There are four ways for you to to legally fly on an aircraft:
1) An aircraft you own, operated under FAR Part 91;
2) An aircraft you pay to charter, operated under FAR Part 135 and on someone’s charter certificate;
3) A dry-leased aircraft operated under FAR Part 91, operated by a crew of YOUR choosing, not by assignment;
4) An aircraft being demonstrated for the purposes of a resale in accordance with Part 91.501(b)3).
To someone on the outside, especially to the person who may be ignorant, willfully or not, of these regulations, the difference is almost none. Ultimately, all they are concerned with and able to see is the cost and that they successfully got to and from Point A or Point B.
So what really IS the difference, why is ILLEGAL AIR CHARTER a problem and what’s really wrong with it?
The FAA sets guidelines for the operation of aircraft under CFR Title 14 FAR’s Part 91 and 135. There are LOTS of small differences between the two but as the FAA will tell you, it’s all about SAFETY.
In short, Part 91 aircraft and their crews do not have to be maintained or trained to anywhere near the standards that Part 135 aircraft do. In the most substantial way, Part 135 requires that any aircraft operated on a charter operators certificate comply with ALL the aircraft manufacturers recommended maintenance, not just the minimum mandatory requirements specified under Part 91.
That’s not to suggest that, what we call “Part 91-only aircraft," are inherently unsafe or that an aircraft owner should maintain their aircraft to the higher Part 135 standards, it’s simply that you, as the person who is likely paying for the flight, have and maintain “Operation Control” of the aircraft.
This is a very important buzz word to the FAA and it should be for you too. What it means is, you are the person who is responsible for when and where the airplane flies but most importantly, who flies it. That being the case, if you’re unable to ensure what standards the aircraft has been maintained to, you’re unable to say that the plane is safe for flight and if, God forbid, there’s an accident, your neck (and / or your estate’s neck!) may be on the line.
If you’re an aircraft owner, without a doubt, people have approached you about dry-leasing the plane out. If you say yes to this, do so on a very limited basis and make sure that you have a good Aviation Attorney (we suggest Aerlex Law Firm) draw up that Lease Agreement. The reason you do this is so that you can properly convey “OPERATIONAL CONTROL” from yourself to the Dry-Lessee when they are on board the aircraft. If you do not do this and do it properly, you are operating illegally and there is no amount of revenue that can offset the legal liability you’re exposing yourself to.
If you’re someone looking to charter LEGALLY, make sure you check and see if the people you’re “chartering” from are on the FAA’s list of Approved Part 91 Operators and Aircraft. Click here to download the latest Excel Spreadsheet from the FAA directly.
If you’re considering a Dry-Lease arrangement, you need to be sure that you know everything that you need to know (and be able to explain it when asked by the FAA when, not if, they come calling!). That’s not information that we’re going to include here as it is governed by your Dry-Lease Agreement with the aircraft owner, however, you should be clear that whomever you choose to be your pilot(s), even if they are the same pilots the owner of the aircraft uses, they need to be paid by you, separately from the dry-lease. You also need to know that you now posses Operational Control over the Aircraft so you should become familiar with the maintenance standards of the owner of the Aircraft and be sure that there is an insurance policy that covers you, by name.
If you’ve read this far, you’ve obviously decided to wade down into the mud and get into the details. Here is some more great reading from the FAA themselves: https://www.faa.gov/documentLibrary/media/Advisory_Circular/AC_91-37B.pdf
For more information or questions, please contact us here.
In Three Transactions Spanning More Than a Decade, Partners Share Three Ways to Save Time and Money on Aircraft Transactions
While many finance executives view sales professionals with some suspicion, to say the least, the CEO of a financial services consulting company has found an ally in, of all things, an aircraft sales consultant.
Randall A. Roth is the CEO of Vitex, Inc., a company that provides consulting services for banks, helping them find ways to become more efficient and improve their bottom line. He is also a multi-engine, instrument rated pilot with over 2500 hours of flying time.
As the manager of consultants, Roth has high expectations of professionals he works with. And like many consulting company CEOs, he finds that visits to client sites are vital to the success of their relationships and sales.
