First of all, let’s discuss what a management company (also called an Aircraft Operator) actually is. Simply put, it is a service company that manages the operation of your aircraft. This includes the actual flying part as well as the back office dealings such as flight scheduling and maintenance planning. With a management company, you can tell them where you want to go, when you want to go, and who your passengers are, and they will have your aircraft ready and waiting for you to walk on-board and fly.
There are two types of management companies. The first is one that only provides management. You pay a fee that covers the cost of the flight items mentioned above. The second type of company is one that provides the above services plus charter, which is called an AOC (aircraft operator certificate), and whether or not you want to charter your aircraft is a personal and different discussion from this one.
At Colibri Aircraft, we strongly recommend our clients to employ a management company for a variety of reasons.
1) The first and foremost reason being because the operation of aircraft is extraordinarily regulated. Europe has become more and more aggressive in trying to glean out the private operation of jets through regulations such as Part NCC (see article on Why You Need to Know About Part NCC). Europe is not declaring it illegal to privately operate your jet. However, they are making it so difficult to do so that they are in essence making it impossible to operate privately. There is so much paperwork and regulation to stay aware of that it is much easier to hire a company that can do it for you.
2) There is more personal liability in private operation. If your jet gets ramp checked somewhere on your journey, or there are flaws in your paperwork, or for whatever reason your aircraft is out of tolerance, then you have a serious problem that you now have to deal with. A management company would keep your aircraft in proper order and if a situation does happen, it is their responsibility to take care of it for you.
3) An AOC can provide great tax benefits such as VAT exemption on fuel and your jet purchase.
4) Management companies usually have good maintenance departments to stay on top of your aircraft’s inspections and needs. Each aircraft model has different maintenance schedules that must be kept to keep the aircraft airworthy. And of course, along with scheduled maintenance is the unscheduled maintenance that must be taken care of.
5) The biggest reason we can give for hiring a management company is the convenience. There is a lot of effort required to operate an aircraft properly especially with new European regulations that have come out and will be issued in the future. A management company will handle the hassle involved with ownership for you. They take care of the regulatory work, the operational details, and the flight and maintenance planning. People buy aircraft for convenience and management companies provide convenience.
BONUS:
Certain management companies (usually when they are large enough) can get better fuel rates, ramp rates and handling fees. They can also bargain for lower costs on your maintenance bills because of their relationships with facilities. Insurance costs can be cheaper with a management company because of the amount of aircraft they have on their policy. Fleets have more bargaining power, and there can be some extra benefits to using a management company.
Note: This article is focused primarily on European aircraft owners. There are different regulations and advice we would give for owners in the USA or other countries.
Articles are written from real world experience by Colibri Aircraft’s individuals. If you have any questions or comments about the topic of this blog, please feel free to contact us at enquiries@colibriaircraft.com
