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Rising Demand for Charter Empowers Jet Owners

This could be a great time to renegotiate your management contract.

Charter demand is at an all-time high. Avinode’s data is showing double-digit jumps in requests for trips on short-notice (within four days); major operators report holiday bookings are already near capacity; and TraqPak predicts December charter traffic will be some 10 percent above 2019’s, the previous highwater mark. Providers are hungry for lift, and for owners with jets on charter certificates, that means now is a great time to re-examine management contracts and ensure you’re getting an equitable return for the charter time your aircraft accrues—either with your current management company or through an alternate opportunity. 

“Owners are in the driver’s seat,” says Nick Tarascio, CEO of charter management company Ventura Air Services. “If there is anything they don't like about their current management structure, there's never been a better time to explore alternatives and try to set up a more ideal structure that can carry them for the next three to five years.”

Brandon Greene at FlyExclusive, a major fleet owner/operator, agrees. “This is an opportunity for the owner to negotiate more favorable terms tied to the access they’re providing to the operator,” he says, quickly adding a critical caveat: “[agreements] should always be a win/win for the operator and owner.”

Meanwhile, some operators looking for novel ways to add quality lift—Ventura and FlyExclusive among them—have rolled out leaseback and lease-like programs offering a new take on standard triple net lease arrangements, which cover operational, tax, and insurance costs—the triple net—plus provide lease payments. These new leaseback programs provide all the triple net lease basics, while also giving owners access to a fleet of jets, or their own, at low hourly rates, in exchange for operational control of their aircraft. 

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Ventura, based at Republic Airport in Farmingdale, New York, offers a lease program for Cessna Citation Excel/XLS and Challenger 604/605 owners—the primary aircraft models it operates for charter. Ventura covers the cost of crews, maintenance, and insurance; shares charter revenue with owners; and provides them access to their aircraft for a negotiated number of days per year. When they fly, owners pay only crew costs and direct operating expenses.

“We take on the majority of the risk and the cost of aircraft management,” Tarascio said. For owners, “the potential is significant and the risk is nearly eliminated.”

North Carolina–based FlyExclusive, a major charter wholesale operator whose customers include Wheels Up and NetJets, introduced a revamped Aircraft Partnership leaseback program this month. Seeking to expand its fast-growing fleet of 75 light, midsize, and super-midsize jets, the company created the program to attract owners and prospective buyers of suitable fleet aircraft, and provides monthly payments that “net the owner positive cash flow”; cover all taxes, insurance, and operational costs; and provide 120 flight hours per year at cost on any fleet aircraft, says Greene. Partners can choose the cabin size they want to fly trip by trip, and access multiple aircraft simultaneously. In exchange, owners cede operational control of their jets, which FlyExclusive uses in its floating charter fleet. 

Prospective buyers, meanwhile, can purchase a refurbished aircraft from the FlyExclusive fleet, or one the company is acquiring, and lease it back at the same terms offered to owners. (Fleet age averages 15 years, and the prices of aircraft recently for sale ranged from about $2.9 million to $6.2 million.) FlyExclusive will also work with prospective buyers and their representatives to identify aircraft suitable for its fleet and lease them once they’re acquired.

California charter management firm Jet Edge this year introduced AdvantEdge, a three-tiered block-charter program for jet owners that guarantees revenue minimums in return for the exclusive use of their aircraft for a set number of weeks per year. “Tell us when you are not using your aircraft and we will charter it,” says CEO Bill Papariella. “It’s like Airbnb.” 

Edge 250+ provides a minimum of 250 hours of charter in return for 14 weeks of access to owners’ aircraft; Edge 500+ doubles those figures while Edge 900 delivers 900 charter hours in exchange for the exclusive use of the aircraft all year. AdvantEdge members can charter aircraft from Jet Edge at preferred rates and change programs if needed.

Meanwhile, the search for lift goes on at charter management companies, putting owners of the most in-demand jets who prefer more conventional management contracts in command. The most in-demand platforms today include the Gulfstream GIV and G450; Cessna Citation CJ3, CJ4, Excel, and X; and Challenger 300/604/605. 

But the goal should be an equitable and reasonable agreement. “Meeting with management company leaders and talking about what the next couple of years will look like is critical,” advises Tarascio from Ventura, which also has conventional management contracts. “This is where new and more favorable structures can be set up. It is clear that no one wins by chasing dollars in this industry.”