hen JSSI first entered the market in 1989,
owners were of course focused on availability
of their aircraft - but they were also
concerned with costs associated with owning
and operating the asset, as well as its
residual value.
Today, these key factors remain critical to every flight
operation. However, a few things have changed...
One key difference is the speed at which owners
demand the same accurate information they are
accustomed to with other data they rely on to run their
business, and they want the information to be definitive.
The second change that we have probably all
experienced over the last decade is how our working
environment is much more volatile. Changes in markets,
economies, financial and political environments, social
perceptions and workforce resources can all impact your
operating budgets and asset values in the blink of an eye.What are the Nuts and Bolts?
The nuts and bolts of managing a business aircraft begins
with keeping it airworthy and available for the owner or
client 24/7. This requires a good back-up plan for
supplemental lift when the aircraft is down. To some of us,
this is the easy part because we’re trained to keep the
aircraft flying, unlike other management tasks that make
you feel as though you need a Ph.D. in finance,
engineering, and psychology.
In addition to aircraft availability, you need a proactive
plan for the life cycle of the asset. This plan not only
encompasses maintenance forecasting—including major
events, enhancements, upgrades, budgeting and asset
valuation—but you also need to manage the owner
relationship, which is where the psychology degree can
come in handy...
Developing and managing this asset plan may take
more time and capacity than you have available.
Therefore, you may want to involve experienced
consultants to assist you with critical aspects of your plan,
like we have at JSSI.
Maintenance planning and forecasting involves keeping
accurate maintenance records and can include the latest
tracking software. But that is just the start. A detailed
maintenance forecast must include out-the-door costs for
all maintenance events, both major and minor.
Once again, consultants can assist with detailed
estimates and advice on where to take your aircraft for thenext major inspection among other cost-critical events.
Budgeting, benchmarking and controlling costs requires
substantial research. Unless you have been managing the
same asset for years with a baseline and year-over-year
escalation history, it is difficult to determine what those
operating costs will be for your operation.
There are tools and consultants that will also support
you with this detailed task, including Conklin & de Decker.
If you need costs for a quick response to a budget
question from the owner, they have online subscriptions
providing a fast solution, as well as detailed life cycle
budgeting programs.
In addition, aircraft values over the past decade have
been a moving target, with market volatility making a
major impact. Aircraft owners need to know where they
stand when it comes to current asset value and they
expect a quick and definitive answer. Whether you’re
working through a change in tax status or planning for the
right time to sell and upgrade to a newer, more efficient
aircraft, knowing the current residual asset value is a
necessity.
It’s good practice today to get an aircraft appraisal at
least once every three years so you can be ready to answer
any of the value questions the owner has on any given day.
In addition, before making a capital investment to upgrade
the avionics or install a new Wi-Fi system, it’s smart to
make sure the investment improves or at least preserves
the value.
Maintenance programs also enhance the residual value
of the aircraft and will be taken into consideration in the
appraisal. We have American Society of Appraisers (ASA)
accredited appraisers at JSSI, and I highly recommend
using a credentialed professional for current aircraft value
determination.Closing Thought...
As our industry continues to grow and evolve, the need for
effective aircraft management practices will be key to our
future success and to the fiscal responsibilities of our flight
operations.
More information from http://www.jetsupport.com ❙W
Guest Editor’s
VIEWPOINT
Louis 'Lou' Seno
The Nuts and Bolts of
Managing Business Jets Today
Louis Seno is the Chairman Emeritus of JSSI, where he provides
counsel to the board and leads JSSI Advisory Services. Mr. Seno serves
on the Board of Directors of EAA and GAMA, is president of the West
Michigan Aviation Academy Foundation, and has been involved with
the Embry-Riddle Aeronautical University for 25-years.4 Vol 23 Issue 8 2019 AVBUYERMAGAZINE http://www.AVBUYER.com
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