“Should I manage my aircraft myself or should I hire professionals to do it?” A question most prospective buyers ask themselves when they’re in the market to buy themselves a business jet.
“Should I manage my aircraft myself or should I hire professionals to do it?” A question most prospective buyers ask themselves when they’re in the market to buy themselves a business jet. And it is a very reasonable question to ask. However, it is always necessary to think about the bigger ramifications of those choices and what they mean for your bottom line. Do you want to rent out the airplane or do you want to use it only for yourself? Do I want to manage everything related to the business jet including maintenance and fueling? Those are some of the things you need to consider.
You are definitely able to manage the jet yourself if you choose to do so. This type of aircraft management falls under what is called the Non-commercial Compliance Certificate or NCC for short. But what does that mean? Well, it means that the company that owns the airplane also manages it, however, it can only use the airplane for themselves. To go into further detail under the NCC certificate you cannot rent out your business jet or allow it to be used by a third party. That is something to keep in mind if you are considering trying to recoup part of your initial investment into your business jet by renting it out to other parties for a fee.
Your second choice is to hire a team of professionals who will take the burden of managing your aircraft off your shoulders. The most common way of operating an aircraft is under the Air Operation Certificate or AOCfor short. What is the main benefit of using this structure? Well, the benefit is two-fold. First of all, during the time period that the business jet is not being used by you or your associates, it can be rented out to be used by third parties. Secondly, if you want to finance the purchase of the jet through a financier, they prefer the AOC structure. From the point of view of the financier or financial institution, this is a better approach since third-party use of the plane brings in revenue, that can be used to pay for the loan.
In the previous two sections, we highlighted the biggest differences between managing your business jet under the NCC certificate compared to opting for it to be managed by a team of professionals under the AOC. Now let’s take a more granular look at the differences.
While operating your airplane can be initially cheaper since you’re not paying a company to do it for you, it can be time-consuming and stressful. That’s because you need to take on a long list of responsibilities including dealing with the crew, checking on the state of the plane and its maintenance as well as refueling the plane, and keeping up with the paperwork.
By hiring an aircraft management company you’d be essentially delegating most of the time-consuming and complicated tasks to a team of professionals who have years of experience and know the ins and outs of managing an airplane. They will handle the operations related to the aircraft such as scheduling flights, hiring, and managing the crew, taking care of the logistics, and fueling the jet. And these are just the basics. Beyond that, they will be in charge of the maintenance of your private jet, including regular inspectionsand managing any service or repairs the jet may need.
Operating a jet also entails a lot of administrative work that needs to be handled (insurance, paperwork, etc.), and the aircraft management company oversees that part of the operation process as well. And since it would operate under the AOC it can also charter the airplane when it’s not in use by you or your associates helping to generate income that would pay for the upkeep and the operation of the jet. However, all of this convenience, of course, comes at a higher price compared to managing the aircraft yourself.
At the end of the day choosing between operating the jet in-house or hiring a team of professionals is always about what best suits your needs. And it is a decision that isn’t to be made lightly and should be properly assessed.
A monthly overview of the most interesting business aviation insights – January 2024
Frequent fliers aboard private jets might have even fantasized about flying the planes themselves to their favorite destinations. Well, we’re going to look at what it takes to become a pilot.