Safety is the primary concern of every aircraft operator, and nothing is more essential than establishing a comprehensive safety management system (SMS).
PRISM, a subsidiary of Argus International, is a market leader in SMS services and solutions. PRISM’s mission is to dramatically simplify the SMS process for its clients by providing a framework and expertise to help flight operators stay abreast of constantly shifting safety standards and regulations.
PRISM support is wide-ranging:
- Design, implementation and documentation of SMS plans
- FAA-endorsed certification
- Safety training for business, air-carrier and helicopter aviation
- Executive coaching, including Six Sigma Black Belt project leadership consulting
Released last month and free to PRISM customers is the safety app for the iPad. The app provides access to PRISM’s flight risk analysis tool (FRAT) from which users can document flight risk factors and update customized reports. The flight data can be saved in offline mode or uploaded to the organization’s SMS website for further analysis. The app also triggers the appropriate risk notifications to the operator.
When it comes to SMS, it’s critical to seek out expertise and experience from a partner with a comprehensive set of services. PRISM provides customized SMS packages for a variety of aviation needs, and it delivers support and guidance that will keep your flight operations running smoothly and safely.
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It’s been all over the aviation news sites for the past couple of days.
Research In Motion (RIM) is selling one of its two jets: A nine-passenger Dassault F50EX. While this may sound like a bold, cost-cutting move, it really isn’t.
RIM, the maker of the BlackBerry, is facing serious losses. It has endured a 95 percent drop in its market value in the past four years. Ouch! After declining sales in the U.S., the company depends on sales in South Africa and Indonesia.
So the big cost-cutting plan is to sell one private jet? This is a symbolic gesture at best. RIM needs to cut costs by $1 billion. According to a source close to the deal, RIM hopes to sell the jet for $6-7 million. That’s a mere 0.7 percent of the total needed to be cut!
However, Jim deDecker of jet consulting firm Conklin & deDecker puts the sale in perspective: “With corporate aviation, the symbolism far outweighs the dollars.”
Companies don’t do a good enough job of justifying their jets to shareholders and the public. Corporate jets are an integral part of business, especially in a highly competitive, global economy. They save time for valuable executives and allow travel to remote locations.
If RIM’s largest markets are in Africa and Asia, you can be sure executives will still be traveling to those areas frequently, racking up expensive commercial flights. Will the company’s symbolic gesture really deliver value to its shareholders?
If your company is showing strong revenue performance in 2012, and you’ve felt a little lightheaded after tallying up executive travel expenses, perhaps you’re wondering if private jet ownership is the right option for your business. Here are a few key questions that will help guide your decision-making process.
1. How many flight hours does your company log each year?
Experts suggest that just 25 to 33 flight hours per month may be significant enough to justify plane ownership. When doing the math, be sure to factor in commuting time from homes and offices and the amount of unproductive time spent waiting for flights at commercial terminals.
Also, consider the number of employees who will use the aircraft and the distances they fly. If overseas flights are common, flying privately may be more cost-effective and more practical than going on a commercial flight.
2. How much does your company spend annually on commercial air travel?
In addition to tracking current travel expenditures, look back at missed revenue opportunities. Were there new business opportunities that might have been captured if a VP had visited multiple client locations? Did an important customer cancel a contract because he felt he needed more face time with the CEO?
However, don’t underestimate the ongoing costs associated with private jet ownership, either. There are insurance premiums, fuel costs, catering, plane maintenance and pilot salaries — and that’s just for starters. For budgeting, a good rule of thumb is somewhere between $100,000 and $200,000 a year for operational expenses.
3. Is a new aircraft purchase the only option?
Not in this market. There’s plenty of inventory available for firms looking to score a great deal on a pre-owned aircraft. Choosing fractional ownership or even leasing may be a way for your business to test the waters before deciding to purchase a jet outright.
4. Now what?
If you’ve done some preliminary budgeting and still think private jet ownership bears a closer look, then you’ll need to reach out to a broker with the experience and resources to help you navigate the next steps. A relationship-minded broker will help address budget and usage concerns and can offer advice, insight and recommendations that will simplify the decision-making process.
