Posts Tagged ‘charter’

Leasebacks: Doing It Right

Thursday, June 2nd, 2016

Before I started flying swept-wing turbojets, it seemed that they were much different than the smaller, mostly light GA, airplanes I had been operating. While they were beautiful, they also seemed foreign. I knew little about the hazard of Mach tuck, the purpose of a zero fuel weight or leading edge slat, the complexities of high altitude aerodynamics, extended operation, or international procedures.

Much to my surprise, after actually making the transition into a jet, it turns out that the similarities far outweighed the differences. Oh, they fly higher and faster, sure. There are additional systems to master. But the truly critical areas like aerodynamics and laws of physics didn’t change, nor did the rules of IFR flying or the basic airmanship requirements. On the contrary, I’d trust a Pitts pilot to fly a Gulfstream long before I’d think about turning a typical jet driver loose in the Pitts. When you look at accident reports, you’ll see the same thing whether the airplane is fast or slow, large or small: human error first and foremost. Poor IFR procedures, inadvertent stalls, failure to fly the airplane. Sound familiar?

Incidentally, I follow the blog of an Oregon-based student pilot who has been struggling with the pilotage and dead reckoning demands of her training. It occurred to me that the purely visual cross-country navigation she’s working on is far more challenging than zipping around with 3 FMS computers, 3 IRS units, 2 GPS boxes, 2 autopilots, 2 human pilots, and a million dollars worth of other avionics guiding the way. She plots courses by hand on a map, measuring distance and accounting for wind on a circular slide rule. Me? I tell ARINC where I wanna go and they do the rest. I don’t even need a computer; one phone call and a professional flight planner will take care of preparing and filing the flight plan. Our weight and balance requirements consist of tapping the occupied seats on a graphical map of the aircraft interior, telling the app how much fuel we have on board, and pressing a virtual button to have the data sent to the company. She’s doing it all by hand.

My point is, despite what the sleek airframe and six-figure salary might suggest, jets aren’t always harder to fly. They don’t necessarily require — or build — a more highly skilled aviator. Sometimes they do the exact opposite.

Another surprising similarity between the largest and smallest airplanes? The long and often painful road many first-time owners seem to tread. It might surprise you to learn that in the charter business, many if not most of the airplanes — even the really large ones — are leasebacks to the Part 135 certificate holder, just as a Skyhawk or Cherokee on the rental line at a local FBO is probably leased from a pilot/owner.

If I had a dime for every aircraft owner who ended up dissatisfied with the end result of leasing, I’d be a rich man indeed. Conventional wisdom tells us that aircraft leasebacks are often a bad deal for owners, especially those who have more than a purely business-minded attitude toward their pride and joy.

As AVweb’s Paul Bertorelli once said:

Nothing is quite as effective at turning a like-new airplane into a flying outhouse, as life on the line at a flight school. AOPA et al can refurbish all of the planes they want to. Unless/until flight schools can figure out how to keep them looking that way, it won’t matter very much.

Leasing to a flight school or charter company typically means high usage, above average wear-and-tear, and less pride-of-ownership than you’d typically find in a privately operated airplane. So why do so many owners venture down this path? Usually because it means the difference between realizing the dream of ownership and standing on the sidelines. Owning an airplane is a powerful draw, and the decision is not always made on the most logical of terms. Such is our romance with the skies!

Fortunately the truth is that leasing needn’t mean your airplane will be reduced to a ratty piece of junk. A personal example: a friend of mine purchased a new Skyhawk in the mid-1980s and put it on the rental line at my home airport. It’s been sitting outside in the salt air environment of Orange County’s John Wayne Airport for three decades… and it still looks fantastic. I’ve flown 30 year old Gulfstreams that still look new after 15,000 hours of charter flying. On the other hand, I’ve also had the misfortunate of operating Gulfstreams with half that time on them that were just about ready to be parted out.

So what gives? How do you do it? As with most things in life that are worthwhile: through a lot of attention and hard work.

After nearly two decades in the industry, the biggest and most consistent mistake owners make is to sign over the aircraft and then walk away, allowing the lessee to fully handle management of the aircraft. Yes, there are issues of operational control and other legalities. But that doesn’t mean owners should relinquish involvement, because the lessee usually in the business of operating airplanes, not owning them. There’s a big difference. Oh, they’ll ensure the airplane is airworthy, but nothing more. If the fading paint, failing interior and cosmetics hurt the aircraft’s value, that’s not their concern. It sounds callous, but rarely is that the intent. Keep in mind how difficult operating an aviation business is these days. Charter companies and flight schools have a lot on their plate and are just trying to survive.

