| Date post: | 07-Apr-2016 |
| Category: |
Documents |
| Upload: | business-aviation-advisor |
| View: | 214 times |
| Download: | 2 times |
JANUARY / FEBRUARY 2015
W W W.BIZ AVADVISOR .COMA Business Aviation Media, Inc. Publication
HIRE STANDARDS
NEXTGEN – WHY?
UPGRADING YOUR IFE OR CMS
DCA’S PROXIMITY ENTICING
The Seven Cs of Charter
Demystifying Business Aircraft Costs:An Owner’s Primer
What You Need to Know About Aircraft Charter – Before You Fly
Trusted to deliver excellence.
rolls-royce.com
Aircraft enrolled on CorporateCare have higher asset values and liquidity as well as access to a truly global service network. So while you are enjoying engine reliability, supported by the resources and engineering expertise of the OEM, you’ll know you are helping to maximize your asset’s value and liquidity for the future. For more on CorporateCare, contact Steve Friedrich, Vice President – Sales and Marketing, at +1 (703) 834-1700, or email [email protected].
CorporateCare®-a global liquid asset
w w w. B i z AvA d v i s o r. c o m Ja n u a r y/ F e b r u a r y 2 0 1 5 B U S I N E S S AV I AT I O N A D V I S O R 3
FE ATURE S
06 The Seven Cs of Charter What you need to know about aircraft charter — before you fly by KATHLEEN H. BRECKENRIDGE
08 Upgrading Your IFE or CMS Three Keys to Success by TONY BAILEY
10 Demystifying Aircraft Costs: An Owner’s Primer by NEL STUBBS
12 NextGen – Why? What is NexGen, and what impact will it have on your flying? by NANCY RISSO
J a n u a r y / F e b r u a r y 2 0 1 5 • V o l u m e 2 / I s s u e 1
6 8 10 12
18
14 Hire Standards It’s more than skills and experience by SHERYL BARDEN
16 Opt to Operate Without Owning Escalating prices, less available credit make operating leases attractive by SIMON DAVIES
The Business of Business AviationThe Information You Need, From Experts You Can Trust
Aircraft owners and charterers now have a resource to help you make the most effective use of your investments in business aviation. Business Aviation Advisor provides the information you need, without technical jargon, on the business of owning and flying
business aircraft – from operations to acquisition, to management and finance.
Business Aviation Advisor: the Business of Business Aviation
Subscribe to our digital edition at www.bizavadvisor.com/subscribe
DE PARTME NTS
05 Publisher’s Message Droning On by GIL WOLIN
18 Washington Report DCA’s proximity enticing by DAVID COLLOGAN
Charter flights in the USA are operated by Jet Aviation Flight Services, Inc. or other FAR Part 135 certified air carriers.
BE ABOVE IT ALL
JETAVIATION.COM/BEABOVEITALLCALL +1 877 392 6442
SELECT AIRCRAFT MANAGEMENT PROGRAMSTAILORED TO YOUR NEEDS.
Ja n u a r y/ F e b r u a r y 2 0 1 5 B U S I N E S S AV I AT I O N A D V I S O R 5
PUBLISHERGil Wolin
CREATIVE DIRECTORRaymond F. Ringston
MANAGING EDITORG.R. Shapiro
EDITORIAL ASSISTANTMichael B. Murphy
WASHINGTON EDITORDavid Collogan
CONTRIBUTORSTony Bailey
Spirit [email protected]
Sheryl BardenAviation Personnel International
Kathleen H. BreckenridgeCooling & Herbers, P.C.
Simon Davies Global Jet Capital
Nancy RissoRisso NextGen Aviation Solutions
Nel StubbsConklin & de [email protected]
BUSINESS MANAGERJoAnn O’Keefe
BUSINESS AVIATION MEDIA, INC.PO Box 5512 • Wayland, MA 01778
Tel: (800) 655-8496 • Fax: (508) 499-2172 [email protected]
www.bizavadvisor.com
Editorial contributions should be addressed to: Business Aviation Advisor, PO Box 5512, Wayland, MA 01778, and must be accompanied by return postage. Publisher assumes no responsibility for safety of artwork, photographs, or manuscripts.
Permissions: Material in this publication may not be reproduced, stored in a retrieval system, or transmitted in any form or by any means (elec-tronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of the publisher.
The views and opinions expressed in Business Avi-ation Advisor are those of the authors and advertis-ers, and do not necessarily reflect the policy or position of Business Aviation Media, Inc. Articles presented in this publication are for general infor-mation and educational purposes and do not con-stitute legal or financial advice.
Postmaster: Please send address changes to: Business Aviation Media, Inc., PO Box 5512 • Wayland, MA 01778, USA
©Copyright 2015 by Business Aviation Media, Inc.
All rights reserved Printed in the USA
Gil Wolin — Publisher [email protected]
Some 40 years ago, I was told that flight crews in the future will be comprised of a pilot and a dog. The pilot will be there to feed the dog, and the dog there to bite the pilot in case he or she tries to touch anything. It was funny then; now, it appears prescient.
Drones, or Unmanned Aerial Vehicles (UAVs) — also known as Remote Piloted Vehicles (RPAs) by the International Civil Avia-tion Organization (ICAO) — have been in military use for those 40 years, for reconnaissance as well as for combat.
