Part 2: Fleet Acquisition Strategies in a Slow Economy

This is the final part of a two part series on fleet acquisition strategies in a slow economy.  If you missed Part 1, you can read it here.

1. Will your new fleet prepare students for airline or corporate pilot positions?

According to Republic Airways, one of the primary reasons their new-hires do not succeed with initial flight training is because they cannot manage the FMS and automation in Republic’s jet aircraft.

Students who have experience with glass cockpits will be highly sought after graduates because of their ability to manage automation and FMS-like avionics technology. They will be the most prepared and have a better knowledge of how to use complex automation on many of today’s airliners.  Having a fleet that can teach this technology is imperative.  REMEMBER:  You can always "dumb" down a smart aircraft, but you cannot smarten up a "dumb" one.

Furthermore, many successful collegiate aviation schools have established bridge programs with regional airlines.  These bridge programs are partly based on the fact that students are exposed to glass cockpit technology and automation early on in flight training and are prepared to transfer those skills to the airline cockpit environment.

2. What factors should I consider when disposing of my current fleet?

    According to Vref (Aircraft Value Reference), the time it takes to sell a single training aircraft is 6 to 7 months.  If you own your fleet, managing the sale of old aircraft and the acquisition of the new fleet is more than a full-time job.  In addition, there are many costs such as insurance, tie-down fees, and maintenance expenses that must be planned for even when an airplane is not being flown for training.

    3. How can I show my CFO that I am decreasing and mitigating my program risk?

      As an aviation program manager there are many risks you need to manage on a daily basis. Take for example the fact that the value index for light piston single engine aircraft has decreased 25% over the past 5 years. 

      With this risk in mind, your University CFO is concerned with protecting the use of University capital.  One mitigation strategy that seems to emulate in every industry is sharing risk through partnerships.

      The operating lease is an acquisition structure that allows the University to offset almost all of the ownership risk to the leasing company.  If your CFO feels the best way to use University capital is ownership, consider a finance lease.  The payments are usually lower than an operating lease, but the University will take on more of the ownership risk by owning the asset at the end of the term.

      Next time you plan to acquire a new fleet consider the benefits of leasing.  Talk to your partners in the industry and your CFO and weigh the many options that are available to you.