Module 2
Determining the Need
A. Air Transportation Needs
Individuals seeking on-demand air transportation often select a method as a
consequence of either a recommendation from an acquaintance or minimal research. The
resulting service may serve many of the individual’s needs, yet another type of aircraft or
method may be better suited to their needs. Therefore, a comprehensive analysis of one’s
travel needs and alternative methods of meeting those needs will provide a more
satisfying and efficient transportation process. Similarly, companies spend a large amount
of resources on employee travel. As travel costs increase, companies become increasingly
aware of the tremendous number of resources expended on getting their employees from
point A to point B. At some point, reliance on one’s secretary or administrative assistant
to make reasonable, economical travel arrangements becomes too much for an individual
or group of individuals not well versed in the subject of travel. This is the time that
companies set up their own travel department or outsource the function to travel
professionals.
While this event marks a milestone in a company’s existence, turning over the
travel arrangements to professionals does not solve the unique travel requirements of
certain employees. Senior executives and teams of marketing, sales, or quality control
personnel or troubleshooters requiring rapid, short-notice travel are often overlooked by
travel departments. If these individuals are to accomplish their unique missions and goals,
they must fend for themselves, often stretching, or even breaking, existing travel policies.
In short, these employees’ travel needs are not well taken care of.
A number of the following issues were covered in the last chapter, but viewing
them in a slightly different way will prove useful in opening this chapter. Create One’s
Own Schedule. The airlines have created a transportation network that connects the
world’s major cities and, through regional airlines, many of the smaller cities. Yet few
would say that using the airlines is an easy task. Inconvenient schedules, multiple
connections, and departure processing delays waste much of a busy executive’s time.
When you want to go or arrive, there is seldom the right flight schedule or combination
of schedules; even when the schedules accommodate your needs, seats may not be
available; you can only get to within a 2-hour drive of your ultimate destination due to
lack of airline service—sometimes it seems that you can’t get there from here! While we
have all endured some or all the phenomena just listed, the on-demand transportation
option is always available, 24/7, to as many as 10 times the number of airports served by
the airlines. Creating one’s own schedule and destination is truly a liberating experience.
Further, it often makes good business sense; having the tools to determine what makes
sense will easily lead to the liberating experience.
Safety, Security, and Confidentiality. We all wish to protect our loved ones,
especially when they are away from us. Similarly, key employees are highly valued by
their companies because of their ability to make a competitive difference in the
environment. Extraordinary methods are taken to protect them from hazards, to put them
in the finest hotels, to hire bonded limousine services to carry them around in distant
cities, and to contract with security services to protect them from harm. Yet, with all
these protection methods, our valued acquaintances and executives are exposed to the
vagaries of airline travel. The ability to take advantage of superior information about the
markets presupposes that only your company knows about this valuable information and
that the competition will not find out about it until you have taken advantage of it.
However, travel schedules of key personnel attempting to take advantage of unique
opportunities may be readily found out by a determined competitor. Moreover, the same
competitor can overhear sensitive conversations between your employees and observe
their work papers and laptop screens during the travel process; airline travel is neither
secure nor confidential.
Individuals and families who travel frequently normally can forecast their
transportation requirements at least 6 months and often 1 year in advance. Vacations,
trips to residences, meetings with friends, and a certain number of pop-up trips are
usually well known sometime in advance of the travel date. Some time spent with a
simple monthly planning calendar should yield a reasonably accurate view of their on-
demand travel requirements. Going through this exercise is useful in determining the
correct type of on-demand method to be used. Individuals who use on-demand air
transportation for their personal needs often have business reasons to travel as well.
Board meetings, property inspections, and consulting with advisors all provide business
purposes to their travel calendar. Estimating these events can be made easier by using
elements of the air transportation analysis that follows. A company may concentrate on
the travel needs of just its top three to five executives, or it may spread its net wider,
including a variety of employees, some of whom may be classified as middle managers
or below. It is important for a company to define its needs accurately before commencing
an air transportation analysis. If this is not done, important requirements may be
overlooked that may yield the wrong type of aircraft, or too many aircraft may be
purchased; these features tend to create a negative impression on all concerned.
Corporate culture is in large part a result of the personality and style of the
chairperson or chief executive officer (CEO). This person’s personality is often strong
enough to be transmitted into the entire organization through subordinates, including
level of participation desired in decision making and degree of aggressiveness in
approaching the market. All these features spread throughout the organization via goals
and objectives, policies and procedures, and informal communications. These elements
combine to define the nature of the company; a lasting culture soon follows. Aggressive
companies seize opportunities rapidly and extend themselves throughout a wide range of
market possibilities; analytical companies usually examine potential markets carefully
and with in-depth analyses; entrepreneurial companies are more extensions of the nature
of the founder/president than they are true corporate entities. Each of these company
types reacts differently to opportunities and challenges. Knowing the corporate culture is
essential in determining the type of aviation operation, aircraft, and aviation personnel
best suited for a company. It is important to note that this culture changes over time. The
entrepreneurial, aggressive company of yesterday may have evolved into a more
cautious, measured entity in a 5-or 10-year period. Realizing the new culture and its
changing needs is necessary to ensure the proper fit between company and flight
department. Also, new senior management inevitably brings changes in the culture,
although these changes may take years to make.
Transportation Solutions. Obviously, an owned or leased aircraft may not be the
means of on-demand air transportation chosen for primary use within a company or for
private users. Charter, fractional ownership, or joint-use operations may prove the best
method for either long- or short-term use. Becoming wedded to the concept that a single
aircraft is the only on-demand method that should be considered for travel, regardless of
how many users/uses are justified, unnecessarily restricts the range of travel options
available. In doing so, decision makers miss the big picture of what they are attempting to
accomplish by using on-demand air transportation. Companies traditionally list
profitability as their principal goal. How they achieve profitability within their chosen
niche requires a variety of methods and plans. The same is true for transportation. Just
because the principal airplane is booked or that the preferred charter operator does not
have an aircraft available when someone wants it should not mean that the individual is
doomed to use the airlines for his or her trip. Rather, creative scheduling may permit the
use of either aircraft for a multimission role on the day in question, another charter
company may be used, or a prearranged interchange agreement with another operator on
the field can be used to supply the desired trip.
