SEPTEMBER / OCTOBER 2016
Science or
Magic?
Forecasting What’s in the Air for Business Aviation
Empty Legs,
Empty Promises Bizav Travel Democratization Costs
A WHOLE NEW WHIRLED FIRST RATE OR BEST RATE? GETTING CARDED WRENCHING DECISIONS FLIGHT HERE, FLYTENOW A Business Aviation Media, Inc. Publication
W W W . B I Z AVA D V I S O R . C O M
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F E AT U R E S
Science or Magic?
Forecasting What’s in the Air for Business Aviation by ROLL AN D VIN C E NT
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• Volume 3 / I s sue 5
Empty Legs, Empty Promises Bizav Travel Democratization Costs
A Whole New Whirled
Helicopters Expand, Enhance Your Bizav Flying
by S COT T A S HTON
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First Rate or Best Rate?
by A DA M M E R E D ITH
Three Factors in Finding Aircraft Financing
When to Bet On a Jet Card BA A S TAFF R E P OR T
Wrenching Decisions
by R ALPH M I C HIE LLI
by W ILLIA M QUINN
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Getting Carded
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Ask the Right Questions to Find the Right Maintenance Provider
D E PA R T M E N T S Publisher’s Message
When 31 Flavors Aren’t Enough
by G IL WOLIN
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Washington Report
by DAVI D COLLOG AN
Flight Here, Flytenow
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The Business of Business Aviation The Information You Need, From Experts You Can Trust Aircraft owners and charterers now have a resource to help you make the most effective use of your investments in business aviation. Business Aviation Advisor provides the information you need, without technical jargon, on the business of owning and flying business aircraft – from operations to acquisition, to management and finance.
Business Aviation Advisor: the Business of Business Aviation
Subscribe to our digital edition at www.bizavadvisor.com/subscribe
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S e p t e m b e r/O c to b e r 2 016 B U S I N E S S AV I AT I O N A DV I S O R 3
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PUBLISHER’S MESSAGE ■ PUBLISHER Gil Wolin gwolin@bizavadvisor.com CRE ATIVE DIRECTOR Raymond F. Ringston rringston@bizavadvisor.com MANAGING EDITOR G.R. Shapiro gshapiro@bizavadvisor.com EDITORIAL ASSISTANT Michael B. Murphy mmurphy@bizavadvisor.com WASHINGTON EDITOR David Collogan dlcollogan@gmail.com CONTRIBUTORS Scott Ashton Associated Aircraft Group scott.e.ashton@lmco.com Adam Meredith AOPA Aviation Finance adam.meredith@aopafinance.com Ralph Michielli Hawthorne Global Aviation rmichielli@hawthorne.aero William Quinn Aviation Management Systems, Inc. bquinn@amsinc.aero Rolland Vincent Rolland Vincent Associates rvincent@rollandvincent.com BUSINESS MANAGER JoAnn O’Keefe jokeefe@bizavadvisor.com BUSINESS AVIATION MEDIA , INC . PO Box 5512 • Wayland, MA 01778 Tel: (800) 655-8496 • Fax: (508) 499-2172 info@bizavadvisor.com www.bizavadvisor.com Editorial contributions should be addressed to: Business Aviation Advisor, PO Box 5512, Wayland, MA 01778, and must be accompanied by return postage. Publisher assumes no responsibility for safety of artwork, photographs, or manuscripts. Permissions: Material in this publication may not be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of the publisher.
