Aviation firm launches alternative to Part 91
As happens in every significant downturn, corporate squeamishness about owning business jets climbs while used aircraft languish on brokers’ ramps. Already during this recession, the stigma against the perceived appropriateness of traveling by business jet has forced companies to cancel new jet orders, sell jets and even close entire flight departments. Yet despite the economic slowdown, there are plenty of companies and individuals who plan to fly either on their own or in charter aircraft.
For those who still have a strong need to travel quickly, safely and securely to the thousands of airports that the airlines do not serve, there is an alternative to ownership that can aid with sale of a suddenly unwanted business jet. Consulting firm Gold Jets of Fort Lauderdale, Fla., offers the 91Plus program, which helps sellers with an ongoing travel need and buyers who are willing to purchase an aircraft that comes with a seller’s commitment to charter flying.
Under the Gold Jets 91Plus sale/charter-back program, the buyer and seller agree on a price for the aircraft. The seller commits to buying a specified number of charter hours and places the funds for those guaranteed hours into escrow. The buyer places the aircraft in a management program and, as is typical, pays all operating expenses. The management company arranges for crewmembers, scheduling, maintenance and other aircraft-related activities. As the seller uses the agreed-on charter hours, funds for those hours are released from escrow to the new owner of the aircraft, who can earn revenue from charters sold to other customers. These hours can offset the charter hours guaranteed as part of the aircraft sale.
Gold Jets recommends charter/ management company FirstFlight, but can work with any credible charter/management provider, said chairman and CEO Terrance Kelley, a CPA and former president of Jet Aviation.
The 91Plus program also includes Gold Jets’ consulting services to help companies that own business aircraft properly structure aircraft-usage policies to make sure they meet all applicable FAA regulations. “I deal with FAA rules with regard to business consequences and how it’s set up within the company,” Kelley explained. This includes helping the company’s tax, accounting, legal, human resource and media relations experts understand the constraints involved in business jet operations.
Gold Jets isn’t just trying to get clients to put their aircraft on charter certificates, Kelley said. “The push is to develop good corporate policies that don’t violate FAA regulations for reimbursement.” In these times of increased corporate scrutiny from regulators, the general media and shareholders, for many companies it might make more sense to buy charter hours so it is clear who is paying for flights. And if the Transportation Security Administration’s Large Aircraft Security Program becomes law, then chartering offers a simple way to comply with the rules as similar rules already apply to charter operators, he said.
“Congress, shareholders and the media are forcing companies to either revise their policies regarding corporate aircraft or shut down the flight department,” Kelley said. “Senior management and directors are rushing to revise aviation policies and the result is often a policy that violates FAA regulations, especially under Part 91. Our experience assists the client in formulating procedures that make sense, are regulatory compliant and demonstrate good corporate governance.”