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Making An Informed Aircraft Decision
Making the right aircraft choice depends on having data that are comparable and appropriate to the mission assigned to the aircraft- explains David Wyndham. Selecting the right aircraft and the right operating options will provide a positive experience demonstrating the true value of the aircraft as a business tool.

It used to be that the company executive got to pick the color of the business aircraft and that was about it. The rest was cloaked in ‘airplane-speak’- or made accessible in limited amounts. Today the reverse is true. There is almost too much information available- and it is overwhelming to figure out what is reliable. There are objective data available- but where do you begin?


DEFINE YOUR EXPECTATIONS
The first step is to clearly define what is expected of the aircraft. This can be as simple as four passengers traveling non-stop from Point A to Point B. From there- other criteria can be developed to define the operational parameters for the aircraft.

It is important to understand that aircraft are compromises. With increased capabilities come increased costs. No one aircraft can do it all. So it is critical to get advice early on as to what is possible and what is not regarding an aircraft.

The second consideration is to realize that the acquisition is only part of the overall cost of owning and operating an aircraft. Fuel- maintenance- crew costs- training- hangarage- parking and insurance are all needed before the aircraft makes its first takeoff. These necessary costs can run into hundreds of thousands of dollars per year. Maintenance costs are highly cyclical- and if not appropriately budgeted- can present significant surprises.

Market depreciation is real and is a cost- not an income. From time-to-time aircraft values do increase- but that is a temporary aberration. Aircraft are complex mechanical devices. Over time the value of the aircraft will decline even when it is well maintained. As one example- a large business jet that sold for $25m new in 1991 today is worth about $8m. To replace that same aircraft with its current production counterpart will cost over $35m.

Managing the aircraft and the people who operate it can be a daunting task- especially for a company that is new to Business Aviation. There are aircraft management companies- however- that offer turn-key services.

If whole aircraft ownership is not appropriate- there are options available ranging from simple charter to shared ownership and fractional ownership. The analysis of these options should focus on utilization and business risk (owning an aircraft entails risk- both financial and liability).

LOWEST COST OPTION?
A well-designed acquisition plan will show that the recommended aircraft- with modifications or upgrades and the associated acquisition and implementation schedule- is the lowest cost option capable of accomplishing the assigned mission. To be effective- an aircraft acquisition plan must:

• Identify and quantify the real transportation needs.
• Differentiate between ‘must have’ and ‘nice to have’ requirements.
• Identify the aircraft best able to meet the technical requirements.
• Balance acquisition cost with operating costs for the greatest benefit with the least investment.

In formulating the plan it is important to remember that the aircraft acquisition process takes time. Once an aircraft is in the service of a corporation- it will probably stay there for five to ten years. This places a premium on the planning process. It is important to recognize that managing the aircraft has four main components- including:

• Operational - What is needed to keep the aircraft reliable and safe?
• Regulatory - Is the aircraft compliant with applicable airworthiness regulations?
• Financial - What is the market value of the aircraft and how do we maintain it?
• Ownership - What is the return on the investment- and what is the quality of the experience?

In the mini-series that will follow over the next few months- we will introduce and expand - upon the many aspects of owning and operating a business aircraft. Our objective is to familiarize you to the business of business aircraft- so that you and your fellow Directors can make informed decisions.

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