As we celebrate the 4th of July this week, we thought it would be appropriate to pay homage to a truly American aviation innovator: Piper Aircraft. Independence Day focuses on the freedoms all Americans enjoy and have enjoyed for 236 years, and there’s nothing more representative of individual freedom than the ability to fly.
Piper has played a major role in the history of American aviation. In 1930, William T. Piper purchased the assets of Taylor Brothers Aircraft Corporation for $761, and renamed the company Piper Aircraft Corporation in 1937. Piper’s vision was that everyone should be able to fly.
The most widely known Piper Aircraft is the J-3 Cub. Its first flight was in 1938, and the company built 19,888 of these single-engine, high wing cabin monoplanes. These aircraft were an integral tool during World War II. With a fresh coat of olive drab paint and green plexiglass skylight and rear windows, the civilian J-3 Cub became the military L-4. The L-4s were all over the newspapers and newsreels, and distinguished people like First Lady Eleanor Roosevelt and General Dwight Eisenhower were seen flying in them. Additionally, during the war, the J-3 Cub was the training aircraft for the Civilian Pilot Training Program. By the end of the war, 80 percent of the U.S. military pilots had been trained in a Piper Cub.
This year, Piper celebrates 75 years. Congratulations, and thank you! Find out more about their many celebrations this year, and watch a video of the Piper Cub here.
“From the head office to the factory floor, there is an understanding that we at Piper are not just making a thing – we’re making magic. We’re making freedom.”
A new study released in April by the U.S International Trade Commission (USITC) provides an in-depth look at the performance of the business jet market over the past five years. At almost 250 pages, Business Jet Aircraft Industry: Structure and Factors Affecting Competitiveness focuses on business jets weighing less than 50,000 pounds.
How bad was it?
For most industry watchers, the results may not be surprising. The number of delivered business jets peaked in 2008 then fell off sharply from 2009 through 2011. From 2008 to 2011, business jet deliveries fell by 57 percent. The demand for very light business jets was hardest hit, with a staggering 71 percent decline in deliveries during the same three-year period.
In spite of these sobering statistics, aviation industry experts are forecasting slow, steady growth over the next few years — though nothing like the double-digit increases enjoyed in the past. The Teal Group predicts 13,879 business jets to be delivered over the next 10 years, with a measured 4 percent growth in 2012 and 6 percent in 2013.
Homegrown opportunities in manufacturing
The USITC’s report underscores the importance of sustained U.S. business jet production to both domestic and global economic recoveries. Three of the world’s six leading business jet producers are U.S. held companies: Lear, Gulfstream and Hawker Beechcraft Corporation.
Domestic aircraft producers supply much-needed jobs in manufacturing, and U.S companies are also leading the way with safety innovations and technological advances. Companies with plants in the U.S. are also a leading source of parts and systems manufacturing.
Of course, the contribution that business jets make to the U.S. economy doesn’t end with aircraft manufacturing and production. U.S. companies that rely on private business travel help stimulate the economy with increased productivity and by creating new business opportunities worldwide. Due in part to the benefits private air travel provides, these organizations earn more revenue and profits and ultimately create new domestic jobs.
As lawmakers make legislative decisions that affect U.S. business jet production companies, the study may bring some positive attention to a less-than-optimal situation. For that, there’s plenty of reason to hope that the sector will continue to improve, preferably at a faster rate.
What did you get your dad for Father’s Day? “Kiss the cook” BBQ apron? Car detail? Heartfelt framed photo? Jay-Z, who has been a father for six months, received a private jet from his wife Beyonce Knowles.
In a more philanthropic note, actor Tom Cruise offered his Gulfstream V to a man working on the set of his new movie Oblivion. A support worker, David, was crushed by a 700-pound weight on set in May, and Cruise quickly ordered his jet to transport David to spinal specialist. David is now undergoing therapy after spending four days in intensive care in Baton Rouge, La.
