Owning vs Fractional??

[100-1/2]

Times are hard and everyone is cutting fat. Wholesale Aircraft Values are in the drink.

Consider a (Mortgage) loss the owner would take selling an an older GXXX against the newer inventory already (Stale) on the market.

At 200 Hours you are in better shape than most in terms of operating cost. Pure dollars and sense 'per hour' should find your current arrangement very competitive against NJ/EJ marketing for Fractions large enough to cover that utilization volume. Ultimately, NJ/EJ will ALWAYS hold all the power in how utilization is/was/will be calculated and terms are ALWAYS subject to CHANGE. Particularly after they have already collected your owner's money and his signature on the TOS! Surcharges are the solution for poorly tendered marketing, structure or worse yet, terrible flight deck management. Sometimes the Owner demand will increase with a recovering economy necessitating more hours, in which restructuring penalties of the NJ/EJ agreement or hassles (penalties/broker fees) with selling the smaller share in exchange for a larger share. You always have to calculate the "what-ifs" for the boss/Owner.

If you have a good crew and the department is small enough, a respectable bunch should consider making the department as efficient as possible, recommend alternative airports and lengthier ground logistics to curb costs for prime fuel/real estate at the downtown airport fbo? And yes, have payroll reduction as a nuclear option as a matter of survival. Drop the T&A in the tight skirt and blouse and show the owner how to use the stove and coffee pot!

I am kind of with another post here, however. The fact you are being consulted, is likely an indirect courtesy by the owner to let you know "it is already in the works?"

Good luck.
100-1/2

 

[PilotKitch]

I am kind of with another post here, however. The fact you are being consulted, is likely an indirect courtesy by the owner to let you know "it is already in the works?"

Unfortunately, we were consulted as a whole by the boss telling us the savings are significant enough to make his aircraft look unjustifiable and he plans to go sign. He seems to have the opinion that no matter how much money you have waste is waste.

I am just gathering as many opinions and "facts"as possible so IF we get the chance to "justify" ourselves we will have as much info as possible. He can afford it, we just have to try and persuade him as to ALL of the benefits and conveniences having a stand alone operation brings him...... HOPEFULLY!!

 

[gret]

Probably heresy...but have you considered offering your a/c out for charter? 100-150 hours of charter would go a long way toward off-setting your fixed costs and the numbers will flip in your favor in a jack second.

If he bought the a/c in the past few years, he is really upside down so his loss is huge. Most likely not deductible for tax purposes because all his use was personal. Leave that one to the tax guys, but be sure and consider it.

Some downside with Part 135, but pick you poison...your job, or flying a bit more.

 

[NJAowner]

Budgeting Hours

Does he fly the same numbers of hours every year +/-? If you are trying to save your dept., see if he really wants to start budgeting his hours and worrying about them. What if they want to take an extra trip skiing this year -- that is another 8 hours (if from the east coast). If he is used to unlimited flexibility this may be difficult to get used to. NJ is not as flexible as the others of needing additional hours. You can only borrow from furture years but your can not "buy" extra unused hours from other owners who are underflying their shares and wish to sell.

 

[waka]

Which is why the fractionals have such a horrible safety record? Not sure what you're getting at but if you're implying that fractional pilots are unsafe then you will lose that argument.

I didn't say anything about the safety record of fracs....didn't even imply it.

 

[waka]

I know plenty of Pt91 operators who squeeze harder.

The entire situation in Pt91 depends solely on the owner and their commitment to Safety and STAFFING.

True, which is exactly why I suggested it. If the owner was one that didn't push their pilots, then it would indeed be a selling point.

In my frac days, you could pretty much count on being abused, 4 to 6 legs a day, min rest in crappy hotels, 8 days in a row. If I was wealthy enough to have my own G Whizz and my own pilots, damn right I would keep them.

 

[Twotter76]

In my frac days, you could pretty much count on being abused, 4 to 6 legs a day, min rest in crappy hotels, 8 days in a row. [\QUOTE]

Yes we do work more than your average part 91 operator but I can assure you that there isn't a part 91 operator out there that has a fatigue policy that's as good as ours. I have no complaints about hotels either - Hiltons and Marriotts suit me just fine, though the Fairmont that I'm in tonight is particularly nice.

As a final point point I do exactly 3 8 day trips a year and never longer than that unless its voluntary. I haven't seen a min rest turn in months, though I certainly would not mind one in order to set up for an owner trip to ensure continuity of their schedule.

 

[SonnyD]

How much is NetJets saying the owner will lose at the end of the contract when your boss tries to sell back his share? How much of that loss is guaranteed, and how much is at risk? In five years, his tail# is likely going to have 5-6,000 hours more time than it has today. What's the hourly depreciation NJ is pricing in for capital recovery at the end of the contract?
How closely is the fuel surcharge tied to retail Jet A?
How much of a loss will your owner bank by selling your GIV tomorrow?
Have you mentioned how much time he has before the frac crew times out trying to fly him back from Europe if he's running a few hours late?
Does your boss like to travel on NetJets's peak travel days? And during his travel days, does he tend to run later than he says? How valuable is it to him to have you sit around and wait for him to show up on his schedule?

NetJets puts out competitive mgmt fees and attractive basic hourly rates. Above, I've ried to give you a sampling of what they don't list. Their fractional product is truly awesome, but it's not for everyone.

 

[BigMike]

You're not implying that NetJets buys airplanes wholesale, sells fractions at retail+ then sells for whatever they can hustle the deal at? You

 

[SonnyD]

You're go$%$#@mn right I'm implying that. Funny how that never makes it into their presentations, leaving the in situ pilots with that unemployment dear-in-the-headlights stare.

You're dealing with commission-seeking professionals who know how to talk NPV and opportunity cost and discount rate. They like to talk "simplified cost structure" with their headline mgmt fees and competitive hourly rates, glossing over win-lose CPI adjustments, and use language in the fuel surcharge clause leaving the end user liable for fuel increases on the charter card side of things.

I'm not knocking NJ, they're a seriously well-oiled machine. I just want to see a fair fight, that's all, and I think the average corporate pilot will walk away a bit shell shocked from the refined sales presentations done by the big dogs. Good luck.