Aircraft Management Companies
Category: BizJet Advisor China
Author: Mike Vines
AIRCRAFT MANAGEMENT COMPANIES
How best to communicate with them
If you own a business jet you are going to need an aircraft management company - unless you are totally knowledgeable of Business Aviation law, aircraft finance, insurance, registry, maintenance and operations, and more. So how should you communicate with a management company to really get the best from aircraft ownership?
Specialist Business Aviation lawyer Aoife O’Sullivan, a partner in Gates & Partners, explained that if a bank or finance firm is involved in an aircraft’s purchase, they mostly specify a preferred list of management operators, and if you are not prepared to use one of them then they will probably not finance your purchase.
“It is vital that the aircraft’s maintenance programs are kept up to date, that detailed records are retained safely and your aircrew is validated. Most importantly it means that someone is taking overall responsibility for your aircraft. However, if the owner is choosing the crew then management companies, quite rightly, are reluctant to take operational responsibility because they would not be in full control.”
Management to fit the need
Jeffrey Lowe is General Manager of Asian Sky Group, a specialist aviation consultancy that advises Chinese clients on the right management company to select. “Depending on the aircraft, the type of operations, the country of registration, home base, typical mission, etc., we help our clients choose the best management company to match their needs.”
Most owners have a very specific idea as to what they expect from their management company. “Even before entry into service of the aircraft, these expectations need to be openly discussed, and the management company needs to communicate exactly what it can and cannot do to meet these expectations,” Lowe explained.
“Successfully managing the expectations of the owner is critical right from day one and will determine whether, from the owner’s perspective, he or she is getting the best from the management company.
“For the best communications, the owner needs a single point of contact, preferably working within their time zone and someone who speaks their language. So the management company needs to assign a dedicated Customer Service Representative who best matches the characteristics of the owner,” Lowe outlined - adding that the key areas in which it is essential to get communication exactly right with management companies seems to be in the areas of crew rostering, maintenance and aircraft unavailability.
“Most owners like a consistent flight and cabin crew – familiar faces on every trip. If crews are juggled constantly this becomes a source of friction, and unavailability of the aircraft due to maintenance – either scheduled or unscheduled – also needs to be managed well with advance notice given to the owner,” he elaborated. “Not all management companies are created equal, and certainly each owner and his/her needs are different too. So it is critical to get the right fit and select the right company.”
Bjоrn Nаf, CEO of Hong Kong-based management company Metrojet Ltd, has a managed fleet of around 30 aircraft. “You don’t have a lot of aircraft management companies in mainland China yet as it’s a very young market,” he remarked. Metrojet plans to gain a CAAC (Civil Aviation Administration of China) Air Operator’s Certificate, while Tianjin-based ExecuJet Haite has also started this application process.
Many Chinese business jet owners are new to Business Aviation and are perhaps uncertain of how to compare management companies. “I think it’s mainly word-of-mouth recommendation that brings a principal to meet with a management company for the first time,” explained Naf.
Communication should be face-to-face, and a trusting relationship built from this. Initial discussions with the principal can differ: maybe a principal has specific questions and focuses on the general commercial terms before handing over to their company’s General Council. Detail will then be handed over to the technical people on both sides. “It is a steep learning curve for them, and we have to do a lot of educational work in explaining Business Aviation and the complexities of business jet operations,” Naf added.
It is imperative that first-time clients get the best possible experience dealing with aircraft management companies. “If an owner has a poor experience from a secondary or a third-tier management company, then the whole business jet experience can be negatively affected and the asset value of the aircraft will suffer over time,” Naf concluded.
Ricky Leung, Deputy General Manager, BAA (Business Aviation Asia Ltd) currently has a fleet of 33 managed aircraft and seven bases in China. Around two thirds of the fleet are on China’s mainland CAAC aircraft register, the remainder are N-registered under (US) FAA Part 91, mostly awaiting eventual CAAC registry. The majority of BAA’s aircraft are based in the Beijing and Shanghai areas, and Leung says that although BAA’s first four or five management clients were referred to the company through aircraft brokers, today it is by word-of-mouth recommendation from other high net-worth individuals.
“Others, particularly those requiring aircraft finance, come to us recommended by the banks and financial institutions as we are a preferred operator,” Leung revealed. “Other referrals come through the OEMs, or agents acting for the OEMs.
“At the first meeting with the principal, we discuss the most frequent cities he or she needs to visit and convert this into approximate annual fixed utilization costs,” Leung explained.
And therein lays the underlying message: It is necessary for the potential customer to understand and appreciate all of the complexities and factors that go into making a smooth operation, and communicate their needs clearly with the prospective management company so that principals will encounter no surprises that could ruin the overall benefits of owning and operating a business jet.
Maintaining an open line of communications with your business jet management company is paramount to getting the most out of aircraft ownership.