After Facebook’s IPO last month, Russian investor Alisher Usmanov sold $1.4 billion in Facebook stock. While not necessarily an international celebrity, Usmanov is certainly wealthy. His personal fortune is valued at $15.8 billion; he’s the 34th richest person in the world. Usmanov is now the proud owner of an Airbus A340, the largest private jet in Russia and possibly Europe. If he decks it out in a fashion similar to his $100 million yacht, which includes a swimming pool and cabins for 20, he could end up spending about $500 million. That’s some jet.
Spare parts keep your private jet in the air, but they also can pave the road to destruction for you, your crew and your guests if they do not meet safety standards.
Counterfeit aircraft parts are big business, so finding the right parts and suppliers to keep your jet safe relies on the expertise of professionals who can discern the difference. And aircraft owners and operators can never have too much knowledge when acquiring aircraft spare parts.
The problem of bogus aircraft parts — officially called “suspected unapproved parts” or SUPs — remains as critical now as ever because substandard parts pose a significant threat to aviation safety.
Sometimes a part is labeled “unapproved” for purely paper purposes, with the primary concern being that the paper trail doesn’t document the design and production quality of a component. The part could be in excellent or dismally shoddy condition. But without proper documentation you can’t know without extensive testing — the testing that the parts manufacturer is supposed to do to certify the part as meeting standards.
Sometimes tests show that the part is bogus and the accompanying paperwork is false. Identifying SUPs is challenging because the bogus parts often appear the same as approved parts, putting the safety of the aircraft at risk without the knowledge of the parts user.
In addition, sometimes the paperwork appears as genuine as the part, which means airlines, maintenance organizations, aviation manufacturers and parts distributors need to create and adhere to systems for the detection and reporting of unapproved parts.
SUP detection
Aviation safety authorities such as the FAA and CASA work to assure information about SUPs is distributed to the aviation community in the hopes of assuring further detection and taking counterfeit parts out of circulation.
They strive to bring together as many aviation industry participants as possible to give those participants the latest information about SUP issues, employ steps to combat bogus parts and give participants opportunities to question international experts.
In recent years, the FAA and the aviation industry began work on a program to assure parts traceability, using special markings and codes not available to the general public. The goal: to create a permanent trail for tracing a part from its current owner and location all the way back to its point of origin.
As the FAA’s SUP program influences the world of new parts, the window of opportunity for counterfeiters will steadily narrow — but not close completely. The new system does little for the millions of older spare parts produced before the new program that are still available.
Start close to home
Minimizing the risk of inadvertently accepting a bogus part starts with aircraft owners and operations, according to FAA guidelines:
- Know your suppliers and eschew low-ball pitches from unknown suppliers.
- Check labels of new parts against those of parts already known to be legal from a known source.
- Watch for damaged shipping boxes or reused labels, smudged stamps or other indications of package tampering.
If you suspect that someone has tried to sell you an SUP or you have inadvertently purchased one, you can report it at the FAA Web site’s Suspected Unapproved Parts Program page at http://www.faa.gov/aircraft/safety/programs/sups/.
To insure that you do not purchase or use counterfeit jet parts, consult with a broker or professionals who know the ins and outs of what to look for during the pre-purchase inspection. Many experts can even help you trace prior ownership (pedigree) and the history of the aircraft.
The U.N.’s International Civil Aviation Organization (ICAO) is working on international emissions standards. The secretary-general of ICAO, Raymond Benjamin, announced on June 18 that the organization plans to have a draft proposal by March 2013. Right now, the ICAO is studying four different options: two cap-and-trade systems, mandatory off-setting, and mandatory off-setting with potential revenue production.
It’s important for the ICAO to develop and implement international aviation emissions standards to fend off a brewing conflict over the EU’s greenhouse gas management system.
The EU instituted its Emissions Trading System (ETS) in 2005. Since Jan. 1 all domestic and international flights to, from, or between EU member states must comply with ETS. In this system, companies are allotted a specific number of CO2 allowances which can be bought, sold, or traded depending on a company’s need for them. For example, if an airline predicts it will exceed its allotted allowances, it can either take steps to reduce its emissions or purchase excess credits from another entity.
