Inside Private Air Travel by Shaircraft Solutions

Donations of Private Flight Time Urgently Needed to Help Four Disabled Vets

2010-08-31T15:32:00.004-04:00

Through its ShairGive program, Shaircraft Solutions, a private aviation law and consulting firm, working with the U.S. Veterans Administration and the Professional Golf Association’s First Tee Program, is seeking donations of flight time on private aircraft to help four visually impaired disabled veterans participate in the National Veterans TEE (Training, Exposure and Experience) Golf Tournament in Riverside Iowa, September 6 – 9, 2010.

The four veterans in need—David Zang (Navy), Michael Smith (Army), Ronald Cody (Marines) and Joseph Taylor (Marines), combined, have served our country for over 36 years, from Vietnam through the Gulf War. Each has been selected to participate, along with 200 other veterans, in the Tee Tournament because they have excelled in completing the Blind Rehabilitation Training Program offered by the Veterans Administration.

These wounded warriors suffer substantial visual impairment as well as other debilitating conditions that include prostate and bladder cancer and melanoma, severe arthritis and the effects of a stroke. Yet, they have persevered and continue to work toward regaining a full and active lifestyle.

Unfortunately, commercial air travel from Florida to the Tee Tournament in Iowa City, Iowa involves time consuming and arduous connections that, due to their respective disabilities, make the trip impossible for these heroes. Shaircraft is asking the private aviation community to step up and donate a flight on September 6, 2010 from West Palm Beach, Florida to Iowa City, Iowa and a return flight on September 10, 2010.

“We are honored to have this opportunity to demonstrate, if only in a small way, the respect we have for these fine servicemen,” says CEO, James D. Butler. Shaircraft works pro bono with donors and charities to help facilitate charitable contributions of flight time on private aircraft.

Time is short. If you are able to help, please contact James D. Butler at (301) 652-9885 or jbutler@shaircraft.com.

Quotes from the veterans themselves:

“My Blind Rehabilitation Center experience was a life changing event. Prior to…[it], I was embarrassed and reclusive regarding my vision impairment – attempted to hide…it. Being at the BRC gave me the confidence to know that regardless of how my condition may progress, I will be able to live a full and happy life…Now, just having my white cane with me at all times, provides me an incredible level of confidence, pride and comfort. No limitations – and it just keeps getting better and better every day. My attendance at the [Tee Tournament] will be yet another boost to…regain confidence and the ability to once again share with others how wonderful it is to excel regardless of our ‘bumps in the road.’”

“My visual disability is quite rare and a prognosis is not possible…With my wife not very mobile, and me not being able to drive, I have been too sedentary and not out and about as I use to be…I think this will be very positive for my psyche and a chance to shine in competitions and participations which are more often lost in my past.”

More information about the Tee Tournament is available at http://www1.va.gov/opa/pressrel/pressrelease.cfm?id=1940.

Survival Tips — What to Do if You’re Stranded

2010-08-02T19:55:00.006-04:00

A major reason you fly privately is to avoid delays and other hassles. Yet, summer is a heavy travel season for all private jet providers--fractionals, jet card companies and charter operators. In such heavy demand periods, variables like weather and equipment problems, as well as pilot work rules, can wreak havoc on flight schedules—inevitably causing delays and even some flight cancellations. It makes sense to plan for this possibility. Here are five tips that will help you survive:

Establish Your Rights Up Front — Make sure your contract spells out your rights to on-time departures, force majeure delays (like inclimate weather) for which the jet company is not responsible, and your rights in the event that an unexcused delay occurs.
Negotiate, Negotiate, Negotiate! — Often times, contract provisions regarding your jet company’s performance obligations are negotiable. Get specifics regarding on-time departures and try to minimize excused delays.
Get it in Writing — If your flight is delayed, maintain a paper trail establishing that fact and the reasons given so that later on you can prove that you’re entitled to compensation.
The Squeaky Wheel… — If you’re not getting the response you need, ask to speak with senior management personnel.
Follow Up and Insist Upon Compensation that is Valuable to You — Ask for compensation that’s most valuable to you, i.e., short leg waivers, guaranteed availability, ferry fee waivers, guaranteed upgrades, etc.

For more insight into how best to handle service problems, click here for the full text version of: “Survival Tips — What to Do if You’re Stranded"

Private Aviation Recovery--Encouraging News But Still a Bumpy Ride

2010-07-20T11:48:00.001-04:00

Recent reports indicate a bit of an upswing, both in the market for private jets and in private jet operations. Quoting JP Morgan's monthly business jet report, AIN Alerts indicates that the pre-owned jet inventory of in-production models fell to 11.9 percent in June--the first time it has dipped below 12 percent since October 2008. This dip was due to mainly to tightening of midsize aircraft inventory, while the supply of light jets increased slightly. Pre-owned aircraft pricing inched up by a half percent last month, but only due to a firming up in the large-cabin jet segment. Prices for light and midsize jets decreased by around 2 percent.