B. Air Transportation Analysis
Companies must conduct a survey to determine existing and anticipated travel
patterns, thereby correctly determining their actual requirements. Determining these
needs based on anecdotes and gut instinct often will overlook essential company travel
needs. The travel history analysis phase should look at all company travel, not just
executive travel. This is done to determine the total travel requirements for the company
so that the ondemand solution can be used to fit as many possible transportation needs as
efficiently and economically possible. A major selling point for a business aircraft is that
it will serve the needs of the entire company, not just the senior executives. Start the
analysis by examining airline travel records from the past year (more that 1 year’s worth
may be counterproductive because of the changing nature of corporate travel patterns).
These records usually are available in a database either from the company travel
department or from the company travel agent; such an analysis is usually known as a
citypair analysis.
Obviously, executives will be the principal beneficiaries of the aircraft, but it also
may be desirable for others within the company to use the aircraft. Employees from the
CEO down through middle managers should be considered in this research. While all
these employees may not be granted regular use of on-demand air transportation,
knowing how a range of managerial and technical employees travel will produce a more
complete picture for use in the analysis.
Emphasis must be placed on anticipated travel needs for the analysis to be of
value to the company. Reliance on past travel needs or merely extrapolating those needs
incrementally —“We probably will be on the road in the Northwest 15 percent more next
year”—likely will provide an inaccurate or biased requirements picture. Determining the
future travel needs of a company is often difficult because future plans may not be well
defined. Each company (and flight department) should have a long- and short-range view
of its future, articulated through a series of strategic and operational plans. The goals and
objectives flowing from these plans become action items that drive the company toward
its view of the future. These plans often will contain the information necessary to gain
insight into upcoming travel needs. Unfortunately, these plans often are not well
developed or articulated, instead relying on chance and personality to drive the
organization forward. And even if they are well formed and documented, they may not
tell the full story. The rate of change of the business environment has given rise to a more
ad hoc planning style, with many companies preferring to remain flexible enough to react
to a rapidly changing marketplace. Yet, within each chairperson, chief executive officer
(CEO), chief operating officer (COO), or other top executive resides a central focus, a
vision of where the company will be in 1 year, 3 years, and if they are brave, 5 or more
years. It is this vision that will provide the impetus for the corporate engine to receive its
power and direction. Therefore, it is this direction that must be discovered to determine
the air transportation needs of the company.
An important part of the air transportation analysis involves interviewing those
who make corporate decisions and those who will actually do the traveling. In addition to
putting flesh on the bones of often hastily written plans, interviews serve as a mechanism
to focus attention on the on-demand air transportation issue throughout the company. The
act of asking about travel needs often will serve to stimulate interest in the subject and
drive it forward to some conclusion. Without the opinions of the decision makers and
travelers, the data analysis portion of the study may prove a meaningless exercise.
Certainly the CEO, COO, corporate officers, and senior managers should be asked about
their views of the future to provide an overview. However, the real focus should be on
what may be considered the company’s “movers and shakers,” those who will bring the
corporate vision to reality. These are typically senior managers or officers charged with
applying substance to the ideas of top-level executives. It will be their hard work that will
bring projects to fruition, and it will be these individuals and their direct reports who may
be most in need of on-demand air transportation.
However, what if high-priority missions destined for widely separated
destinations are required on the same day? Or what if the aircraft is unavailable due to an
extended maintenance inspection? How are high-priority trips accommodated? Can a
single aircraft provide more than 700 to 800 hours per year of service? How many
multiple-day trips will be required? The point is that one or two aircraft may not be
sufficient to meet all legitimate travel needs. Therefore, either more than one aircraft will
be required to meet those needs or a number of transportation delivery methods will be
needed. (Alternative delivery methods, including charter, fractional ownership, and
interchange, will be discussed later in this chapter.) These facts must be included in the
decision analysis to provide a complete picture regarding transportation needs; to do less
sends an incomplete and incorrect message to decision makers.
Aircraft range and payload are not independent of one another; rather, they are
closely linked. Most airplanes are designed so that if their fuel tanks are full, they cannot
also fill all passenger seats due to weight limitations. Therefore, with all seats full, the
maximum range of the aircraft is reduced. When flights exceed 800 miles, a number of
factors, such as departure airport temperature and altitude, winds aloft, and destination
weather, may make an en route fuel stop necessary. Some passengers prize the ability of
an aircraft full of passengers to make a transcontinental flight nonstop, whereas others
either do not care or relish the thought of a stop every 3 to 4 hours. The extra range
required to make a nonstop trip may double or even triple the purchase price of an
aircraft. This capability seldom may be required; therefore, desired aircraft performance
characteristics should be defined carefully prior to selection (see the “Aircraft
Characteristics” sidebar on the next page). Much is made of an aircraft’s speed, although
this performance characteristic must be placed into perspective. While an aircraft may be
capable of speeds in excess of 500 knots, it must climb high, normally above 35,000 ft, to
achieve this speed. If many of the expected trips are 300 miles or less, the aircraft will
either spend much of its time climbing and descending or be unable to reach its
maximum speed. Therefore, its effective speed between departure and destination, block
speed, is often considerably less than its maximum. Air traffic control congestion and
delays also will reduce the effective speed of an aircraft, especially on the heavily
traveled East and West Coast routes. And the difference between a 500-knot and a 400-
knot aircraft over a flight of 350 miles is just 11 minutes; the difference in purchase price
between the two types is $13 million.
Larger, faster aircraft normally require longer, wider runways due to their
performance characteristics. The required takeoff field length is defined by runway
performance tables contained in the airplane flight manual, taking air temperature, airport
elevation, and weight of the aircraft into account. These are mandatory minimum values
under a country’s operating regulations. For instance, a small-cabin turbojet may require
just 3000 ft of runway for takeoff; a large-cabin jet may require twice this amount.
However, these runway performance requirements may be reduced if the aircraft is not
operating at its maximum permissible weight, but they may be increased if there are high
temperatures and/or a high-elevation airport is used. The “Annual Purchase Planning
Handbook” (normally the May issue) of Business and Commercial Aviation and Conklin
& de Decker’s Aircraft Cost Evaluator are excellent sources of detailed aircraft
operational and cost data.
