Privately owned VS managed aircraft

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garfield
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Privately owned VS managed aircraft

#1 Post by garfield » Sun Apr 03, 2016 6:29 pm

hi,

I'm wondering what's the cost for a corporate aircraft to be managed by a company VS if the owner manage it himself?

For example a citation, the owner hire himself the pilots and they do the paperwork or he pay for a company to do everything for him.

I'm guessing maybe at least the double of the cost?

thanx
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who me ?
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Re: Privately owned VS managed aircraft

#2 Post by who me ? » Mon Apr 04, 2016 4:02 am

It all depends on the experience, and how knowledgeable, and hands on the crew is,
that is hired. It is possible to do it for less then a managed aircraft.
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goingnowherefast
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Re: Privately owned VS managed aircraft

#3 Post by goingnowherefast » Mon Apr 04, 2016 12:38 pm

How many pilots would be willing to set up and run a 604 operation? I bet that by the time you've paid for all the costs associated with that, including the higher salary, you wouldn't be far apart.

Then there's the time involved as well. It's quick and easy to add a C560 to a fleet when you already have 3 others. It's substantially more difficult to set up an entire 604 operation around one aircraft.

Then there's all the unforeseen expenses, and learning curve. A company that manages Citations knows how to manage Citations and knows what to expect. Setting up a 604, you don't know what you don't know. Your bound to f-up a couple things that will cost a lot of money.

This part is largely just a guess on my part. A company that's been operating a fleet of Citations safely for years will likely get cheaper insurance rates than a brand new one aircraft 604.

Hangar, ground equipment, training, maintenance, operating certificate, experience, fuel contracts, insurance, catering, even re-certifying the 1st Aid kit. This is what management companies do. It's their business. They're going to charge a premium, they need to turn a profit, but I bet their all-in cost isn't much different than if you were to do it all yourself.
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wallypilot
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Re: Privately owned VS managed aircraft

#4 Post by wallypilot » Mon Apr 04, 2016 10:56 pm

There are many things to consider when deciding to use a management comany or do it yourself. It really depends on the philosophy of the company that owns the aircraft.

While there is a lot of equipment to purchase as private operator, that equipment is an asset tthat can be depreciated, but also retains a certain market value. So there is always some residual value.

Also, control is a large benefit ofrunning things yourself. A friend of mine who flies a managed private aircraft recently had his aircraft down for 2.5 months for a major inspection. our aircraft had the same inspection done in 1.5 months. This was due to the management company doing the inspection themselves vs we sent our aircraft to a service center with our own ame to keep things moving along.

Also, remember that management companies tack on charges for everything they are billed for on your behalf. That lav service that is normally $100 is now $120, for example.

Running an operation yourself isnt rocket science, but you do need experence and some help from outside service providers. But someone with good experience in the business will do a better job for the owner any day over a management comany. Its the quality of service, privacy, ability to adapt quickly, and control of day to day operations and costs that really make running things yourself beneficial.

The previous poster mentioned something about difficulty of setting up an operation as opposed to the relative ease that a management company can just add another aircraft. This can be true, but ill tell you straight up that those with the right experience and smarts can get things going just as quickly, or quicker. We just replaced our craft with a new type. From the time we initially put an offer on the new (used, but new to us) aircraft to the time we were flying it was exactly 2 months. This included training, manual rewrites, importation, a major inspection, etc, etc. A management company down the road took about 6 mths to get a new challeneger into their operation.

Point is there are many variables, but the right people can do it just as cost effectively if not more than a management company. But the big thing is the owner will generally get a better experience. So, it depends on if the owner wants easy turn key type thing with a management company with easy one stop pay the bill shopping, or if they want a more personalized operation with direct control.
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ahramin
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Re: Privately owned VS managed aircraft

#5 Post by ahramin » Mon Apr 04, 2016 11:57 pm

I'll second what Wallypilot is saying. If the pilots have no knowledge of 604 and are going to hire consultants for everything, it's going to cost way too much and have way too many mistakes. You're almost forced to use a management company if you want the plane in the air. There are lots of pilots out there though who know 604 inside out and some of them are looking to move up. Hire one of these people and you will likely be in great shape.

