- 28 Jul 2021
- Sherryn de Vos
- AvBuyer Africa Articles
As an aircraft operator and owner, choosing your aircraft management team is potentially the biggest decision you need to make for your aircraft. Different companies offer varying services, have diverse capabilities and manage different types of aircraft. Some offer full turn-key services, while others specialize in certain managerial aspects. So, getting the right team on your side is crucial to ensure that your needs are met with your company.Back to Articles
An experienced, and well-established management team will radically reduce various risks that come with managing, maintaining and operating your aircraft. Although the sourcing process may be time- and resource-consuming, the reduction of financial loss as well as overall operational risks is well worth it in the long-run.
A comprehensive due diligence process is necessary in the case of aircraft management, due to the high asset value of the owner’s aircraft.
Price tag aside, aircraft maintenance is a highly complex process and can only be done by highly experienced personnel. This, together with the day-to-day management of the aircraft require a well-versed and established team on your side.
With this in mind, we unpack the process of choosing your management company. What should you look out for, what are the critical aspects to consider, and what red flags should you avoid when leaving your aircraft in a company’s hands.
What Is an Aircraft Management Company?
In order to answer this, we spoke to Justin Reeves, the CEO at Comair Flight Services, South Africa. Not only do they specialize in charter services for private travel, they offer aircraft management and FBO services to aircraft owners and operators.
Reeves expounds on the role of a management company for an aircraft owner, explaining that their role is to fulfil the day-to-day, as well as critical management and maintenance aspects of an aircraft that the owner cannot handle themselves.
“This is mostly true in the case of jets," he says. "You can somewhat compare turboprops to a very expensive luxury car. Not only are they easier to manage than jets, but they are easier to park, and store. So, many turboprop owners tend to opt for self-management over choosing a company.
“The other hurdle facing turboprop owners in Africa is the fact that as you move out of Southern Africa, management companies become more and more expensive due to their scarcity. So, while you can find a number of management companies in South Africa, with competitive pricing, once you start moving into Central or East Africa, those numbers start dropping.
"Because they also only manage one or two aircraft, they also have to push their pricing up substantially. So, you will end up paying almost double to manage your aircraft, as they have to balance their costs of overall operation.”
Depending on your needs, management companies offer varying services for the overall management of your aircraft. This includes:
Technical services, such as maintenance and repairs;
Crew management services, such as hiring and payroll;
Training for crew personnel;
Security for the aircraft and travelers,
Ensuring FAA compliance and varying regulations are met;
Customer service, and management of the full itinerary and details of the trips;
Managing the aircraft’s financial management and accounting;
Creating a revenue stream for the owner by chartering out the aircraft to other paying customers.
Aspects to Consider When Choosing a Company
Choosing the company to manage your asset as well as its maintenance needs to be an intensive process. A thorough due diligence should be conducted on various companies in order to understand a prospective management company’s backgrounds, their experience, their offerings and their capabilities.
Conduct A Full Due Diligence On The Company
According to Reeves, a crucial aspect of choosing your management company is opting for one that has been around for a number of years, has a good reputation in the industry, and has a knowledgeable and experienced team. When it comes to your aircraft, the technicalities, and the maintenance of it, you need to know that your aircraft is in good, experienced hands.
Do a 'deep dive' into the company's previous and existing clients; track their years of operation; and ensure that you can trace the company back a couple of years to assure yourself that they have enough experience to expertly manage and maintain your asset.
One of the biggest challenges faced by the industry in Africa is the glaring lack of regulation by the various authorities.
“Granted, there are regulations stipulated by the Civil Local Aviation Authority, but the fact is that they are not broad enough to cover all aspects of the aircraft management sector," Reeves warns. "The overall regulation of the management and maintenance of aircraft is severely lacking, and I have seen a number of players popping up, offering services, and then disappearing due to their absolute lack of knowledge and experience.
"There are simply not enough systems, policies and authority in place in Southern Africa, as well as the rest of Africa to determine who manages your aircraft, and just how they do it,” he continues.
It is therefore imperative that as an owner, the right amount of due diligence is conducted on management companies to ensure that they can effectively manage and maintain your aircraft.
“Look for a company that has been around for a number of years and that has a portfolio of clients," Reeves suggests. "A fly-by-night company who promises the world for a great price is a high-risk for your huge ticket asset. So simply do not take the risk. The company should also have a good reputation. So, spend time asking around, and don’t be afraid to contact other owners and operators to ask for their recommendations”.
Establish a Relationship With the Manager and Team
Emphasizing the need to get to know the team and the person managing your aircraft, Reeves reveals, “I have seen cases where a 'manager' will sell his services to an owner looking to save a few thousand Rand by claiming to have all of the relevant experience and know-how for the aircraft.