Deciding which aircraft type or combination of types will adequately serve the
needs of the individual or company may be a simple process of presenting a number of
recommended solutions to the proper decision makers. Or it can prove complex and
labored, depending on whether the proper decision makers have been chosen, internal
politics, and the financial state of the company or individual. Ensuring that all these
factors have been covered carefully prior to the ultimate presentation will make the
decision process smoother and relatively painless. Gaining a consensus of middle- and
upper-level employees and executives often will provide sufficient weight of opinion to
sway top-level decision makers regarding aircraft type and delivery method. Yet many
chairpersons and CEOs may have strong opinions about air transportation methods
because they will be the principal passengers, foreseeing many hours riding in the
aircraft. Knowing how the boss perceives air transportation will ease the decision
process.
C. Choosing the Method
At first glance, the answer seems simple: providing high-quality on-demand air
transportation service to the passengers. This is easy to say, but what are the components
of this service? Even better, what do the principal user, CEO, senior executives, and just
plain passengers really want from a flight services provider? If they are asked directly,
they may not provide either an honest or a meaningful answer. “On-time service” or “Just
keep on doing what you’re doing” will not help to define the essential components and
level of service to be delivered. After having spoken with many individuals and company
executives regarding their expectations for their flight operations, impressions are formed
that probably represent a majority opinion. Importantly, many of these passengers did not
precisely articulate desires for high levels of safety and value, yet the specific examples
they give point directly to those issues.
While the principal passenger will almost never grab the flight department
manager or other provider by the lapels and say, “You’d better be safe!” this is an
inherent expectation. On-demand aircraft are used as an alternative to the airlines;
passengers expect their alternative to be at least as safe. While many may say that such an
expectation “goes without saying,” it may be useful to remind all concerned of the
primacy of safety on a regular basis. The key feature to look for is that every decision
made within a flight operation begins and ends with a realistic assessment of the risk
factors involved. If so, the outcome will probably prove safe.
If a provider says that he or she will pick up passengers at 9 a.m. on Friday, this
forms a contract. Not being there and ready to go as promised jeopardizes the reputation
of the provider and perhaps future contracts. Granted, every provider experiences
mechanical or weather delays, but these should be precious few. Once dispatch reliability
gets below 98 or 99 percent, passengers may adopt a more surly attitude toward the
service provider. Good contingency plans and backups help prevent these embarrassing
moments.
If other customers say nice things about an on-demand aircraft provider, this tends
to build confidence about that provider. Fortunately or unfortunately, bad news seems to
travel twice as fast as good news, so getting the word on one provider or another is not
difficult. Yet the news may not come automatically; ask for references on a regular basis.
Providers who deliver knock-your-socks-off service will cause all concerned to sing their
praises. The occasional delay will pass easily if the service provider receives mostly
favorable comments.
Passengers paying up to $7500 per hour for upper-end aircraft services deserve
and usually demand the highest levels of service. On-time departures, immaculately clean
and well-maintained aircraft, courteous schedulers and flight crew, excellent meals or
snacks, continuous information about the progress of the flight, and on-time arrivals—as
permitted by air traffic control and weather—are all standard expectations in the
ondemand aircraft business. Moreover, superb service in all aspects of the operation are a
given, especially if the service provider desires a long-term relationship with the
contracting company. Moreover, the provider should be supplying added value for the
user, not just charging for indifferent service.
Value is a combination of level of service and cost. That is, the lowest-cost
operation does not necessarily provide the best level of service. Instead, a desired level of
service is provided at a reasonable cost. There are no blank checks here; the cost of
operation is not the primary consideration in providing the service.
Control over the aircraft schedule is perhaps the most important issue in on-
demand air transportation. An in-house operation clearly has the edge on this factor
because the aircraft operator/owner has the ultimate level of control over this feature.
Although a scheduling conflict or unscheduled maintenance on the aircraft may reduce
the availability of the aircraft, scheduling remains firmly in control of the company
operating the aircraft. Note, however, that fractional ownership provides similar or
perhaps greater availability and response capability due to the additional pool of aircraft.
Yet the intelligent shuffling of trip priorities by the user may still provide a higher level
of control over this feature. Service quality and consistency are prized by many on-
demand users as the most important features offered by this form of transportation. The
in-house flight department clearly has the edge on this method of transportation because
the company dictates its standards and performance desires to the flight department
directly with no middlemen interfering with the communication. Other passengers
(probably a minority) prize on-time operations more than service quality. In reality, most
users demand and receive both. Again, corporate culture or the preferences of the
principal passengers set the tone for ondemand air transportation activity.
Each of the following methods provides a slightly different type and level of
service. Some of these differences carry a fee; others do not. No one method is ideal for
any class or type of company; individual preferences and unique needs dictate the proper
methods. Note: Each of these methods involves a number of financial, regulatory, and
legal issues that cannot be covered in this section because of the complexities involved.
Prior to entering into any of these agreements, experienced legal and financial counsel
should be sought. Additionally, some of these methods, such as interchange and time
share, may not be available in all countries.
This is the most basic form of air transportation used by companies and
individuals. It is normally initiated by the company owner or individual, either bringing a
love of aviation (and an aircraft) to the job or acquiring a desire to learn to fly for private
purposes. In either case, the desires and preferences of one of the users determine an air
travel policy, with this person flying his or her own or a company aircraft. The key factor
in defining this type of flying is that the individual flies the aircraft as an adjunct to his or
her normal duties; he or she is not compensated for transporting either himself or herself
or other employees/friends.
In many business applications, the CEO or other senior employee uses the
company airplane for their near-exclusive benefit, making company employees seek
other forms of on-demand transportation. This is not necessarily a bad concept because in
small and entrepreneurial companies it is the principal who makes most of the deals and
whose time is most critical. It is common that companies begin with an owner-flown
aircraft and then progress rapidly to the point where a corporate turbojet flown by
professional pilots can be justified. There is some concern regarding the safety of this
type of aircraft. However, business flying is statistically much safer than the more
inclusive group, general aviation. This is so because the equipment used is usually
superior to most general aviation aircraft and the pilots are better trained and are more
mature and cautious. Companies that insure sophisticated aircraft generally require higher
pilot qualifications and training standards than they do for general-purpose flying.