As for management companies, I've seen the best and the worst and most of what I have seen is not good. A long time ago I placed an aircraft under Airsprint's OC and everything was done properly, no corners cut, and they really added a lot of value to the operation. Every other POC management company I have dealt with was a gong show. Manuals were a joke, training was pencil whipped or once not even pencil whipped, just a bunch of blank files when I stopped in for a quick check of the paperwork. Maintenance was costly and slow. Basically a very high price paid for no value.
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wallypilot
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Re: Privately owned VS managed aircraft

#6 Post by wallypilot » Thu Apr 07, 2016 7:37 am

ahramin wrote:I'll second what Wallypilot is saying. If the pilots have no knowledge of 604 and are going to hire consultants for everything, it's going to cost way too much and have way too many mistakes. You're almost forced to use a management company if you want the plane in the air. There are lots of pilots out there though who know 604 inside out and some of them are looking to move up. Hire one of these people and you will likely be in great shape.

As for management companies, I've seen the best and the worst and most of what I have seen is not good. A long time ago I placed an aircraft under Airsprint's OC and everything was done properly, no corners cut, and they really added a lot of value to the operation. Every other POC management company I have dealt with was a gong show. Manuals were a joke, training was pencil whipped or once not even pencil whipped, just a bunch of blank files when I stopped in for a quick check of the paperwork. Maintenance was costly and slow. Basically a very high price paid for no value.
No doubt there are good and bad management companies, and everything in between. Do your research before placing an aircraft with one.
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Taxivasion
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Re: Privately owned VS managed aircraft

#7 Post by Taxivasion » Thu Apr 07, 2016 7:52 am

With the newish POR Rules you essentially have todo the leg work of a 703 startup which is very time consuming and expensive if you have to hire consultants.

Finding a pilot now a days that can write and maintain all the POR Docs (Ops Manual, SMS, Training Files,Special Authorizations) will be nearly impossible, This doesn't even bring into the picture of the accounting that needs to be done if you have more than one owner. It's doable but can be a real pain and finding the right person to keep this all in order can be extremely difficult.

PM me if you have any other questions or alternate options.
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wallypilot
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Re: Privately owned VS managed aircraft

#8 Post by wallypilot » Fri Apr 08, 2016 5:35 pm

Taxivasion wrote:With the newish POR Rules you essentially have todo the leg work of a 703 startup which is very time consuming and expensive if you have to hire consultants.

Finding a pilot now a days that can write and maintain all the POR Docs (Ops Manual, SMS, Training Files,Special Authorizations) will be nearly impossible, This doesn't even bring into the picture of the accounting that needs to be done if you have more than one owner. It's doable but can be a real pain and finding the right person to keep this all in order can be extremely difficult.
For sure, manuals are a pain in the ass and time consuming. That's why we paid a modest fee to have them done professionally.

Accounting is for the accounting department. Presumably said owner owns a decent size company with an accounting department. Pretty easy to set up accounts for the airplane.

Consultants can write all your manuals for you with SA's and everything starting at around 5K for an initial write. Not really very expensive imho.

People, listen... It's not that hard for a common sense type half decent educated pilot with a good amount of experience, but obviously you have to be given appropriate resources.
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CJM
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Re: Privately owned VS managed aircraft

#9 Post by CJM » Mon May 30, 2016 4:54 pm

When you have someone who's paycheck relies on a single owner being happy things seem to get done. Private flight departments have generally had the happiest pilots to my knowledge.

When buying a jet with a 500K-1M annual budget though you don't want any headaches and if that means 5-10K / month for a management fee then that's minor.

Depends on the owner...
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