Need some good advice

[RadarVector]

First, a little background - I fly for the 135 operator and recently the partners who own one of the aircraft approached me to take over the management of their airplane. This puts me in a somewhat sticky situation and I have many questions and concerns about the pros and cons of becoming an independent pilot/manager of the airplane. The idea is to operate the plane mostly part 91, but we can't rule out some 135 ops or even dry lease block time. Also, they are thinking about moving up from a light jet to a midsize so I will be invloved in the decision as to what aircraft makes sense.

I need some assitance from those of you who have been there done that as to the pros and cons. By nature I have a very entrepreurial spirit and would love to be in greater control of the situation. I just want to make sure I'm going into this with eyes wide open so I need to identify the pitfalls. Obviously flying 135 for below average wage with no schedule is somewhat easy to beat, but this is more than just flying the airplane. Most of my questions/concerns are center on how to structure such a deal and what would be fair and adequate compensation. My thinking is that the devil is in the details, I just need some advice on identifying the issues and selecting a course of action.

Thanks guys!!

 

[h25b]

You're right, the devils ARE in the details. The first trick (and most common mistake) is making sure the owner's expectations are clearly defined AND realistic. What do you hope to accomplish by chartering the aircraft ? Because if the owner has been led to believe that this will defray all costs of operation or will actually make money in the long run, well they're dreaming. Just from what I have seen, the amount of hours you'd have to charter an aircraft would significantly accelerate depreciation and aircraft wear/tear.

Another question, do you have a A&P or other maintenance background ? Because if you don't, be careful because it gets complicated in a hurry especially if you're operating Part 135. I would advise a maintenance tracking agreement and look for as many oppourtunities to tie down your costs as much as possible to a flat hourly rate. Depending on your aircraft, there are many options such as Smart Parts, Honeywell MSP, JSSI, etc... My biggest fear is some unexpected 250,000 repair and have tried to protect ourselves as much as possible with these programs that make sense. I think you'd be surprised at how bills seemingly come out of the woodwork trying to keep an airplane flying and it will take you a good year (probably) to get everything honed in.

I have quickly learned why when you see a job posting for a Chief Pilot/Dept. Manager most require previous experience as such because it's certainly a steep learning curve.

My 2 cents...

 

[English]

You could "manage" the aircraft but have the 135 charter company do the maintenance tracking for you. Usually 135 companies will get a better break on hangar space, fuel and even maintenance than you might be able to procure on your own, especially if the charter comapny has lots of planes.

Just make sure the charter company has an experienced director of maintenance that knows the regs, and that you trust.

 

[h25b]

Ditto... Especially the D.O. that you can trust part... We have done the same thing in negotiating a flat deal for hangar space, maint. tracking, fuel discount, etc...

 

[RadarVector]

H25b - I don't have a maint background so as far as maintenance tracking goes, can you estimate about how much time and effort I'd hve to put in (i.e. approx. hours per week)? How would you breakdown or explain an acceptable compensation package? I'm thinking for a Learjet captain the salary should be in the 60-70K range and another 25k for managing the aircraft. Am I off base?

Also, I'm hoping I can structure a deal to avoid operating part 135 with some dry lease if necessary. What would the potential problems be with a dry lease? If we do have to go with some 135, how much control can I really retain as far as maint? With additional training and operational costs of going 135, not to mention extra hours on the airplane and its effect on residual value, is there a genrally accepted rule of thumb as to how many revenue hours need to be flown just to break even because the aircraft is operated 135? What questions should I ask of a D.O when interviewing potential 135 operators? I could go on for days with questions and I really appreciate any input you guys can give. I'm really hoping for you guys to point out things that you've learned from past expereince. I don't want to get my a$$ in a sling!!

 

[h25b]

Since ours is tracked for us I really couldn't give you any exact estimates on how much time you'd be looking at on a weekly basis. My point however is that I have my hands full keeping up with everything else that needs to get done. We spend $2500/mo. for hangar space, maintenance tracking, and a .65 discount on fuel from the home base. Pretty good deal. For that I get a constantly updated spreadsheet that includes every item on the aircraft and how many months/hours/cycles until it's due. From there it's just a matter of sitting down and going through due items and figuring out the most cost-effective/best way of getting them accomplished (which in and of itself can be enough of a challenge).

As far as compensation goes, I sure would say at least the 70K figure plus whatever you decide managing is worth. I think if we just wanted maint. tracking we would be looking at around $1500/mo. But without an A&P certificate, I sure wouldn't get in to it... Especially if you go Part 135 because sooner or later you will have your friendly FAA principle maint. inspector looking over your work. You know, because they'll let operators like Air Tahoma's planes fall from the sky, but won't think twice about violating someone like you for flying .5 past a due maint. inspection.