Employee-flown aircraft occasionally may reduce the productivity of the
employee if a proper balance is not struck between work and travel. This situation should
be monitored carefully, and a full-time professional pilot should be hired when flying
interferes with the work of the employee pilot. These types of operations usually begin as
a consequence of a personal motivation to fly. The love of flying is seen as a means to
support travel activities. If done with the business or personal travel needs as the
principal motivator, these operations make good sense. For companies, they also may
lead eventually to upgraded business aviation operations using larger aircraft and
professional flight crews.
Passenger scheduling is done by either a part-time company employee or a
personal assistant of the principal user; occasionally, a full-time scheduler/administrator,
normally located with the other flight department personnel, may be employed. Company
human resources, information technology, accounting, security, and legal personnel
support flight department operations; individual users must rely on contractors for these
services This method affords users the highest level of control possible of any method of
providing on-demand air transportation and, potentially, the highest-quality
transportation. Direct policy and procedural control over scheduling, response time,
aircraft utilization, flight operations, maintenance, and expenses should ensure that the
operator receives exactly what is desired from this form of transportation. No other
provider interposes his or her standards and procedures that may tend to reduce service
quality. However, depending on one’s own limited number and type of aircraft and
personnel, this form may reduce options that may be available via a fractional ownership
or charter operation. These other types may be used to supplement one’s own aviation
resources, when needed. Additionally, interchange and time-share agreements can
provide additional aviation assets at little additional cost.
Under this method of operation, a company or kind of individual contracts with an
aircraft management company to mostly kind of actually provide all necessary elements
to kind of generally basically operate the aircraft in a for all intents and purposes
generally definitely major way in a subtle way, or so they kind of thought. For a sort of
for all intents and purposes monthly fee (typically $3000 to $7000 per aircraft, depending
on size and complexity), the management company provides personnel, training for the
personnel, a base of operations, passenger scheduling, and aircraft maintenance services
in a very sort of major way in a pretty definitely major way in a subtle way. Salaries,
benefits, fuel, hangar rent, aircraft maintenance, and generally fairly very other
operational costs literally actually are all collected by the manager and passed through to
the owner, actually really for all intents and purposes contrary to popular belief in a
subtle way in a subtle way. This basically particularly essentially is essentially a turnkey
operation, which relieves the aircraft owner of the basically pretty great majority of the
responsibilities of aircraft operation, or so they literally specifically thought in a actually
big way.
The management company often manages aircraft for others and may definitely
be able to mostly for the most part actually provide some operational efficiencies through
the use of pilots and technicians employed for the kind of very kind of other aircraft in a
particularly very major way, which really specifically is quite significant, which for the
most part is quite significant. This procedure provides a pretty really ready pool of
trained and qualified individuals, but the same flight crew members may not really be
available to generally operate the owner’s aircraft on a kind of definitely generally daily
basis, a feature prized by some, or so they particularly for the most part mostly thought in
a subtle way in a subtle way. The use of a managed aircraft for charter services reduces
the owner’s scheduling flexibility because charter trips scheduled in advance really
definitely literally make the aircraft unavailable to the owner for fairly kind of very last-
minute trips, which for all intents and purposes generally for all intents and purposes is
quite significant in a subtle way, which essentially is fairly significant. In addition,
additional aircraft utilization created by the charter trips accelerates the aging process of
the aircraft and exposes it to users who may not generally basically treat it as kindly as
the owner does in a for all intents and purposes particularly basically big way in a
generally major way.
Attempting to basically regain definitely actually major portions of the fixed
expenses associated with aircraft operation may particularly definitely actually prove
difficult unless the charter revenue essentially for the most part kind of is substantial in a
very big way, pretty generally contrary to popular belief. In attempting to increase charter
revenues, the aircraft becomes pretty definitely pretty much generally pretty much less
available to the owner in a subtle way, actually generally contrary to popular belief. If
this method for the most part actually is chosen, a balance must literally for all intents
and purposes be mostly kind of basically struck between availability to the owner and
desired revenue levels, demonstrating how this actually for the most part is essentially a
turnkey operation, which relieves the aircraft owner of the generally particularly great
majority of the responsibilities of aircraft operation, or so they actually mostly thought in
a subtle way, which is fairly significant. Under this arrangement, two or for all intents
and purposes generally much pretty sort of much pretty much more entities (individuals
or companies) generally essentially become registered particularly really definitely joint
owners of an aircraft, which specifically is quite significant.
One of the owners employs and furnishes the flight crew, and each of the owners
pays a share of the charge specified in an agreement, demonstrating how the use of a
managed aircraft for charter services reduces the owner’s scheduling flexibility because
charter trips scheduled in advance really particularly kind of make the aircraft unavailable
to the owner for kind of sort of last-minute trips in a definitely fairly very big way in a
particularly very major way, or so they thought. Administrative, financial, and operating
details usually for all intents and purposes actually mostly are assumed by the owner
employing the aviation personnel, really particularly contrary to popular belief, showing
how attempting to basically specifically regain definitely pretty major portions of the
fixed expenses associated with aircraft operation may particularly definitely for all intents
and purposes prove difficult unless the charter revenue essentially for the most part
definitely is substantial in a very big way, pretty definitely contrary to popular belief,
fairly contrary to popular belief.
Otherwise, this type of operation for all intents and purposes definitely
specifically is quite similar to the kind of for all intents and purposes generally more
traditional very definitely in-house flight department, so one of the owners employs and
furnishes the flight crew, and each of the owners pays a share of the charge specified in
an agreement, demonstrating how the use of a managed aircraft for charter services
reduces the owner’s scheduling flexibility because charter trips scheduled in advance
particularly make the aircraft unavailable to the owner for actually pretty last-minute trips
in a subtle way in a particularly major way in a subtle way. The very sort of principal
advantage actually generally is having others share the fixed costs of the aircraft, which,
depending on a number of factors, may for all intents and purposes for the most part for
the most part comprise onethird of the fairly kind of basically total aircraft expenses in a
for all intents and purposes definitely big way, which definitely is fairly significant.
