Business Aviation 101 low res

Business Aviation 101An introduction to business jet travel

CONTENTS

Introduction ..................................................................................................................... P03

Evaluating your travel needs ............................................................................................ P06

Which business aviation option is right for you ................................................................ P08

Fractional Ownership 101 ................................................................................................ P12

Private Aircraft Overview .................................................................................................. P14

Micro Jets / Very Light Jets ............................................................................................. P18

Light Jets ........................................................................................................................ P20

Super Light jets ............................................................................................................... P22

Mid-size Jets ................................................................................................................... P24

Super Mid-size Jets ........................................................................................................ P26

Large Jets ....................................................................................................................... P28

Super Large Jets ............................................................................................................ P30

Ultra Long-range Jets ..................................................................................................... P32

Converted Airliner ........................................................................................................... P34

Conclusion ...................................................................................................................... P36

Glossary of Terms ........................................................................................................... P37

PublisherPaul [email protected]

Editor in ChiefAnn [email protected]

P01

INTRODUCTION

Each day, more and more informed people are selecting business aviation

as their preferred air travel solution. And for good reason. To begin, business

aviation allows travelers to set their own schedule and avoid the system-wide

delays and missed connections of commercial airline travel. Then, there are the

issues of airport security, fewer direct flights, increased ticket and fuel costs

plus diminished service.

The fact of the matter is, there is just no better way to fly than business

aviation.Business aviation gives you the ability to work productively while you

travel, private space to confer with associates, more comfort and greater

security. With a reputation for unmatched levels of service, outstanding safety

and security, as well as access to airports that commercial carriers do not serve,

business aviation is truly positioned as a growth industry for the 21st century.

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The versatility and flexibility of business aviation enables a wide range of solutions for the most complicated scenario.

For today’s business aviation traveler, the options available have never been so comprehensive.

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With numerous ways to experience business aviation, how can you best evaluate what makes most sense for you? The following framework is provided to help you understand the issues, organize your thoughts, and ask the right questions as you consider your needs.

EVALUATING YOUR TRAVEL NEEDS

KEY CRITERIA FOR YOUR BUSINESS AVIATION

NEEDS

Mission Flexibility encompasses the degree to which you can match a particular aircraft or service to your trip requirements. Consider the number of passengers that would normally fly, the duration of the average flight and the number of flights per month.

Consistency and Control. Business aircraft operators strive to deliver a consistent product each day, but you will have to decide which is good enough to deserve your business.

Cost / Value is a fundamental consideration for a business aviation customer, whether the need is for business or personal travel.

Complexity and Commitment. Owning and operating a business aircraft in your own flight department requires an up-front investment.

Schedule Flexibility considers your ability to schedule or change your travel plans with minimal notice, or otherwise use the aircraft when you want, without constraints.

Safety and Security is increasingly recognized as one of the key benefits of flying in a business aircraft.

Utilization Rate. Defined as the hours you might expect to fly in a given year, it is one of the most fundamental considerations in your decision-making.

UTILIZATION RATE

SAFETY & SECURITY

SCHEDULE FLEXIBILITY

COMPLEXITY AND COMMITMENT

COST / VALUE

CONSISTENCY AND CONTROL

MISSION FLEXIBILITY

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FULL OWNERSHIP

When you own a jet fully, that aircraft and all the benefits that go with it, is available for your use exclusively. You can buy or lease an airplane, then either create the infrastructure to operate it in (an independent flight department), or outsource these tasks to a Management Company. In addition, an owner may decide to make the aircraft available for charter, generating revenue to offset operating expenses.

FRACTIONAL OWNERSHIP

Fractional ownership provides many of the same benefits of having your own aircraft without the cost of operating a whole aircraft. Simply stated, you buy a fraction of a plane, are allowed a fixed amount of hours per year and charged a monthly management fee, an hourly charge for usage and an hourly fuel surcharge. The normal term of ownership for fractional shares is usually 5 years. Shares commence at 50 hours of flight time per year, up to 800 hours. The share acquisition cost is pro-rated according to the market price of the whole aircraft. Hourly fees are levied on occupied hours only, not on positioning legs. An additional benefit of fractional ownership is that you have the ability to upgrade or downgrade aircraft models within the fractional fleet for specific trips. At the end of your ownership term you sell your share back to the company for fair market value less a remarketing fee.

WHICH BUSINESS AVIATION OPTION IS RIGHT FOR YOU?