When 31 Flavors Aren’t Enough Innovation occurs when someone wants a 32nd – or 33rd – flavor. While scanning the ice cream shop menu, they realize, “None of the 31 works for me – I need something different.” And sometimes, if it’s not available elsewhere, they create it. It happened in 1964, when the retired military founders of Executive Jet Aviation (EJA) determined that rather than owning their own jets, executives all over the U.S. could be served by a “motor pool” of business jets that floated from trip to trip. Business aviation’s “33rd flavor” appeared when Matt Weisman realized some people did want to own a business jet, but didn’t want to be burdened with flight department administration, like hiring pilots and support staff, or managing the operation. Thus Executive Air Fleet (today part of Jet Aviation) was born, one of the first wave of third-party aircraft management companies which handled those functions for first-time jet owners – and then marketed those aircraft for hire when the owner wasn’t flying, so some of the cost of their own flying could be offset. Today more than 90% of the 2,200+ aircraft in charter service around the world are managed under some variation of this 50-year-old model. Business aviation experiences this kind of innovation repeatedly. Each variation enhances our industry by making bizav travel more accessible and more cost effective for a new market segment: NetJets and fractional ownership in 1984, followed by the Marquis Jet Card in 2001; Vistajet, offering a return to the operator-owned charter fleet option in 2004; membership-based models Wheels Up and JetSuite; and today, the wide variety of charter apps providing discounted business aircraft travel by shopping and booking unoccupied repositioning legs on previously-scheduled charter trips. And then there’s Business Aviation Advisor. Our 2014 genesis stemmed from the recognition that there was no print or electronic source of information for owners on the business, rather than the lifestyle, of business aviation. The spirit of innovation inspired one of our staffers. Ten years ago, editorial assistant Michael Murphy realized there was no guidebook for people with Nonverbal Learning Disabilities, written by someone who was successfully navigating the life challenges it presents. And so he wrote one: NLD From the Inside Out: Talking to Parents, Teachers, and Teens About Growing Up with Nonverbal Learning Disabilities, now in its third edition (June 2016, Jessica Kingsley Publishers). So far, thousands of readers in 37 countries have benefitted from his experience, wisdom, and innovative research. Innovation exists when somewhere, someone isn’t satisfied with the status quo. It arises from a market need, a human need, or a desire to make things just a little bit better. Our thanks to all those who take the risk to make our industry – and our lives – easier to navigate. BAA
The views and opinions expressed in Business Aviation Advisor are those of the authors and advertisers, and do not necessarily reflect the policy or position of Business Aviation Media, Inc. Articles presented in this publication are for general information and educational purposes and do not constitute legal or financial advice. Postmaster: Please send address changes to: Business Aviation Media, Inc., PO Box 5512 • Wayland, MA 01778, USA ©Copyright 2016 by Business Aviation Media, Inc. All rights reserved
Gil Wolin — Publisher gwolin@bizavadvisor.com
Printed in the USA S e p t e m b e r/O c to b e r 2 016 B U S I N E S S AV I AT I O N A DV I S O R 5
■ INDUSTRY UPDATE
Science or Magic? BY ROLLAND VINCENT Rolland Vincent Associates / rvincent@rollandvincent.com
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orecasting, an inexact science at the best of times, has come under close scrutiny throughout the business aviation community in the aftermath of the 2008 financial crisis. And why not? In the search for answers to the inevitable questions like “Where are the markets going?” it’s been a tough time to be a forecaster. Whether missing the downturn, the upturn, or the hairpin turn and rock face, there has been no shortage of opportunities for forecasters to “get it right.” Faced with volatile indicators that no longer seem to correlate, forecasters are hard-pressed to provide clear forward visibility, an ironic turn of events in a world of big data, near-instant intelligence, and always-on mobile connectivity. Forecasters, strategic planners, and market analysts can be forgiven for feeling insecure in their jobs. Like the constantly churning position of Dark Arts teacher in J.K. Rowling’s Harry Potter books, it would be hard to disagree with the indomitable Hagrid: “They’re startin’ ter think the job’s jinxed. No one’s lasted long fer a while now.” Several factors have had an impact on the business of business aviation in the last seven to eight years. GDP growth rate forecasts for the world’s leading economies have been cut back on an almost continual basis for the past several years. For the handful of 6 B U S I N E S S AV I AT I O N A DV I S O R