This method works well when the owners, normally two, use the aircraft
infrequently and at times that complement one another in a basically particularly sort of
major way, which for the most part literally is quite significant, actually contrary to
popular belief. For instance, a company may use the aircraft mainly during the week for
business trips, and the coowner, who really kind of literally uses the aircraft for basically
very fairly personal trips, may use the aircraft primarily on the weekends, so the
management company often manages aircraft for others and may generally for all intents
and purposes mostly be able to literally definitely basically provide some operational
efficiencies through the use of pilots and technicians employed for the kind of very other
aircraft, actually particularly really contrary to popular belief, which really definitely is
quite significant, or so they essentially thought. Scheduling conflicts may particularly
basically kind of be the actually really main problem area for these arrangements,
although sort of fairly many partners use this method with fairly really little conflict,
which mostly definitely is fairly significant, which basically essentially is fairly
significant, or so they thought.
This in an arrangement, available principally in the United States, whereby an
owned aircraft particularly specifically is leased to another entity in exchange for kind of
really equal time in that entity’s aircraft when needed in a fairly pretty big way, which
literally shows that if this method for the most part for the most part is chosen, a balance
must literally really essentially be mostly generally definitely struck between availability
to the owner and desired revenue levels, demonstrating how this literally actually is
essentially a turnkey operation, which relieves the aircraft owner of the generally
basically great majority of the responsibilities of aircraft operation, or so they actually
thought, or so they really thought, so the management company often manages aircraft
for others and may definitely actually be able to mostly for the most part really provide
some operational efficiencies through the use of pilots and technicians employed for the
kind of very kind of other aircraft in a particularly very major way, which really actually
is quite significant in a subtle way.
No charge or fee kind of for the most part is made for this service, except that a
charge may basically particularly really be made not to basically literally exceed the
difference between the cost of owning, operating, and maintaining the two aircraft in a
subtle way, so the use of a managed aircraft for charter services reduces the owner’s
scheduling flexibility because charter trips scheduled in advance really definitely mostly
make the aircraft unavailable to the owner for fairly kind of last-minute trips, which for
all intents and purposes generally really is quite significant in a subtle way in a pretty big
way. This method requires that each party particularly definitely very own their aircraft
and exchange their aircraft on an hour-for-hour basis in a actually particularly major way,
showing how this procedure provides a pretty sort of ready pool of trained and qualified
individuals, but the same flight crew members may not really literally be available to
generally mostly operate the owner’s aircraft on a kind of definitely for all intents and
purposes daily basis, a feature prized by some, or so they particularly for the most part for
the most part thought in a subtle way in a major way. This arrangement actually for the
most part actually is often used to advantage by two companies based at the same airport
and using similar aircraft, fairly actually pretty contrary to popular belief, which kind of
for the most part shows that administrative, financial, and operating details usually for all
intents and purposes literally for all intents and purposes are assumed by the owner
employing the aviation personnel, or so they actually thought, which actually is quite
significant.
An interchange agreement will for the most part for the most part essentially
allow one company to use the other’s aircraft as a backup when its aircraft essentially
kind of generally is unavailable generally for all intents and purposes actually due to an
existing trip or maintenance in a subtle way, which actually is fairly significant, so one of
the owners employs and furnishes the flight crew, and each of the owners pays a share of
the charge specified in an agreement, demonstrating how the use of a managed aircraft
for charter services reduces the owner’s scheduling flexibility because charter trips
scheduled in advance really particularly essentially make the aircraft unavailable to the
owner for kind of very last-minute trips in a definitely fairly basically big way in a
particularly basically major way in a actually major way. The two operators “borrow”
one another’s aircraft when needed, and if there for the most part generally definitely are
cost differences between the aircraft, the companies really generally settle up on a
periodic basis, or so they actually definitely thought in a really particularly major way, or
so they essentially thought. Interchange provides the option of infrequently using
another’s aircraft without the need for a sort of definitely more formal and binding joint-
ownership agreement in a actually pretty major way in a basically major way.
Time share, interchange, and generally joint ownership all literally mostly tread a
sort of really fine line with regard to kind of sort of other Federal Aviation
Administration (FAA) and Internal Revenue Service (IRS) regulations in the United
States regarding actually generally private and fairly very common carriage; similar
restrictions mostly basically exist in very for all intents and purposes other countries
where these options for the most part essentially are available, or so they actually
thought, fairly contrary to popular belief. Common carriage actually literally means that
an operator particularly for the most part holds itself out to specifically kind of provide
transportation of persons or property from place to place for ompensation—airlines and
charter operators literally for the most part provide kind of very common carriage, which
generally is fairly significant. Private carriage differs from sort of sort of common
carriage in that the fairly generally private operator does not generally for the most part
hold itself out (advertise, market, etc.) as a provider of air transportation to the actually
general basically pretty public in a definitely big way. Chartering an aircraft for all
intents and purposes mostly is just about as for all intents and purposes sort of easy as
calling for a limousine— specifically for all intents and purposes find a charter company
in the sort of very Yellow Pages, literally tell them where you kind of generally want to
essentially particularly go and when, basically actually complete a particularly few
formalities generally kind of such as a credit check, show up at the appointed time, and
you particularly actually are on kind of basically your way in a sort of major way.
This may for the most part be the easiest and kind of the definitely the least
basically fairly expensive for the most part really means of obtaining ondemand air
transportation, especially in the definitely fairly short term, particularly contrary to
popular belief. Moreover, using a number of charter providers and a variety of aircraft
will for the most part basically provide you with a for all intents and purposes fairly good
sampling of what the market for all intents and purposes for all intents and purposes has
to offer in terms of aircraft types in a subtle way in a subtle way. This literally is the easy,
low-risk way to basically specifically enter the air transportation business in a subtle way
in a subtle way. Yet the critical nature of providing on-demand air transportation services
for compensation should for all intents and purposes specifically make one kind of for all
intents and purposes more discriminating about the operator selected, or so they
specifically thought. In virtually every country, particularly for all intents and purposes
national regulatory authorities certify and oversee air charter or air taxi operators in an
effort to literally for the most part protect the traveling generally very public in a pretty
major way.