JP Morgan reported that business jet flight operations in May grew year-over-year by 12.5 percent. Although this increase was less than the year-over-year increases in March and April, it nevertheless continues a positive trend. Nevertheless, ARGUS reported only a 4 percent year-over-year increase in business aircraft flights in June. Fractional flying led the way with a 6.7 percent increase. Mid-size jet charters increased by a whopping 18.9 percent and flights utilizing fractional turboprop flights, mainly Avatar, were up a solid 15.6 percent.

All in all, it appears that the good news continues to outshine the bad, although the industry recovery remains painfully slow. The growth in charter flights and fractional turboprop operations would seem to indicate that flyers are approaching the market gingerly and looking very hard at flying costs. That's just as I'd expect.

Private Air Travel Decisions: You’ve Got to Have an Attorney on Your Side

2010-06-24T16:48:00.007-04:00

If you are considering an investment in private flying, should you seek the advice of an attorney? The answer, in no uncertain terms, is yes!

Most private air travel arrangements, such as buying a fractional jet share or buying into jet card or block charter programs, involve rather complicated legal, regulatory and liability issues, and substantial dollars, and so deserve careful legal review.

As a general rule of thumb, I’d recommend that anytime you’re parting with more than $25,000 in exchange for a promise by a jet company to fly you sometime in the future, you should have an experienced attorney review the paperwork. Indeed, even if you’re just booking a charter flight, which may cost less than $25,000,, issues like cancellation fees, aircraft and crew specifications, safety standards, etc. are likely to be covered in the fine print that comes with most standard charter contracts. When we broker a charter flight for our clients, we pay close attention to these details.

Jet companies, fractional ones in particular, have a subtle way of making their contracts seem simple (and so non-threatening). They print them in a way that makes them seem short and full of “boilerplate.” Some will even tell you that they don’t change their contracts and, “Everyone signs the same documents.” (We recently negotiated over 150 changes to one such company’s contracts.)

The more risk – financial, legal, etc. - you assume (and there is always risk, contrary to what a jet company may tell you), the more important it is that you have experienced legal counsel review and negotiate these contracts. (Even in the case of some jet card programs, the contracts reflect complicated legal structures and can run to more than 90 pages, notwithstanding the fact that in their ads, they make them look like simple credit cards!)

As with any capital asset purchase, you want to make sure that the asset is liquid and that you can get a fair price for it when you sell, even more so in the case where the fractional company knows much more about the jet market than you do and when you’re almost forced to sell back to them. We hear from fractional owners every week who wish they’d paid more attention to the details of how they’d liquidate their fractional share and how the value of that share would be determined.

When you are putting thousands, or millions, at risk, you also want to make sure that the jet company’s promises are ironclad and that you have real and workable recourse if it doesn’t live up to its end of the bargain. Again, as you’d expect, the fractional companies draft their contracts in a way that gives them a great deal of latitude with respect to these performance standards.

You may first think to call on your in-house or family attorney. Bad idea. Your average attorney understandably won’t have experience with how these contracts work and so won’t know which aspects are negotiable and which are not. Faced with these circumstances, you may be inclined to just go ahead and sign the “standard” contract, only to find out later that you’ve made a costly mistake.

In the end, it seems to me that anytime you contract for a private jet flight—putting your dollars and, more importantly, your safety and that of your family and business associates at risk, you should have an experienced attorney, who specializes in aviation transactions, review the contracts.

Fractional Ownership: Sometimes, ‘Fair Market Value’ Isn’t So Fair

2010-06-08T12:51:00.002-04:00

In my debut contribution to Business Jet Traveler's "Inside Fractionals" column, I offered some advice to fractional jet owners looking to exit their contracts.

That advice is even more relevant now, at a time when the fractional jet industry has been rocked by the economic downturn. With fractional flying down, and some fractional companies apparently in distress, many fractional owners want out. Desperate for cash, providers are making it as difficult as possible for owners to exit their contracts, often delaying repurchases or offering valuations so low, it almost doesn’t make sense to sell. Owners wonder if their shares have gone down in value as the providers claim, in some cases as much as 70%. What owners may not know is that they have the right to contest these valuations through the appraisal process provided in their Purchase Agreements. Owners, who appreciate that they have this right, often don't have the market knowledge and other expertise necessary to exercise it successfully.

