And What Do My Client's Private Plane Needs Have To Do With Me?
A lot. Especially if you are a fiduciary. The options to charter a jet are seemingly limitless, such as on-demand air charter service, jet cards and private jet ownership, to name a few. With this tremendous variety of options come a variety of price points, safety considerations, and pitfalls that your client can wander into. Your stewardship of their finances and lifestyle should extend to the sky. Read on to learn how you can become more informed about chartering a private jet.
A Fool and His Air Charter Money are Soon Parted
Even the smartest people and their money can be separated quite quickly. Especially when they are only marginally informed about a particular product or service. Take the latest private plane darling turned debacle; a young "entrepreneur" with admittedly no aviation experience or knowledge promises to "democratize" private flights, and lands millions of investment dollars to try and do so.
For a few years, the model was brilliant for those flyers that could not quite afford to charter a private jet and were willing to pay a fee to fly with others on the same route aboard a business jet. The fees were pennies in comparison to what an ad-hoc air charter or jet card would have cost. Clients often had the aircraft to themselves. Celebrities were lining up to invest as well as promote the latest trend in private aviation. This company soon became an industry darling, valued by some calculations at over $1B. What's not to love?
It turns out the model was fatally flawed. At no point could scale and volume overcome the fact that this company was losing money on every transaction. A good analogy is if you split the cost of a whole pizza with a friend, but you only charge that friend for one slice; no matter how many pizzas you split, you are losing money every time, and no amount of scale will change that. In the end, the billion dollar air charter unicorn lost virtually all of its value and was assimilated by another company. From $1B to virtually valueless. Lawsuits, lost money, very unhappy air charter clients, and red faces all around.
The lesson here is that air charter will always have a lot of buzz around it, with lots of new innovations. Sometimes they are just that -innovations. Other times, it warrants a much closer look.
Educate Yourself & Your Client About Private Jet Flying
Just as you are providing financial expertise and advice to your clients, the same should be true for the private plane industry. Is borrowing a not-for-hire aircraft a smart approach (not, really, learn about why here)? What about Jet cards? That depends on you client's flying profile, their preferences, their desired spend, and a number of other factors. Jet cards can be a solid solution - but which jet card? With so many choices, is your client being well-served by a safe, reliable, and cost-competitive jet card program?
The same is true with on-demand air charter, whereby a client will utilize an air charter broker or operator to source their private plane in the open market. Who is vetting the operators, crews and aircraft? How is this being achieved and through which audit protocol? What is the operator's reputation? Is their insurance sufficient? Is non-owned aircraft insurance prudent? Is the price for the private jet a good value?
Aircraft ownership is a great solution for many depending on one's income and tax situation. Owning an aircraft can result in a lower charter spend over time. However, it comes with more cost risk. If the market turns sour, there will be less revenue flying to offset ownership costs. What are the benefits of a private, not-for hire operation versus putting an aircraft on a commercial for-hire certificate? Hint: commercially operated aircraft have a far superior safety record and more robust regulatory oversight of operators, crews, and aircraft.
How Do I Become a More Informed Air Charter Advocate For My Clients?
Start with explaining to your client that the costs to charter a private jet should be included as part of a holistic financial and investment planning approach. Their private jet travel doesn't happen in a vacuum. From there, set up a flying audit with a qualified air charter broker to help understand if the present solution is the best approach, or if another solution makes more sense. This can be achieved relatively quickly and will provide you with a path forward, as well as ongoing support to continue to evaluate (and adjust if necessary) your client's needs to charter a jet.
Click here to learn more about Air Plannings air charter auditing services.