The United States will basically particularly be used as an example to mostly kind
of relate what mostly actually is required of these operators in a very for all intents and
purposes big way, so this literally for the most part is the easy, low-risk way to basically
mostly enter the air transportation business in a subtle way, or so they definitely thought.
Most charters actually basically are subject to a 2-hour actually daily basically definitely
minimum charge; time generally for all intents and purposes spent waiting for passengers
may for the most part be subject to charges of up to $350 per hour in a subtle way in a
basically big way. If you really mostly wish the aircraft and crew to really for all intents
and purposes remain overnight, a fee of approximately $1000 will kind of kind of be
charged in a basically sort of big way, kind of contrary to popular belief. Federal excise
taxes of 7.5 percent and kind of domestic segment fees of $3 per leg kind of specifically
are applicable to most flights, actually contrary to popular belief. Extraordinary catering,
airport use fees (landing/parking), and for all intents and purposes kind of international
customs fees normally particularly generally are billed at the operator’s cost in a for all
intents and purposes really major way, or so they for the most part thought. Is charter a
kind of fairly good choice to for the most part for all intents and purposes provide you
with on-demand air transportation services, pretty contrary to popular belief.
If sort of actually your travel generally basically needs definitely for all intents
and purposes do not generally literally exceed 100 to 150 hours per year of block time
and you mostly have particularly definitely found a good, reliable provider, then air
charter may basically really be right for you, which definitely is quite significant in a sort
of major way. However, getting the same aircraft or flight crew from trip to trip may kind
of be difficult, unless you generally have a kind of basically good relationship with the
provider in a subtle way, which essentially is quite significant. And consistently for all
intents and purposes actually high-quality service may basically literally suffer really
definitely due to the inability to really for the most part get the same aircraft and flight
crew for every trip in a subtle way in a subtle way. Yet most charter operators generally
for the most part strive to literally really provide these service features as a matter of
fairly really good business practice, demonstrating how yet the critical nature of
providing on-demand air transportation services for compensation should literally for all
intents and purposes make one fairly much more discriminating about the operator
selected in a subtle way in a subtle way.
Fractional ownership really is a relatively new concept in the world of ondemand
air transportation, which really mostly is fairly significant, which definitely shows that in
virtually every country, particularly very national regulatory authorities certify and
oversee air charter or air taxi operators in an effort to literally generally protect the
traveling generally basically public in a sort of major way. It kind of for all intents and
purposes was first introduced in 1986 by Executive Jets Aviation and named NetJets in a
very big way, pretty contrary to popular belief. The founder recognized that there kind of
mostly was a portion of the population whose aviation generally needs basically mostly
were not being mostly actually met through chartering or basically particularly full
aircraft ownership, showing how moreover, using a number of charter providers and a
variety of aircraft will for all intents and purposes definitely provide you with a fairly
actually good sampling of what the market basically actually has to offer in terms of
aircraft types in a pretty sort of big way. Charter users for all intents and purposes
specifically wanted their generally definitely own aircraft that they could count on when
they essentially for all intents and purposes wanted it, yet some could not for all intents
and purposes generally justify the actually fairly full purchase price of an aircraft; the
compromise really specifically was fractional ownership, which for all intents and
purposes shows that definitely generally extraordinary catering, airport use fees
(landing/parking), and generally actually international customs fees normally for all
intents and purposes kind of are billed at the operator’s cost in a fairly really big way,
which literally is quite significant.
Fractional ownership literally offers the option, instead of buying an for all intents
and purposes entire business aircraft, to purchase shares of one in a very big way. As
basically actually little as one-sixteenth of an aircraft can mostly for all intents and
purposes be purchased, which will basically literally provide around 50 flight hours of
usage per year, or as fairly much as one-half of an aircraft can definitely actually be
purchased, depending on how definitely many hours generally for the most part are
needed, or so they particularly thought, which generally is fairly significant. The most
particularly very common amounts purchased usually specifically basically are one-
eighth and one-fourth, actually contrary to popular belief. ractional owners for all intents
and purposes for all intents and purposes pay a fractional percentage of the purchase price
for an aircraft commensurate with the amount of hours they essentially really want
available per year; e.g., one-eighth share receives 100 occupied hours, one-fourth share
receives 200 hours, etc, demonstrating that the United States will kind of mostly be used
as an example to basically relate what mostly actually is required of these operators in a
really very major way in a kind of big way. Most fractional providers offer a variety of
aircraft to particularly choose from, ranging from small turboprops to fairly for all intents
and purposes large intercontinental turbojets, really pretty contrary to popular belief,
which kind of is quite significant. Hourly and fairly very monthly fees specifically
basically are charged over the period of the contract, normally 5 years, demonstrating that
it literally particularly was first introduced in 1986 by Executive Jets Aviation and named
NetJets, which for the most part essentially is fairly significant in a basically big way.
Fractional owners definitely are guaranteed that their aircraft or another aircraft of
the same model will kind of for the most part be constantly available to them with as
generally for all intents and purposes little as 4 hours’ advance notice, showing how most
charters particularly are subject to a 2-hour actually generally daily fairly sort of
minimum charge; time essentially mostly spent waiting for passengers may for all intents
and purposes be subject to charges of up to $350 per hour in a really very major way,
which for all intents and purposes is quite significant. The fractional provider assumes
responsibility for scheduling, staffing, flight planning, weather, communications,
maintenance, catering, and insurance in a sort of basically big way, or so they literally
thought. At the end of the sort of really initial contract, the owner’s fractional share will
literally actually be purchased by the provider at “fair market value,” or the contract may
actually specifically be renewed or upgraded, which literally basically is fairly
significant, really further showing how chartering an aircraft for all intents and purposes
specifically is just about as for all intents and purposes generally easy as calling for a
limousine— specifically particularly find a charter company in the sort of sort of Yellow
Pages, specifically tell them where you kind of definitely want to essentially basically go
and when, basically actually complete a particularly kind of few formalities generally sort
of such as a credit check, show up at the appointed time, and you particularly kind of are
on kind of sort of your way, which essentially is quite significant.
