And I’m motivated. My goals this year literally depend on it. It’s got to be somewhat refreshing to hear someone speak so openly, right? I mean, how much of general aviation is filled with bullshit designed to avoid talking about the simple truths of running a business in this space? Operators are here to sell experience and convenience. Our partners are here for the experience and be convenience….d? But that question was rhetorical. Most of the space is filled with hot air and hot garbage, slick marketing, pushy salespeople and processes, deceptive pricing, and the list goes on and on…….That’s not Silverhawk, though, and it’s definitely not me. We’re here for three things: have fun, help our friends and partners solve problems transparently (even if Silverhawk isn’t the solution), and make a little money (again, transparently) along the way. We’ve found that so long as we focus on the first and second, and the transparency piece in the third, the actual “making money” piece is simple.
I know I’ve mentioned this before, but I really don’t like to recycle material. Which means I am unironically recycling material by telling you that. It feels worth it this time, though, because I’ve gotten more inquiries into managed aircraft solutions in the last six weeks than I have in the last 12 months. So there’s clearly some curiosity and questions, which I have fortunately (or unfortunately for those looking for something new) already discussed.
I’ll be honest, it’s not often I don’t know where to go with my writing but I’m not really sure how to continue without feeling gauche. So, without further ado…….I’ve got a plane to sell you – like, literally a whole plane. And this whole plane would fit perfectly into our managed aircraft fleet. So, I’ll tell you a bit about what this type of arrangement typically looks like, the type of business I’d imagine would get the greatest value, and we can get on solving each other’s problems 😉.
Long story short, I’ve got a CJ I want to sell. I’d prefer to sell the entire aircraft in one shot and am willing to work with the right buyer. What is the right buyer? Likely a business. Possibly something related to dirt (agriculture, developers, construction, equipment dealer). Likely something with a midwestern emphasis geographically. Probably someone who values their time. And probably someone cool.
So, here’s what it could look like. For purposes of this explanation, I’m assuming your pilots cost you $1,750 (total) per day, you fly your 300 hours over a ~75-day period, and your average overnight cost (pilot hotels, meals, etc.) to ~$600/night total. Management fees can vary based on the complexity of the arrangement (think maintenance logs, scheduling, billing, etc.) but would generally start no lower than the figure used here.
| Total Annual Utilization | |
| Owner Hours | 300 |
| Charter Hours | 200 |
| Total Hours | 500 |
| Total Annual Charter Revenue | |
| Charter Revenue Per Hour | $ 1,000.00 |
| Total Charter Revenue to Owner | $ 200,000.00 |
| Hourly Direct Operating Costs | |
| Maintenance Labor/Parts | $ 250.00 |
| Engine Program | $ 350.00 |
| Wifi | $ 131.00 |
| Fuel Cost | $ 715.00 |
| Hourly Direct Operating Cost | $ 1,446.00 |
| Annual Operating Costs | |
| Annual Management Fees | $ 72,000.00 |
| Maintenance Labor Parts | $ 125,000.00 |
| Insurance | $ 30,000.00 |
| Hangar Rent | $ 45,600.00 |
| Engine Cost | $ 175,000.00 |
| Pilot Day Rate | $ 131,250.00 |
| Owner Trip Passthroughs (Crew lodging, meals, airport fees, etc.) | $ 45,000.00 |
| Fuel Cost | $ 214,500.00 |
| Wifi Cost | $ 39,300.00 |
| Total Annual Expense | $ 877,650.00 |
| Annual Net Cost | $ 677,650.00 |
| Effective Cost Per Owner Hour | $ 2,258.83 |
Now, keep in mind the fuel and Wi-Fi costs for the “charter” hours are covered by the operator (Silverhawk, in this example). Engine program(s) and maintenance reserves should still be made from the “charter revenue” figure stated. For the sake of conservatism, I assume those reserves are made for each hour flown but some owners choose to not reserve and just deal with those issues – and the checks required to remedy them – as they arise.
I realize that figure can still be daunting but it’s far more reasonable than it seems at first blush. Try to imagine being in Lincoln and having to send a team of four to say……Kansas City. The aircraft used in the example above is wheels up to wheels down in ~35 minutes. Round trip in ~70 minutes. For ~$650/person you can eliminate six (6) hours in a car, renting the car in the first place, and potentially the need for hotels for each of the team members. PLUS, you gain the ability for all four people to continue to actively work during their travel.
Now let’s say this wasn’t hypothetical, it was very real. Let’s also say it doesn’t just apply to construction, but a lot of tangentially related industries to Real Estate, as well as Finance, Law, and Agriculture. Let’s also say you are, or know, that person at those companies in those industries. Now, let’s say you reach out to me. We’ll save you (and/or them) time, help you make money more efficiently, and, perhaps most importantly, jets are just cool to fly in and even cooler to own. So do it. Buy a jet, buy any jet, but especially buy one of mine.
Adieu,
Mark
| mrodgers@silverhawkaviation.com |