But UAVs for commercial use — that’s something new, and a hotly debated issue. Cur-rent U.S. regulations restrict remote-control commercial UAVs’ size to 55 pounds, and flight operations to below 400 feet, quite sufficient for aerial filming or to monitor re-mote farmland or facilities.
The concern is one of training and regulation: will commercial UAVs stay below 400 feet? What is the potential to interfere with low-flying manned aircraft, perhaps carry-ing passengers? And what is their future?
In September, the FAA approved the use of UAVs for commercial purposes as per an exemption provided by the 2012 FAA Modernization and Reform Act, Section 333. More than 50 companies already have applied for these exemptions, for aerial mapping, facili-ties monitoring, and movie production. As of this writing, 13 have been approved for lim-ited operations for crop surveying and movie production, thanks to some heavy lobbying by Hollywood. FedEx, Amazon, and UPS have added their voices to that lobby, looking to use UAVs for small package delivery.
That lobbying is about increase, by a very different group: the U.S. Congress. The As-sociation for Unmanned Vehicle Systems International (AUVSI) forecasts that drone use will create 100,000 jobs and $82 billion in economic impact in the first 10 years after approval. Those are numbers no self-respecting legislator seeking reelection can ignore.
How large a leap is it from photo missions and package delivery to UAV passenger transportation? Nicholas Carr’s 2014 book The Glass Cage examines the accelerating ex-pansion of automation into modern life. The chapter “On Autopilot” traces the impact of the resulting changes on today’s pilots’ “stick-and-rudder” skills. As automation assumes more control of routine flight activities, the pilot’s challenge becomes one of maintain-ing those critical skills. That makes twice-yearly recurrent training sessions in Level-D full-flight simulators mandatory to insure optimal operational safety.
While pilotless passenger aircraft may still be years away, aviation automation re-mains on a fast track. As Nancy Risso writes in this issue (“NextGen — Why?” p. 10), jet own-ers are required to install Automatic Dependent Surveillance — Broadcast Business (ADS-B) equipment by 2020.
And by then, a very different group of lads and lassies may be staffing our aircraft.Glad to have you aboard!
Droning On
PUBLISHER’S MESSAGE ■
6 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5 w w w. B i z AvA d v i s o r. c o m
BY KATHLEEN H. BRECKENRIDGECooling & Herbers, P.C. / [email protected]
Whether you are a first-time or experienced charter customer, or an aircraft owner looking for alternative or supplemental lift, you are familiar with the advantages of business jet travel. However, before you sign on the dotted line for your next charter trip, there are some key issues that you and your aviation manager should consider when negotiating with a charter company.
Charter Operators & BrokersAircraft charter operating companies range from large (75 or more aircraft) to very small (one or two aircraft), and their fleet composition can range from ultra-long-range large aircraft to small propeller aircraft. While you can book directly with any charter operator, many smaller charter operators work through the various charter brokers. These brokers function much like travel agents, shopping your trip among a variety of charter oper-ators before presenting it to you for acceptance and confirmation. Larger charter operators also work through brokers, but often prefer to provide full service directly, from the initial contact with the charter customer throughout the flight.
ContractsA charter contract may be for one flight, a series of flights, and/or for multiple flights on a single aircraft, or for multiple flights on multiple aircraft.
Single flight charter agreements typically are negotiated with a charter broker, not with the actual charter operator. You will be presented with a quote from the charter broker containing some terms of payment and a “General Terms and Conditions” docu-ment from the charter certificate holder, similar to that which an airline posts on its website. This tends to be a “take it or leave it” offer.
In a Block Charter Agreement, you purchase a set number of hours per year in a certain type of aircraft, usually directly from the charter operator. Because this may represent a significant amount of business, especially for a small operator, you may have substantially more leverage to negotiate the terms of an agree-ment than you would with just a single trip.
A more recent type of charter program (similar to block char-ter) is the “Jet Card Program,” in which you deposit a set amount of money, from which the charter operator or broker draws down
The Seven Cs of Charter
What You Need to Know About Aircraft Charter – Before You Fly
ISTO
CK
PH
OTO
■ AIRCRAFT CHARTER
w w w. B i z AvA d v i s o r. c o m Ja n u a r y/ F e b r u a r y 2 0 1 5 B U S I N E S S AV I AT I O N A D V I S O R 7
over a set term. These programs usually are offered by the larger charter companies and allow you to charter any of its fleet air-craft with variable rates depending on aircraft size. However, broker programs draw upon a range of charter operators, often required to meet an industry-recognized safety rating from an established auditor such as ARGUS or Wyvern (see below).
Some card programs have a set term, while others allow draw-downs to continue until the balance reaches zero. With the latter, you can continue to fly at your negotiated rates for the remainder of the term by replenishing the balance. Jet card companies usually are not as willing to negotiate business terms, but often will agree to adjust insurance or default provisions via a separate amend-ment. Operators who offer jet cards often subcontract to other charter operators for additional lift during their busiest times.