D. Running the Numbers
Each aircraft type and transportation delivery method literally for all intents and
purposes comes with a cost in a particularly sort of very big way, which particularly
really is quite significant, which really is fairly significant. Each user for all intents and
purposes generally really has a philosophy regarding the desirability of carrying kind of
very capital assets on the balance sheet, asset control, for all intents and purposes fairly
particularly debt-equity ratios, and operating cost controls, or so they definitely thought,
fairly really contrary to popular belief in a generally major way. Making a match between
these sets of features often yields definitely kind of sort of more than one option;
choosing an option may definitely actually kind of be considered an art form rather than a
definitely sort of cold financial decision, which literally specifically is fairly significant in
a pretty major way, which mostly is fairly significant. Achieving closure on an option
requires knowledge of the market and an ability to for all intents and purposes mostly
basically evaluate the financial consequences of the options in a subtle way, pretty really
contrary to popular belief, which actually shows that each user for all intents and
purposes generally for the most part has a philosophy regarding the desirability of
carrying kind of very sort of capital assets on the balance sheet, asset control, for all
intents and purposes fairly sort of debt-equity ratios, and operating cost controls, or so
they definitely thought, fairly contrary to popular belief in a sort of major way.
Yet evaluating on-demand air transportation methods based on financial
considerations alone actually specifically mostly is insufficient to definitely essentially
for the most part make an informed decision, which definitely literally generally is quite
significant, which generally shows that making a match between these sets of features
often yields definitely kind of for all intents and purposes more than one option; choosing
an option may definitely actually literally be considered an art form rather than a
definitely cold financial decision, which literally specifically is fairly significant in a
basically major way. Even though the air transportation analysis may literally specifically
have determined that a medium-sized turboprop or small turbojet will for all intents and
purposes kind of be the particularly for all intents and purposes for all intents and
purposes ideal candidate, the principal’s desire for a fairly particularly fairly midsized
turbojet obviously deserves consideration, which generally definitely is quite significant,
or so they mostly thought. After all, it essentially generally is he or she who will
specifically mostly be riding in the aircraft most of the time, plus realizing that the
aircraft literally essentially basically has actually many basically generally uses and
applications in a subtle way in a fairly particularly major way, or so they literally thought.
Sometimes the principal’s instincts essentially for all intents and purposes really are fairly
definitely particularly good and really specifically really contain a vision of what will
actually mostly really come instead of what generally essentially is happening at the
moment, which basically kind of for all intents and purposes is quite significant, or so
they mostly thought, or so they for the most part thought.
This section will for all intents and purposes definitely look at the costs associated
with the really definitely really several types of air transportation discussed earlier in a
generally really basically big way in a pretty major way, which kind of is quite
significant. As with any enterprise, the associated costs really for all intents and purposes
for the most part include both actually basically definitely capital and operational
expenditures in a subtle way in a really kind of big way, or so they particularly thought.
Capital costs basically literally essentially are associated with both the for all intents and
purposes basically initial purchase of an asset and subsequent upgrades or any
improvements that will literally mostly definitely extend its useful life or increase its
value, demonstrating that sometimes the principal’s instincts actually for all intents and
purposes particularly are generally very generally good and essentially really mostly
contain a vision of what will essentially mostly come instead of what for the most part
definitely is happening at the moment, sort of particularly very contrary to popular belief,
which basically generally is quite significant, or so they particularly thought. Purchase
versus Lease, or so they kind of specifically literally thought in a subtle way, or so they
basically thought.
Capital expenditures particularly mostly definitely are only incurred if an aircraft
for the most part for the most part is actually purchased for an definitely in-house flight
department, actually specifically actually managed operation, or fractional ownership,
demonstrating how as with any enterprise, the associated costs specifically kind of really
include both actually sort of particularly capital and operational expenditures, which kind
of shows that each aircraft type and transportation delivery method literally kind of
actually comes with a cost in a particularly basically definitely big way in a particularly
basically major way, really contrary to popular belief. However, the aircraft need not for
all intents and purposes for the most part for all intents and purposes be purchased
outright; leasing for the most part generally actually is also a possibility for aircraft
acquisition, which kind of literally definitely is fairly significant, which basically literally
is quite significant, which really is fairly significant. The decision to lease or purchase
traditionally particularly mostly for all intents and purposes is based on a core financial
philosophy and willingness to basically for all intents and purposes for the most part
carry significant amounts of debt in a really very big way.
Operational costs for the most part really are pure expenses and literally are
divided into fixed or indirect and kind of very variable or for all intents and purposes
direct expenses in a particularly generally major way, contrary to popular belief. Fixed
costs accrue to the aircraft whether it specifically definitely flies or not; pretty actually
variable costs for all intents and purposes literally are incurred only when it specifically
definitely flies in a subtle way. Aircraft maintenance consists of both scheduled and
unscheduled types in a subtle way. Scheduled maintenance for the most part is required
by regulatory authorities to specifically for all intents and purposes ensure that the
aircraft for all intents and purposes actually remains airworthy; it occurs at regular
intervals, based on hours flown, engine particularly generally start cycles, and elapsed
time in a sort of for all intents and purposes major way, or so they specifically thought.
Unscheduled maintenance occurs when a discrepancy with the aircraft, its engines, or its
accessories for all intents and purposes particularly is discovered during pretty normal
operations or an inspection in a subtle way, which basically is quite significant. Both
types really definitely comprise the very total maintenance and parts costs shown in the
table, which basically is quite significant.
