Flexibility key to one company’s first aircraft purchase
When travelling professionals make the move from the main terminal to the FBO, they usually first do so through charter services or fractional aircraft ownership experiences.
As part of their business model, fractional providers offer partial aircraft ownership for a fixed cost based on how often owners plan to fly.
While the system can benefit businesses new to aircraft ownership, a company’s travel needs often quickly grow large enough that taking full ownership of an aircraft is the more pragmatic and cost-efficient choice.
The general counsel for a Tennessee-based company says his business had a similar experience. Fractional ownership proved to be a sensible choice in the beginning, but he eventually found his team’s travel restricted by the limited amount of flying the plan allowed.
“The last year,” he said, “we ran out of hours in August, and the upcoming fall was our busiest travel season.”
From the company’s Memphis headquarters, teams, including executives, frequently travel to cities around the United States to respond to proposals and meet with potential property developers and investors.
Finding themselves out of fractional hours before the end of their contract, company executives increasingly forfeited important trips or relied on commercial travel. The change shielded them from incurring overuse fees, but cost them valuable time away from the office and their families.
“When you run over your fractional hours, it becomes very expensive. You begin to think, ‘Well, maybe we shouldn’t use the plane for this trip,’ and there goes the benefit of the airplane.”General counsel for Tennessee-based company
Company owners began to research full ownership during their fourth year of fractional ownership. After flying in several of the fractional provider’s jets, company executives found themselves deciding between two options: a Learjet and a Citation® XLS+®.
“When it came down to it, the Lear was just too tight – it was too uncomfortable for the seven, eight passenger level that we’re at. The XLS+ has the headroom, and with the dropped aisle it feels nice and spacious for that size of aircraft,” said the attorney. “The XLS+ just felt good.”
Questions to ask when considering a move to full ownership:
- How much is my staff traveling every month?
- Does use of the aircraft increase during a certain time of the year?
- Do I use commercial travel to offset costs from the fractional company?
- Am I having difficulty justifying my bill every month?
- Do I prefer a specific aircraft in the fractional owner’s fleet?
With full ownership, the company now has full control of its travel arrangements. Since purchasing the aircraft, they’ve averaged 270 hours annually. The flexibility has allowed the company’s traveling executives to respond to market opportunities during the busy fall season. Today, the company manages $2.6 billion in assets.
“We’re at the threshold where it makes sense to own the airplane,” the attorney said. “Being able to easily get our very top executives to their destinations in a way that is efficient so that they can be in other places too has definitely helped our business grow.”
A local aircraft management company assists with the day-to-day operations of the aircraft, and a familiar, in-house crew carries out the small details that make business and travel easier for passengers. It’s a perk fractional providers, with their rotating aircraft and crews, can’t provide.
“We have our pilots who we know; we have all their cell phone numbers. Because it’s our airplane, it’s stocked with what we need,” the attorney said. “It just feels like our plane.”