Charter Safety ScreeningAll charter operators must be licensed by the FAA, which re-quires that they hold a Part 135 Air Carrier Certificate. In addi-tion, there are several organizations that audit Part 135 air carriers and rate their safety practices and records. Wyvern and ARGUS are two such companies. Both companies’ websites allow you to check the safety rating of any particular operator in their program. It is important that you request the name of your trip’s actual operator, even when you have a contract directly with a charter operator. This will ensure that the particular charter company that is operating your trip complies with your safety standards, and that if it has subcontracted the flight to another operator, that operator also meets your safety standards.
If you have engaged a charter broker, be certain to obtain the name of the operator. You also can request that charter compa-nies or brokers engage only Wyvern-registered or ARGUS-rated (a Gold Plus or Platinum ARGUS rating indicates the operator has earned the International Standard for Business Aircraft Opera-tions certification) charter operators for your flights.
Certificate of InsuranceTo make adequate provisions for insurance, you should request that the charter company name you, the customer, as an addi-tional insured with respect to liability coverage — not only for you, but also for any officers, directors, shareholders, members, and/or managers, even if you own an aircraft and your own policy covers flights aboard non-owned aircraft. Although you are not operating the aircraft, you still have a liability risk in case of an accident, since everyone involved usually is named in a lawsuit.
The additional insured status also should include a waiver of subrogation by the insurance company in your favor, with respect to the aircraft’s physical damage coverage. You should request a clause stating that the insurance provided by the charter com-pany is primary to any other insurance available to you, and that written notice of deletion, cancellation, or material changes in coverage for the charter company’s insurance policy be provided to you in advance.
Request that the charter company provide you with a Certifi-cate of Insurance from the insurer verifying these coverages be-fore the flight. Be certain there is adequate insurance coverage
for the size of the aircraft and the type of mission. Small aircraft insurance coverages vary from $50-$100 million and large air-craft could be $300 million or more. International flights may re-quire certain minimum coverages or special types of policies; check with your risk manager as to what is required, and then ver-ify that the operator has appropriate coverage.
Should your request for additional insured status be denied, or if the charter operator is hiring third party operators to complete your flight, you have the option of purchasing your own Non-Owned Aircraft Liability policy, if you do not already have such coverage. This will provide coverage for all the aircraft you char-ter or lease.
Company Default ProvisionsAs a charter customer, especially if you are making a large deposit in advance for charter hours, be sure any agreement contains provisions describing default of the charter company, including bankruptcy, lateness, or cancellations not caused by force majeure (an extraordinary event or circumstance beyond the control of the parties, such as a strike, war, riot, crime, or severely disruptive weather), and also surrender, suspension, or revocation of the company’s FAA Air Charter Certificate. The charter company or broker should be required to return any unused deposit funds in the case of a charter company default.
ConfidentialityCharter companies and brokers usually will accommodate cus-tomer requests for confidentiality provisions, including requiring its personnel to sign individual Confidentiality Agreements. How-ever, if you require the crew to sign, be aware that this may happen at the last minute, even as you are boarding the flight, as final crew assignments may not be made until the day of your flight.
CounselFinally, if charter is part of your business plan, do have both ex-perienced aviation counsel and your risk management depart-ment or insurance broker review the charter agreements before you fly. This will ensure that you, your executives, and your com-pany, as well as your family and friends, are all properly protected when flying aboard any chartered aircraft. Remember: while in-suring personal safety is always first, business safety should never be far behind. BAA
KATHLEEN H. BRECKENRIDGE of Cooling & Herbers, P.C., in Kansas City, MO, is a second-generation aviation attorney. She holds an L.L.M. in Taxation, and serves as Board VP of the National Airline History Museum.
ALL CHARTER OPERATORS MUST BE LICENSED BY THE FAA, WHICH REQUIRES THAT THEY HOLD A PART 135 AIR CARRIER CERTIFICATE.
■ AIRCRAFT CHARTER
8 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5 w w w. B i z AvA d v i s o r. c o m
FLY
ING
CO
LOU
RS
CO
RP.
BY TONY BAILEYSpirit Aeronautics / [email protected]
There was a time when a state-of-the-art aircraft In-Flight Entertainment system was a Lear Jet Stereo Eight Track tape player, and the best Cabin Management System was
an overhead reading light and fan.While today’s owners have many more options, it may surprise
you to know that the entertainment system in your car is proba-bly better than that in your aircraft.
If you are ready to upgrade your Cabin Management System, upgrade from an In-Flight Entertainment System (IFE) to a Cabin Management System (CMS), or simply upgrade your IFE, it’s important to understand the difference.
The IFE System usually is comprised of monitors, a sound sys-tem, and an input device, such as DVD, Blu-ray, or Satellite Tele-vision. The CMS is an integrated control system which has all IFE elements, and also allows you to regulate other in-cabin systems, such as lighting, temperature, and window shades. Some aircraft are equipped only with an IFE, while others have a CMS. So what are your upgrade options?
■■ Upgrade the IFE — You may wish to include a HD monitor or a Blu-ray player for better onscreen display. This option is significantly less expensive than upgrading or installing an entire CMS, as most IFE Systems use commercial equipment, like a big box store DVD player. However, those less-expensive systems may not integrate well with more complete CMS systems, nor will they meet all of the aircraft-installed equipment regulatory requirements.
■■ Upgrade the CMS — If your system is older, you may not be able to find parts. If you upgrade to a new digital system, be prepared to purchase a top-of-the-line system, as anything less may not offer a discernable difference.