FRACTIONAL CARD

With a fractional card you enjoy the same access to a fractional fleet as a share owner, without the responsibilities associated with aircraft ownership. There are two types of fractional cards. The “debit card” type is a pre-paid card that guarantees access to a fractional fleet with the funds deducted per flight based on a fee schedule of plane size, flight time and one way or round trip travel. When you’ve used your allotment, you simply purchase another card. The second type is the “hour-based card”. These cards are sold in 25 or 50-hour blocks of flight time in a specific make or model of aircraft.

CHARTER CARD

Like the fractional debit card, a pre-paid charter card guarantees access to Flight hours but, on a charter fleet. It too offers the freedom to travel at anytime without hidden costs, management fees and lengthy commitments. Funds are deducted per flight cost, based on occupied hours only, until the balance is depleted or additional funds are deposited.

ON-DEMAND CHARTER

On-demand charter is the traditional charter format where each trip is bid separately. Charter hours can be purchased from a regional or national charter provider. You are charged for all aspects of the flight including positioning legs before and after a flight. Knowing who you are booking the flight with, and who is actually providing the charter aircraft and crew, is important to know for safety and quality assurance.

AIR TAXI

Thanks to the development of Very Light Jets (VLJs), Air Taxi services are becoming increasingly available. Air Taxis operate under the same regulations as on-demand charter and provide point-to-point service to smaller cities and communities.

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• Your airplane, at your disposal24/7/365, customized to yourunique requirements.

• Purchase price plus all fi xedand variable operating costs

• Full operational control• Purchase or lease, new or

pre-owned; depreciable assetwith tax benefi ts

• Guaranteed 365-day availabilitywhen notice is given

• Purchase or lease, new orpre-owned; depreciable assetwith tax benefi ts

• Flexibility to upgrade ordowngrade aircraft

• Predictable pricing

• Same benefi ts/issues asfractional ownership but withno long-term commitment orupfront acquisition cost

• Same fl exibility in fl eet optionsas on-demand charter

• Consistent pricing

• Competitive pricing• Identifi able, trip-specifi c pricing• Flexibility in fl eet options

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OPTIONS OPTIMUM HOURS PROS / CONS PLAYERS

200 - 800 hours BombardierCessnaFalcon

FULL GulfstreamOWNERSHIP Hawker Beechcraft

Embraer

Brokers

50 - 400 hours FlexjetAvantAir

FRACTIONALCitationShares

OWNERSHIPFlight OptionsNetJetsXOJET

25 - 100 hours Flexjet Card

FRACTIONALJetPASS

CARDMarquisVector JetcardXOJET

25 - 75 hours Skyjet

CHARTERDelta AirElite

CARDJets InternationalSentientXOJET

0 - 25 hours SkyjetDelta AirElite

ON-DEMANDEJM

CHARTER /Jet Aviation

AIR TAXIPrivatAirSentient

Day Jet

P11HOURS FLOWN PER YEAR

0 25 50 100 400 800

WHICH OPTION BEST SUITS YOU?

FULL OWNERSHIP

FRACTIONAL OWNERSHIP

FRACTIONAL CARD

CHARTER CARD

ON-DEMAND CHARTER

As a fractional owner, you will not be specifically charged for positioning flights to move aircraft to where they are needed to serve owners or to go in for maintenance. Expenses associated with these flights are blended into the program rates and spread across all shareowners, providing better cost predictability for you.

Fractional ownership offers personalized, highly professional on-demand service while removing the hassles of ownership and much of the guesswork over costs. It is no wonder that this segment of the business aviation market has been growing as a preferred alternative for discriminating travelers.

With fractional ownership, your costs fall into three categories:

1. Share Acquisition Cost (up front, one-time)

This reflects the shareowner’s portion of the “sticker price” of the aircraft.

2. Aircraft Management Fee (charged monthly)

The Aircraft Management Fee is specific to the type of aircraft and size of share owned.

3. Occupied Hourly Rate (charged hourly as you use your aircraft)

This is also specific to the type of aircraft and size of share owned, reflecting the costs of operating the aircraft, including fuel and maintenance.

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Fractional Ownership offers customers the ability to enjoy many aircraft ownership benefits at an overall cost lower than Full Ownership. This is made possible by dividing the aircraft into smaller shares (fractions), giving you the option to buy the number of flight hours that best fits your needs. U.S. Federal Aviation Regulations prohibit fractional shares to be sold in increments less than 1/16th, typically equating to 50 hours per year.

Share Typical Annual Hours

1/16th = 50 hours

1/8th = 100 hours

1/4th = 200 hours

Half = 400 hours

Some fractional programs offer both new and used aircraft. The programs range from small, regional programs to large nationwide networks. Network economies afforded by a fleet of similar (or even identical) aircraft, always available to all the owners, make the “anytime, from anywhere to anywhere” concept achievable.

