Air Partners adds frax to its charter, management business
Canadian aircraft management company Air Partners has launched a fractional-share program to capitalize on historically low used aircraft prices. Air Partners is headquartered in Calgary and is a subsidiary of Morgan Air Services, which was founded by WestJet Airlines cofounder Tim Morgan in 1983. In addition to aircraft management, Air Partners offers charter and aircraft maintenance services.
Air Partners operates Cessna Citation Ultras and Excels and Hawker Beechcraft King Air 200s. So far the company has added one of each of those types to its fleet in the last six months and sold a one-sixth share in each type. The dramatic drop in used aircraft prices spurred the move to sell fractional shares, according to managing director Vik Saini. “The private aviation side has been battling a serious storm, and as a result prices have decreased 50 to 55 percent in some cases,” he said. “We’re confident that we were near the bottom, and it’s a great opportunity to buy airplanes that are undervalued or being sold by motivated owners.”
With used prices so low, Air Partners can sell shares for lower prices and charge less to manage the aircraft, Saini said. These prices are much less than the cost of a one-eighth share and the operating costs of similar new aircraft other fractional-share companies offer, he said. In addition, having only six owners per airplane will help prevent scheduling conflicts but still allow good utilization and reasonable fixed costs.
All of the Air Partners aircraft–two Excels, four Ultras and three King Air 200s–are on the company’s charter certificate so fractional owners can use revenue from charter flights to offset their ownership costs.
Other fractional-share companies–such as Flight Options–were started with the intent of selling shares of used jets, and some fractionals have faced challenges recently, especially during the recession. Saini said that by limiting itself to three aircraft types, Air Partners will be able to keep costs down. “[Other companies] get into multiple aircraft types,” he said, “and it creates a real nightmare. It adds costs.”
Saini hopes to add two more airplanes of each type in fractional service, but that depends on how soon used aircraft prices return to normal levels, eliminating the advantages of buying at such low prices. “We’re betting on [the market] coming back around,” he said, “and when it returns to pre-2007 values, we’ll lose some of those advantages. This is a short-lived opportunity, and some of the discounts we’re able to offer will go away.”
Air Partners has grown during the recession, in part due to the booming oil and gas economy in the Calgary region. Employment rolls expanded to 59, up from 48, during the last 12 months, Saini said. “We’re happy with how busy we’ve managed to keep ourselves through the downturn.”