Driven by recessionary fears, and increased scrutiny around sustainability, executive flyers may have found a workaround for the problem of the corporate jet. For many, the best way to maintain control of the corporate jet is to simply not own one at all.
While that may seem counterintuitive, it’s exactly why the model of moving from aircraft ownership to a service agreement works so beautifully. A report from Ernst & Young shows that the majority of CEOs fear that an impending recession could be worse than the financial crisis. While many in the C-suite are eager to shed liabilities from their balance sheets, few want to swap the freedom and flexibility provided by private air travel for the unpredictability of business air travel.
How are CEOs and C-suite travelers getting around the issue? Surprisingly, the answer may not be charter.
While jet owners are eager to shed the costs associated with hiring pilots, maintaining a flight crew, and handling aircraft maintenance, the reality is that giving up the familiarity and predictability of an aircraft that’s always ready can cause travelers to lose a considerable amount of time. Charter flights simply don’t provide the perks that go along with knowing that the same aircraft and crew will be available every time. What’s more, charter companies don’t offer price transparency.
The model that executive travelers are pivoting to is an ownership transfer that allows them to retain access to their aircraft without the financial burden of owning a jet. This model of flights on demand with no strings attached is being offered by a well-known company in the aviation world called Four Corners.
Through its Freedom by Four Corners program, the company purchases aircraft from private jet owners. Unlike a lease situation, the Freedom by Four Corners program puts the ownership, maintenance, and tax liabilities associated with the jet fully on the plate of Four Corners. However, customers are guaranteed use of the aircraft they’ve just turned over with the same pilot and crew using a membership program that guarantees price transparency for both fixed monthly costs and hourly rates.
“We take away the cost of capital and the significant cost of depreciation that an owner/fractional owner will incur and cannot scale or forecast,” shares Vincent Kavanagh, Executive Vice-President and Head of Sales for Four Corners.
This agreement turns exposure on the seller’s balance sheet into a monthly service cost spread over a period of five years that will show up on the profit and loss statement. Once Four Corners purchases the aircraft at fair market value to take over crew, flight operations, and aircraft management, the seller is free to reinvest the capital into the growth of their business. The Four Corners program can even be used to shed entire fleets.
“From our Insight Card to owner focused Aircraft Management to the revolutionary Freedom program – Corporate Jet as a Service program, we offer highly differentiated, customer obsessed products tailored to their specific wants and needs for business aviation, not what the industry wants them to buy,” shares Cam Gowans, Four Corners President and COO.
While the Freedom program is on the cutting edge of private travel, the fact that it’s being delivered by a company with a track record in private travel that spans decades is adding reassurance for jet owners facing the reality that the corporate jet just can’t stay. Ultimately, this model converts what was a source of pain for executive travelers into a win-win situation that frees up capital and unburdens balance sheets.
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