When is it worth it to contest your provider's low ball valuation? The larger the share and the bigger the aircraft, the more likely it is that it will be worth your while. Bringing to bear a unique blend of legal and aviation expertise, we've fought for and obtained significantly higher fractional share valuations for many owners.

You can put yourself in the best position by anticipating this contest and negotiating changes in the standard boilerplate Purchase Agreement with regard to how the process will work and, most importantly, how the value of your share will be determined.

Read the full article, “Sometimes, ‘Fair Market Value’ Isn’t So Fair” here.

Shaircraft Broadens Its Social Media Outreach

2010-05-19T12:14:00.004-04:00

Bethesda, Maryland - May 2010

Attorney and CEO of the veteran private air travel consulting firm, Shaircraft Solutions, James Butler, Esq., is making a splash in the world of social media, with active profiles now on Twitter, Facebook and LinkedIn.

“Following the launch of our blog, Inside Private Air Travel, we decided to expand our outreach on social media applications. While not all of our clients are using them, many are, as are many of our industry colleagues. It’s turning out to be just one more venue for listening to and connecting with private air travelers, getting first-hand information from industry folks, and sharing our expertise with the exclusive private aviation community.”

Finding James Butler/Shaircraft online:

LinkedIn: www.linkedin.com/in/shaircraft

Facebook: www.facebook.com/shaircraft

Twitter: www.twitter.com/shaircraft

Blog: blog.shaircraft.com

Shaircraft Solutions is a Maryland based consulting firm advising businesses and individuals on a range of private air travel investments, including fractional ownership, jet card programs, air taxi services and charter, and also specializes in fractional share valuation disputes. CEO, James D. Butler, is an attorney and frequent commentator on the private air travel industry. He authors the “Inside Fractionals” column for Business Jet Traveler magazine, contributes regular pieces to Halogen Jets, and recently has served as an expert analyst for media outlets such as The Wall Street Journal, Robb Report, Forbes, Aviation International News, Halogen Jets, CNN and Fox News. He can be reached at jbutler@shaircraft.com.

The Future of Fractional Jet Ownership

2010-05-13T13:54:00.003-04:00

As a private aviation advisor for more than a decade, I’ve seen the fractional jet industry go through plenty of ups and downs. Early on, fractional flying flourished as NetJets, the result of the creative genius of Rick Santulli and the capital of Warren Buffett, came to the fore, followed by new entrants developed by strong aviation companies like Bombardier, Cessna and Raytheon.

In the early part of this decade, the triple whammy of the 9/11 tragedy, the bursting of the internet bubble and the stock market plunge threw the industry for a loop. As the stock market recovered and the commercial air travel experience continued to deteriorate, fractional flying again began to flourish, along with some new private flying program models like fractional jet cards, block charter programs and the like.

In the past two years, however, the recession has hit the fractional jet industry hard. Fractional companies have seen many share redemptions and few share sales. The decline in the preowned jet market has hit fractional owners particularly hard, revealing the Achilles heel of the fractional flying model--the purchase price owners receive for their shares at the end of their contracts.

While recent headlines suggest that private aviation as a whole is rebounding, the future of the fractional industry is uncertain. Every fractional owner and potential fractional owner has the same basic question: Does it make sense for me to invest/stay invested in fractional or should I consider other private air travel options like charter or jet cards? While the fractional industry has both floundered and flourished in recent years, the answer to this question always is the same--it depends on your individual circumstances including your investment time horizon, your travel profile and budget, etc.

Your goal should be to purchase maximum flight time on aircraft that best fit your needs from reliable and financially stable companies at a minimum cost. Making the wrong choice can cost you hundreds of thousands, if not millions, of dollars. Making the right choice can free you from the horrible service offered by the airlines in a way that does nothing less than change your life for the better.

To read a more thorough discussion of the factors you should consider in making your decision, see my recent article in Business Jet Traveler magazine: "Flying Privately Without Buying a Jet"

NetJets Modifies Contract to Extract More $$$ From Owners

2010-03-19T11:13:00.002-04:00

Recent losses apparently have spurred NetJets to seek increased profit margins on the backs of its customers. Case in point, NetJets used to increase hourly flying rates, international crew fees and ferry charges based solely on increases in the Consumer Price Index. Admittedly, the CPI bears little relation to any of these charges but, in a low inflation environment, NetJets has had to forego meaningful increases in these charges. Not any more. NetJets quietly has instituted a minimum annual increase of 2% in these fees, even if that exceeds the increase in CPI. Existing owners who expect to renew their contracts on essentially the same terms as their existing contracts may be surprised to find this change in their deal.