■■ Install a new CMS — While the most costly because of the certification requirements, this option has the advantage of being the most responsive to your specific needs and wants.
When preparing to refurbish or improve your aircraft’s systems, before soliciting any vendor RFPs, first determine your needs:
■■ Virtual Office Capability — Can you connect to the world just as if you were behind your desk? Can you connect with ground stations as well as with satellites, and do you need to do so? Is the system compatible with Euro ISDN protocols (if you or your guests bring on European computers and equipment)? Will you print or store documents? Must the system be completely secure from cyber threats? Do you want Wi-Fi connectivity and seamless phone calling? Currently there are two options for onboard Wi-Fi: GoGoBiz (formerly
AirCell) for U.S.-only coverage, and Swift Broadband/Inmarset for coverage worldwide. A third option, SmartSky, recently announced that it will offer 4G connectivity worldwide at near-ground-based speeds later this year.
■■ Entertainment — Will the system connect to outside entertainment like Satellite TV or will it all be internal? Do you want the system to be controlled by a smart phone or other intelligent device? Will it have moving maps or ticker-tape news? Do you want to be able to connect other devices such as iPad, laptop, or phone for video or music? Do you want to store movies onboard and get automatic updates?
■■ Cabin Control – Should the CMS control the shades, dim the lights, adjust the temperature, and control the seats? Does the controller have a touchscreen interface? Can the flight attendant make adjustments at the Galley Controller?If you are considering upgrades to either your IFE system or
CMS, the three keys to success are: selecting a reputable and technically- experienced installation facility, determining your needs, and precisely communicating those requirements to the facility. These will help insure that they “get it right the first time,” critical with the newest computer-based systems. When chosen, set up, and installed correctly, your system will respond to your every command. BAA
Upgrading Your IFE or CMS Three Keys to Success
TONY BAILEY is the President and COO of Spirit Aeronautics. His aviation career – in avionics, engineering, maintenance, operations, acquisitions, and both domestic and international executive leadership – spans more than 30 years.
■ IN-FLIGHT COMMUNICATIONS
For more than 35 years, corporations, high net worth individuals, and owners and operators
of business aircraft have looked to AMS to deliver cost effective solutions to complex aviation
issues. With an unparalleled combination of expertise and a valuable collection of aviation
products and services, AMS is ready to become a member of your decision making team.
Business Aviation Professionals Taking You to the Next Step
Aviation Management Systems, Inc.155 Fleet Street | Portsmouth, NH 03801
800 (603) 431-3362 | [email protected]
■ New & Pre-Owned Aircraft & Helicopter Acquisitions
■ Purchase New & Pre-Owned Fractional Shares
■ Transportation Analysis & Aircraft Ownership Options
■ Aircraft and Flight Department Audits & Evaluations
■ Charter/Management Company Evaluation & Selection
■ New Aircraft Completion Management
■ Manage & Oversee Aircraft Pre-Purchase Inspections
■ Portfolio & Asset Management
HO
NDA
AIR
CR
AFT
CO
MPA
NY
BY NEL STUBBSConklin & de Decker / [email protected]
Unless you are a financial executive, you may not be famil-iar with the basic terms of financial and tax accounting as they relate to your flight department. Below is a short
guide to some of these terms:Financial Depreciation, or Book Depreciation, is a system to
distribute the cost or other basic value of tangible assets, in this case your aircraft, less any residual value, over the estimated use-ful life of the asset in a systematic, rational way. Straight line de-preciation is the most widely used method. Ten years is a common, though not the only, “estimated useful life” for aircraft for financial accounting purposes:
$2,200,000 (acquisition cost) – $200,000 (residual value) = $2,000,000 (available depreciation)
$2,000,000/10 (useful life) = $200,000 (per year depreciation expense for 10 years)
Market Depreciation is a widely changing variable based on the value of the aircraft in the marketplace. Market depreciation percentages are based on historical residual values. The exact value of an aircraft is unknown until it is sold, so until the sale, market depreciation is only an estimate. Prior to the recent reces-sion, residual values declined by 3%-4% per year for jets. The dif-ference between retail value and wholesale value was insignificant because of the high demand.
However, there is a big difference post-recession. The residual value (with no inflation) for new aircraft is, on average, 76% of purchase price during the first year. It drops an average of 6% per year thereafter. While the first-year drop on a used aircraft is not quite as significant, much larger drops during the second or third year often bring the residual value percentage in line with that of a new aircraft.
Tax Depreciation is the annual deduction allowed to recover the cost or other basis of business property with a useful life of more than one year. The Modified Accelerated Cost Recovery System (MACRS) is mandatory for most tangible depreciable property placed in service after December 31, 1986. Property is depreciable if it wears out, has a determinable life that exceeds one year, and is used in a trade or business or for the production of income. Aircraft used primarily for commercial (Part 135 char-ter) purposes are depreciated over seven years. Non-commercial (Part 91) aircraft, and all helicopters, are depreciated over a five year period. Depreciation deductions reduce the tax basis on a dollar-for-dollar basis until the basis has been reduced to zero.
