VLJ Expo Provides Primer on Operating VLJs

A future in which private jet transportation allows travelers to use their most valuable asset – time –was the opening message at the VLJ Expo held in Charlotte, N.C. recently, which provided a primer on every angle of ownership from insurance to finance, management, legal, tax implications...

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A future in which private jet transportation allows travelers to use their most valuable asset – time –was the opening message at the VLJ Expo held in Charlotte, N.C. recently, which provided a primer on every angle of ownership from insurance to finance, management, legal, tax implications, valuations for the secondary market to offering aircraft out for charter services.
The VLJ industry from around the southeast gathered not only to learn about VLJs, but kick the tires of the dozen or so aircraft spead over two hangars at Wilson Air Center, host, along with Jetpool, which organized the second annual VLJ Expo – The Future of Business Aviation VLJ Show.
The 1940s music wafting through the hangars provided a counterpoint to the ultra-modern aircraft on the scene but with the quality of the attendees – independent aviators interested in breaking into jets and senior execs interested in getting into corporate aviation – harkens back to the time when many aviators were being separated after the war to start their own businesses.
Organized by Jetpool, the show attracted pre-registration numbers exceeding 1,000 but high winds and bad weather kept most of the pilot/operators at bay. Jetpool President Ryan Stone said that total numbers would not be in for a few weeks but about 60 to 70 percent of the attendees were senior executives or business owners. The balance was aviation professionals and pilots who could make it through the unusually rainy period in the drought-stricken southeast. The number was under the 600 that came through last year despite the expansion of display areas to two hangars. The only no shows for aircraft that had committed to the show included the ATG Javelin which suspended development in December, Adam Aircraft, which suspended operations in February, and HondaJet, from nearby Greensboro which had a conflict with its annual golf tournament during the same week.
Jetpool President Ryan Stone kicked off the workshops by noting he had just contracted with Spectrum for an unnamed number of Freedom and Independence aircraft for a Part 135 operation for which Jetpool is now undergoing certification. Related Story
“The textbook definition of a very light jet is under 10,000 pounds, Part 23 certified, turbofan engines used for single or dual pilot operations,” he told a group of about 50 attending the first workshop. “A VLJ is a low-cost, high-performance option that didn’t exist a few years ago.” He noted that the only two aircraft have made it to market – the Eclipse 500 with over 100 deliveries and the Cessna Citation Mustang, with over 50 deliveries – both of which were at the show. Despite protestations that it was mainly marketing to the pilot/owner, Cessna has achieved impressive success in the on-demand market with several U.S. and European business starting up using the Mustang as the basic platform. Related Story
Stone indicated that the selection criteria depends completely on the mission including availability, ownership structure, whether it will be used in Part 91 or 135 operations, and aircraft economics. Other considerations include passenger and cargo requirements, payload/range and speed along with amenities such as a private toilet – “unless you want to become really good friends with those you fly with,” he said. As for availability, Stone noted that while the Mustang and Eclipse 500 were out, they have long backlogs as does the Embraer Phenom, due out at the end of this year, the Spectrum Independent and Freedom due out in 2011 and 2010, respectively.
He also noted that delivery positions taken long ago were part of the secondary market. “If you go to Spectrum,” he said, “they will tell you no delivery positions are currently available in the near term. Since our fleet order, we can tell you yes, you can acquire a Spectrum.” Jetpool is soon launching a fractional ownership program.
Unknowns that must be resolved before purchase include projected vs actual specifications, availability which has implications for both valuations and the secondary market, whether a manufacturer has both a production and type certificate, maintenance expectations both for unexpected and for overhauls. He also outlined that insurance costs included not only hull and liability but perhaps a requirement for using manufacturer mentor programs and whether the aircraft will be professionally managed. Insurers like to see the use of both mentors and professional aircraft managers as they reduce risk. Consideration must also be given to such costs as user fees and market depreciation, he said.
“All these are unknowns as you approach acquisition,” he said, adding that the Expo was designed to help people understand what they don’t know about acquiring an aircraft and how they can make the right decisions up front. The overall message, however, was the importance of involving a professional aircraft management firm – such as Jetpool – to work through the decisions.
Stone also mentioned that such considerations as manufacturer sustainability since three proposed programs have already gone under – ATG, Adam and Safire – are of importance. In addition, he pointed to the operating changes wrought by VLJs that made making the right decisions up front very important such as how productivity can be boosted and resources optimized in order to gain a tactical advantages in business operations.
“If you have five sales people and only two are top performers,” he said, “with a VLJ you could get rid of the bottom performers and use that money to pay for getting the people who are better at closing the deal to more meetings in your territory. Instead of building a new plant because your current plant is remote without transportation, you could invest in a VLJ and expand your market area. That is what aircraft management is all about.”
Stone gathered experts from all areas of aircraft management to cover the facets of ownership. The coming issues of VLJ Report will include focus reports on legal, insurance and tax issues along with other decisions that need to be made in the acquisition process.
Next Week: Legal Issues