Ownership: The Part 135 option

Owning an airplane will change your life. Just try a few trips on the airlines after you purchase an airplane and you’ll understand that pretty quickly. Private aircraft owners don’t fuss with long security lines and they travel where they want, when they want. Life is good. Of course, the reality of aircraft ownership also means understanding that operating an airplane costs money—often, lots of money.

Some aircraft owners, especially those operating turbine airplanes, think adding their airplane to the air carrier certificate of an established Part 135 charter operator is one way to make ownership a bit less expensive. Being part of a larger charter fleet usually entitles the aircraft owner to a better deal on fuel than they might find on their own, improved pilot training and insurance, and best of all, a link to a maintenance department that can help keep a close eye on an expensive asset.

The charter company that operates an owner’s airplane will, of course, rent the aircraft for a greater sum each hour than the cost, creating the margin for their profit from the deal. But does adding your airplane to a charter certificate really mean you’ll make money on that airplane, when it might otherwise be sitting idle in a hangar somewhere? Can you transform your expensive asset from a cost generator into a revenue producer? The simple answer is—don’t count on it.

Ashley Smith, president of Charlotte, North Carolina-based Jet Logistics, said, “You can defer costs and offset some of the expenses, making the aircraft less expensive to own, but you really can’t make money putting an airplane on a Part 135 certificate. If an aircraft owner believes they’re going to see a check from their charter operator every month, they’re probably going to be disappointed.” Smith, whose company manages airplanes and operates an emergency medical services fleet, says the idea that there’s money to be made from an idle airplane is quite common. “I’ve lost more deals than I care to think about, though, because I told someone that they probably won’t be seeing a check every month if we put their aircraft on a charter certificate.”

Time for another reality check. Smith believes some of the confusion about charter evolves when some owners begin thinking they might be able to afford a larger airplane if they use charter revenue to offset the extra costs. Smith tells people that, “If they can’t own and justify that airplane without using charter, then they shouldn’t buy it in the first place.” It is incumbent on anyone even thinking about placing that machine on a 135 certificate to conduct a little due diligence—just as they might when launching any other small business. Ask the tough questions such as, “Is there really a local market for my kind of airplane? If so, how big a piece of business might you expect?” Companies such as Argus/U.S. and Conklin and DeDecker offer national average data on how many hours annually a specific aircraft might fly, but like politics, every market is local.

If an aircraft owner does come to realize they won’t get rich chartering their airplane but still are ready to move ahead, they need to find the best charter management company to handle the work—and that might well mean bypassing the folks at your local airport. An owner needs to identify a charter operator capable of treating his or her airplane like a business asset and not simply as an airplane. They also need a company with experience with their specific airplane—so giving your King Air to a company that operates Gulfstreams and Falcons might not be such a good idea. Owners simply need to remove the romance and emotion from their decisions, and realize that personal referrals from other aircraft owners are worth the trouble to find before making any decisions.

Once on board with the right aircraft management company, however, a good charter operator can help an owner save money through education, such as during maintenance events. The average owner pilot might see a scheduled maintenance issue as simply a yes/no decision and OK the work as it comes. A good management company can read between the lines of required maintenance and, for instance, be savvy enough to find rebuilt parts that are perfectly serviceable, potentially meeting the letter of the law while saving thousands of dollars for the owner.

Clearly understanding the sweet spot on the number of hours flown each month before an owner commits to anything also is important. Flying too few hours means the additional Part 135 operational costs could eat an owner alive, while too many hours might lead to major maintenance costs sooner than expected. At its worst, running extremely high hours could deliver cash flow to the owner each month, but saddle them with an airplane that becomes old long before its time. The reduced value of a depreciated asset, with worn-out engines and a beat up interior at the time of a sale, could be mind-altering.

There isn’t really much paperwork to add a turbine aircraft to a Part 135 certificate as long as the machine’s been maintained on the manufacturer’s schedule with all mandatory service bulletins completed. The aircraft must have been weighed within the past 36 months and the charter operator must conduct a conforming inspection just to be sure the logbooks are in order, as well as the aircraft flight manual, placards, and navigational databases.

Pilot training is one area where things can become expensive. Part 91 pilots typically train every 24 months. Part 135 captains train every six months, and first officers once each year. The aircraft owner is normally on the hook for all pilot training, as a cost of doing business to prepare the aircraft for flight—but, of course, everything is negotiable. Noteworthy is the FAA’s plan to soon update its guidance to air carrier inspectors to demand more direct operator involvement in pilot training, rather than simply sending pilots off to a Part 142 training provider with a reminder to ring home when they’re finished. This new guidance could increase training costs.

Finally, there are scheduling issues to consider. Adding your airplane to a charter certificate means being practical—the airplane is not all yours any longer. Owners who want their airplane when they want it means that conflicts with the charter operator trying to create a market for that same asset are inevitable.

Smith said, “If the owner can afford the airplane on its own, charter can become a bonus.” But adding an airplane to a Part 135 certificate is certainly no guarantee of anything other than headaches if he owner doesn’t ask the right questions before they sign the paperwork.

Robert P. Mark is a corporate pilot and president of Commavia, an aviation communications firm that publishes Jetwhine (www.jetwhine.com).