NetJets: You Know It's Bad When...

2010-03-10T14:39:00.004-05:00

In a recent letter to shareholders, Warren Buffett said that were it not for Berkshire Hathaway's guarantee of their debt, "NetJets would have been out of business." This is unsettling news for existing NetJets owners who regularly contact me, concerned about the future of NetJets and how their investments will be impacted - particularly if they decide to sell.

With the industry down as a whole and many fractional companies struggling to stay afloat, owners have good reason to be concerned. As I've noted before, the attempt by some fractional companies to delay repurchases is a clear indicator that capital is tight. If you’re wary that financial problems may cause your provider to fail, you might seriously consider selling your share now. With few sales occurring, you’ll benefit from older comparable sales that reflect higher values. That said, many fractional companies have and continue to low ball their owners on repurchase valuations - a battle that I've been fighting against for years. (See this related client story.)

For those considering a new investment, it’s important to consider the length of your investment horizon. While the current economic downturn may provide an opportunity for you to take advantage of lower aircraft pricing (resulting from declines in the market value of aircraft), this decrease may continue for some time and so the value of your aircraft, and thus your share, may drop over the next couple of years. The private jet market tends to by cyclical, and so values likely will come back with the economy, but this will take time.

Whether you're an existing owner, concerned about your provider's reliability or getting out of your investment, or you are considering a new investment in hopes of striking a good deal, it’s crucial to have an expert sitting on your side of the table, ready to fight for you.

NetJets: Losses Run Deep

2010-03-08T13:17:00.002-05:00

Aviation International News recently reported some staggering facts on NetJets’ performance over the last couple of years:

NetJets lost $711 million in 2009.

NetJets revenues dropped last year by $1.465 billion-or 32 percent-versus 2008 due to a 77-percent fall in aircraft sales and lower flight operations revenues.

In the 11 years that Berkshire Hathaway has owned it, NetJets has recorded an aggregate pre-tax loss of $157 million.

Here's another factoid: Aircraft manufacturer, Hawker-Beechcraft, recently announced that NetJets has canceled its order for "a significant number" of aircraft that were to have been delivered over several years, starting in 2011. The cancellations represent 90% of NetJets' orders with Hawker Beechcraft. In an apparent response to these setbacks and a shake up of senior management, NetJets has been taking a much harder line with its customers in all areas--contract terms, customer service, share buybacks, etc.

Intensified Commercial Security Screenings Make Private Aviation Even More Appealing

2010-02-22T17:20:00.005-05:00

The web is buzzing with discussion about the Transportation Security Administration's (TSA) ordering of significantly more intrusive and time consuming passenger screening measures following the attempted bombing on a US-bound Northwest Airlines flight on Christmas Day. (See this recent article in The Washington Post on the new security procedures at U.S. airports.) In addition to the use of full body scans at more US and international airports, TSA will begin randomly swabbing U.S. travelers' hands and baggage for explosives.

By contrast, TSA recently nixed plans to impose new intrusive security screenings on private jet travelers. Currently, about 15,000 private aircraft are subject to these unnecessary procedures. By reducing the size of aircraft subject to these regulations to exclude most private jets, TSA will significantly reduce that number. In addition, instead of mandating that all passengers aboard private planes be checked against terrorist watch lists, name checks could be left to the discretion of pilots. These actions are in recognition that such intrusive procedures simply don't increase security in the context of private jets.

Discretion and fewer security hassles have long been a draw of private aviation - particularly post-9/11. With pressure mounting to tighten security on commercial flights even further, and with more intrusive searches on the rise, commercial travelers (or travelers who might have left private air travel for financial reasons), are likely to turn (or return) to private aviation. (See this recent article in The Wall Street Journal - "When Security Takes Longer Than the Flight" by Scott McCartney.)

As I've said before, with private aviation, you know who’s on board the aircraft, what’s in the luggage and who’s in the pilot's seat. That sense of control provides peace of mind which, in today’s world, is priceless.

Shaircraft Recommends: La Playa Golf and Beach Resort

2010-02-18T13:34:00.005-05:00

Looking for some fun in the sun close to home? Naples, Florida is a great beach and golf destination. We highly recommend the La Playa Golf and Beach Resort.

Just minutes from the Naples and Fort Myers airports, La Playa offers excellent accommodations on the beach, excellent restaurants and superior service. The La Playa Golf Course is highly rated and also is the home of the David Leadbetter Golf Academy.

What's Up With Flight Options?

2010-02-07T11:44:00.001-05:00

Given the economic downturn, common sense tells you that the fractional jet business must be down. Unfortunately, common sense is largely all we have to go on because the major fractional companies don't publicly report their programs' results of operations.

