Downsizing

Business Jet Traveler » October 2009
Your provider would be much happier to keep you on the ledger with a share in
Thursday, October 1, 2009 - 5:00am

Scaling back doesn't have to mean giving up the benefits of private aviation and settling on airline travel.



Let's say you're an aircraft owner feeling the pinch-both economically and from the point of view of your company's public relations. You can retain a majority of your flying advantages by downsizing your ride. Depending on your primary mission, you may be able to sell a large-cabin jet to make way for a midsize one. Or replace a small jet with a cabin-class turboprop. True, with values down 20 to 30 percent across the board, you'll lose more dollars than you'll save on the less-expensive purchase (good news for those lucky folks looking to upgrade). But it will still be easier to swallow than getting out of business aviation entirely-and if you buy and sell well, you can minimize the hurt.

The same could be true for owners of fractional shares. Your provider would be much happier to keep you on the ledger with a share in a smaller airplane than to lose the business altogether. Those who decide to summarily dump their shares are likely to fare the worst from contractual terms related to early termination. There's little incentive for the provider to soften the blow and great motivation to squeeze as much cash as possible from the customer who is abandoning his share. However, a customer who wants to remain a customer is far more likely to enjoy a pleasant relationship with the provider's finance manager. And that will make it much easier to upsize again once the economic turbulence has subsided.



Many charter customers have negotiated long-term deals-committing to a fixed number of hours of flying per year in exchange for a lower rate. If your finances force you to reduce your travel budget drastically, don't assume you're stuck with the penalty for failing to fulfill your travel commitment. Especially now, operators are inclined to show flexibility with their financial plans-and good communications are the start of a win-win accommodation.



AD HOC occasional charter customers may also find that they need not forgo private flying just because belt-tightening is necessary. It's likely that your charter provider has smaller aircraft-even of the piston-powered, single-engine variety-that could do the job for you. You might have to cut down on how many passengers you bring or limit your range somewhat. But there's little shame these days in fessing up about your need to economize and asking your provider for lower-cost alternatives. If the provider can't accommodate you, it could be time to investigate other operators.



It can be maddening to try sticking to any sort of five-year plan when it comes to investment in private flying. Next time you read a five-year market forecast to help make your private flying plans, check the archives for the same provider's forecast from five years ago. It will likely be good for a laugh. The more involved you are-with a fleet, a single airplane, fractional share or some sort of charter commitment-the more you are subject to the ebb and flow of aircraft values and operations costs. But there are ways to soften even the toughest of market tumbles. If you don't panic, and you perform the proper due diligence, you can retain a high percentage of your travel advantage while suffering minimal financial losses.



Finally, you can do yourself-and everyone else who flies privately-a huge favor by going public with your decision. Let your employees, stockholders and customers know that the responsiveness and flexibility you get from an airplane allows your company to remain competitive-especially in trying economic times. You may have chosen to right-size your activities, but don't be afraid to let the world know that there's still no substitute for the competitive advantage of on-demand private flying. 

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