Depreciation deductions are allowed only on the business use of an aircraft, which are: A business aircraft owner is allowed an annual deduction on its income tax return for depreciation business air-craft that are used in a “trade or business” and are subject to “ex-haustion, wear and tear, and obsolescence” over time (IRC §167).
Aircraft costs directly associated with flying are divided into two categories: variable and fixed. For example, fuel costs vary in direct proportion to the number of flight hours, as do the costs for engine maintenance programs, landing fees, catering, crew ex-penses, etc. Fixed costs do not depend on the number of hours flown, and include, for example: insurance, training, crew sala-ries, and hangar and management fees.
Other Costs are those associated with the ownership and op-eration of an aircraft, such as taxes, interest, lease payments, de-preciation, etc.
The Chart of Accounts is a list of accounts used to categorize all expenditures for accounting purposes. At the company level this may just be 1 line titled — Aviation Department. It may be up to you to show where all the money is spent.
While the recent recession did not change the tax laws, it may have affected your aircraft’s anticipated residual value. Be sure to review your own depreciation schedules — and adjust your tax planning expectations accordingly. BAA
Demystifying Aircraft Costs: An Owner’s Primer
w w w. B i z AvA d v i s o r. c o m10 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5
NEL STUBBS , VP Conklin & de Decker, advises aircraft owners and companies on aviation tax issues. Her 25 years’ experience includes developing NBAA’s tax seminar. She has a BA in Mathematics and a Master of Aeronautical Science.
■ AIRCRAFT FINANCE
Manage your aircraft as you do your other Financial Assets.
How Is Your Aircraft’s Maintenance Condition
Affecting Its Value?
Call (540) 905-4555
www.assetinsightinc.com
Find Out — With the Asset Insight Index
This simple-to-understand, industry standard grading scale measures the single greatest factor
affecting your aircraft’s asset value — its maintenance condition. The better your aircraft’s
maintenance condition, the higher its Index. Avoid surprises, use the Asset Insight Index to:
▲ Objectively analyze and grade your aircraft’s maintenance condition.
▲ Compare your asset to aircraft listed for sale.
▲ Justify your ask or offer price for an aircraft.
The Only “Credit Score” for Your Aircraft’s Asset Value
The Aircraft Graybook Asset Quality Manual
Try the new, web-basedmaintenance equity guide
FREE for a limited timeassetinsightinc.com/tools/graybook
w w w. B i z AvA d v i s o r. c o m12 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5
BY NANCY RISSORisso NextGen Aviation Solutions / [email protected]
NextGen is an FAA upgrade to the U.S. air traffic control system, from ground-based to satellite-based technol-ogy, which is being implemented in phases through 2025.
Designed to shorten routes, save fuel, reduce air traffic delays, and increase the number of aircraft in the sky at a given time, it also enables controllers to manage aircraft with a wider margin of safety.
One fairly new such technology already in use is Automatic Dependent Surveillance-Broadcast (ADS-B). If your aircraft is ADS-B-equipped, its position is transmitted to Air Traffic Con-trol (ATC) and to adjacent aircraft also equipped with ADS-B. The Global Positioning System (GPS) on board your aircraft sends its position via a “transponder” to ATC. While a simple concept, it is not yet widely used.
Currently, ATC gets position information from radar facili-ties that bounce signals off your aircraft. As the aircraft dis-tance from the radar increases, radar information becomes less accurate; not so with ADS-B. Radar is expensive and has a lim-ited service volume, especially in mountainous terrain; again, not so with ADS-B. While 634 ADS-B ground stations already
have been installed in the U.S. to provide full domestic coverage, ADS-B will not be required in the U.S. until January 1, 2020 — a date unlikely to change.
However, ADS-B now is required in many foreign countries including: Australia, Canada, China, Fiji, Hong Kong, India, In-donesia, Singapore, Seychelles Islands, the Sanya Flight Infor-mation Region (FIR), Taiwan, and Vietnam. This list is continually growing.
As with many NextGen technologies, ADS-B is being insti-tuted in specific areas and altitudes that can benefit the most from better fuel efficiency. If your aircraft is not ADS-B equipped, you may be held at a lower altitude below Flight Level (FL) 290 (29,000 feet), where much more fuel will be consumed. One Fortune 500 company recently made a two-week trip to Asia without the benefit of ADS-B. The flights were held at alti-tudes below FL 290 for much of the trip — versus a more advan-tageous FL 400. That company estimates an additional $10,000 to $15,000 was spent on fuel, due to the dramatically increased
fuel burn at the low, less efficient altitude. Immediately after that trip, it installed ADS-B and applied for FAA approval.
Most jet aircraft will require a “kit” to modify the current tran-sponder to an “extended squitter,” or ES format, operating on fre-quency 1090ES. One Challenger operator says that he spent approximately $25,000 per aircraft to upgrade the transponder and install wiring to the GPS receiver to become ADS-B compli-ant. This cost will vary widely, depending upon your aircraft type, and the age of both the aircraft and GPS unit on board.
When you are ready to upgrade to ADS-B, your flight depart-ment will select a shop approved by the manufacturer of the ADS-B equipment they’ve selected, to avoid installation error. A quick, easy, and no-cost way to be sure that the ADS-B is prop-erly installed and configured, is to send an e-mail to: [email protected]
Your crew can enter your aircraft tail number and request an ADS-B avionics check. As soon as you fly your aircraft above ap-proximately 1,500 feet anywhere in the U.S., an ADS-B ground station will receive and evaluate your ADS-B transponder infor-mation for accuracy. A report will be emailed to you within a couple of days, according to Jim Marks of the FAA Flight Stan-dards Maintenance Division, who provides this service.