Another clue to look at is how a fractional provider is handling the repurchase of shares from existing fractional owners. With share sales slow, these companies likely must utilize existing capital or lines of credit to fund many of these repurchases.

In this regard, Flight Options' recent business practices give one pause. To be sure, in the past Flight Options has consistently low balled its owners on the value of their shares. I know this because, for over ten years, I have been fighting on behalf of Flight Options' (and other jet company) share owners to get them fair value for their shares. It's no surprise to me that this practice of low balling owners on share valuations continues. What's new is that now Flight Options is trying to delay share repurchases in direct contravention of its contractual obligations. It's excuse? In a recent letter it claimed that, "[T]he current market for used general aviation aircraft is illiquid, with very few transactions taking place making it increasingly challenging to establish market value." This claim is disingenuous at best. A liquid market does exist and values can be reasonably determined.

One wonders how financially strong Flight Options is if it's trying to delay share repurchases and offering flight credits in its JetPass program in lieu of cash. As we continue to do battle with Flight Options, we'll let you know.

Making the Case: Corporate Use of Private Jets

2010-01-28T13:49:00.007-05:00

Without question, private air travel has taken a public relations hit over the last year. Media reports of executives from the Big 3 automakers traveling to Washington via private jets to testify at congressional hearings angered the public and resulted in some corporations selling their jets altogether. Have some executives likely abused the privilege of flying on the company jet? Probably. Still, when it comes to business travel, the case for flying privately vs. commercial, is a strong one.

Properly employed, private air travel is a net plus for many companies. It saves time and increases the productivity of senior executives. Indeed, many business travelers will tell you that they’re more productive on the aircraft than they are in the office. In what is now an incredibly fast paced business world, the ability to react and move quickly is essential. Even the most novice traveler knows that flying on the commercial airlines is a nightmare. Do we really expect that we'll be better off forcing senior executives of troubled companies to spend ten hours flying commercially, sitting in airports waiting out long delays, missing connections, etc. to take a trip that can be accomplished in two hours flying privately?

Pressuring companies into divesting their aircraft at this time will only hurt them. The market for private aircraft, like other markets, is down. With many sellers and buyers waiting for prices to fall further, forced sales no doubt will mean substantial losses for these companies. From a market perspective, this is exactly the wrong time to force companies to sell their aircraft.

Understanding and appreciating that there is a lot of resentment and anger in the country, the private aviation industry must make the case on the merits that private aviation works to the benefit of these companies. The industry and these companies must demonstrate that these aircraft are not boondoggles for spoiled executives, but rather are justified because they add to the bottom line in clear and demonstrable ways. To do that, these companies must institute travel policies that limit use of private aircraft to official company business and be transparent in implementing these policies.

Sidenote: In a recent Daily Finance piece, contributer, Jonathan Berr, defends corporate use of private aviation, arguing that public anger over it "misplaced." (Click here to read Berr's piece in its entirety.)

Considering a Year-End Private Jet Deal? Only Fools Rush In!

2009-12-09T23:38:00.002-05:00

Towards the end of the year, you might find yourself flooded with offers from various fractional and jet-card companies that tout significant savings and other incentives. My advice? Do not rush into making such an important decision. You don't have to necessarily hold off on making a deal, but you must do your homework. This includes taking the time to thoroughly understand your needs and budget, identifying the best program for you, shopping around, understanding the cost and, of course, reading the fine print. The cost of making the wrong deal will far outweigh any year-end benefits and incentives.

For a more detailed look at year-end deals, download a PDF of my article, "“Year-End Private Jet Deals, Only Fools Rush In" here.

How Fractional Owners Can Ensure Hassle-Free Holiday Jet Travel

2009-12-01T10:09:00.004-05:00

The holiday season is the time of year when many of our fractional-share clients get the most out of their private jet investments. That said, it pays to plan ahead to ensure that your travel is trouble-free and all that you bargained for.

Here are some tips from an article I wrote for Business Jet Traveler on getting the most out of your jet investments during the holidays and other busy travel periods:

Play the Slots — Some more popular airports have limited landing slots so your provider may require more advance notice for these flights. Work with your provider to give yourself the best chance of averting hassles.

Avoid Peak Travel Days — Many designated “peak travel days” fall on and around holidays. On such days, access to aircraft is more restricted and delays are more common. Whenever possible, schedule flights on nonpeak days. You’re much more likely to avoid a charter and to fly on your preferred schedule.

Take Advantage of Guaranteed Upgrades — Check your contract and if it so permits, consider upgrading to a larger aircraft to accommodate more travelers and extra luggage. Request the upgrade well in advance and avoid peak travel days.

