Buying a King Air to be operated by a Charter Operator

kontiki

kontiki

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Kontiki
I know someone looking at doing this because they fly so much and it's a place to invest money. My friend is a businessman, that has no aviation background at all. I have no first hand info on this sort of thing either. Anybody out there tried this? What are the pitfalls? How about the ROI? How do you control the luck element with no background?
 
kontiki said:
My friend is a businessman, that has no aviation background at all.
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That pretty much describes the typical businessman who chooses to invest in aviation. A fool and his money, what more could you need?
 
It’s wrong to refer to the businessman as a fool. If he’s gotten to the point of affording a twin turbine airplane, he’s hardly a fool.

Misinformed might be better. Charter operators will try to make it appear it’s an investment.

I had a client who wanted me to manage his GIV, and he wanted it on a charter certificate. I advised him against it.

We went to the charter operator and listened to the proposal. After the meeting was over we walked out, and in the parking lot the owner looked at me and said “that’s a load of crap!”

Needless to say, the deal didn’t happen.
 
That.^^^

Or, your friend could hire a chief pilot with 135 experience, first, then have that pilot find an airplane with 135 potential. Then operate it for a full year under Part 91 before making a decision to go 135. In my experience, a new owner under-estimates their own utilization by about 50% and may not want to share access to the plane with others once they realize how productive the plane can be.
 
Ask your friend how much money he can afford to lose and still stay in business because he’s about to find out.
 
I googled for aircraft appraisers. I see hits. I'm sure they is a lot of variability. I know it's not really controlled. Anyone have experience with their services?
 
If they want to put it on a charter certificate to offset some costs, and perhaps for some tax purposes, that's fine. If they are looking to put it on a charter certificate to make a profit, they are going to be very disappointed.

The most reputable charter/management companies are Solairus, EJM and Jet Aviation.
 
I was approached by my FBO when I had my Citation II S/P, I listened carefully and it was totally one sided, not my side!!:D
Basically, I provide the airplane, insurance, pilot expenses etc. They get 20 or 25 percent of the revenue and all the fuel and maintenance sales!:eek:
 
N747JB said:
I was approached by my FBO when I had my Citation II S/P, I listened carefully and it was totally one sided, not my side!!:D
Basically, I provide the airplane, insurance, pilot expenses etc. They get 20 or 25 percent of the revenue and all the fuel and maintenance sales!:eek:
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And you didn't jump all over that?
 
Rather that thinking of it as an investment, think of it as somewhat reducing the cost of ownership as a sole owner.

Some sample annual numbers for a G200:
  • Flown 105 hours for owner use
  • Flown 180 hours for charter
  • Total fixed and variable owner costs: $1,285,000 ($12k per hour)
  • Charter net contribution (income less variable cost): $473,000
  • Net owner costs after charter: $812,000 ( $7.7k per hour)
 
Tarheelpilot said:
If he decides to do this for the love of god make sure whatever airplane he buys is currently operating on a charter certificate.

Edit:

reputable charter certificate

Or at least as reputable as you can find.
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My company bought a Hawker that was currently on a 135 certificate…a little over $500k to get it into conformity, IIRC.
 
MauleSkinner said:
My company bought a Hawker that was currently on a 135 certificate…a little over $500k to get it into conformity, IIRC.
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Just imagine how bad I could have been from a 91 operator. But… we are talking turboprop and you bring up a jet. There is a significant difference. Not quite apples and oranges but headed down that road.
 
Tarheelpilot said:
Just imagine how bad I could have been from a 91 operator. But… we are talking turboprop and you bring up a jet. There is a significant difference. Not quite apples and oranges but headed down that road.
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I think it depends more on the quality of operators and their maintenance than what regs they operate under. Overhaul times and mandatory SBs are the only maintenance requirements I can think of that are required for 135 but not 91, and they’d be pretty easy to know ahead of time.
 
Well..................it can be done! I needed a corporate job........wrote a 135 manual.............found a customer to sign up for 40hrs/month...........found a rich guy to buy the airplane.

1967 65-A90 N773S

It was Win/Win/Win

Jim Raisbeck also used it for testing.

It had a "Goutche" paint job.

img.axd
 
Tarheelpilot said:
Just imagine how bad I could have been from a 91 operator. But… we are talking turboprop and you bring up a jet. There is a significant difference. Not quite apples and oranges but headed down that road.
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I know part 91 operators that maintain their aircraft better than the 135’s.

And I’ve seen part 91 aircraft go smoothly through conformity while previous 135 airplanes get rejected.
 
Tarheelpilot said:
There’s always an outlier.
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Generally a135 airplane has to make money, so they try to keep maintenance costs down. Often 91 airplanes aren’t a separate P&L, so often they’re willing to spend whatever money is necessary for proper maintenance. I don’t think either is an outlier.
 
MauleSkinner said:
Generally a135 airplane has to make money, so they try to keep maintenance costs down. Often 91 airplanes aren’t a separate P&L, so often they’re willing to spend whatever money is necessary for proper maintenance. I don’t think either is an outlier.
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Ok

We can now officially state we have shared anecdotes regarding aircraft maintenance and the proclivities of owners we have been exposed to. I guess the conclusion is there is no expectation for any particular outcome from any type of owner.
 
Every time I've seen a supposed former 135 aircraft brought onto another 135 certificate, it's cost a fortune to get through conformity. I'd tend to think the outlier is an aircraft bought off of 135, put onto another 135, and have it go smoothly.

This has gone from piston twins up to jets.

Can it be done? Sure, I've seen it, but I think most of the time what you're really looking at is not an investment that makes money, but maybe some of the costs getting adjusted or spreading out calendar maintenance items over more flight hours. It seems like it works easiest for people who buy factory new planes, with some sort of financing, and do fuzzy math that way vs. taking a 40+ year old aircraft with that many years of skeletons in its log books.

More often, what happens is you have passengers treating your baby as a rental, and wearing out your interior faser, plus getting you towards those high dollar maintenance items (hot sections, overhauls, etc.) sooner. And while a lot of Part 91 King Air operators will operate past TBO just doing hot sections, can't do that 135 (although I suppose the MORE program can be accepted).
 
kontiki said:
I know someone looking at doing this because they fly so much and it's a place to invest money. My friend is a businessman, that has no aviation background at all. I have no first hand info on this sort of thing either. Anybody out there tried this? What are the pitfalls? How about the ROI? How do you control the luck element with no background?
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Can speak from experience coming from a 135 operator doing exactly what your friend is looking to do (just not on a King Air, but definitely looking to add one to the certificate soon).

Pitfalls: Huge money pit. Maintenance, management, crew cost, fuel, storage, etc. is all incurred on the owner.

ROI: Depending on the airplane and how busy a 135 op can keep it, can greatly reduce the money pit to a money hole. Personally have a jet owner that after charter offset pays sub $500/hr after cost of ownership. No deferred maintenance, ever. Airplane is a workhorse when not being used by the owner and the owner wants it that way.

Can't speak for the luck element. Aircraft owners have a tendency to flock towards large operators because "their business model is proven" or "too big to fail." Fact of the matter is this industry has seen just as many large operators fail as the small ones with as few as one airplane.
 
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