If you are flying to foreign countries now, and you wish to “beat the rush” that is sure to ensue as January 1, 2020 ap-proaches, consider gaining your ADS-B capability now. BAA
NextGen – Why?What is NexGen, and What Impact Will It Have On Your Flying?
NANCY RISSO, owner of Risso NextGen Aviation Solutions, consults to business aircraft operators and the FAA. An ATP rated pilot and engineer, she previously worked as the FAA’s Flight Standards Eastern Region NextGen Branch Manager.
ADS-B IS BEING INSTITUTED INSPECIFIC AREAS AND ALTITUDES
THAT CAN BENEFIT THE MOSTFROM BETTER FUEL EFFICIENCY.
■ FLIGHT OPERATIONS
NextGen – Why?
globaljetcapital.com
At Global Jet Capital, we provide flexible, streamlined financing for the private aircraft market. Our team is comprised of senior-
level executives who possess both impressive financial acumen and vast aviation industry experience. If you’re thinking about mid- to large-sized
corporate jet financing, give us a call. We’ll get you in the air. Contact us at 844.436.8200 or visit us at globaljetcapital.com to learn more.
Operating Leases Interim Leases Finance Leases and Mortgage Loans Progress Payment Financing Mezzanine Financing
FLEXIBLE FINANCING AND LEASING SOLUTIONS
Where aviation and financing come together.
14 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5 w w w. B i z AvA d v i s o r. c o m
BY SHERYL BARDENAviation Personnel International / [email protected]
Aviation departments often operate with a lean staff, so when an employee retires, is terminated, or leaves, there may be a rush to fill that position. To avoid the most com-
mon hiring mistakes — which can be costly not only in financial terms, but also in loss of productively and morale — follow these best practices:
Take Your Time — Finding the best match for your flight de-partment is not likely to be quick or easy. The cost to replace a “bad hire” can be as much as five times their annual salary, according to the Society for Human Resources Management, so allowing sufficient time for the search will help ensure that you get it right the first time.
Understand the Nature of the Job You Are Advertising — Your chief pilot, for example, does a lot more than fly. He or she will, among other duties, supervise and arrange to train the flight crew, create and operate within your defined budget, approve in-voices, advise you on new purchases, choose the FBO for each flight, administer flight and maintenance records, oversee travel security, arrange for domestic and international permits, and much more.
Write a Clearly Defined Job Description — In addition to technical duties, a key selection criterion of any aviation hire is whether the candidate can maintain and protect the value of the company’s assets. In writing the job description, focus on the value an individual can bring to your company. Your maintenance technician may save you more yearly by carefully shopping major inspections than your pilot saves on managing fuel flow.
Do Not Rely Solely On Internet Recruiting — This practice often results in responses from those who are either unemployed or dissatisfied, not those who are happy and successful in their current role. It’s imperative that your team create a solid recruit-ing process with HR, use current industry best practices, and con-sider relying on outside help from a recruiter experienced in analyzing a candidate’s professional background.
Have Reasonable Expectations of Your Current Staff — Do not expect your pilot to also be an expert recruiter, nor your in-ternal recruiters to understand the technical nature of the open position.
Seek Out a Culture Match — Candidates who share your company’s passion, vision, and culture will merge easily with your current staff. Even if the candidate has come from the flight de-partment of a highly regarded company, or was referred by a friend, that does not ensure that he or she will be a good match for your company.
Carefully Vet All Applications — In an August 2014 survey, Careerbuilder.com noted that 58 percent of employers have caught a lie on a resume, which only makes one wonder: how many were not caught? Allow sufficient time to investigate a candidate’s background and experience, and always check references. As the old saying goes, “4000 hours of flight time can be one hour re-peated 4000 times.” That’s not the kind of varied and challenging flight experience required to fly trans- or intercontinental flight legs. Consider outsourcing psychological testing and background checks for all candidates: your life may depend on it.
Rely On Your Instincts — A candidate who does not “show well,” or who presents a sloppy résumé full of grammatical errors or misspellings, is not likely to be someone you would trust to han-dle your aviation investment — or your safety. That’s why the in-person interview is such a critical part of the hiring process. It’s where your instincts intersect with your knowledge of the job and your company. And it is a cross-check on whether the candidate’s background, education, experience, and attitude are a match with your existing flight department personnel.
Following these simple, common sense steps to recruiting will help ensure that your future aviation hires are “good hires” — even great ones. BAA
SHERYL BARDEN , BS, MBA, is CEO of Aviation Personnel International, where she helps business aviation and HR teams select great hires with the same values, passion and safety focus as their potential employer.
Hire Standards It’s More Than Skills and Experience
ISTO
CK
PH
OTO
■ AIRCRAFT MANAGEMENT
TAKE YOUR BUSINESS TO A HIGHER LATITUDE.
The Latitude has landed. Our next-generation Citation is redefining the midsize category, and competing jets will f ind themselves
way out of their comfort zones.
