For the regular user, full ownership may be far more economic than either charter or a fractional share. Benefits are constant availability and relative economy. Critically, operating standards and security are also brought totally within the control of the owner.
Cost of capital and depreciation become major considerations. Depending on the type of aircraft selected and of course when and how purchased, the aircraft may not, however, suffer greatly from loss in value – indeed in some cases well-maintained pre-owned examples have historically commanded resale prices close to their original purchase price, often permitting a write-back as exceptional profit at time of trading. Leasing options are also available, certain of which provide ‘off balance sheet‘ benefits.
Many owners elect to place their aircraft under the control of a management company, which will provide all the necessary support (crews, training, maintenance, etc.) and which can offset some costs by offering the aircraft to others for charter should the owner so wish. However, potential revenues may not be relied upon as being predictable over a period of time as availability for charter depends entirely upon the owner’s pattern of use. The revenue from chartering is directly related to the availability of the aircraft and, most importantly, effective marketing and management of the charter process.
Advantages of ownership are:
- Equity stake in asset at best negotiated price
- Ability to select aircraft type, make, model, age, history
- Ability to design or in the case of a pre-owned aircraft refurbish to meet own personal requirements
- Immediate response capability
- Known crews – total security and confidentiality
- Absolute control of maintenance and operating standards
- Charter option to offset costs
- Choice when to upgrade, downgrade or sell, and at what price
Disadvantages are the possible lack of back-up aircraft and also non-availability when on maintenance, and non-availability to owner if permitted charter to third parties. To alleviate such issues, maintenance can be scheduled at times so to have minimum impact on the owner. Where immediate availability is often required, third party charter operations are not recommended.
Financial risks associated with ownership are possible unknowns such as the costs associated with major mandatory modifications, particularly on new, unproven types, which may not be covered under manufacturer warranty; unforeseen maintenance costs such as repairs due to, for example, corrosion; and non-insured loss, for example engine damage inflicted by poor pilot handling procedures. These factors are generally overcome by contracting with knowledgeable advisers for the entire aircraft acquisition and survey process, and employing defined operations and maintenance procedures.
Ownership is essential where absolute privacy and security is paramount, where trips are scheduled at very short notice and where the very highest of expectations in respect of maintenance and flight operations standards, cabin environment and service standards must be both met and maintained.