Let’s assume you’ve heard of the benefits of using Business Aviation to fulfill your necessary business travel requirements, and you’ve even received some advice on a potential aircraft that would fit your needs – is it time jump in to the market and buy? This article highlights the need to obtain impartial advice in the arena of aircraft acquisition.
I had a prospect who was interested in getting their first business aircraft recently. A Board Member and golf-buddy had just obtained one, and suggested that Business Aviation was the best way to travel. Pleased with his newly acquired light jet, he suggested that his fellow golfer also acquire a similar model. My prospect had already started hangar construction at his local airport, and within a week an aircraft salesperson was bringing in the suggested jet for a demo ride.
I asked my prospect if he was in the same business and did the same sort of traveling as his golf partner. Did he analyze the details of his intended acquisition? Did he have a budget in mind? How many passenger did he intend to transport, how far and how often? While the aircraft in question was a fine design, I suggested that there may be better or more cost effective alternatives.
An aircraft is a business tool that enables you to get your job done safely and efficiently. There are many different models, and each is designed to harness the laws of physics differently to achieve slightly different objectives. Sometimes, you need a different tool than your neighbor to do a different job.
Whatever the reason for getting an aircraft, it pays to have a good Aircraft Acquisition Plan before presenting your request to the Board.
An Aircraft Acquisition Plan must at a minimum:
– Identify and quantify the transportation needs.
– Differentiate between “required” (must have) criteria and “desired” (nice to have) criteria.
– Identify the aircraft best capable of meeting the transportation needs.
– Analyze all the costs involved with acquiring an aircraft: such as acquisition, operating and residual values.
– Consider taxes and market depreciation.
Once an aircraft is in operation, it usually remains with the purchaser for at least five years, and often for much longer. Therefore your Aircraft Acquisition Plan should cover a period of at least five years, or as long as you expect to operate that model.
The purchase plan should be void of emotional issues and stay as far from subjective criteria as possible. Having firm numbers doesn’t remove all questions, but it does offer a justification based on reasoned thought.
An effective aircraft acquisition plan consists of the following elements:
– Real, not imagined or fanciful needs.
– Key missions and evaluation parameters.
– Technical analysis.
– Operational alternatives.
– Financial analysis.
– Tax planning.
Objective evaluation parameters
Identifying the key mission for the aircraft is an internal process. That task will, in turn, lead to developing the objective evaluation parameters. Those parameters can be things like payload, passenger seats, range, runway performance, etc.
Once you have a set of parameters, you will need to determine which aircraft are capable of meeting them. You know what you want the aircraft to achieve, but how does that translate into aircraft choices? What are the costs of these choices? Where do you get the information about possible options?
While business associates who have used aircraft can provide insights, be careful. If I feel sick, I see a doctor. If I need to design an addition for my house, I see an architect. If I happen to be seeing my doctor at the same time I am contemplating modifications to my house, the fact that my doctor does or does not have a nice house is immaterial. My doctor may know a good architect, but is that architect the one I should consult?
Aircraft salespersons know their aircraft well. But they work for the seller, not you the buyer. This truism applies to both the aircraft manufacturer’s sales teams as well as independent brokers. They are an excellent source of information, but their end-goal is to get you to buy their aircraft.
Aviation trade publications provide a good overview, and will give you an idea of options offered by the manufacturer. But do you have the time to go through all of them?
There are databases of aircraft costs, selling prices and performance available. Such references are relatively inexpensive and some provide highly detailed data. But how does that information apply to your situation? Like any technical profession, aviation is loaded with specialized terms and acronyms. You need to access what is important to your business travel and how your requirements translate into airplane-speak?
For truly impartial direction, bring in an objective aviation consultant – someone who has no conflicts with what aircraft you buy, or even whether you buy. That individual can guide you along the decision-making path, and ask the pertinent questions that can lead to a well informed aircraft decision:
- How far do you travel?
- How many people will travel, and how often?
- What are the locations that you frequent?
A consultant’s fees will be insignificant compared to the costs of owning and operating a business aircraft – more still owning and operating the wrong business aircraft. Making an informed decision you’ll be happy with for years ahead depends on thorough and impartial data.
So what did happen to my prospect I referenced at the beginning of this article? He ended up with the same type of plane as his golf buddy. But at least he had some neutral, informative data to validate his choice!