It will flat out floor you. The 6-foot-5-inch-wide, 6-foot-high, flat-floor interior is just for openers. You’ll
also be wowed by the wireless cabin technology, Garmin G5000™ avionics and 2,700-nm range. We based
our clean-sheet design on Citation standards of reliability, efficiency and quality – and went up from there.
Including a simple push-button, electric cabin door with stairs that won’t take up cabin space.
From the people who know you, the business jet that understands your needs. Redefine your business
travel for a higher Latitude. Visit latitudejet.com to learn more.
Client: Textron Aviation/CessnaAd Title: TAKE YOUR BUSINESS TO A HIGHER LATITUDE.Publication: Business Aviation Advisor - Trim: 8.25” x 10.75” • Bleed: 8.5” x 11” • Live: 7.5” x 10”
U.S. +1.844.44.TXTAV | International +316.517.8270©2015 Textron Aviation Inc. Cessna’s logo and Cessna are registered trademarks of Textron Innovations Inc., used by permission.
33085_Latitude_Interior_BusAviationAdvisor.indd 1 1/5/15 3:16 PM
16 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5 w w w. B i z AvA d v i s o r. c o m
DAS
SAU
LT F
ALC
ON
JET
BY SIMON DAVIES Global Jet Capital / [email protected]
Since the economic downturn of 2009, your ability to bor-row funds for buying aircraft has been greatly diminished. Many lenders withdrew entirely from the aircraft market,
retrenching to focus on their core business sectors. Others are re-quiring more stringent credit standards. Traditionally, you could borrow a large percentage of the purchase price, putting the air-craft and loan onto your balance sheet. Now, many lenders are re-ducing the percentage they are prepared to advance against the aircraft value, forcing you to make a larger down payment. (See:
“The Changing Lending Climate,” BAA September/October 2014).The impact of this tighter credit is felt most acutely in the non-
U.S. markets, especially for pre-owned aircraft buyers who are have difficulty finding an interested lender.
At the same time, the global economic downturn raised addi-tional concerns for aircraft owners. Companies were pressured by lenders to show more liquidity on their balance sheet. Owners who elected to dispose of their aircraft during this period faced cash shortfalls when the resale value of the aircraft was less than their outstanding loan balance.
With aircraft prices now rising, there are more options as you decide how to pay for your acquisition. Some buyers still pay cash; others obtain a loan to reduce their cash payment. A third alterna-tive — the operating lease — is becoming increasingly attractive.
This financing structure involves a lessor (the financier) who purchases the aircraft that you (the lessee) want to fly. The lessor leases you the aircraft for an agreed term, with the lessor main-taining ownership throughout. What are the benefits to you?
■■ Typically, the lessor pays 100% of the acquisition cost. At closing, you would need only to provide a security deposit, substantially reducing the capital required to obtain the aircraft.
■■ In recent months, aircraft manufacturers have been announcing new models that will compete against older aircraft with similar capabilities. While the impact on the resale values of these older aircraft is uncertain, the introduc-tion of new models traditionally has had a negative impact on residual values. With an operating lease, the risk to the residual value lies with the lessor, not with you. At the lease’s end, you simply return the aircraft in the agreed-upon
condition, with no further obligation. An operating lease provides you with certainty of the capital cost required for the planned life of the aircraft’s use.
■■ With an operating lease, the lessor is both the legal owner and the owner for tax and accounting purposes. Usually, this means that the aircraft is not shown on your balance sheet, and the lease rents are recorded as an expense.
■■ An aircraft not shown on your balance sheet offers you more privacy and security.
■■ When the lessor acquires the aircraft, you do not have to pay the tax on the purchase price as a lump sum. You pay tax only on each rent payment, which eases your cash flow.For all these reasons and more, there is a robust market for op-
erating leases, especially for U.S.-based aircraft. Many U.S. finan-cial institutions will pass some of the tax benefits of ownership back to you in the form of lower rents, particularly if your credit profile is strong. For those with weaker credit, those interested in used aircraft, and for international transactions, the number of willing lessors has decreased. However, just in the past year, a number of new companies have entered the market to provide op-erating leases, offering some long-awaited relief. BAA
Opt to OperateWithout Owning
Escalating Prices, Less Available Credit Make Operating Leases Attractive
SIMON DAVIES, Managing Director, Global Jet Capital, has 25+ years in senior-level aircraft finance positions for Sierra Advisors, Guggenheim Aviation Finance, and Bombardier, in non-U.S. markets. He holds a BA from the University of Western Ontario.
■ AIRCRAFT FINANCE
ARGUS Rated Charter Operators are the most trusted and respected in the world. ARGUS Rated Operators are the only choice for the most selective buyers of charter. ARGUS Ratings are private aviation’s only truly independent, third-party source for trusted operator due diligence. Demand the best, demand ARGUS Rated Charter Operators.
FLY CONFIDENTLYWWW.ARGUS.AERO
ARGUS RatingsThe Most Recognized and
Requested Symbol of Quality
18 B U S I N E S S AV I AT I O N A D V I S O R Ja n u a r y/ F e b r u a r y 2 0 1 5 w w w. B i z AvA d v i s o r. c o m
ISTO
CK
PH
OTO
BY DAVID [email protected]
Despite rigorous security requirements, business flights are increasing at Washington National.
