Aircraft Management Agreements

Most owners of business jets appoint a manager to look after the aircraft. An aircraft management agreement sets out what the manager will do, what it costs and who is responsible when something goes wrong. It is one of the most important contracts an owner signs, and one of the most frequently overlooked.

Key terms

• Scope of services. Crewing, maintenance planning, airworthiness management, flight operations, insurance, hangarage and, where relevant, charter sales.
• Budgets and fees. The management fee, how operating costs are budgeted and approved, and any mark-ups on third-party costs.
• Owner funds. How the owner’s money is held, often in a reserve account, and how it is reported and reconciled.
• Maintenance and records. The standards the aircraft will be maintained to, and the manager’s duty to keep complete records, which are vital to the aircraft’s value on resale.
• Insurance and liability. The cover the manager must arrange, the owner’s position as an additional insured and the limits of each party’s liability.
• Owner’s use. Priority access for the owner, particularly if the aircraft is also chartered.
• Termination and handover. Notice periods, and the return of the aircraft, its records and any unused funds at the end of the relationship.

Operational control

A recurring issue is who has operational control of each flight. It determines whether a flight is private or commercial, which rules apply and who bears responsibility. The agreement should reflect the way the aircraft is actually operated, particularly where it is also available for charter.

How we help

We draft, review and negotiate management agreements for owners and managers, and review existing agreements when an aircraft is bought, refinanced or moved to a new manager.