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countries that loom large and account for 80% of the world business jet fleet – the United States, Mexico, Brazil, Canada, the United Kingdom, and Germany – economic growth has been tepid at best, and generally no better than 1.5-2% per year in 2016 and projected to remain so into 2017. U.S. corporate profits, long considered a prerequisite to business aircraft sales, leveled off for three years beginning in 2012, and since have fallen. The BRIC countries, until recently the darlings of aircraft salesmen, have lost much of their swagger, with both Russia and Brazil nose-down, China throttled way back, and India still trying to take on fuel for a future journey. Since 2008, tighter lending requirements have added unwelcome headwinds to prospective buyers who had become accustomed to using OPM – Other People’s Money – to finance their aircraft, especially at the lower end of the business jet market. With steep mark-to-market residual value corrections over the past 18+ months, business jets are not proving to be the solid investments they were in the pre-financial crisis period. Where are the markets going? The current volatility, whether expressed in declining residual values, aggressive price discounting for new aircraft orders, or high levels of unsold pre-owned aircraft inventory, is not going away anytime soon. Many indicators point to an oversupplied market, with too many aircraft and aircraft salespeople chasing too few eager buyers. Except for some of the youngest jets, average annual utilization has fallen in the core w w w. B i z AvA d v i s o r. c o m
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Forecasting What’s in the Air for Business Aviation
U.S. market from pre-crisis levels at the same time as the underlying fleet has been expanding. Projected annual business jet takeoffs and landings are only now back to the same levels they were in 2003, despite an almost 50% increase in the number of aircraft that are based in the United States. We expect to finally see an increase in the rate of business jet retirements, a long-awaited market correction that is being encouraged by a wave of new aircraft introductions, expensive required maintenance and overhaul work, and equipment updates required by regulation. Customers are sitting up and taking notice of recently-certified aircraft like the Embraer Legacy 500, Citation Latitude, and the HondaJet. They continue to move up into larger and more capable models, whether that aircraft is a light jet Citation M2, a super midsize Challenger 350, or a long range Falcon 8X or Gulfstream G650. They anxiously await all-new designs like the Pilatus PC-24, Falcon 5X, and Global 7000 that promise to raise the competitive bar, as well as the levels of buyers’ expectations. Whether driven by a looming equipage requirement like ADS-B (now just 40 months away), or by the operational advantages of fly-by-wire technologies, the inevitable march of change – and progress – is coming to an airport near you. Our Forecast: Buckle your seatbelts, as there is more turbulence up ahead. We expect continuing buffeting of aircraft prices and residual values until supply and demand conditions are w w w. B i z AvA d v i s o r. c o m
closer to being in balance. There are simply too many new production models and too much new production for the current level of demand, and this is not sustainable. Some tough decisions are needed to reset production rates to match more closely today’s level of demand. In some cases, this situation could lead to certain models being taken out of production, especially if delivery rates slip below minimum sustainable levels that we estimate to be about 1.5 aircraft per month. What’s the business sense in building so few business aircraft? Although arguments can be made that a model line can be profitable at very low rates of production – especially on older models where development costs, non-recurring engineering, production tooling, and other investments may be written off – there is a steep opportunity cost that is paid when people, time, and capital are not available to nurture new and compelling investments in new models that could deliver sustainable competitive advantages. Ten, fifteen, and twenty years ago, the business aviation market was abuzz with microphone sound checks as one Original Equipment Manufacturer (OEM) after the next jostled for position at industry press conferences to announce ever-larger orders from a major fractional program like NetJets, Flexjet, or FlightOptions. Today, we can count more than 1,000 business jets that have flown fractionally, and some of these aircraft are now high-time, highcycle – and attractively priced for resale. There is little doubt that we are on the leading edge of other new business models that, leveraging the power of massive computing power and virtual markets, are beginning to transform the way operators fly and the way customers experience business aviation. Our Forecast: The transformation will be incubated in the United States, and to be more precise, California, in the heartland of America’s entrepreneurial talent pool. Businesses like “all-youcan-fly” SurfAir in Santa Monica, CA and Stellar Labs in Palo Alto, CA – in the process of building a digital marketplace for private aviation charter operators and their customers – are creating the core of what could be a step-change in the business of business aviation. Time will tell if our forecasts are accurate, but we couldn’t agree more with Paul Touw, CEO & Chairman of Stellar Labs, when he says: “When we look up, we see possibilities.” People who “get” the power of business aviation see things differently. They move more quickly. They get much more done in a day. Whether along the airways to Presidential election victory, or simply on the way home to share a precious weekend with family and loved ones, business aircraft are instrumental to the way busy people stay connected. Until the invention of a magical transporter, our forecast is that the future of business aviation looks bright indeed. BAA ROLL AND VINCENT is President of Rolland Vincent
Associates, an aviation and aerospace market research, forecasting, and strategic planning firm. His 30+ years’ experience includes work with manufacturers, commercial operators, and international organizations.
