Selecting a Management Company

Selecting a Management Company — Originally published in BusinessAir Magazine, June 2013, Volume 23, No. 6.

When purchasing an aircraft, whether new or used, the list of decisions can sometimes seem endless. One very important decision a new aircraft owner should make early in the acquisition process is whether to employ a management company to operate the aircraft – and if so, choosing the management company. Picking a management company is a key issue because the correct choice can establish a positive and longstanding business relationship. Having the right management company in place allows the owner peace of mind that the newly acquired aircraft is being operated in a legal and proper manner, with the utmost attention to safety and cost efficiency.

Clearly not all management companies are equal, and the cost and services provided cover a broad spectrum. The most important factor to consider is whether the management company’s culture and philosophy match well with the new aircraft owner. Too big? Too small? Too frilly? Too new? Only the individual aircraft owner can make those determinations. However, there are some factors to consider regardless of personal preference.

First, has the company invested in a recent third-party audit, and what were the results of that review? All management companies talk about safety, but finding a company that has a safety culture that it strives to improve on a daily basis can be more challenging. An audit by an independent auditor is one of the most objective ways to evaluate a management company. However, smaller management companies are sometimes unwilling to incur the substantial cost of a third-party audit. If the aircraft owner’s preference is for a smaller company, then the owner should be prepared to gather information about such things as the number of FAA violations, accidents, incidents, required pilot training, disaster relief planning, and defined processes and procedures in order to have a better understanding of the company that does not have a recent third-party audit.

Second, has the executive leadership team of the management company been in place for a sufficient amount of time? Do they have the experience necessary to lead the company to success? Well-established companies that do not have frequent management changes can often provide the continuity that many new aircraft owners desire. Furthermore, since aviation is such a specialized field, it is often helpful to have someone leading the management company who has many years of experience in the industry.

Third, does the management company have experience with the type of aircraft the owner is purchasing and the owner’s expected flight missions? If most of the planned flight activity is within the continental United States, a smaller regional provider should be able to handle the missions. However, if frequent international travel is planned, a company with more international experience and presence will likely be a better choice. Also, if the management company has never managed the type of aircraft being purchased, it may end up costing more due to the management company’s learning curve.

Often times, new aircraft owners select a management company because of name recognition, personal referral or price. Basing the selection of a management company on these types of factors can be detrimental because every air-craft owner has a different mission, aircraft type or company culture preference. Given the importance of this selection, a clear and thoughtful evaluation leading to an unbiased business decision should be every owner’s goal.

Please contact Amanda Applegate at 877-237-5398 or aapplegate@aerlex.com.