Consider Simultaneous Use — When transporting family from multiple locations, Butler suggests asking your provider for use of two aircraft on the same day. This capability usually is granted to owners of larger shares on larger aircraft, but sometimes can be negotiated on smaller shares.

Say No to Charter — During busy periods, fractional providers rely more than usual on charter aircraft. If you’re averse to flying charter, let your provider know up front and insist that a note to that effect be included with your request. That way, when fleet aircraft are stretched thin, they’ll be more likely to send one to you and pass the charter on to the next guy.

Build a Relationship — Communicate your needs and concerns to your sales rep or a senior manager. He or she has a stake in making sure your trip goes well and so can be an additional voice advocating on your behalf.

Bottom line: An understanding of your contract rights as well as careful planning are essential ingredients in making the most of your jet travel — especially during peak travel periods.

For more advice on flying fractional during peak travel seasons, download a PDF of my article, "Beating the Holiday Rush," here.

Alert: FAA Computer Glitch Causes Flight Delays and Cancellations

2009-11-19T15:27:00.015-05:00

An FAA computer glitch which caused several flight cancellations and delays across the country today has been resolved, but delays are expected to linger throughout the day.

Major flight delays were reported in Washington, New York, Philadelphia and Chicago. Some flights were more than two hours behind schedule. Some airports in the South reported delays as well.

According to David Demelio, director of Aviation for the Greater Rochester International Airport, it is possible that the failure could also could have a ripple effect and delay corporate jet and private flights as well.

NetJets CEO, David Sokol, on the Future of NetJets, Pilot Furloughs and More...

2009-11-18T12:16:00.004-05:00

In a recent interview with CNBC, NetJets CEO, David Sokol, paints a picutre of a new and improved NetJets, meanwhile smoothing over their recent announcement that, effective January 15th of next year, they will furlough up to 495 pilots from its North American fractional operations. Many NetJets owners I speak with these days are understandably concerned about the future of NetJets and how their investments will be impacted by the upcoming changes. We will, of course, be watching this very closely and report back with any new information.

Re-post: Welcome to Inside Private Air Travel!

2009-11-09T12:33:00.002-05:00

For those just now joining us...Welcome to Inside Private Air Travel, a blog devoted to providing information, insight and commentary on issues of interest to private air travelers. My company, Shaircraft Solutions, represents and advocates for private flyers, providing a unique blend of legal and aviation expertise. We specialize in so-called “shared use investments” like fractional ownership, jet card programs and charters.

As the CEO of Shaircraft, I have been an industry commentator for some time--authoring the award-winning “Inside Fractionals” column for Business Jet Traveler magazine, as well as providing insight and analysis for several other media outlets—print, online and broadcast. In doing so, I’ve learned that many media outlets are somewhat limited in their ability to provide inside and timely information to private air travelers. Some are in large part beholden to the jet companies that advertise and sponsor them. Others publish infrequently, so developments in today’s rapidly changing industry environment are stale by the time they go to press.

Thus, we at Shaircraft have decided to offer this blog as a means of providing unvarnished and timely industry information to the private flying community. We are not compensated by the private jet companies; so we’ll bring the same candor and insight to this blog that we deliver everyday to our clients.

We will investigate and comment on a wide range of industry issues. We’ll also provide timely information on the latest developments with the jet companies and other industry players.

In short, Inside Private Air Travel will be a one stop destination where you can learn how to get the most out of your private air travel investment, and avoid costly mistakes.

We welcome your feedback. If you have suggestions for topics that we should cover, or a comment on any of our blog posts, please email us directly at info[at]shaircraft.com. This blog is here for you and there’s nothing more valuable to us than your input.

Finding the Right Jet Charter (Part II): Finding an Empty Leg

2009-11-09T23:37:00.008-05:00

As I've mentioned before, the most important aspect of any flight is, obviously, safety. For most of our clients, the second most important aspect of any charter flight is cost. One way to achieve the lowest possible cost is to find an operator who is flying an “empty leg” that suits your itinerary.

What’s an “empty leg?” In most cases, when a private flyer books a charter for a trip that includes a stay at his destination of more than a couple of days, upon completing the outbound leg, the charter operator will fly the aircraft back to its home base, and then back again to pick up the flyer for his return flight. In so doing, the charter operator will charge the flyer for two round trip flights. However, the aircraft will be flying empty on two of the legs. In such a circumstance, the charter operator may be willing to charter these “empty legs” at a very favorable price.