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■ AIRCRAFT CHARTER
Empty Legs, Empty Promises Bizav Travel Democratization Costs BY WILLIAM QUINN Aviation Management Systems, Inc. / bquinn@amsinc.aero
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charter broker, verify that it uses a system like this as part of its booking process, before boarding that aircraft. According to Argus’ data, there currently are more than 2,000 FAA-certificated charter operators in the U.S. alone, operating more than 5,500 fixed-wing jets and turboprops. That number would seem to provide pretty good odds for matching an occasional charter request with an empty leg. But there just aren’t enough flights to most geographic markets to make the emptyleg-only business model successful. Each empty-leg trip has yet another hurdle to surmount: more than 90% of the world’s charter fleet is owned not by the charter operator, but by third parties with their own business aircraft travel requirements. Those aircraft are available for charter only when the owner isn’t flying, and then only at the owner’s discretion (not every owner is willing to charter to a rock band or group of weekend partygoers). Many owners rightly insist on approving each trip’s itinerary and revenue potential. Those constraints add yet another layer to the approval process required before any empty leg trip is scheduled. In the attempted democratization of business aviation travel, the “empty-leg-only” model likely is untenable for the long haul. An unregulated charter broker’s loss leader is an unreliable means of meeting your ongoing business aircraft travel requirements. BAA WILLIAM QUINN brings his 40+ years’ aviation experience to his position as Founder/President of Aviation Management Systems, Inc. AMS provides management, technical, operational, and assetbased consulting services to aircraft owners/operators, and to the financial, insurance and legal communities.
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n the past decade, many new discount options to access business jet and turboprop travel have become available to many more travelers. Most of these new lower cost options involve booking all or some part of a repositioning or “empty leg,” often referred to as a “deadhead flight,” on a chartered aircraft. Since the empty leg operating costs already have been covered by the original charter customer, the charter operator can resell the empty leg at a significant discount – often as much as 50% – to another customer, or to a broker. These primarily online-only charter broker marketplaces are just trying to gain visibility and market share. The main difference between them and traditional charter brokers is marketing strategy: they use the lure of empty legs to land new customers, and then hope to retain them as customers for traditional charter brokering when their travel needs surpass that empty leg model. For the most part, it’s the host of newly minted, unregulated online charter brokers with little or no previous aviation experience who offer these “one-way discount charter” programs. Here’s how they work: they rely on web-based search capabilities to scan empty-leg postings of certificated charter operators. By matching charter requests with empty legs, the operator generates additional revenue, the online broker makes a commission, and you, the client, get a significant discount. The empty-leg charter does offer excellent cost savings – when it works. But you’ll need to be flexible with your own schedule. If the retail client on whose trip you’ve piggybacked changes his or her schedule or itinerary, your discounted travel could disappear. That leaves the broker with three choices: simply cancel the trip, charter a substitute aircraft to fulfill the trip and honor the discounted price, or offer to charter a substitute aircraft to fulfill the trip and charge full retail price. When it comes to empty-leg flights, neither the price, the schedule, nor even the flight itself, is guaranteed. And, as with all charter broker programs, it’s uncertain whether the charter operator actually performing the trip consistently holds to the highest levels of safety. The more credible programs employ a safety due diligence system, using third-party operator vetting programs like Argus or Wyvern, just as do traditional brokers. For example, legitimate online charter marketplaces that claim to use Argus-rated operators should be using the Argus CHEQ system, which automatically checks the operator’s current safety rating. Should you opt to use an online one-way
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■ FLIGHT OPERATIONS
A Whole New Whirled Helicopters Expand, Enhance Your Bizav Flying BY SCOTT ASHTON helicopter can be a powerful, efficient enhancement to your business flying, whether you own and use regularly, or charter occasionally. Consider three of its valuable uses: ■■ The short, local flight – Fly from a convenient urban heliport to a short landing field near your customer or plant, or travel to multiple clients in the same region, all in the same afternoon. ■■ Longer distances – Helicopters’ point-to-point capability can provide meaningful time savings. Consider a trip between Manhattan and Washington DC, where using a fixed-wing business aircraft involves driving to a local airport, such as Teterboro or White Plains, waiting in line for departure, the actual flight itself (which can be the shortest part of the trip), arriving at Dulles, and then an aggravating car trip downtown. Compare this with the same trip on a helicopter: leave from a NYC heliport, fly for one hour, land at a local general aviation airport right outside the Washington DC Flight Restriction Zone (“FRZ”), then a short car ride downtown. ■■ Positioning – As metropolitan airports get more congested, many owners have moved their aircraft to remote airports with more plentiful hangar space. This strategy may involve a repositioning leg to move the aircraft to a closer airport for your trips – putting excess wear on the aircraft, creating risk of departure delays, and using