My friend’s cherry Skyhawk doesn’t break any less than other C172s. There’s nothing magical about it. But he flies the airplane at least once a week, using an IFR currency flight as an excuse to check out the airplane and assess its condition. If anything’s broken, it gets fixed rather than deferred. The aircraft goes to the paint shop annually to be touched up and have any corrosion properly treated. As a result, his airplane remains airworthy and is one of the most requested aircraft in the fleet by renters.

On charter airplanes, the owners are typically high net worth individuals who are too busy running their business to get directly involved with the nuances of aircraft maintenance. But they can delegate that task to someone — typically a pilot who will “manage” the aircraft as well as fly it — for a fee. After every trip, deficiencies ranging from inoperative equipment to smudges on the upholstery will be directly handled by that person, because they are specifically authorized to approve those expenditures on the owner’s behalf. They have the “power of the purse”, and it makes all the difference in the world. They get to know that airframe, its pros and cons, and develop a direct relationship with the individuals who work on it. Most of all, they function as the owners eyes and ears and are responsible to that person for the airplane’s condition.

An airplane on leaseback is going to fly more than one operated privately. The average privately-owned Part 91 airplane is flying something like 50 hours per years. On leaseback, it could easily be 500 hours. That translates into more frequent maintenance, repair, refurbishment, and overhaul of everything from engines to avionics. It’s not cheap, and it doesn’t necessarily even make ownership any less expensive than private operation. That’s one of the dirty little secrets of leasebacks. If you’re doing it to make ownership less expensive, you might be disappointed.

Even if it doesn’t save money, it can still provide benefits. For example, one of the most deleterious things you can do to an airplane is to simply let it sit. Big or small, these machines were made to fly. Long periods of disuse may provide relief from the wear-and-tear of frequent operation, but they lead to corrosion and dramatically raise the hourly cost of flying because maintenance events are amortized over fewer flight hours. As one friend sagely put it, the first hour he flies his RV-7 each year sets him back $10,000. Every hour after that can be flown for just the price of fuel.

So if you’re not flying much but don’t want to sell the aircraft, leasing can make sense. But don’t be fooled, leasing requires a solid commitment of money by the owner to keep the airplane in tip-top shape. Otherwise you’re simply prolonging the plane’s inevitable slide into tatters. The situation can become surprisingly acute when the owner has also bought more airplane than he or she can afford to operate.

As with all things, the key is education, and there is absolutely none whatsoever required prior to taking the expensive plunge. I’ve long felt that the aviation world would profit by having potential aircraft buyers take an ownership class before purchasing an airplane. Instead of learning through costly and unnecessary expenditures which blow up their budget, they could learn from the painful experience of folks who’ve already made those mistakes.

A better ownership experience translates into an improved life for the airplane. General aviation as a whole would benefit, and that’s something we can’t get enough of these days.

Blurred Lines

Monday, March 28th, 2016

The advent of smartphones and apps has led to a variety of creative new businesses which are reinventing how we shop, work, and communicate. They’re also changing how we travel by bringing private aviation to the masses.

Some of these concepts, like SurfAir, seem to be doing well, while for some reason east coast equivalent Beacon never really got off the ground. Others — Flytenow and AirPooler — were quashed by FAA determinations about their legality.

It was probably inevitable that this phenomenon would make it’s way into my own flying life. The company I work for has entered into a partnership with JetSmarter, a mobile marketplace for private jet charter that the Wall Street Journal described as the “Uber of the air”. We’re flying scheduled service between the coasts and other major cities as part of their “JetShuttle” program. Instead of chartering an entire airplane, you can now book a single seat of your choosing.

A typical Gulfstream interior.  This layout isn't just more comfortable -- it's also designed to facilitate discussion and interaction among the occupants.

A typical Gulfstream interior. This layout isn’t just more comfortable — it’s also designed to facilitate discussion and interaction among the occupants.

I’ve done a few of these trips so far and the passengers seem delighted with the ability to avoid most of the hassles typically associated with air travel and large hub airports. A business jet’s interior looks more like a living room than a typical airliner, so it tends to facilitate discussion and interaction between the passengers. Flight attendants have told me that by the end of the flight, strangers have become friends. And some business connections are probably being made as well.