As you can imagine, several countries aren’t fans of the ETS. Non-EU countries believe the ETS infringes on their rights as sovereign nations. China and India refuse to share their emissions data or participate in the program.
This conflict has a negative effect on aviation in general. The EU has promised disciplinary measures against Chinese aircraft for non-compliance, and China announced it will implement countermeasures. As a result, China has suspended long-distance jet orders from Airbus that add up to about $14 billion.
There is a lot of optimism for growth in the aviation sector in the next 10 years; conflict over emissions isn’t doing anyone any favors. Will the ICAO’s efforts to create international standards be completed in time to diffuse the situation in European airspace?
If your company’s jet is occasionally used for pleasure as well as business — such as flying an employee to a vacation destination — you could jeopardize your tax deduction, increasing the cost of owning and operating the aircraft for your business.
The Internal Revenue Service (IRS) will disallow any deductions for expenses of a business aircraft when it is used for entertainment purposes. In a nutshell, if the jet was flown for 100 hours and 30 hours was for entertainment purposes, the IRS would force the company to disallow 30 percent of its deductions, including — and most significantly — depreciation deductions. For a company with a high-tax-basis aircraft, the loss of depreciation entitlements can push the lost tax deduction to more than $20,000 or $30,000 per flight hour (or more in the case of bonus depreciation eligible aircraft or aircraft purchased late in the tax year).
The disallowance even extends to “deadhead” flights, when the aircraft is needed for business use while an employee is using it for a vacation and the jet is brought home after dropping off the employee. The new rules provide that the company factor in the deadhead flight into the calculation of the disallowance and, even though no passengers are on board, the company will experience further loss of deductions.
The best antidote to this problem is to sell jet membership or block-time cards — licensed resellers of unused fractional shares — for entertainment flights. With these programs, you don’t own the aircraft but, instead, charter it from the card provider, purchasing a block of hours such as 25 or 50 on the card.
The benefit of block-time cards is that usually, the card provider has a fleet of aircraft they manage and are also able to draw from a wide array of charter operators, which means flight availability is often guaranteed with minimal notice.
Other benefits:
- Your account is deducted only for occupied flight hours.
- Deadhead flights don’t usually count toward your flight time.
- It may be possible to obtain a discounted rate or elongated time frame on which to use your card hours.
- You can choose the best possible aircraft solution based on the purpose of your trip — either light-, mid-, large-cabin or extended-range aircraft (as opposed to the one-size-cabin option with your company aircraft).
The biggest and most-important benefit to using a flight card: The disallowance rules relate only to the amount paid for the card, and tax depreciation is not a cost factored into the card. As a result, the after-tax cost of using a card is likely lower than use of a company aircraft with a high-tax basis.
For more information about maximizing your investment in your company jet, contact the experts at L & L International at sales@l-lint.com or call us any time at 877-453-8276.
A dry winter in the West inevitably leads to a dangerous fire season during the summer months. This fact is being borne out by wildland fires occurring earlier and more intensely than usual in the summer of 2012. Most notably, wildfires in New Mexico and Colorado are burning right now. The High Park Fire raging outside Fort Collins, Colo., has already claimed one life, 118 structures and more than 73 square miles — and it’s only 10 percent contained.
Fortunately, specialized firefighting aircraft are on hand to aid the fight against the massive blaze, especially since rain is not in the forecast.
These aircraft play a major role in fighting wildland fires, but the U.S. Forest Service has an inadequate fleet. For this reason, it relies on private aviation companies like Neptune Aviation to bolster the fleet during active fires. The Forest Service also generally uses aircraft only to fight fires that threaten homes rather than ones burning only in the wilderness.
Aircraft being used in the High Park Fire include the following:
- Five single engine air tanker (SEAT)
The heavy air tankers, or “heavies,” are in high demand during fire season. They are expensive, but their impact is great.
- Cost Forest Service an average of $10,000 per day
- Make up 5 percent of Forest Service’s annual $2 billion firefighting budget
- Hold 2,100 gallons of retardant
For more about the aircraft fighting the High Park Fire, read this report by KUNC’s Grace Hood.