up precious crew duty time. In contrast, an executive helicopter can pick you up close to your home or office, take you quickly to your aircraft right at its home base, and allow you to get off the helicopter right onto your jet. Because these airports typically are less congested, immediate departures are much more common. As a passenger, you should have exactly the same safety expectations and standards as you have for your fixed-wing turbine aircraft. Given the unique mission and operating environment of helicopters, you should expect: ■■ Two pilots – Although many smaller helicopters can be flown safely with a single pilot, having two pilots reduces the workload in busy metropolitan environments where the demands of Air Traffic Control (ATC), terrain avoidance, and traffic can keep a crew very busy. ■■ Two engines – Twin engine helicopters may afford better performance, and can increase the margin of safety. ■■ Safety Equipment – Like bizjets, modern helicopters have traffic and terrain collision avoidance systems (TCAS), and, if operating near water, emergency floatation equipment installed. ■■ Audited Operations – The highest-quality helicopter operators are audited using standards such as Wyvern and Argus and are ISBAO (International Standards for Business Aircraft Operators) 10 B U S I N E S S AV I AT I O N A DV I S O R
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registered with a helicopter-specific safety management system. As you consider integrating the helicopter into your business jet flying, be aware of these differences: ■■ Local regulations – If you want to land on a golf course, private property, or other off-airport site, know that not all communities allow this. ■■ A shorter “time constant” – Unlike business jets, which may be in position up to two hours before departure, most helicopters preposition with a 15-minute window. Being accurate with your pickup and departure times will save you money on heliport parking and waiting fees. ■■ Weather – Unlike business jets that can quickly climb and be above it, helicopters “operate down” (fly under) in the weather. Local weather conditions can be changeable and microclimates can make forecasting conditions challenging. ■■ Schedule with your final destination in mind – Many flight department scheduling systems are set up for fixed wing business aircraft, and filter out airports with shorter runways. Helicopters frequently use small general aviation airports that are much more convenient to your final destination than are local executive airports. In the business aviation “toolkit,” the VIP helicopter is a precision instrument that shaves off precious time as you go directly from point to point. Consult a helicopter specialist to find out how you can harness these unique capabilities to enhance your business aviation operation. BAA SCOT T ASHTON is President, Associated Aircraft Group, a
subsidiary of Sikorsky. His 25+ years of aviation experience includes aircraft management, finance, and engineering. A NBAA Certified Aviation Manager, he serves on NATA’s Air Charter Committee.
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Associated Aircraft Group / scott.e.ashton@lmco.com
■ AIRCRAFT FINANCE
First Rate or Best Rate? Three Factors in Finding Aircraft Financing BY ADAM MEREDITH AOPA Aviation Finance / adam.meredith@aopafinance.com
W
ith so many great new and used aircraft available – and some very good buys too – how can you secure the best loan for your aircraft purchase? These three tips can help:
Carefully Consider Your Aircraft Selection
Be Flexible in Structuring Your Terms
If you are able to provide a larger-than-usual down payment, or to pay a larger monthly payment, you are more likely to get advantageous terms, and of course, you’ll also spend less in interest. The single most important force that drives interest rates is the length of the term of the loan. The least expensive option is a floating rate, also known as an adjustable rate. If you are willing to bear the risk of an interest rate increase, a floating rate may be your best option. If you are risk averse, however, take a hard and realistic look at how long you plan to keep the aircraft. Then give yourself an extra 12 months to cover the unforeseen, and target a fixed rate loan for that term. Should you then be able to pay down the loan over a shorter period, often this too will get you a better interest rate. Instead of trying to get 20 years amortization, if you can afford payments on a 10-year schedule, not only can you typically expect a lower rate, but also you save in interest. Just be sure that the loan you choose does not have a pre-payment penalty. 12 B U S I N E S S AV I AT I O N A DV I S O R
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Employ the Services of An Aircraft Finance Broker
Since the market is changing all the time, a competent, experienced broker will keep up with trends, rates, and new approaches to financing. Aircraft buyers who have a pre-existing relationship with their banker might be tempted to seek a loan from him or her, and often there is some benefit to doing so. However, financing this purchase may be different, with different challenges, and different options may now be available. (See “Mind The Gaps,” BAA, Sept/ Oct 2015). An aircraft finance broker can provide multiple solutions for your loan. If you go directly to the lender, you might get a good deal, but you may be limiting your options. Think of an ice cream store that sells only vanilla and chocolate. If you use a broker, you get all 31 flavors: you’ll be able to learn what many lenders are offering. Since aircraft finance brokers tend to see more volume and a broader range of transactions, they have a better idea what the landscape looks like and therefore can provide a variety of choices for the savvy buyer who is looking to finance an aircraft. BAA ADAM MEREDITH , President of AOPA Aviation Finance, connects owners and pilots with aircraft finance lenders. With more than 15 years’ experience in the finance industry, he holds both an MBA and an MS in Finance.