The JetSmarter membership isn’t cheap. It costs $9,000 annually and requires a $3,000 initiation fee. On the other hand, when you compare it with the cost of chartering a large cabin business jet for even a single cross country flight, the price seems downright thrifty. It’s even competitive with first class airline travel, especially for those who travel frequently.

At first I wondered how this sort of thing would be legal. Wouldn’t scheduled service require a Part 121 certificate? Apparently not. JetSmarter’s model has been validated under 14 CFR Part 380, which requires those who wish to arrange public charters to have their prospectus approved by the Department of Transportation. JetSmarter doesn’t operate the aircraft or have “operational control” over the flights; they simply help facilitate the placement of individuals onto an approved Part 135 certificate holder’s airplane. In that regard they function more like a broker than a charter company. Incidentally, brokers are not regulated by the FAA, DOT, or anyone else that I’m aware of.

I never would have expected to be flying scheduled service while working in the charter industry, but that’s the sort of thing you get when disruptive technologies begin to work their magic. It blurs the lines between what we traditionally think of as airlines and charter companies. For most folks, the primary distinction has been the fixed schedule of the former versus the non-scheduled, or “on-demand”, nature of the latter. But times are changing, and the aviation industry with it.

I can think of several other examples of this phenomenon. I learned to fly about 20 years ago, and back in “the day”, a training airplane was almost invariably a 152/172 or Cherokee of some kind. Oh, you’d find the occasional Tomahawk or Citabria in use for that purpose, but for the most part it was a Skyhawk/Cherokee game. Today’s trainers come from an impressive fleet of Diamonds, Cirruses (yes, people do learn to fly in them), prototypical Cessnas and Pipers, and more LSAs than you can shake a stick at. If my experience is any indication, tailwheels are seeing a resurgence in training roles—something regular readers of mine will know I’m happy about. And there are probably ten thousand more homebuilts are out there than when I took my first flight.

Do I even need to mention about how the general aviation cockpit has changed over the same period? In the corporate aviation world, we’re seeing the first hints of supersonic aircraft on the horizon with the Aerion AS2, Spike S-512, and whatever Gulfstream has got up it’s sleeve after partnering with NASA, Sukhoi, and parent General Dynamics.

JetSmarter also made a deal to purchase my company’s empty charter legs for the next few years. Traditional charter flights are priced round-trip, because even if the passengers only want to fly one way, the company has to get the plane back to its home base. The ability to offload those empty flights to a third-party for resale helps the bottom line and connects passengers with flights that meet their needs.

Any way you slice it, this is an exciting time to be part of the aviation world. I can’t help but wonder what they’ll think of next.

Time is Money

Tuesday, September 2nd, 2014

One of the first things people discover about flying is that it requires an abundance of two resources: time and money. The money part is pretty obvious. Anyone who inquires about flight instruction at a local school will figure that one out before they even take their first lesson. The importance of time is a bit more nebulous.

When I began working as an instructor, I noticed that even in affluent coastal Orange County, at least one of those two assets always seemed to be in short supply. Those who had plenty of money rarely had much free time; they were financially successful because they worked such long hours. Younger pilots typically had fewer demands on their schedule, but funds were limited at best. It reminds me of Einstein’s famous mass-energy equivalence formula, E=mc2. But instead of matter and energy being interchangeable, it’s time and money. Benjamin Franklin took it a step further in a 1748 letter, concluding that “time is money”.


I learned to fly during a period when both of those elements were readily available. It was a luxury I didn’t appreciate — or even recognize — at the time. It’s probably for the best, since I would have been sorely tempted to spend even more on my addiction.

After flying Part 135 for the past three years, it’s interesting to note how those same limits apply to charter customers despite being much higher up on the proverbial food chain. These restrictions are the very reason Part 91/135 business aviation exists at all.

Case in point: I recently flew a dozen employees of a large retailer around the U.S. to finalize locations for new stores. They were able to visit ten cities in four days, spending several hours working at each destination. Out of curiosity, I ran our itinerary through booking sites like Kayak, Orbitz, and Travelocity to see how a group of twelve might fare on the airlines. Would you be surprised to learn that the answer is “not well”?

Our first leg, three hours in length, would have taken twelve hours and two extra stops on the airlines and actually cost more, assuming business class seats. Some of the subsequent legs wouldn’t have been possible at all on the airlines because they simply don’t serve those destinations. Overall, chartering the Gulfstream IV-SP cost less than trying to do the same trip on an airline. As far as time saved, on an airline, each of those ten legs would have required passengers to be at the airport 90 minutes in advance of their scheduled departure time. That alone would have wasted fifteen hours — the equivalent of two business days.

