How much does a Charter Jet Cost

Could you get your jet to buy itself?

When BJT Long Island, quoting New York business man Michael Pascucci from New York, claimed that his three plane flight was "free" on the basis of the off-set revenues he earned from their charter, we got responses from readership asking if this was really possible. Pascucci's bookkeeper would insist that the charter would indeed cover all its expenses - down to the pre-tzels and groundnuts - but we did decide to speak with some sector specialists to get their opinion.

Isn' it really real that an airplane operator expects the charter to compensate all his costs? "We have certainly seen many different types of individuals try," said Steve Hankin, CEO of the Sentient Flight Group in Weymouth, Mass. "And there are more men who thought they could make it, and she did not, than men who succeeded in it.

" N.Y.-based Excelaire operator Ronkonkoma's Ronkonkoma flight operations manager David Rimmer approved the agreement. "It'?s difficult to reach, and I don?t think it?s a destination that I would go into owning an aeroplane with," he said. Others, among them Cyrus Sigari, Chairman of Jetaviva, a recently founded very lightweight jet managed firm, took a more optimistic stance.

" A lot of expenditure needs to be evaluated before you can determine whether you are free to fly or at a much reduced cost. In addition to the overhead and floating cost of running the plane, you have to take into consideration the purchase cost as well as the actual and fiscal write-downs. However, while the taxation and write-off of planes are very different and critical in deciding whether you can get a zero net cost flight, our specialists agree that you need to adhere to certain basic principles in order to have any chance of recovering your operational cost from charter revenues.

Here is what you need to do: 1. Find the right manager. "Their source of income is only as good as the business chartering your aircraft," said Kenneth Starnes, CEO of Woodstock, Cerulean Jet, Ga. It is certainly possible to cover all your expenses if a business markets your plane to its customers in an aggressive manner.

" And Rimmer said yes. "You' re dependent on the kind of deal your charter party does," he said. "to keep your plane as occupied as you want it to be. In order to maximise charter revenues, you need to make your plane available to clients as much as possible, which can be difficult.

A new owner "doesn't always want their gleaming plane to be in the hand of strangers," says Rimmer. Also, the periods when the need for charter planes is greatest can be the periods when you want to use the plane most yourself. When you consider how rare the plane might be available for you, Hankin said: "You have the question: "Are you better off just being a charter customer yourself?

Similar comments were made by Michael Leeds, Chairman of FlightStar, the jet managed business located in Long Island, N.Y.. "Flying the aircraft 200hrs a year and keeping it away from the charter business won't give you nearly the commercial value you have if you spend 25hrs a year," he said.

A further consideration is that your own use increases the cost; the less you use the plane, the less charter revenue you need to reach break-even. "It'?s not possible for you to charge the plane for 20 nights a month" and still make progress, Starnes said. "A charterer must be able to get this plane when he needs it and it must be available at least 75 per cent of the time" to enable profit.

"Insisting on going home on New Year's Eve will cut out a date when the charter suit is likely to be able to do more deals than normal at a higher price," Leeds commented. "Some of the Jet Aviation shareholders are pursuing the reverse approach and are determining their utilization needs month in advance," said Bob Seidel, Jet Aviation's general Manager of ACM.

If the aircraft is not maintenance-free and does not fly for the owners, we can make it available for charter," he said. "Will it help to be in a geographical area that has a higher net wealth resident base? "We have a number of wealthy people in our area, which makes it much simpler for us to make money with our aircraft.

"A plane is more likely to be hired when it's where those who want to charter or want to go are," he said, and added, "Let's say you have the best plane in the whole you have. When it is in Kansas and all charter for it is on the Kansas coastline, then every times you charter this aircraft, you would have to take it to the Kansas coastline before you even start the charter and then in the end you would have to take it back to Kansas.

Much of the prospective return in a charter environment is dependent on the airplane itself. The recent rise in the cost of fuels has given newer, more effective planes a decisive edge. "There is a period when all airplanes become less effective and desirable," said Mr LEEDS. Remembered Excelaire's Rimmer:

"Recently we had a talk with the proprietor of a [Gulfstream] GII, who was amazed when he heard that he could actually loose cash on running expenses if he chartered the plane. "Older plane operators face a Catch-22 scenario in conjunction with higher aviation fuels costs: "The more you pilot them, the more they need maintenance," Hankin said.

There' also a client' s preferences for newer planes. "As Starnes said, the newer the charter the better the chances of being able to compete in the charter world. A further determinant is the visibility of your plane. "As Rimmer said, the more you have to tell a person about a plane, the more difficult it is to charter it.

"Humans like name tags. As soon as your plane is charters, the kind of flight for which it is chosen can help to make a difference. "Long-haul operations where you consume all the gasoline are the most profitable flight in maximizing airplane performance and therefore the least cost of ownership," said Seidel of Jet Aviation.

" Proprietors should watch how charterers use their planes, Rimmer said. "It is a fact that every charter operator has to serve its customers by making both the better and the less prolific trips," he commented.