As for break even point on operations, well I can tell you for our late model Lear 31a that charters for $1950/hr. + 175/hr. fuel surcharge our break even would be about 30 hrs. of charter per month. We're on the high side because were on MSP Gold for our TFE-731's which runs around $300/hr. alone... Bottom line though, this will depend greatly on your particular aircraft and is why I said that it will take a few months before you will truely have the numbers pinned down.

PM me with any other questions...

As for finding a 135 operator, their reputation usually precedes them so you shouldn't have much problem weeding the bad ones out.

 

[O-Line]

H25b - I don't have a maint background so as far as maintenance tracking goes, can you estimate about how much time and effort I'd hve to put in (i.e. approx. hours per week)? How would you breakdown or explain an acceptable compensation package? I'm thinking for a Learjet captain the salary should be in the 60-70K range and another 25k for managing the aircraft. Am I off base?

Also, I'm hoping I can structure a deal to avoid operating part 135 with some dry lease if necessary. What would the potential problems be with a dry lease? If we do have to go with some 135, how much control can I really retain as far as maint? With additional training and operational costs of going 135, not to mention extra hours on the airplane and its effect on residual value, is there a genrally accepted rule of thumb as to how many revenue hours need to be flown just to break even because the aircraft is operated 135? What questions should I ask of a D.O when interviewing potential 135 operators? I could go on for days with questions and I really appreciate any input you guys can give. I'm really hoping for you guys to point out things that you've learned from past expereince. I don't want to get my a$$ in a sling!!

Just do it! Once you've taken that step you'll realize what a lot of us already realize, there's nothing to managing an airplane.

I definitely wouldn't do it though if 135 was required. Maybe strike a deal where you try it strictly 91 for a year, then if not happy you'll put it on a certificate.

Your salary figure is pretty accurate, make sure you get a contract that spells out what happens if the airplane gets sold or the arrangement somehow dissolves. Try to make sure you and your copilot are employed directly by the parent company, not just does this protect you it also makes you eligible for that company's 401k, retirement, health/dental, etc.

Since you're starting a new company, make sure you have some way of paying for fuel. Lenders tend to have a problem giving a 1 month old company a $40,000 a month credit for fuel.

The best advise I can give you is add 20% to your budget. If you think you're annual MX bill is going to be $100K, budget $120K, if training is going to be $24K budget $30K. Think of it this way, if the guy can barely afford the actual budget, what happens when you get an unexpected bill? At the end of the year it's a whole lot better to come in under budget than over budget (that extra money might even become a bonus ).

 

[Capthuff]

C.A.M.S. seems to be a pretty good way of tracking MX. Does any one else have a suggestion? This is the only one I know of.

 

[FlierDude]

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Just do it! Once you've taken that step you'll realize what a lot of us already realize, there's nothing to managing an airplane.

I wouldn't characterize it as such. Depending on the owner, it could be great or get ugly. I've managed turboprops and jets, and more than once has the owner tried to make me the 'fall guy'. Especially the ones who say they'll 'treat you like family'. I guess incest is in their background, cause I almost got screwed a couple of times.

As far as having the 135 DOM being responsible, I've had former clients get milked by just such an arrangement. If it's MX tracking, that's fine, but the repairs should be closely watched. You'll earn that 2K a month. 3K would be more like it, and keep a daily log of activities, phone calls, etc.

.

 

[RadarVector]

Thanks for the advice everyone. I think this will be a welcomed change for myself and the other pilot involved. We continually get frustrated with the lack of pride & professionalism we have experienced within the charter company we currently work for. And eventhough this opportunity will come with additional duties, we're really looking forward to raising the bar for ourselves.

For those of you who currently, or have managed part 91 aircraft in the past, do you have any regrets and/or would you have done anything differently?

I'd love to learn from other's mistake and aviod re-inventing the wheel. Other than NBAA, does anyone have other sources of info they find helpful?

Thanks!!

RadarVector

 

[h25b]

One piece of advice....If you're in the right situation (and boy do I hope you are), your owner CAN afford the aircraft and should have very simple demands. One of which will be that you should be on top of things. A lot of times is not about the money, it's about surprising the owner with some huge bill that will get you in trouble. So remember, if you budget a little high and come in under budget you're everyone's hero. But if you budget low just to make things look rosey and come in way over it's your arse. So be conservative and try to strike a balance between keeping the boss informed and staying off the radar. This has been my biggest challenge.

In short, try and avoid surprises.