A chartered aircraft waits for passengers if they’re running late. If they need to change a destination, we can accommodate them. Travelers spend more time working and less time idle, literally turning back the clock and making everything they do more productive. And once we’re airborne, they can continue to do business, preparing for their next meeting and using the cabin as a mobile office. They can conference, spread out papers, and speak freely without worrying about strangers overhearing sensitive information.

This time/money exchange is present on every trip. Since I’m based in Los Angeles, our passengers are often in the entertainment industry. Imagine an artist or band who had a concert in Chicago on Monday, Miami on Tuesday, Denver on Wednesday, and Seattle on Thursday. They need to be in town early for rehearsals, interviews, and appearances. These tours sometimes last weeks or even months. Keeping a schedule like that would be nearly impossible without chartering. Imagine the cast of big budget film needing to be at film festivals, premieres, media interviews, awards shows, and such. Or the leaders of a private company about to go public or meeting with investors around the country prior to a product launch. Franklin was right: time is money.

When I fly on an scheduled airline, the inefficiency and discomfort remind me of why charter, fractional, and corporate aviation will only continue to grow. The price point of private flying doesn’t make sense for everyone, but for those who need it, it’s more than a convenience. It’s what makes doing business possible at all.

Contracting: A Great Career Option for the Professional Pilot

Wednesday, April 16th, 2014

As much as one may love flying, it can be a tough career choice. Many pilots struggle through the food chain only to end up discouraged, if not downright hating their job. We’re all aware of the reasons: low pay, long days, little respect, too much time away from home, difficult working conditions, commuting, regulatory hassles, bankruptcies, furloughs, and ruinously expensive training.

Quite a list, isn’t it?

Ours is a small community; word gets around, and it begs the question, how many have bypassed a flying career altogether because of it? I once read a survey suggesting that most pilots would not recommend the field to their children. Of course, many vocations are in this rickety boat. Even formerly high-flying professions like physician and attorney have lost their luster. The message: “it ain’t what it used to be”.

On the other hand, life is often what we make of it. From bush flying to firefighting, there are many different gigs out there for those willing to take Frost’s road-less-traveled. For the past three years, for example, I’ve been flying as a “contract pilot” and truly enjoy it.

The Contractor

Ready to Ride

It’s kind of a generic term, since anyone who flies as an independent contractor rather than a traditional, W-2 employee fits the definition, but I’ll focus on Part 91 and 135 corporate/charter flying because that’s what I know best.

Contract pilots function as a kind of overflow labor. Operators might need temporary help in the cockpit for a variety of reasons: a full-timer is sick, on vacation, leaves the company, times out due to regulatory limitations, or is unavailable for some other reason. God forbid, maybe they ran into trouble with a checkride or medical exam. Perhaps a trip requires multiple pilots due to length or logistics.

Some companies find it advantageous to run tight on full-time labor and supplement with contract pilots since there are no annual costs for training or benefits. They only have to pay contractors when they’re actually used, so as the flight schedule ebbs and flows, they can gracefully scale their workforce up or down without the inefficiency of, say, leaving full-time, salaried pilots sitting at home for an extended period.

For the pilot, there are both pros and cons to life as a contractor.

The Pros

  • You’ve got some control over your schedule and can decline trips. I really hate doing that, because a) I don’t want the company to stop calling me, and b) you never know when things will slow down, so it’s smart to sock away some acorns for the winter. But if you’ve got a big vacation planned or your best friend is getting married? You’re ultimately in control.
  • We can work for multiple operators, which can provide a bit of protection if the flying slows down at one company.
  • You aren’t tied to a seniority system. If you’re an experienced captain at company A, you needn’t start over as the lowest-paid right seater at company B.
  • Contractors earn far more per day than full-time employees, and therefore needn’t work as many days to reach a given income level. That means better quality of life, especially if you’re married and/or have kids.
  • Contract pilots are typically paid by the day. I might have a five day trip consisting of a flight to Hawaii followed by three days on the island before flying home. That’s five days “on the clock”. It can be a more lucrative system than one where you are compensated based on flight hours. Operators are essentially purchasing your time.
  • You’ll travel the country, if not the world. Instead of a few major airports, on larger aircraft like the Gulfstream, you’ll see places you’d never dream of. Though I haven’t been there — yet — North Korea and the South Pole have both been on the table. (Random note: Jeppesen does publish charts and procedures for Pyonyang!)
  • I always get an honest sense of gratitude from the operators for whom I fly, because by definition I’m helping them out when they really need a pilot. For example, I recently got a call from a Part 91 Gulfstream operator whose pilot broke his arm in the middle of a trip. I airlined out the same day and flew that evening’s leg to Las Vegas, keeping the aircraft on schedule.

