The hidden value of aircraft partnerships

6 Sept 2013

Brian Hennessy, Blue Hawk Aviation, LLC

A chief concern of companies or individuals considering an aircraft partnership is the cost of scheduling conflicts between the partners.   Even if your advisor has done a good job of arranging a complimentary partnership, it is inevitable that conflicts will arise from time to time.  However, the cost of ferrying your airplane back to base due to a conflict should be viewed as a small one, relative to the savings the partnership enabled.

A complimentary partnership arrangement will help minimize scheduling conflicts, however they will happen occasionally.  Practically speaking, the expense associated with these flights should be billed to the partner(s) as variable or “occupied” expense only, rather than total hourly cost (fixed + variable).  For a newer, efficient super-light jet this variable expense will be in the neighborhood of $2000/flight hour.  Additionally, the owners should have a well thought out agreement as to who pays these costs.  Different models exist, but Blue Hawk recommends in most cases that an agreement be built that encourages scheduling well in advance.

Critically, partners must view the reposition expense not as a cost only, but rather net of how much they save annually on the acquisition of the aircraft by having a partner.  For example, $60,000 of reposition expense annually looks pretty small in comparison to $350,000 of aircraft payments avoided annually due to the fact that your partner is paying for half of the airplane.

When considering reposition expense associate with aircraft partnerships, your advisor can and should model these net expenses as accurately as possible and include them in the final analysis.

Blue Hawk Aviation provides expert aviation and aircraft advisory services and can match companies, individuals and families with the safest, most efficient private aviation solution.  Additionally, Blue Hawk advises on negotiations, partnerships, purchase arrangements, upgrades, delivery, management and operations issues.

Blue Hawk represents our client’s interests alone. We do not accept referral fees or other consideration from service providers or vendors. 

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