasional travel needs.
If you still favour charter services but you know you have a minimum number of hours to fly in a year then block-hours purchase is a better option. It’s cheaper than on-demand charter but still offers all the benefits of using an executive aircraft.
It basically does what it says on the tin – you pay for blocks of hours in advance and there’s usually a minimum number of hours you have to purchase. The block-hour fee covers all aircraft and crew costs and is measured from engine start to engine stop. You’ll need to pay external costs, such as landing and handling fees, in addition.
Block-hours purchase gives you the freedom to specify what type of aircraft you want from the start and there are often other benefits which you wouldn’t enjoy with on-demand charter. Our clients, for example, can offer their friends and colleagues a sub-charter at preferential rates and earn commission towards their flying. We often recommend block-hours purchase as a good starting point for those who want to eventually move on to fractional or even full ownership.
Most successful businesses depend on efficient travel for their executives and senior management which is why many have turned to owning and operating their own aircraft as an alternative to using commercial airlines. Sometimes, however, businesses feel they are too small to justify sole ownership of an aircraft and hesitate to commit the additional resources needed to manage them.
If you’re put off by the cost and organisational hurdles of owning and operating your own aircraft, you should consider fractional ownership, especially if you fly on a regular basis and want the many benefits of ownership without all the capital outlay of full ownership.
The cost varies depending on the type of programme you go for and which operator / management company you choose. Our Air Share programme, for example, offers a unique low-cost entry level option of a Piper PA-31 Chieftain, which enables clients to own an 1/8th share in an executive aircraft for less than £30,000 while still having the flexibility to use other aircraft types in our fleet at preferential rates.
This low-cost entry level means you can ‘test the water’ without any significant exposure. If it works, you can continue with the Chieftain or upgrade or both; if not, you can get out with minimal cost. Each 1/8th share on any of our aircraft types – piston, turbo-prop or jet – entitles our clients to 40 days’ exclusive use each year and, aside from the monthly aircraft management and overhead fee, every time they fly they only pay direct costs plus 15% contingency.
You keep your share for a minimum term, which varies depending on which scheme you opt for, at the end of which you can sell it. Our Air Share clients, for example, keep their share for a minimum of five years and can then either renew their contract, upgrade to another aircraft in our fleet, or sell on at a fair market price. We also offer a guaranteed buy-back price of 60% of the original investment and a ‘get out’ clause sooner than this if it really is not for you or there is an unforeseen problem.
Fractional clients benefit from AOC (Aircraft Operator’s Certificate) rates on fuel, reclaimable VAT and potential tax advantages, not to mention the safety umbrella (in our scheme) of using an aircraft operated by a UK Civil Aviation Authority scheduled and charter airline operator that meets rigorous safety and engineering standards.
The ultimate option for those who can afford the capital outlay of course is total ownership and management. That means you own the aircraft and a company like ours manages it.
Total ownership is obviously the most expensive option in terms of capital outlay but as your annual demand grows to around 200 – 250 flight hours, it becomes economically viable.
Best of all, there are no limitations – you can choose the optimum aircraft to suit your regular mission profile and decide on colour, logo and interior layout and amenities. When you plan your trips, you have your aircraft at your call and available at short notice. You can change plans, leave luggage on board, and use the aircraft to pick up friends and colleagues.
Once you have purchased your own aircraft, ‘the more you fly, the cheaper it is’ really is true. What’s more, depending on the management package, it offers many financial and tax benefits.
Placing your aircraft under management gives you several major advantages: you don’t have to worry about the time-consuming administrative burden; the aircraft is maintained and operated to the highest industry standards; aircrew are fully trained to the highest airline standards and are a financial burden on the management company, not you; and the cost of ownership can be significantly offset through third-party income.
Of course you might want your aircraft to be yours alone with no other people travelling in it but many clients ask their management company to utilise their aircraft for on-demand charter to third parties. This supplies revenue to you as the owner and provides a legitimate commercial relationship which can maximise tax benefits as well as offset ownership costs.
At the end of the day, whatever option you go for, the formula needs to be right for you. We often meet clients who have been faced with biased advice from those who want to sell them whatever suits their trade – but even a client who has sufficient need to merit fractional or full ownership should be open to on-demand charter if the need arises. For example, a light to mid-size aircraft may suit you 90% of the time but for the 10% when a larger or longer-range aircraft is required, you should simply hire one.
The most important thing is to get objective and honest advice right at the outset so that you end up with a made-to-measure solution that suits all your travel expectations.”
For more information and advice, email ABA at consultancy@atlanticbridgeaviation.com, call 01797 322655 or visit www.aba.aero
Factfile:
The Atlantic Bridge Aviation Group (ABA) has been providing commercial and business aviation services globally for more than 25 years, trading in aircraft, aircraft leasing and aviation consultancy. As well as owning a successful airline (LyddAir Ltd and its division World Executive Airways), operating piston, turbo-prop and jet equipment on domestic and international routes, ABA offers fractional ownership through its Air Share division. ABA is headquartered at London Ashford Airport in Lydd, Kent.