The Cons

You knew there had to be a few, right?

  • Contractors inherit all the hassles of being your own boss. Does anyone work harder? From providing your own benefits (don’t get me started about healthcare) to paying self-employment taxes, it’s not always the carefree work-and-go-home experience of a full-time employee.
  • You pay for your own training. On a jet, the annual recurrent training costs run in the thousands. I currently allot $15,000/year for recurrent training and associated costs (airfare, hotels, food, incidentals) on my airplane. The expenses are deductible, which helps a bit, but I figure my first month’s work each year is spent digging my way back to financial “zero”.
  • You can’t control when the phone rings. That can mean short-notice trips and/or weird hours.
  • It can be hard to plan your life out when you never know what days you’ll be working. I average about 10 days a month away, so my philosophy has been to just plan my social life as usual, and make sure people know I sometimes have to reschedule or cancel.
  • Work can conflict with itself. I’ve had three operators call me for a trip on the same day. I can only be in one place at at time, so I “missed out” on two of them.
  • No guarantee of work. But then, history has shown that there are no guarantees in life or aviation for anyone, are there?
  • It can be tough getting started. As with many careers, the best entrée is knowing someone who can get you in the door. Initial start-up costs of obtaining a type rating can be a major barrier.


I like contracting because when a trip is offered I know it’s because the operator wants to use me rather than has to use me. Contracting represents some of the best that flying has to offer: adventure, interesting destinations and passengers, phenomenal aircraft, and decent pay for the work I do.

So why don’t more people jump into contracting? Awareness, for starters. Not everyone knows about this little niche. Also, it can be tough to break in to the business. You don’t have to know someone on the inside, but it certainly helps.

The initial expense is probably the largest impediment. The best compensation is found on the larger aircraft, and that means an expensive type rating funded solely by the contractor. Some pilots speculate on their ability to get work by obtaining the type before they have a job to use it on. Unless you’re well-heeled, that’s a big financial risk, but it works out for some people.

There is a rather circuitous way around the type rating burden: start off as a salaried employee and switch to contracting after a couple of years. That way the operator pays for your training and in exchange you accumulate a significant body of experience on the airplane.

FAA to the Rescue! Not.

I should note that contracting in the Part 135 world is a bit harder than it used to be. In the old days, if you were typed and current on an aircraft, you could fly for any charter company that operated that kind of plane. It wasn’t uncommon for a contract pilot to fly for several operators. A few years ago — for reasons no one has been able to adequately explain — the FAA essentially did away with that capability.

Today, a five-figure recurrent only entitles you to work for the certificate holder under whom you trained. It doesn’t matter if you’re a veteran of ten years and 10,000 hours in a Gulfstream IV; if you went to recurrent on Company A’s OpSpec, as far as the FAA is concerned, when you move to Company B you are completely unqualified to operate a G-IV on any Part 135 flight until you’ve been through another recurrent… at your own expense, of course.

At first, this seemed like a potential deal-breaker for contract pilots, but it can help as much as it hurts. Just as the change make it harder for a contractor to work for multiple operators, it also makes it more challenging for that operator to replace a contract pilot since a successor wouldn’t be legal to fly until they went back for recurrent training.

Walking the Aviation Tightrope

Contracting does have something in common with scheduled airlines: it’s not right for everyone. If you’re the type that wants a fixed schedule or has to know exactly how much your bi-weekly paycheck is going to be, this ain’t the place. In addition to all the attributes of a good corporate or charter pilot, contracting requires the ability to run a business and cope with uneven income. Some months will be fantastic. Others, not so much. Even when business is slow, though, I get something valuable: more time at home with friends and family. Like I said at the top, life is what you make of it.

But the ability to earn a six figure income right off the bat while working a relatively small number of days? For me at least, it’s more than worth it. What I want in my flying carer is sustainability, the capacity to survive on this aviation tightrope, and ironically that’s what contracting provides. I want to fly without hating it, and that means avoiding the soul-crushing schedule and monotony of many professional flying jobs.