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With all the aircraft choices available to you, be mindful that lenders prefer certain aircraft models over others. This doesn’t mean that the airplane models lenders find less desirable are unsafe or inefficient, it’s simply that they are looking for qualities such as an aircraft’s utility and resale value. For example, the PC-12 and CJ3 are aircraft that lenders especially like. With so much utilitarian value in, and such a robust secondary market for these aircraft, lenders are eager to finance them. When shopping for your aircraft, you can refer to pricing digests like Vref or Aircraft Bluebook for resale values to determine which airplanes rank highest. Lenders often prefer to finance more expensive aircraft, yielding more interest for them and slightly better terms for you. When considering a turboprop, choose a model that’s in production, or which has a variant currently in production. That way, there’s both a reliable supply of parts and a healthy secondary market. Conversely, if the aircraft is no longer being made, parts and maintenance service can be a challenge, significantly increasing the cost of ownership.
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■ ALTERNATE LIFT
Getting Carded When to Bet On a Jet Card
P
BAA STAFF REPORT
ositioned between the pay-as-you-go occasional use of charter flying, and the long term financial obligations of a fractional share or whole aircraft ownership, the prepaid jet card offers an excellent option for alternate lift. A jet card can satisfy your regular business jet or turboprop travel requirements at preferred rates, with guaranteed availability, and allows you to review your business aircraft flight activity annually and adjust your commitment for the ensuing year accordingly. It may be the best option for you when: ■■ Your trips have various origin points, ■■ Your intermediate stops require extended time on the ground, and/or ■■ You need a guaranteed response time. If you own an aircraft, a jet card also is useful when: ■■ Your own aircraft is down for maintenance, and/or ■■ A second aircraft is required while yours is already flying.
Every major fractional ownership operator – plus many national and regional charter operators and charter brokers – offer some version of the prepaid jet card. Purchasing a jet card enables you to contract to fly and pre-pay for 25 to 50 occupied (“live”) hours annually, based on the size of the aircraft you anticipate using most, drawing down on that deposit as you fly. Most jet card companies will allow you either to extend your contract term, or to add (“roll over”) the unused hours to your renewal commitment for the next contract year, but do check before signing. The hourly cost can range from a flat rate of $4000 for a light jet to $15,000 for a large cabin, long range aircraft, plus taxes, but with no membership fees, and as of this writing, no extra charge for fuel. Scheduling a trip is very similar to booking a charter flight, except that unless your card program is related to a fractional fleet, you will be booking a category of aircraft, rather than a specific
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PentastarAviation.com | 800-662-9612 | 14 B U S I N E S S©2016 AV I ATPentastar I O N A DV I S O R®. AirScharter eptem b e r/O c to b e r 2 016 w w. B i z AvA d v i s o r. c o m Aviation transportation services are provided by Pentastar Aviation Charter, Inc., a U.S. FAR Part 135 on-demand airwcarrier, or by other U.S. FAR Part 135 certificated on-demand air carriers arranged by Pentastar Aviation, LLC.