Roth has owned “a dozen or so” airplanes over the years he’s been flying, and has enjoyed working with aircraft sales professional Brian T. Chase for more than a decade. Chase and Roth began flying together in Roth’s Citation I in 2003. They share a passion for aviation and for good management practices. Roth and Chase shared three key factors illustrated by their relationship that finance industry executives can profit from.
Get Everyone Together in the Same Room At Key Points.
When Roth wanted to sell his Citation II, Chase found a buyer from Caracas, Venezuela. This is when the importance of good people skills came into play.
As sometimes happens with aircraft transactions, there were some questions raised during the rigorous inspection process.
“The whole deal was falling apart because of some details with windows, but Brian got the buyer and his chief pilot to come to my office and introduced us. We were able to put emotions aside, and get comfortable with each other,” said Roth.
After meeting Roth in person and visiting his office, the buyer felt much more comfortable that the plane had been managed by a reputable company and he was doing business with a reputable person.
The deal went through without a hitch.
“Aircraft transactions aren’t just about miles flown and inspection reports and dollars. They’re really about two human beings and finding an arrangement that is profitable and fair to them both,” said Chase.
Get Expert Help Early Enough to Act On It.
Selling an aircraft can be challenging when there are many similar planes on the market.
“Brian told me what we ought to do to get it ready to sell. He was pretty direct and specific. He even told us which airport would be the best place to keep the aircraft while it was for sale,” said Roth.
“By making the airplane more attractive and more accessible to prospective buyers, we can help sell it more quickly,” explained Chase.
Roth and Chase are just beginning to work together on a third transaction, flying to Denver together to see a prospective plane for Roth to buy.
Find Somebody To Trust and Stick with Them.
“Traditionally when I have worked with an aircraft broker, they’ve made me do a lot of the work. They’re just interested in selling the plane or doing the transaction. Some of them are not that knowledgeable about makes and models and just let me come to my own conclusions,” said Roth.
A great aircraft consultant should know the market, the pros and cons of different planes for different missions and budgets.
“I don’t have time to do all the research. Chase Aviation is really in tune with the market and handles all the details and paperwork. They look at every page of the plane’s logbooks, they do it all, and keep me well-informed. I’m very comfortable that they’ll give me the good news and the bad,” said Roth.
It’s also important for business executives to find an aviation consultant that is a good fit for the way they like to do business.
“Brian can read me pretty well, he can tell when I have time to talk on the phone and when I don’t, and he’ll send emails or texts to make sure I’m in the loop while making good use of my time.”
Roth also mentioned that personality is a factor – many of the professionals he’s worked with can be either “lazy or fanatical,” it’s reassuring to work with someone who has a balanced, stable approach to these complex transactions. Aircraft transactions can be stressful and emotional to buyers or sellers, because the transactions can be challenging and have a big impact to a company bottom line or a negative financial outcome for an individual .
“We have found ourselves constantly being put in position of choosing between our own self-interest and the well-being of our clients. We have walked away from hundreds of thousands of dollars of revenue that we could have earned had we just done what most every aircraft broker would do; shut up and ‘get the deal done.’ I’m not sure I should be proud of this but we have literally talked people out of buying an aircraft! Imagine that… Whether they weren’t going to use it enough to justify the real costs, couldn’t make a business case for it or just had downright unrealistic expectations, an aircraft sales company gave advice not to buy an aircraft. But in aircraft sales, we have a long horizon for success, we’re emphasizing relationships over transactions, and I’d rather walk away from a deal today and keep a solid relationship; we’re fortunate to have clients like Randy who appreciate that mindset. In fact a year ago I talked Roth out of buying a plane he was considering,” said Chase.
Founded in 1995, Vitex combines senior-level consultants and industry experts to help both community banks and large financial institutions optimize resources and discover opportunities for improved profitability. They have over 800 clients across the U.S., and seeing them in person is crucial to the company’s success.
About Chase Aviation
Chase Aviation Company, LLC was founded by Brian T. Chase in May of 2006. Located at the Charleston International Airport (CHS,) Chase Aviation provides clients with aircraft sales and acquisition related consulting services, focusing primarily on turbine aircraft acquisitions.
