Criteria for Selection of a Business Jet

The decision to purchase a business jet, whether for facilitating business activity or as a status symbol, is a complex one and it is unlikely that a business house would have adequate in-house expertise to arrive at the best decision, unless its business is aviation. The exercise is best left to an expert company; typical services provided by such companies can be viewed at the official site of Conklin and de Deckers --- one such company name picked up at random and not necessarily the best or the most recommended one. It is prudent to hire a company or agency for the diligence and comparative analysis at a flat fee and not for a percentage commission. This is to ensure that the expert company’s motivation to earn a bigger commission, does not lead to a higher purchase cost for you. Whether a business house engages an expert company or carries out its own appreciation of its acquisition needs, it is worth having knowledge of the criteria that go into deciding which business jet suits its needs best.

OPERATIONAL CRITERIA

The typical initial questions to be answered while taking a decision on buying or leasing a business jet are operational in nature: What is the average length of a trip? How many passengers typically travel on a trip? Are travel legs short or long? What is the premium on time? The generally accepted categories into which business jets get shared out are heavy jets, large jets, super-mid size jets, mid-size jets, light jets and very light jets (VLJs). In general, aircraft with longer ranges tend to be bigger and thus can carry more passengers, but are more expensive to fly and require longer runway lengths. Conversely, the smaller aircraft can carry fewer passengers and cover shorter distances due to their lower fuel carriage capacities. A VLJ could typically carry four passengers from Delhi to most cities in South India, but would be a wrong choice if its owner travelled to international destinations frequently. A light jet like a Hawker, could carry up to eight passengers to the Middle East, but not further to Europe or Africa. If the purpose was to fly often to the Americas, a super-mid size jet would be a more appropriate asset to acquire. It may be mentioned here that the smaller the size of the aircraft, lower would be the cabin height. Indeed, the cabin of a VLJ resembles the interior of a car and not a very big one at that, with no possibility of standing up erect once inside the cabin.

One needs to hire an expert for carrying out a “pre-buy” inspection of the aircraft so that its documented history and logs can be subjected to due diligence.

Before getting down to the number-crunching leading to the exact type of aircraft that would best meet one’s requirements, it may be worthwhile considering whether one already has a fleet and if so, what is the crew availability, existing infrastructure and organisation to support a particular type of aircraft. Thus, if one’s newly expanded business required him to travel to Europe; but he already had a fleet of light jets, the choice would be between a new type that would carry him in one hop to a Eurpoean destination or another light jet of the type already held by him to do a one-stop trip to Europe, but at much less additional cost of operation due to existing fleet and economy of scale. Having zeroed in on the general class of aircraft one wanted to buy (seating, internal dimensions, baggage space, speed limits), one would get down to the next step which is a comparison exercise between different types of aircraft within that class of aircraft. The most important criteria to be considered would be the mission parameters i.e. runway length required, flight time and fuel consumed for a typical flight that is envisaged. The airport performance at different elevations and temperatures may become critical if flights are likely to airports located at heights above 5000 feet above mean sea level (AMSL). Other less important parameters that would influence the purchase decision could be the external dimensions, the power plant type and flat rating thrust figures, the weight figures i.e. basic weight, maximum ramp, maximum takeoff and landing distance, maximum zero fuel, maximum payload, useful load, maximum fuel carried, available payload with maximum fuel weights, mach number limits, cabin pressure differential, certificated ceiling and maximum payload range/speed/trip fuel. While each of these operational factors may not be critical to each decision, these factors are nevertheless worth including into a comparative analysis. As an illustration, one type may have a cabin pressure of 6000 feet at its maximum cruising height while another may have 8000 feet. In short duration flights, it may not make a difference, but in longer flights, it could make a discernible difference to the comfort level of the passengers, especially if their age was on the wrong side of fifty. It may also be beneficial for the analysis to include the speed/fuel figures for each aircraft under consideration for a typical flight planned e.g. four passengers over 1500 nautical miles. The cockpit avionics suite would be another consideration. There are several professional companies whose help could be obtained for a comparative analysis but for a coarse analysis (and to clear one’s mind on the basics), one could refer to the annual comparison tables published by Business & Commercial Aviation, a journal brought out by McGraw Hill.

