Aircraft management is a business that even those interested in planes may not know too much about. The practical business of operating an aircraft can be very complex, subject to a wide variety of state and federal tax laws, government oversight on operation, and intricate maintenance. Whether a company owns a small plane or a fleet of delivery jets, handling the business generally requires working with a company that understands the ins and outs of the industry. If your company owns any number of airplanes for business purposes, there are a few things you need to know.
Generally speaking, clients of these companies are airplane owners looking to fully monetize their assets. In this sense, it might be easiest to think of this business as analogous to that of a property manager. In that situation, let’s say a landowner is in possession of 15 properties in a metro area. Dealing with all of these properties can be very time consuming, and it can require a keen business sense and an understanding of all the relevant laws. The property manager takes control of rentals, ensures compliance with tax and structural laws, and ultimately generates revenue for the owner, taking either a commission from revenue or a flat fee.
It’s easy to see how this same structure is applied to the aircraft management business. In a nutshell, the owner of various jets will hire out an independent organization to generate revenue, ensure and demonstrate legal and ethical compliance, and manage new purchases. This saves the owner a great deal of time and resources, and it can be calming to rely on a team of professionals that knows the business.
When choosing a company to do business with, there are a number of factors that need to be investigated in order to ensure the best return on investment.
1. Understand Your Business Needs
Before making a choice, you need to really take a look at your own organization and understand what you want and what you need. Look at the structure of your business and check out any relevant laws. It might be a good idea to retain legal council, because aircraft ownership and operation is very highly regulated. In addition to making sure that you are in compliance with all relevant laws, you want to make sure that, further down the road, you will be making as much income as possible for your investment.
2. Understand the Ownership Structure Offered
There are various ways that a company can choose to operate. In some cases, the owners may choose to charter out their jets to an aircraft management company. This company then takes responsibility for the operation and staffing of the fleet and for returning a set amount of the profit to the owners. In another case, the management organization takes full ownership of the planes. Understanding the ownership structure on offer is a key part of deciding on the best option.
3. Perform Due Diligence
To the extent possible, make sure the company has a good record of legal compliance. Check to see if they pay their bills on time, make sure they pay their taxes on time, and generally ensure that they are not regularly getting into legal trouble.
To save yourself the hassle of dealing with regulations, maintenance, and government oversight, it pays to invest in a company that will take care of these issues for you. Working with a business that truly understands the industry can make all the difference to aircraft owners.