With Republicans in control of both the House and Senate as the 114th Congress convenes, the possibility exists that Congress might actually debate and pass some important legisla-tion this year. (Wild concept, eh?)
If the legislative branch does start functioning again, an in-creasing number of company executives, trade association repre-sentatives, and individuals will be trekking to Washington to lobby their elected representatives.
For those with access to business aircraft, there are three major airports to choose from: Washington Dulles (IAD), 27.2 miles west of Washington in Virginia; Baltimore-Washington International (BWI), 32.4 miles to the northeast in Maryland; and Washington National (DCA), 5.2 miles from Capitol Hill.
Flying into IAD or BWI is pretty simple — tell your flight crew when you want to depart and off you go. When you arrive you’ll be facing an hour (or more!) on congested highways to reach con-gressional office buildings and most federal agencies in Washing-ton, D.C.
Passengers arriving at DCA can get to congressional office buildings in 10-12 minutes. But there’s a catch. Passengers and crewmembers on non-airline aircraft must adhere to a rigorous security protocol.
In the aftermath of the 2001 terrorist attacks that brought down four U.S. airliners, security officials ordered numerous steps to prevent similar attacks, including installation of secure, lockable doors on airliners to keep intruders out of the cockpit.
But it isn’t physically possible to install lockable doors in most business aircraft cockpits. So, because of DCA’s proximity to the White House and Capitol Hill, non-airline flights into DCA were prohibited. Formerly a very busy business aviation facility, Signa-ture Flight Support’s fixed-base operation (FBO) became mostly silent, hosting only small numbers of military and government flights.
That prohibition continued until 2005 when — after countless hours of meetings between members of the business aviation community and federal transportation security officials — agree-ment was reached on the DCA Access Standard Security Program (DASSP).
Key elements included: vetting of security coordinators and flightcrews; screening/search of passengers, baggage, and aircraft for flights coming to and departing DCA; flight authorizations processed by TSA HQ; FAA slot reservations with assigned times; nonstop flights only to DCA and only from authorized FBOs at designated “gateway” airports; and, the carriage of an Armed Se-curity Officer (ASO).
Few operations were conducted under DASSP initially because crew vetting took time and there were only 12 gateway airports. But as more flight departments became acquainted with DASSP’s requirements, and more gateway airports and FBOs were added, flight operations grew — from a few hundred in 2007 to just more than 900 by 2010.
In 2011, DASSP operations jumped to 1,400 after federal offi-cials acceded to industry requests and permitted operators more flexibility in swapping out crews, aircraft, and permitting adjust-ments to arrival and departure times. Discussions continue about finding an alternative to the ASO requirement, with indications a resolution could come soon.
There are now more than 200 DASSP-approved operators, and a significant number of others who have met all the requirements but are not currently flying into DCA — primarily because of the ASO requirement. Passengers, crews, and aircraft can now be cleared for flights to DCA at more than 170 FBOs and flight de-partment hangars on 100 gateway airports in 40 states.
Mary Miller, vice president, industry and government affairs for Signature, has been based at DCA since the days when having scores of airplanes parked on the GA ramp was the norm. She es-timated DASSP operations would reach 1,500 by the end of 2014. “It’s not like the old days, but boy, has it come a long way,” she said.
Particularly rewarding, Miller said, is observing a flight depart-ment making its first DASSP trip. “The back seat passenger has just experienced an eight-minute ride” from his meeting on Capi-tol Hill back to DCA. “He’s getting ready to go through the magne-tometer, standing there smiling, saying, ‘This is great … we’ll be back!’” BAA
DCA’s Proximity Enticing
DAVID COLLOGAN has covered aviation in Washington, DC for more than four decades. This award-wining journalist is known as one of the most knowledgeable, balanced, wary, and trusted journalists in the aviation community.
■ WASHINGTON REPORT
6,200 nm at Mach 0.85* • Max Speed Mach 0.9255,000 nm at Mach 0.85* • Max Speed Mach 0.925
*Maximum ranges shown are based on NBAA IFR theoretical range with eight passengers and typical crew. Actual range will be affected by ATC routing, operating speed, weather, outfitting options and other factors. All performance is based on preliminary data and subject to change.
SCOTT NEAL | +1 912 965 6023 | [email protected] | GULFSTREAM.COM
Aviation experts claim you can’t have it all. Don’t believe it. The optimized
design of the all-new Gulfstream G500 and G600 shifts the aeronautical
paradigm. Fly farther faster without sacrificing cabin comfort, fuel efficiency
or field performance. With the G500 and G600, the future of business
aviation is boundless.
OPTIMIZEDUNRIVALED
[ discover ]
The World Leader in Aviation Market Intelligence | 800.553.8638 | +1.315.797.4420 | jetnet.com
Finally, one clear source to fuel all your aviation business needs. Aviation Business Index (ABI) is a worldwide portal for aviation sales information.
Easily find:
• jets, turboprops, piston aircraft and helicopters for sale worldwide
• market reports and lists
• aircraft owners/operators, dealers/brokers and FBOs
• aircraft financiers and insurance providers
• aviation industry news and events
Go to aviationbusinessindex.com to find accurate, real-time, updated information on aircraft for sale worldwide.