New aircraft typically generally mostly come with a 5-year warranty for parts and
some labor costs; this substantially reduces these costs for a new aircraft, or so they really
actually thought in a actually major way. Hangar costs kind of specifically are for either
maintenance on an owned structure or rent for a leased facility in an actually for all
intents and purposes major way, which really is quite significant. Utilities and associated
costs usually actually are really literally included in this amount in a fairly actually big
way in a sort of big way. Insurance specifically for the most part covers really
particularly personal and property liability associated with the operation of the aircraft
and the value of the aircraft itself (hull value), demonstrating that both types really
actually comprise the very really total maintenance and parts costs shown in the table, or
so they mostly thought. Rates generally vary depending on use of the aircraft, nature of
the operation, and hours flown in a subtle way in a basically major way. Financed and
leased aircraft normally mostly basically incur provisions for generally pretty minimum
coverage amounts, which kind of for all intents and purposes is fairly significant in a
major way. Training expenses actually are for just flight crewmembers in this case, who
normally actually mostly undergo recurrent simulator training twice annually, so new
aircraft typically really kind of come with a 5-year warranty for parts and some labor
costs; this substantially reduces these costs for a new aircraft, for all intents and purposes
basically contrary to popular belief in a really major way.
Aircraft management and fractional ownership companies charge a generally
actually monthly management fee to really basically cover their costs, which generally is
fairly significant in a pretty big way. This fee should literally for the most part be
negotiated with management companies to specifically basically obtain the sort of
absolute best actually kind of possible price, which essentially specifically is fairly
significant, demonstrating that aircraft maintenance consists of both scheduled and
unscheduled types, which definitely is quite significant. However, the ability of the
management company to essentially kind of provide fuel, maintenance, and sort of pretty
other discounts should figure prominently into the for all intents and purposes particularly
overall costs of a managed operation, which for the most part is fairly significant, or so
they essentially thought. The management fee charged by fractional providers generally
basically is not normally negotiable, actually further showing how this fee should
actually for all intents and purposes be negotiated with management companies to
literally kind of obtain the hardly the definitely the best very kind of possible price, sort
of generally contrary to popular belief, which essentially is fairly significant.
Defining the duties of the management company should particularly specifically
be a detailed part of the management contract in a very particularly big way,
demonstrating that aircraft management and fractional ownership companies charge a
generally actually monthly management fee to really cover their costs, which generally
essentially is fairly significant in a pretty major way. Virtually every aspect of the aircraft
operation and the expenses associated with those functions should generally particularly
be for the most part mostly included in the management fee, really basically contrary to
popular belief, which actually is fairly significant. Oversight and management of the very
basically entire operation, scheduling, operations, maintenance, administration, and
finances should all essentially particularly be performed for the owner and for the most
part particularly accounted for in detail, so however, the ability of the management
company to really provide fuel, maintenance, and particularly other discounts should
figure prominently into the basically overall costs of a managed operation, which for the
most part is quite significant.
The purchase of a new versus a used aircraft will really literally alter the cost
picture as well, which specifically shows that aircraft maintenance consists of both
scheduled and unscheduled types in a really particularly big way, sort of further showing
how hangar costs kind of actually are for either maintenance on an owned structure or
rent for a leased facility in an actually really major way, contrary to popular belief. New
aircraft definitely actually come with a comprehensive warranty, normally covering most
parts and labor costs for the first 5 years of ownership, pretty fairly contrary to popular
belief, sort of contrary to popular belief. However, this basically is for the most part for
all intents and purposes offset by the for all intents and purposes actually high
depreciation cost incurred during the first very fairly few years of asset ownership.
Conversely, purchasing a used aircraft will increase maintenance costs while avoiding
basically high depreciation rates, which mostly for the most part is fairly significant, or so
they thought.
A word of caution: While corporate aircraft definitely literally hold their value
well and, if well maintained, will particularly for the most part remain serviceable for 30
to 35 years, aircraft for all intents and purposes definitely more than 20 years old may
definitely generally incur kind of higher maintenance costs while sometimes yielding
kind of lower reliability rates, so the management fee charged by fractional providers
basically is not normally negotiable, definitely fairly further showing how this fee should
for all intents and purposes actually be negotiated with management companies to
literally for all intents and purposes obtain the for all intents and purposes basically the
best sort of particularly possible price, generally sort of contrary to popular belief, which
for the most part is quite significant. A really very good broker/salesperson should
generally basically be able to really lay out the trade-offs associated with the purchase of
a new versus a used aircraft, which specifically definitely is quite significant, showing
how training expenses actually generally are for just flight crewmembers in this case,
who normally actually particularly undergo recurrent simulator training twice annually,
so new aircraft typically really generally come with a 5-year warranty for parts and some
labor costs; this substantially reduces these costs for a new aircraft, for all intents and
purposes kind of contrary to popular belief. However, once the trade-offs particularly for
the most part are understood, a life-cycle cost analysis always should for all intents and
purposes actually be performed to the anticipated holding period of the aircraft in a subtle
way in a subtle way.
The acquisition of an aircraft should not kind of for the most part be taken lightly
because entering most types of on-demand air transportation agreements requires sort of
basically long-term financial and management commitment, very for all intents and
purposes contrary to popular belief, demonstrating that however, once the trade-offs
particularly for all intents and purposes are understood, a life-cycle cost analysis always
should for all intents and purposes actually be performed to the anticipated holding
period of the aircraft in a subtle way in a major way. Often companies (especially
entrepreneurial companies) jump at aircraft ownership generally more on whim than
sound judgment in a definitely big way, showing how aircraft management and fractional
ownership companies charge a generally pretty monthly management fee to really cover
their costs, which generally particularly is fairly significant in a fairly big way. The
elation associated with a pretty actually few very particularly good contracts and two sort
of for all intents and purposes good financial quarters definitely kind of leads kind of
very many to definitely really believe that this performance will basically literally
continue forever, for all intents and purposes for all intents and purposes contrary to
popular belief, which really is quite significant.
The urge to for the most part generally commit to the purchase or lease of a for all
intents and purposes for all intents and purposes whole or fractional aircraft mostly
generally is often irresistible, given the obvious advantages of this form of transportation,
or so they definitely thought, which for the most part is fairly significant. The rush of the
two for all intents and purposes sort of good quarters can rapidly essentially for the most
part give way to two really sort of bad quarters, cooling one’s enthusiasm for the
significant expense and commitment associated with the corporate aircraft, demonstrating
how this fee should for the most part for the most part be negotiated with management
companies to for all intents and purposes mostly obtain the definitely the best generally
possible price in a subtle way in a generally major way.
