Considering the rising number of first time customers in the business aviation industry, VBACE 2020 got together experts to pitch in advice for them
As NBAA’s inaugural VBACE 2020 continued on its second day, sessions significantly acknowledged the rise in the number of new buyers for business aircraft. Owing to the safety concerns and the need for social distancing, the pandemic of novel coronavirus has nudged a shift in people’s perspective towards business aviation, bringing in new customers for the BizAv industry.
A panel discussion during the VBACE 2020 analysed how charter differs from traditional airline travel and what are some of the tips that first time buyers can keep in mind. In the session, Chartering a Private/Business Aircraft: Tips for First-Timers, NBAA Senior Vice President of Strategy and Innovation Mike Nichols, CAM, laid out the various options available. There was another session, Buying a Private Aircraft: What First-Time Private Aircraft Buyers Need to Know, which was also moderated by Nichols, along with aircraft transactions experts Amanda Applegate, a partner at Aerlex Law Group, and Deborah Bew Liu, founding President of Aircraft Acquisitions, Inc.
Speaking through the session Nichols explained a typical charter customer uses an aircraft for 50 or fewer hours per year, and customers can book directly with a charter operator or with a charter broker, that arranges air transportation but does not directly provide the transportation. He also added how by comparison, on-demand charter, jet card programs and membership programs are different from charter, and that they typically include pricing of oneway flights, opportunities for shared flights and other perks.
“Flights under any of these programmes may be tax deductible if used for business purposes, but customers should verify this possibility with their tax professionals. Charter customers should consider their specific needs when looking for a charter operator or charter broker,” Nichols said.
Bradon Miller, Director of Charter Sales at Desert Jet added, “It’s important to understand what your mission and need will be. There are many options available to charter customers and the right solution depends on the customer’s unique needs. I’d recommend the first time charter customers look for a referral to a specific charter operator or broker and ask if the operator has received a third-party safety audit.”
While Sonnies Bates, CAM, and CEO of WYVERN Ltd suggested that if one is going to book charter, particularly for the first time, don’t do it in a rush. “It takes a while to develop relationships with brokers or the actual operator. I encourage the first-time charter customers to ask questions about a charter operator’s safety programmes, specifically if the organisation has implemented a safety management system.”
The experts also added that overall, the key to a successful firsttime charter experience is to do your research by asking questions on these topics and others before chartering a flight for the first time.
The sessions also offered tips for what to consider before embarking on a purchase, some of the key considerations, as stated by NBAA, included:
- Buying an Aircraft Is a Team Sport: A prospective aircraft buyer should assemble a team of experts to help guide the process. Applegate supported this statement by explaining that buying an aircraft is a complex process and no single person can be an expert on all issues at play, including tax planning, insurance, aviation maintenance and legal compliance.
- Understand Your Mission Profile: Another expert advised to start with a mission profile analysis and consider factors such as where one needs to go, how often and how many passengers would be there and hence finding the right fit. Firsttime buyers should purchase an aircraft that meets the majority of their mission needs. “Buy an aircraft for the majority of your trips and consider other options, such as chartering an aircraft, for the outliers,” they said.
- Explore Options: While whole aircraft ownership might be the right choice for some buyers, other options including partnership or fractional ownership are also available. Some aircraft users might benefit from a jet card programme or membership program instead of ownership. Compare aircraft models and potential fixed and variable costs associated with those models.
- Have a Structure: Nichols explained many agencies, including the FAA and IRS, have regulations that impact aircraft ownership, so it’s important to consult with your team to make the best arrangements for regulatory compliance and tax planning.