Chase Aviation is pleased to announce that our last blog post had an article written about it which got syndicated in over 100 different publications!
Here's a few of the links:
By Brian T. Chase
For the most part, the difference between an Aircraft Broker and an Aircraft Acquisition Consultant comes down to priorities. That’s not to say that an aircraft broker doesn't do the things that an aircraft acquisition consultant does, it's just about where their priorities are and their financial motivations.
To dispel any preconceived notions, it should be known that there is ZERO regulation of the aircraft sales industry. There are no Federal Aviation Regulations which apply to it, no internationally recognized set of standards to be adhered to and almost no barriers to entry into this industry. Some of the “best” (defined here as highest grossing) aircraft salesman have little aeronautical knowledge, no formal training and many have no college degree. What they are good at though is “getting deals done.”
Not unlike a real estate broker, an aircraft broker only gets paid when they “get their deal done.” This is by design and it is how it has always been. And sometimes what you need when you encounter adversity during an aircraft purchase, is somebody that can just "get the deal done.”
However, there will also be a time when what you need to do is to walk away from that airplane or that seller. After all, is the person who only makes money if the airplane sells motivated to give you that advice?
We started Chase Aviation Company eleven years ago and found ourselves constantly being put in position of choosing between our own self-interest and the well-being of our clients. We have walked away from hundreds of thousands of dollars of revenue that we could have earned had we just done what most every aircraft broker would do; shut up and “get the deal done.”
I’m not sure I should be proud of this but we have literally talked people out of buying an aircraft! Imagine that… Whether they weren’t going to use it enough to justify the real costs, couldn’t make a business case for it or just had downright unrealistic expectations, an aircraft sales company gave advice not to buy an aircraft.
So about six years ago we totally walked away from the "Aircraft Broker" label and set out to do something which much more closely matched the service we provide; advice to aircraft buyers with only their interests in mind. Not the pilot who wants to fly the next best aircraft in his career, not the seller’s broker who knows how to “get a deal done,” not the “buddy” who has a Learjet; the best aircraft for the mission, needs and budget.
We work with many first time aircraft buyers that currently charter, have a jet card, or fractional share but have a business need and as they fly more, see how insanely expensive those options will get. So for a clean slate aircraft acquisition, the first thing we do is assess the mission; what are the current and future requirements, typical passenger loads, frequent airport requirements, range profiles.
We are constrained in this analysis by a budget range that the customer sets and we then present a list of options that fit the criteria. It sounds pretty simple and something that a Google search can provide but all airplanes have “dirty little secrets” that don’t advertise themselves.
As an example: You may like the Pilatus PC-12 (we do too!) but did you know that the *Legacy* version of it cannot currently be enrolled on a charter certificate? It’s information like that that you’ll most likely never get from a Broker that has one for sale. Chances are, they didn’t even know that but if they did, they’d have no obligation to tell you.
Another area to watch out for is the contract used to purchase the aircraft. There’s a hundred different ways to buy an aircraft and there is no such thing as a “standard” or generic contract.
Every one must be appropriately tailored for the category and class of the aircraft, needs of both the buyer and requirements of the seller, and most importantly the conditions of the sale.
All of these questions, and much, much more have to be answered in this contract and the time to discuss them isn’t after you’ve agreed to a purchase price, but before accepting the price. We call this “deal structuring.” Everyone thinks the purchase price is the most important part and I’d argue it’s one of the least. The first time aircraft owners we see have the worst problems are the ones who were simply motivated by that purchase price. But that’s just the cost of ownership on day one
So, what is the difference between an aircraft broker and an aircraft acquisition consultant? In my mind, it boils down to the priority of who we represent. We represent you, the buyer. That’s our number one priority. Not the broker, who wants the biggest commission; not the seller who wants to unload an airplane as quickly as possible; not the manufacturer, who wants the order; not your chief pilot, who wants the next step up on his resume; not your CPA, who wants what looks best on the balance sheet this quarter; not your publicist, who wants the plane that he’ll look the best stepping out of. And most definitely not your brother-in-law, who knows a guy.
So, if you're in the market for a business aircraft or are considering it, put time and experience on your side.
Call us today at: +1-843-628-7406 or Contact Us Here