"Owners have fallen for the pilot/maintenance/manager all-in-one, and the risks that come with this are huge.
“Pilots, for example, require regular tests and simulations to determine their abilities, and keep updated with relevant skills and practices. The problem faced in South Africa is that this is not a legal requirement.
"So, pilots, especially for large private companies, will not go through any kind of simulation for years, and simply be increasing their flying hours”.
This is highly risky for the owner, Reeves emphasizes. "Should the untrained pilot be put into an unexpected situation, especially something that he has not been tested for in several years, the risk to the passengers, crew and pilot is incredibly higher. And as the aircraft owner, you will be held responsible for any damage, injuries or death that results from an incident.”
An individual pilot/manager also poses a threat to the maintenance of the aircraft. An established company with a well-versed, and well-rounded team will offer you the full range of services that you need to expertly manage your aircraft.
Maintenance is a critical aspect of your aircraft, and the risks are compounded if you are not opting for a maintenance team that is highly skilled.
Very few operators in Southern Africa have their own management companies for this reason. In fact, this has been seen to be more reserved for families such as the Oppenheimers and the Rothchilds, who have the budget to hire a fully-qualified complement of staff. Operators and owners tend to instead opt for a management company who can manage their turn-key needs.
Unpack Qualifications, Safety Records and Maintenance Capabilities
Reeves highly recommends spending time getting to know the more technical capabilities of a prospective management company, their safety records, and what kind of aircraft they can cater for.
“Maintenance on the aircraft is a complex, intricate process, requiring experts who know what they are doing," he says. "It also requires the manager of the aircraft to know, item-for-item, what has been maintained, and what needs maintenance.
"The operators are held responsible for the maintenance of the aircraft, and many are not aware that if an incident takes place due to a problem in maintenance, they will be responsible,” he adds.
Aircraft owners and managers therefore need to work closely together to work through the list of maintenance items and be able to have an in-depth knowledge of the historical record as well as requirements for each item.
“Keep in mind, on an aircraft there are thousands of vital working parts that need individual attention," Reeves highlights. "So, if you miss anything, you can end up increasing the risk of an incident taking place. This is why maintenance tracking systems are so critical to aircraft management. You will require someone who is absolutely qualified to be able to thoroughly keep track of the full maintenance of the aircraft.”
Because of the severely lacking regulations surrounding rigid aircraft maintenance, many owners have found themselves in a position with operators that are severely under-qualified and lacking the necessary skills to thoroughly manage the maintenance process.
Management companies with high safety records, and well-qualified engineers will streamline the maintenance process for you. Not only will they know to order parts months in advance to reduce downtime of the aircraft, but they are less likely to omit any maintenance or checks of any part.
It is highly advisable to schedule an on-site visit with your aircraft management partner for a walk-through of their facilities, and to examine the team's qualifications.
Opt For a Well-Established Company With Trusted Partners
Apart from an expert, experienced team, and peace of mind regarding maintenance capabilities, aircraft management companies come with an entourage of established partners.
“Many owners and operators overlook how management companies establish relationships and partnerships with suppliers and partners over the years," Reeves says. "Part of the management fee comes from the fact that we have worked closely with these companies over the years to reduce the cost to the owners for outsourced products and services.”
Insurance, fuel, parts, and transport are all examples of partnerships which can be negotiated by management companies who have established working relationships with them. By establishing relationships with fuel providers, for example, management companies are able to negotiate large discounts for bulk fuel, lowering the overall cost to the operator.
“Insurance is also a great example," Reeves continues. "An insurance company, for example, will almost halve the insurance rate of the aircraft if it is properly managed by a company (such as CFS).
"They will understand that the maintenance is being regularly performed by highly-qualified experts, the day-to-day management of the asset is of high quality and the team is highly qualified.”
In most cases, the monthly fee of aircraft management through a reputable and established provider can actually be offset by what owners and operators would be spending on the higher fuel and insurance costs.
Reeves wrapped up the conversation mentioning the growth of the industry over the last year.
“Private air travel, charters and aircraft sales have sky-rocketed over the last year," he notes. "With commercial travel being significantly reduced due to COVID-19, many have turned their eye towards buying or chartering to meet their business and leisure travel needs. The practical use of turboprops, jets and helicopters has significantly increased over the last year, and this is not looking like it will wane any time soon”.
It is critical for owners and operators - especially new players entering the market - to fully understand the necessity of qualified and established aircraft management teams.
Many seem to enter the market without a full understanding that they hold full responsibility for each flight, and for who are flying all on board. So, having a reputable and established management partner is absolutely crucial for the smooth-running of the operation.
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