Sounds good, right? How can you find an empty leg that’ll work for you? Here are a few tips:

Flexibility is the Key. The more flexible you are, the more likely you are to find an empty leg. Be willing to depart at any time of day, or over a couple of days, and be willing to fly out of as many airports as possible. Also, be flexible as to the type of aircraft you’ll fly on. If necessary, accept a fuel stop in order that smaller aircraft can be included in your search.
Do the Legwork. The more in depth your search, the more likely you are to be successful. Check with as many reputable operators as possible.
Accept Uncertainty. Most operators don’t know whether they’re going to have an empty leg until a week or so before the flight, because that’s when most charter flights are firmly booked. Thus, get comfortable with the fact that you may not know whether an empty leg is available until the last minute.
Make Sure Your Booking is Firm. Once you book the flight you’re entitled to know that the booking is firm and that the price will be honored by the operator. On the flip side, make sure you understand the cancellation policy in case your plans change.

Safety Remains Your First Concern. Your flexibility in flying on the operator’s schedule is what gets you the lower price, not compromising safety. Insist upon satisfactory answers to the safety questions we discussed in our last post.

If you’d like to find an empty leg, but still want to fly your trip privately if you can’t find one, Shaircraft can help. We’ll book a charter flight for you while at the same time searching for an empty leg. That way, you have all your bases covered.

When we book a charter, our goal is to find you the best price for your flight with an experienced operator on a well maintained and appropriately equipped aircraft flown by top notch pilots, all with a spotless safety record.

Want to Fly Fractional Without the Commitment? Consider Sharing a Share.

2009-10-30T16:31:00.015-04:00

In the current economic climate, many private fliers are cutting back on travel— whether for business or for pleasure. This is especially costly if you’re a fractional owner because you continue to pay monthly management fees whether or not you fly and, if you underfly your allocated hours over the life of your contract, those paid for hours may simply be lost—dramatically increasing the real cost per hour of this investment.

Sound like you? We’ve come up with a solution that may ease your pain. On occasion, we have high net worth clients who prefer to fly on a fractional fleet but don’t want the long term commitment of owning a fractional share. We’ve been able to match these clients with other clients looking to lay off some flight time and recoup some of their management fees. The flyer pays all charges for his flight and a portion of the owner’s monthly management fee. As in all good deals, this arrangement is a win/win for both parties.

Any such arrangement must be worked out carefully to protect both parties and to make sure that it does not run afoul of FAA regulations. Utilizing our legal expertise, we’ve crafted time sharing agreements that do just. If such an arrangement may be of interest to you, from either side of the equation, give us a call. In the meantime, check out this related success story:

As a successful financial advisor, Dave Schrader knows a thing or two about smart investments. So when a client came to him, frustrated with the cost of sustaining a fractional investment that he wasn’t much using but didn’t want to sell, Dave turned to Shaircraft for advice. Thinking outside the box and utilizing our industry contacts, we identified another private flier who wanted the benefits of fractional, without the long term commitment, and so was well suited to sharing use of this fractional share. We brought the parties together and drafted and negotiated a time sharing agreement that met both their needs.

Finding the Right Jet Charter: Think Safety First

2009-11-04T10:44:00.001-05:00

With the holidays approaching, many private flyers are turning to traditional charter to satisfy their travel needs. With no long term commitment and an abundance of capacity in the market, charter may offer an attractive alternative to fractional shares and jet card programs.

If you’re new to charter, your first concern should be to make sure that the flight will be safe and operated by a reputable charter company. A personal referral is always great, but with over one thousand charter operators in the United States, you may have to some due diligence. Here are a couple of tips that will help you guide you as you look to book your next flight:

Review the operator’s five year safety accident/incident record.
Require that the operator, the aircraft you’ll be chartering and the pilots all are certified by one of the established safety auditing firms like ARG/US or Wyvern.
Make sure the aircraft has state of the art avionics and other safety equipment and is in full compliance with all FAA directives and maintenance requirements.
Make sure the pilots have flown a significant number of hours in the particular model aircraft you’ll be chartering.

I’ll have more to say about chartering in future posts, but for now, think “Safety First.”

Residual Value of Fractional Investments - Part One

2009-10-26T23:30:00.003-04:00

The Achilles heel of the fractional jet business model is the residual value that an owner receives at the end of his investment (generally 5 years). I’ve commented on this for many years. Most fractional owners consider the cost of this investment considering the buy in cost for the share and the operating costs (monthly management fees, hourly flying costs, fuel and other surcharges, etc.), but in crunching these numbers they forget to figure in what they’ll get back when they sell the asset. The providers have done everything possible to make sure a secondary market hasn’t developed. Thus, there’s really only one market for these shares—the fractional companies themselves.

