The Unique Nature of Family Office Aviation

The ability to go anywhere, anytime, on their own terms was breathtaking, especially at that time, when aviation had only existed for just over half a century.

Fast forward to the present time and we see a much more evolved landscape, with clear threads and utilization strategies developing rapidly over the last thirty years. Corporations most certainly have embraced private aviation, using it to accomplish strategic objectives by leveraging their key employees' time.

In fact, the vast majority of Fortune 500 companies use private aircraft, many owning one or more units and running entire departments that are staffed by professionals who are at the top of their game. Many companies would simply not be where they are today without the use of a private aircraft.

Even Warren Buffett once famously said that he went from calling his private aircraft “The Indefensible” to “The Indispensable”. Berkshire Hathaway went on to buy NetJets, the world's largest fractional ownership company, which today boasts a fleet of over 800 aircraft.

As family offices have gained popularity in the past ten years, more are taking on the responsibilities of overseeing the aviation program for their family. This has brought unique challenges which are not insurmountable, but must be carefully considered when staffing and operating a family aviation program.

Scheduling can be challenging

One of the key differences between business and family office aviation is that of scheduling. Whereas most business occurs Monday through Friday, this allows a certain predictability when scheduling crews, and offers quality of life, which is very important for employee retention these days.

Many larger corporate aviation departments have gone to a quasi-airline style scheduling model, with guaranteed days off and the ability to bid a schedule which fits with each crewmember's individual situation.

With family office aviation, just the opposite may be true. Many trips occur on weekends and holidays, and may involve being on-call more than the counterparts who fly for a company.

Vetting candidates is extremely important in order to find the best personality fit with the family culture. Set the right expectations for how the family travels, how they make changes, and how last-minute those may be. The differences may be subtle, but one starts to see some stark contrasts between flying for a business and flying for a family.

Think of it as the difference between staffing a trucking company and a fire department. The trucking company will seek candidates who value fixed schedules, completing a mission on time and guaranteed time off. A fire department, though, will want people who are more flexible, able to handle periods of waiting while maintaining a great attitude, and able to jump into action when called upon with short notice.

By putting the right people in place for the specific demands of the situation, a family can build a flight services team that can function at a high level no matter what the circumstances, since those will have been anticipated and factored in from the beginning.

Financial considerations

Another big difference between business aviation and family aviation is that of operational expenses and accounting. Most businesses have a tax benefit when owning an aircraft, whereas a family does not. A corporation can leverage its buying power to reduce costs in the aviation department, but a private aviation program for a family will pay close to retail for everything, with no ability to write it off.

One strategy that families can use is to place their aircraft under a dedicated management company, which will actually produce other benefits. Not only will they be able to take advantage of bulk pricing, unlike a standalone flight program, but the family will also tap into an entire safety program that will directly impact their operation. There are some downsides to using a management company but overall, those can be compensated for.

A corporate aviation department will have access to all of the built-in functions of the company, from HR to Purchasing, Finance, IT, Risk Management, Facilities, and an executive team hired to make complex decisions. The aviation department becomes an extension of the company, with the support of all of these departments orchestrated through the Aviation Director.

With the family office, these functions may not be as robust as those found in a corporation. While the family flight department will be staffed by highly competent aviation professionals, the family office itself may not have the experience or framework to deal with all of the issues that a corporation is set up to handle.

One solution is for the family office to have a highly experienced aviation advisor to help talk through everything from budgeting to strategic planning, fleet planning to use policy, hiring standards, safety, risk management, tax, and much more. It can get complicated if the aviation professionals at the hangar are not well versed in these issues, and neither is the family office team.

This can present some real challenges, which can fortunately be mitigated by hiring a competent aviation consultant on a project or retainer basis to advise the family, the family office, and the aviation department through these different issues in a coherent, coordinated way.