Off to a Flying Start: Considerations for Procuring, Staffing and Insuring Private Aircraft

the one minute takeaway

Private aviation is one of the most rewarding investments a family or business can make, and one of the most complex to get right. The owners who get the most from their aircraft share a common approach: They ask the right questions before they buy, choose the access structure that fits how they fly and treat staffing and risk management as strategic decisions, not afterthoughts. This article covers all three.

With the promise of a more convenient and comfortable travel experience, the global private aviation market is growing rapidly. As more businesses and individuals enter the market, competition for qualified crew, hangar space and other resources has increased substantially. In this climate, it’s essential to take a strategic approach to determining which aircraft best fits your needs, what ownership or lease structure makes the most sense, and who will fly and maintain it.

Setting parameters

The best experiences with private aviation start with asking the fundamental questions that define your needs and having informed conversations with brokers, management companies or leasing agents:

How many passengers will our aircraft need to accommodate?
Should we prioritize seating capacity, comfort or a specialized business function?
Will it require special accessibility accommodations?
What range will be needed to complete our most common trips?
What are the runway limitations of the airports we will use most frequently?
What is our purchase and maintenance budget?

Understanding access

There are essentially four ways to gain access to a private aircraft, each with its own advantages. Different arrangements allow for different levels of control over the aircraft, along with different levels of responsibility and cost. The decision between owning and chartering also has significant tax implications in both the U.S. and Canada, so it’s important to consult your tax advisor.

While other considerations will come into play, the number of hours you expect to fly is a good place to start. If you anticipate:

Less than 25 hours a year, consider chartering.
About 25 to 50 hours a year, consider jet cards.*
About 50 to 300 hours a year, consider fractional ownership or leases.
More than 300 hours a year, consider full ownership or leases.

*Compared to the U.S., penetration of the jet card model remains low in the domestic Canadian market.

Owning aircraft, outsourcing management

Most private aircraft, particularly those that are chartered or owned through fractional programs, are enrolled in some type of management program. Program management companies vary greatly in the size of their managed fleets and the range of services they offer. Many assist private owners by providing pilots and stewards, handling maintenance and flight planning. They may also manage charters of privately owned aircraft in their care, helping the owners defray their operating costs.

Your most important decision

Hiring a pilot is the most consequential decision facing those who manage their own aircraft. The qualifications of the person flying your plane will have a significant impact on the cost of your insurance and, far more importantly, on the safety of your family, friends and employees. As they’ll also oversee your aircraft maintenance and supervise your flight crew, the right pilot defines both the safety and the quality of your operation.

Your primary consideration in hiring a pilot should be the amount of experience they have in the type of aircraft (or even better, the specific make and model of the aircraft) you own. The more recent the experience, the better. You should also favor pilots who are familiar with the routes and regions where you travel most often, particularly if that involves more challenging terrain.

A broader view of risk management

While most private owners have policies that adequately cover the value of their aircraft, serious uninsured risks are common. Contracts should specify clearly who is liable for any damage incurred in the hangar or on airport grounds. Those who directly employ flight crew should also ensure that appropriate workers’ compensation policies are in place, whether through private policies in the U.S. or provincially administered policies in Canada. If you have not had a recent review of the policies pertaining to aircraft, ask your HUB Private Client Risk Advisor to connect you with HUB’s aviation specialists.

A broader view or risk management

Maximizing the benefits of private aviation begins with choosing the right solution for your specific needs and the right people to help you along the way. If you would like guidance on these considerations, our HUB Private Client Risk Advisors are here to help.