Over the past few years, and especially during Covid, aviation management companies have experienced explosive growth. This is due in large part to the influx of new aircraft owners—both high-net-worth individuals and companies new to ownership.
This trend toward the use of management companies has me thinking about its long-term impact. Specifically, as it relates to aircraft owners, aspiring aviation leaders, and business aviation as a whole.
To get a sense of what’s happening, I spoke with an aviation director who’s been on both sides of the aisle. He's served as an in-house flight department director, and he’s led a multi-aircraft solution through one of the larger management companies.
Now his operation has grown so much that his company is transitioning to an in-house solution. My colleague was very insightful about what he sees as the advantages and disadvantages of aviation management, especially as it relates to owners and aspiring aviation leaders.
Impact on the Aircraft Owner
To begin with, outsourcing the management of an airplane has considerable benefits. Most significantly, it’s a quick plug-and-play solution for the new aircraft owner.
They can start flying while the management company fulfills the role of HR, operations, maintenance, and scheduling. First-time owners often benefit from the discipline and education provided by the operator. Just one of the many learnings is how to use their aircraft wisely, reducing risk.
My director colleague says a "typical" management client is a one-airplane owner. They might fly 200 to 300 hours a year with two pilots, one mechanic, and a flight attendant. At that size and scope, outsourcing makes great sense.
But at what point does it make financial sense to start an in-house operation? Once an owner increases the scale and scope beyond one aircraft, it may be time to ask that question.
Especially if the owner has the requisite team to manage the collateral duties involved. These include managing compliance, working with the FAA, scheduling, training, accounting, interfacing with the OEM, and communicating with executives or family members.
There's tremendous value in having an aviation director or v-p who has direct access and insights into the organization or family office. According to Mike Mikolay, COO of Guardian Jet, the management company account lead typically doesn't have a “seat at the table.”
“A leader of the aviation organization is set up for success when they understand where an organization is heading, and how the aviation team can add value,” Mikolay said. “In the corporate setting, the director is almost always part of their reporting executive’s leadership team. Conversely, when the client representative at a management company doesn’t have the same level of information, they can’t dynamically drive an aviation strategy to meet the company’s goals. That’s where they can fall short,” he explained.
Impact on Aspiring Aviation Leaders
Working for a management company is a great way to develop one’s craft. A pilot, mechanic, flight attendant, or dispatcher can show up, work as a member of a team and do what they love. That said, the aviation professional must “swim in their lane.”
The challenge often comes for those professionals who seek a pathway to aviation leadership. “At a management company, aspiring aviation leaders don’t always develop the broad skills required for someone to lead an in-house flight department,” said my aviation director colleague. It would be more difficult to move directly into the role of a chief pilot, maintenance director, or aviation director.
He shared this example: “A lead pilot for a two-pilot operation at a managed operation may not have the experience setting up strategic flight training. Nor would they likely have an ongoing relationship with their FAA FSDO. They might not take advanced training and/or volunteer on committees. And they might not be as involved in the industry, adept at building a network, or have an understanding of broader best practices.”
An in-house aviation professional is more “entrepreneurial,” according to the director. By design, team members face more challenges and are able to solve problems.
“Whether you're with a large flight department or a smaller in-house operation, you get to experience so much more," he said. "You get to communicate with executives, refurbish the airplane, go through the procurement process, and participate in hiring where everyone gets a say. You’re not going to be in that silo [or swim lane] so I think that would be a more diverse professional experience.”
Impact on Business Aviation
As more airplanes move under management, I do hope the owners will support the industry. Will these new owners understand the great history of business aviation? Will they help fund our foundations and associations like many of our legacy flight departments do? Will they help us tackle our environmental, safety, regulatory, and workplace issues? Will they become advocates, bringing many more voices to address the issues at hand?
Speaking of voicing concern for the issues, a few years ago our industry saw the power and impact of greater numbers of people coming together in a common cause. Tens of thousands in our industry—including both individuals and companies—banded together to help defeat the proposal to privatize the ATC.
Our Fortune 500 company leaders understood how a privatized system would hamper their ability to operate efficiently and used their voices. Thus, I’m hoping we can help educate these new airplane owners to become advocates for business aviation, to protect their assets, and their ability to robustly use them.
Conclusion
Despite the current trend toward management companies, the market size is still relatively small. In fact, Solairus Aviation CEO Dan Drohan told me that he believes the three largest management firms probably manage less than 5 percent market share of business jets.
The in-house flight department is not at risk of going away. That said, I do hope we can educate new owners coming into the industry. And I hope aspiring aviation leaders will consider how best to architect their career.
Lastly, I encourage management companies to continue to foster a career path for their team members and advocate for the industry and leadership opportunities.
Sheryl Barden, CAM, is the president and CEO of Aviation Personnel International, the longest-running recruiting and HR consulting firm exclusively serving the needs of business aviation. A thought leader on all things related to business aviation professionals, Barden serves on NBAA’s board of directors and is chair of the NBAA advisory council.