TAKING CONCESSIONS

TAKING CONCESSIONS

James D. Butler

CEO, Shaircraft Solutions

301.652.9885

www.shaircraft.com

To remain viable over the past few years, fractional companies have changed their business models and shifted more of the variable-cost risk to the share owners, making the contracts more favorable for the fractional companies than previously. But James Butler, CEO of Shaircraft Solutions, says the terms of those contracts are seldom set in stone.

The companies make the contracts seem simple, and they’ll say, “We don’t change our contracts.” Well, we recently did a fractional contract in which we negotiated more than 150 changes to the document—and this wasn’t the first time we made so many changes to a contract.

Companies have a basket of concessions, and each concession has a dollar value attached to it. You don’t want to ask for things that don’t add value for you, because when you deduct that dollar value, you may leave little room for anything else. If you take a lot of short hops, for instance, you want to negotiate a short-leg waiver so that you’re not required to pay for a full hour of flight time. If you have a family member or business interests outside the primary service area, then you should try to have the ferry fees waived. You want to know what your needs are, what your travel profile is, so that you know what concessions are most valuable to you.

Some clients are sheepish about asking for changes. There are big dollars going back and forth across the table, and if you don’t negotiate some changes, you can double or triple the cost per hour of flying the aircraft.

You can leave a lot of benefits and value on the table if you don’t have an attorney or someone who really understands private-air-travel contracts on your side. Usually it’s the people in their second contracts who focus on the details; they learned the hard way.