To Be an Aircraft Owner, or Not To Be?

With the announcement of the Productivity Mega Deduction policy here in Canada, under which it appears that aircraft owners can now depreciate the entire value of an asset in year one, some thoughts came to mind about being an aircraft owner.

Starting out in commercial airlines and then later getting into private operations was an eye-opener.

If you’re involved in the details of putting together a maintenance program, evaluating ADs and SBs, managing components and updating the software, you wouldn't see much difference between a commercial and a private operation.

The way you perform these tasks is the same. For example, in the case of ADs, you periodically check the ADs issued by the competent authority or the State of Design for your specific aircraft and evaluate them. You record them in the system, whether they’re applicable or not, along with reporting thresholds, intervals, conditions and all the details that you think need to be highlighted.

This process is the same whether you’re managing a helicopter or fixed-wing aircraft, in a commercial or private operation.

The real difference lies in the big picture: the management of the entire operation.

Regulation, age and type of aircraft, utilization, area of operation, storage needs, maintenance providers, etc. — they all affect the outcome in terms of safety, smoothness of operations and, of course, costs.

So, what does the aircraft owner have to do with all of this?

Let’s start first by understanding why a person would need a private aircraft.

For many, it’s a business tool.

They get from A to B in a fraction of the time of what it would take on a commercial airline.

I don’t need to tell you how painful that can be, even when you have “Platinum” or "Elite" status.

Owning an aircraft makes business travel faster and more efficient.

In the same way, some people don’t drive their own cars. They have drivers, so they don’t have to waste time driving, trying to find a parking spot, etc.

It’s delegation.

They delegate the act of driving so they can focus on other tasks, like continuing to work on their business, taking calls, etc.

Once the decision to buy an aircraft is made, most of the process is in the hands of lawyers, accountants and the technical team, including pilots, maintainers and aviation managers.

In many cases, the aircraft owner is never involved in the “nitty-gritty” of managing the aircraft, unless something specific happens that affects its value or their ability to use the machine.

I’ve experienced this first-hand. With some aircraft, I’ve never seen or spoken with the owners for the entire time I managed their machines.

I've also seen cases where a person responsible for managing the aircraft was never formally appointed.

This is a messy scenario, because the owner doesn’t have the knowledge to understand the complexity of managing an aircraft and doesn’t have the time to do so.

In the meantime, flight crew do what they’re paid for: flying the aircraft. Maintainers do what they’re paid to do: perform maintenance when they see the aircraft.

This is something that I've experienced, and it was not fun.

I could not rely on anyone because no one really knew the status of the aircraft, and the owner could not understand the processes and the issues I was facing that were affecting his ability to use the airplane.

Knowing your aircraft is fundamental to what I’ve mentioned at the beginning of this article: safety, smooth operations and efficiency.

Before buying an aircraft and becoming an aircraft owner, it is important to understand that these are complex machines and that they need attention and care.

Attention and care call for a managing team.

Earlier, I mentioned regulation, age and type of aircraft, utilization, area of operation, storage needs and maintenance providers. Let’s examine briefly what they actually mean and how they often affect owning an aircraft.

Regulation dictates how you can use your aircraft, what you must have in place to operate it, and the ongoing approvals and tasks such as C of A inspections, audits, manuals, etc.

Age and Type of aircraft influence the maintenance program, which in turn affects maintenance, its costs, where you can operate and under which jurisdictions. This can also influence taxes and other financial aspects.

Utilization affects the maintenance program and the applicability of specific tasks that need to be performed. So, it affects the performance of maintenance and how much it’s going to cost. Low utilization calls for specific maintenance programs and tasks. High utilization typically calls for more frequent maintenance.

Area of operation can require specific tasks to be performed — which means more money — along with increased wear and tear on the aircraft and/or specific components.

Storage always needs to be taken into account; what happens to the aircraft when it's not flying has huge ramifications. Not taking this into account can cause such headaches that you might regret the day you bought the aircraft. I’ve seen it many times; and I’ve seen so many nasty bills because of it.

Maintenance providers have a big impact on the aircraft. Not only on how it is physically maintained but also in terms of the quality of the technical records. Evaluating providers and leaning towards those with vast experience with the type of aircraft and operations is critical.

For example, if you operate in a salt-laden environment, having a maintenance provider who has in-depth experience in dealing with corrosion will save you money down the road.

Owning an aircraft is not for everyone.

If you are not willing to have an aircraft management system and interface with it, don’t buy an aircraft.

Just charter one when in need. 

If you do want an aircraft and you see the benefit to you, your family and your business, educate yourself a little. Go beyond the financial and accounting aspects of ownership and talk to the managing team once in a while.

At the end of the day, they not only play an important role in keeping you safe, but their good work also helps protect the value of your aircraft. 

Aircraft owners must have some understanding of what’s involved.

Ultimately, it’s their asset, their safety, their money.

Annalisa - Aircraft Management Specialist, Airworthiness, Co-Author of Introduction to Aircraft Management