commitment as well as contracted aircraft size in accordance with changes in your travel requirements. The downside: ■■ No depreciable asset, ■■ No related tax advantage, and ■■ No potential for asset value appreciation. Since there are many points to consider with respect to each company’s jet card offering, as well as your own specific needs, a professional aviation consultant can help you analyze your travel requirements, answer your questions, and assist you in determining which program is best for you. Ultimately, the jet card offers you an excellent source of alternative lift, with many of the benefits of both charter and fractional ownership. BAA
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make and model. For example, “mid-size” can mean any one of an extensive number of aircraft models, such as Hawker 800, Learjet 60 or 70, or Citation XLS. If your jet card program is one provided by a charter broker, that broker will shop each trip among charter operators proximate to your trip origin. You will need to make sure that the broker vets its potential charter operators and regularly audits them for operational safety and reliability, as well as for financial stability. The broker’s profitability depends in large measure on its ability to purchase “empty legs” (repositioning legs already paid for by another charter client) at a discount, and reselling them to its own jet card clients at contract rates. If your jet card is provided by a fractional operator, you gain access to an entire fractional aircraft fleet with no capital commitment and no monthly management fee. In exchange, you may pay a higher occupied per-hour charge and are committed to fly aboard the specific make/model aircraft in the provider’s fractional fleet, with the option to trade up or down on specific flights, with an appropriate adjustment to the hourly cost. The upside: ■■ No capital investment, ■■ No long-term commitment, and ■■ The opportunity to adjust annually the size of your flight
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■ AIRCRAFT MAINTENANCE
Wrenching Decisions Ask the Right Questions to Find the Right Maintenance Provider BY RALPH MICHIELLI Hawthorne Global Aviation / rmichielli@hawthorne.aero
A trustworthy, knowledgeable business aircraft maintenance service provider is one of your most important aviation partners: for safety, to help manage costs, and to protect your investment. Being informed before you begin evaluating potential maintenance partners shows them that you’ve done your homework and have high expectations for those with whom you work. These five questions will help you and your flight department identify a dependable maintenance service provider:
If you drive a Tesla, you don’t want a mechanic who has worked only on motorcycles. Find out how much experience the vendor’s maintenance technicians have with your specific type of aircraft. The vendor you are considering should be able to send you a spreadsheet with the mechanic’s background and qualifications, as well as training certificates. You’re not only interviewing a maintenance provider; you’re interviewing the people who will have their hands on your plane.
2
Are they an authorized service center for your aircraft?
Find out which manufacturers’ maintenance certifications the company holds, and be sure your aircraft is covered. If so, they will be able to correct any items still under warranty, at no cost to you. While working with an authorized service center can save you headaches and money, in smaller cities, that may not be an option. In that case, at a minimum, look for a vendor with a licensed mechanic who is trained on your aircraft.
3
Are they an FAA-approved repair station?
Safety always should be the prime consideration, both for you and your provider. Ask whether they’re an FAA-approved repair station, as well as for the name of their FAA maintenance contact. Ask that FAA representative whether the provider has any FAA violations, and about the caliber of their work. Make sure processes are in place to ensure complete oversight and transparency to the FAA for all work completed. It’s one of the hallmarks of a responsible maintenance shop.
4
Are they recommended by people your team trusts?
Just as you’d ask your friends and colleagues for their experience with any big purchase you’re considering, your aviation manager should ask colleagues within the industry who they trust for aircraft maintenance. 16 B U S I N E S S AV I AT I O N A DV I S O R
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Find out how long they’ve been working with their provider, whether any issues have arisen, and what they like most (and least) about working with them. The recommendations of people your flight department trusts can go a long way toward finding a trustworthy maintenance provider.
5
Are they cost-competitive?
While cost shouldn’t be the primary driver of your decisionmaking, it’s certainly a key consideration. For any significant maintenance project, your aviation manager should seek estimates from three different vendors. If one comes in significantly lower than the others, be wary. For major inspections, repairs, or modifications, vendors often will negotiate, either on the hourly rate or on the markup for parts. A good maintenance service provider also can help you avoid big costs by staying on top of preventive maintenance and helping to identify small issues before they become bigger, and more expensive to fix. Ask potential providers about their approach to ongoing maintenance, to ensure you’ll be working with a company whose values and priorities mesh with yours. You want a company that is thinking about the long-term viability, safety, and value of your aircraft, and not just on fixing what’s wrong right now. Knowing the right questions to ask – and not being afraid to ask them – shows potential maintenance service providers not only that you’re informed, but that you will expect complete transparency. Armed with the right information, you’ll be able to make informed decisions about your aircraft’s maintenance. BAA R ALPH MICHIELLI , VP and Director of Maintenance, Hawthorne Global Aviation, also serves as technical liaison between Hawthorne and its aircraft owners. An FAA-licensed Airframe and Powerplant jet aircraft technician, he helped launch ExcelAire in 1993.
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Do they have experience with your kind of aircraft?
