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CORPORATE AND PRIVATE AVIATION

CHARTER

Several thousand licensed air charter operators are registered throughout the world, operating aircraft as diverse as six-seat piston-twins to VIP-configured Boeing airliners.  Many of these operators provide, subject of course to aircraft and crew availability, immediate response 24-hours a day.

A large number of such charter aircraft are owned by private individuals and corporate entities and managed by professional aircraft management organisations under a commercial Air Operators Certificate.  This ensures safety standards for the owners and also facilitates legal charter to third parties when not otherwise in use.  With such owners primarily seeking a contribution from charter revenue to offset their ownership costs, many charter rates have historically been (artificially) low.   However, it must be noted that primary use of the aircraft is for the owner, thus true availability in the charter market is limited. 

Most charter operators therefore routinely operate house fleets of older, fully depreciated aircraft offering the operator the best margins, supplemented by one or two newer customer-owned aircraft managed and operated primarily for the owner. Few operators have the financial resources to invest in newer equipment for dedicated charter operations.   At current charter rates, a commercial operator taking the financial risk in owning such a machine will generally achieve a breakeven at somewhere between 600 and 650 annual flying hours, depending much on the age and thus capital cost of the aircraft.   Attractively refurbished older aircraft will generally achieve the same charter rates as newer machines of the same or similar capacity and performance.   The average age of charter aircraft used is presently over twelve years, with many much older than this. 

Availability is always subject to market conditions and, in chartering on an ad hoc basis, the regular charterer will inevitably experience a wide range of operators with differing styles of operation, various aircraft types and models, unknown faces in the cockpit and often marginal service standards.

Frequent users may however take advantage of their relative bargaining power to conclude reduced rate, sole-supplier, and block time agreements. Under such agreements, the customer will generally have guaranteed availability and a fixed rate for a defined contract period.  He/she will know what to expect of the operator and its crews.  The operator will also understand the customer’s precise needs and service standards may be enhanced.  



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