ENGINEERING CRITERIA

The next step is to consider what kind of maintenance, repair and overhaul (MRO) support is available for the types being considered. For this purpose, the original equipment manufacturer (OEM) glossies should be read with caution and some effort made to get informal information on the after sales experiences of previous owners. The question of whether to buy new aircraft or a pre-owned one is discussed later, but if the latter is the case, one needs to consider the calendar time/flying time remaining for the next major inspection (typically 12/24/36/48 months or 600/1200/1800/2400 hours). If for example, one is considering an aircraft that has a month left to go for its next 48 month inspection, the cost of that inspection needs to be factored into the cost of acquisition. In the case of a new aircraft, the warranty coverage needs to be considered. One very important consideration in purchase of a used aircraft is its engineering history. Not only should it be checked that all the due servicing and schedules have been followed, but due consideration should be given to the MROs used for that purpose and the quality of records available thereof. An aircraft that has been in an accident is a certain no-go. No one would want to travel in an aircraft that has been in an accident before. The reason is superstition at times but, at others, it is just plain instinct telling a prospective passenger that the accident has probably left the aircraft less safe than before. It is quite possible that a buyer ends up discovering he now owns an aircraft that has been involved in an accident earlier, much after paying for it. It would be a recommended practice to hire an expert for carrying out a “pre-buy” inspection of the aircraft intended to be purchased so that its documented history and logs can be subjected to due diligence.

COMMERCIAL CRITERIA

From the economic point of view, the considerations of various operating costs namely RNFC, TNLC, landing and parking charges, insurance, handling, ground handling, hangar charges, navigational database and documentation, are important. Generally, most of these are directly proportional to the size (All Up Weight) of the aircraft. In the same vein, a larger aircraft would burn up more fuel, require larger runway lengths which would be at larger airports with higher landing/parking charges and cost more to maintain. Having considered these factors, one would reach a balance between one’s operational requirements and budgetary constraints. At this stage, it might be profitable to address the question of whether to buy a new aircraft or a pre-owned one. The economic comparison would consider historical data of maintenance activities on a pre-owned aircraft during the last three to five years, to then compare it with the cost differential in real terms between a pre-owned and a new aircraft --- a simple but crucial opportunity cost decision. An expert would be of use here again to make sense of the market information and, to use a term sneered at by some, “time the market” for affecting the actual purchase. This exercise is akin to playing the stock market and is not an exact science. One could make an “informed” delay on whether to purchase now or delay but, like in the case of the stock market, one could never guess right with a 100 per cent probability.

Some decisions into purchase of business jets go awry because of lack of awareness of criteria that ought to be considered for the decision.

There is also the question of whether to carry out an outright purchase using company finds or raising a loan or leasing (wet or dry) or sale-and-lease-back. This aspect depends on several factors including company financials, company credit ratings, type of aircraft and so on and are too deal-specific to be discussed in the short space available here.

CONCLUSION

A business jet is usually, but not necessarily, a small jet and may be variedly referred to as a corporate jet, an executive jet or a private jet, if being used entirely for private purposes. Boeing has Boeing Business Jets (BBJs) built on the Boeing 737 airframe and even on the Boeing 747 series of airframes. However, those are used in small numbers and the generally used business jets tend to be designed with less than 20 seats in the cabin. In India, the most popular business jets have four to 10 seats. Supersonic business jets are just around the corner.

In recent years there has been a perception shift in the way business jets are viewed. While they were seen as status symbols earlier, much like expensive cars, their value as business enablers has been realised in recent years. However, some decisions into purchase/lease of business jets go awry because of lack of awareness of criteria that ought to be considered for the decision. The result can well be a decision that leaves a company straddled with a business jet that is painfully expensive to maintain and equally hurting to get rid of. Therefore the need to carry out diligence based on the criteria outlined above.

Author is Group Captain (Retd), IAF