■ WASHINGTON REPORT
Flight Here, Flytenow Wanna Go for a Plane Ride? BY DAVID COLLOGAN dlcollogan@gmail.com
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stated: “an agency’s interpretation of its own regulation, which is not based on expertise in its particular field, but is rather based on general common law principles, is not entitled to great deference” by the courts. In their petition for review, plaintiffs said FAA’s action prohibiting Flytenow members and the public from communicating on the internet “is a content-based speech regulation. It applies to speech because of the topic discussed: communication by Flytenow pilots of their travel plans.” The petition said the Circuit Court’s opinion regarding the First Amendment violation at issue in this case “directly conflicts with [the Supreme Court’s 2015] opinion in the case of Reed v. Town of Gilbert … and results in discrimination against internetbased communications.” The Reed opinion held that contentbased laws are “presumptively unconstitutional” and must satisfy strict scrutiny, something that the Circuit Court did not provide, plaintiffs said. Whether the Supreme Court decides to accept the Flytenow case remains to be seen, but the odds against that happening are certainly long. The high court typically receives 7,000-8,000 petitions for a writ of certiorari each term, of which about 80 are accepted and scheduled for oral argument. But the Goldwater Institute raises some provocative constitutional issues, which could have broad ramifications on how pilots and operators of aircraft solicit passengers in the internet age. The court’s next term commences the first Monday in October. BAA DAVID COLLOGAN has covered aviation in Washington, DC
for more than four decades. This award-wining journalist is known as one of the most knowledgeable, balanced, wary, and trusted journalists in the aviation community.
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he U.S. Supreme Court is being asked to review whether pilots and owners can ask that question on the internet. In the “Future Shock” world in which we live, everyone is besieged by appeals to download “apps” for almost everything, including some that will connect you with companies offering bargain basement prices for flights on private aircraft. But now the U.S. Supreme Court is being asked to overturn a decision by the U.S. Court of Appeals for the District of Columbia, which recently upheld FAA’s authority to ban private pilots from posting their flight plans on the internet to solicit passengers. The case was filed on behalf of Flytenow, a startup firm that provided a website platform where private pilots could post their flight intentions, and solicit responses from individuals who wanted to fly along, in return for paying their share of fuel, oil, and similar costs. Participating pilots, who were required to have at least a private pilot certificate, could accept or reject requests from potential passengers who expressed interest in flying with them. After beginning operations in 2014, Flytenow requested an interpretation from FAA that it was in compliance with applicable regulations. FAA responded that pilots could not solicit potential passengers on the internet as that would constitute providing “common carriage,” which would make the transportation providers subject to the much more stringent regulations applicable to large commercial carriers. Flytenow sought the support of The Goldwater Institute, which advocates for constitutionally limited government. Attorneys at the Institute argued the case before the Court of Appeals. Lawyers for the plaintiffs noted FAA has permitted private pilots to receive a pro rata share of flight expenses for decades. In seeking Supreme Court review of the Circuit Court decision, lawyers for the plaintiffs maintain that the lower court opinion “transforms pilots of small aircraft who use the internet to communicate their travel plans, and who are by definition not engaged in a commercial enterprise, into commercial common carriers akin to large airline providers. Such a dramatic change in the law will have significant consequences for this nation’s regulation of airline travel … and may also significantly impact other forms of transportation in the sharing economy.” Plaintiffs also said different Circuit Courts have issued conflicting opinions about how much deference should be given a federal agency when it is interpreting a common law term such as “common carriage.” They cited an Eighth Circuit opinion which
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MAX SPEED: MACH 0.85 • MAX RANGE: 3,600 NM • MAX ALTITUDE: 45,000 FT
THE TOTAL PACKAGE Outstanding performance and exceptional comfort—the Gulfstream G280™ delivers with the best-in-class combination of range, speed and fuel-efficiency. The aircraft can fly from Miami to New York in 2 hours and 24 minutes. Autothrottles and autobrakes provide impressively smooth flight backed by Gulfstream’s award-winning product support. For superior flight in a super-midsize jet, fly the G280.
SCOTT NEAL | +1 912 965 6023 | scott.neal@gulfstream.com | GULFSTREAMG280.COM Theoretical max range is based on cruise at Mach 0.80 with four passengers, two crew and NBAA IFR fuel reserves. Flight duration is estimated at best cruise speed and accounts for 85 percent annual winds conditions. Actual performance will be affected by ATC routing, operating speed, weather, outfitting options and other factors.