Because of this blind spot and an understandable lack of knowledge and experience with the way these contracts work, most prospective fractional owners fail to negotiate the buyback provisions of their contract so that the process yields a fair result.

In addition, when fractional companies offer buy out prices, supposedly based on the value of the underlying aircraft, most owners lack the knowledge and expertise to challenge them.

Thus, in many if not most cases, the fractional provider is able to buy back the share at a significant discount to its fair market value. It is only then, at the end of the deal, that the owner can really determine what it has cost per hour to fly fractionally (the sum of the buy in cost and the operating costs over the life of the investment, less the residual value, divided by the actual time in the air.)

At Shaircraft, we have attacked this problem on behalf of fractional owners for many years—both in negotiating their contracts up front, and in bringing to bear our knowledge and expertise in challenging the low ball residual share values offered by the fractional companies. In one recent case, our efforts increased the valuation of a fractional aircraft by more than $2 million.

It’s no secret that the value of preowned private jets has decreased generally due to the recession. This down market has adversely affected the residual values of fractional shares; but frankly, faced with many more redemptions than new sales, some providers are using the recession as an excuse to low ball their customers. In our next post, we’ll look at a specific case in which a fractional company essentially refused to buyback its owner’s share, despite a clear obligation under its contract to do so.

Residual Value of Fractional Investments - Part Two

2009-10-27T04:19:00.002-04:00

In my last post, I discussed that an essential, but oft overlooked, aspect of the all-in cost of a fractional share is the residual value you receive when you sell your share back to the fractional jet company. In many cases, by disregarding contract provisions, manipulating the valuation methodology and taking advantage of owners who understandably lack in depth knowledge of the jet market and expertise in appraising aircraft, fractional companies get away with offering less than fair value for these shares—often substantially less. Shaircraft challenges these low ball offers and gets our clients fair value for their shares.

A recent case stands out, however, because the fractional company simply refused to buyback a fractional share even though its contract clearly obligated it to do so. Here’s a thumbnail of what happened.

- The owner notified the fractional company that he wanted to sell. Although obligated to provide the owner with a valuation of the share and a repurchase contract within 10 days, the fractional company did virtually nothing for two months.

- Two months later, the fractional company notified the owner that it would not abide by the valuation method provided in the contract. Instead, the company unilaterally decided that the owner could either (i) hold onto his share for another 6-12 months, or (ii) sell based on a wholesale price for the aircraft. Both options clearly breached the terms of the owner’s contract, which required a 90 day closing and a valuation of the share based on the fair market retail value of the underlying aircraft.

- Shaircraft became involved shortly thereafter and we were able to get the process back on track. Ultimately, the fractional company was willing to do almost anything to keep from having to buy back the share, and so offered free flight time and other credits and incentives to the owner.

Unfortunately, this sort of blatant disregard for the clear and unequivocal repurchase terms of its contracts is, in our experience, more the rule than the exception, with this fractional company. Although perhaps not as blatantly, other fractional companies often try to short change their owners in valuing shares to be repurchased.

Welcome to Inside Private Air Travel

2009-10-20T11:06:00.011-04:00

Welcome to Inside Private Air Travel, a blog devoted to providing information, insight and commentary on issues of interest to private air travelers. My company, Shaircraft Solutions, represents and advocates for private flyers, providing a unique blend of legal and aviation expertise. We specialize in so-called “shared use investments” like fractional ownership, jet card programs and charters.

As the CEO of Shaircraft, I have been an industry commentator for some time--authoring the award-winning “Inside Fractionals” column for Business Jet Traveler magazine, as well as providing insight and analysis for several other media outlets—print, online and broadcast. In doing so, I’ve learned that many media outlets are somewhat limited in their ability to provide inside and timely information to private air travelers. Some are in large part beholden to the jet companies that advertise and sponsor them. Others publish infrequently, so developments in today’s rapidly changing industry environment are stale by the time they go to press.

Thus, we at Shaircraft have decided to offer this blog as a means of providing unvarnished and timely industry information to the private flying community. We are not compensated by the private jet companies; so we’ll bring the same candor and insight to this blog that we deliver everyday to our clients.

We will investigate and comment on a wide range of industry issues. We’ll also provide timely information on the latest developments with the jet companies and other industry players. In short, Inside Private Air Travel will be a one stop destination where you can learn how to get the most out of your private air travel investment, and avoid costly mistakes.

We welcome your feedback. If you have suggestions for topics that we should cover, or a comment on any of our blog posts, please email us directly at info[at]shaircraft.com. This blog is here for you and there’s nothing more valuable to us than your input.