Four key agreements are required:

1. Purchase Agreement governs the share acquisition (or lease).

2. Management Agreement establishes the procedures under which the fractional operator manages your share of your aircraft. Services provided include providing pilots, arranging for maintenance, catering, weather reporting, reservations, and scheduling.

3. Dry Lease Exchange Agreement, also known as a master interchange agreement, allows aircraft to be shared amongst fractional owners. This document serves as a contract: 1) between all owners of an individual serial-numbered aircraft; and 2) between all owners of one aircraft and all owners of other aircraft in the Fractional Ownership program. This contract allows an owner of one specific aircraft to use an aircraft owned by another group of individuals.

4. Joint Ownership Agreement establishes the framework for providing each fractional owner with access to both an undivided interest in their aircraft and a share of allocated hours as established in the Purchase Agreement.

FRACTIONAL OWNERSHIP 101

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It’s impossible to discuss private aviation without an overview of the plane itself.

Private aircraft can be defined in many ways, but are typically categorized by passenger capacity and range.

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Light Jets

$7M - $8.5M

Super Light Jets

$11.5M - $12.5M

Mid-size Jets

$13.7M - $16.5M

Super Mid-size Jets

$21M - $25M

Large Jets

$27.5M - $32M

Super Large Jets

$35M - $48M

Ultra Long-range Jets

$49M - $60M

Converted Airliner

$30M - $70M10

00 n

m -

1600

nm

1600

nm

- 2

000

nm

1800

nm

- 2

250

nm

2450

nm

- 3

200

nm

3000

nm

- 3

400

nm

3800

nm

- 4

100

nm

4100

nm

- 5

200

nm

5200

nm

-63

50 n

m

2500

nm

- 6

100

nm

Micro Jets /Very Light Jets

$1M - $3M

2 - 5 passengers 5 - 8 passengers 7 - 9 passengers 8 - 10 passengers 8 - 12 passengers 9 - 13 passengers 12 - 16 passengers 13 - 19 passengers 15 - 30 passengers

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IRC

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VE

RV

IEW

Cessna Mustang Diamond D-JetEclipse 500Embraer Phenom 100Hondajet

MICRO JETS / VERY LIGHT JETS

Cabin HeightMJ 4.5 / VLJ 4.8 feet

Cabin WidthMJ 4.58 / VLJ 4.8 feet

Cabin Length MJ 9.8 / VLJ 11.0 feet

Price MJ $1M - $1.5M / VLJ $1.5M - $3M

PassengersMJ 2 - 4 / VLJ 3 - 5

Speed (kts)MJ 340 - 420 / VLJ 380 - 475

Aircraft RangeMJ 1,000 nm - 1,200 nm VLJ 1,200 nm - 1,600 nm

Representative Aircraft Shown HereEclipse 500

Cessna CJ1+Cessna CJ2+Hawkwer Premier 1A

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Bombardier Learjet 40XRCessna Citation BravoCessna Citation CJ3Cessna Citation CJ4Cessna Citation Encore+

Cabin Height4.92 feet

Cabin Width5.1 feet

Cabin Length 17.67 feet

Price $7M - $8.5M

Passengers5 - 8

Speed (kts)415 - 465

Aircraft Range1,600 nm - 2,000 nm

Representative Aircraft Shown hereBombardier Learjet 40XR

Embraer Phenom 300Hawker 400XPGrob SPn

LIGHT JETS

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Bombardier Learjet 45XR Cessna Citation XLS+Hawker 750

SUPER LIGHT JETS


Cabin Width5.1 feet


Price $11.5M - $12.5M

Passengers7 - 9



Representative Aircraft Shown HereBombardier Learjet 45XR

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Bombardier Learjet 60XRCessna Citation SovereignGulfstream 150Hawker 900XP

MID-SIZE JETS


Cabin Width5.92 feet


Price $13.7M - $16.5M

Passengers8 - 10



Representative Aircraft Shown HereBombardier Learjet 60XR

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Bombardier Challenger 300 Cessna Citation XDassault Falcon 50EXGulfstream 200Hawker 4000Embraer Legacy 600

SUPER MID-SIZE JETS




Price $21M - $25M

Passengers8 - 12



Representative Aircraft Shown HereBombardier Challenger 300

Bombardier Challenger 605Dassault Falcon 2000DXDassault Falcon 2000EXDassault Falcon 2000LXGulfstream 350

LARGE JETS




Price $27.5M - $32M

Passengers9 - 13




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Bombardier Global 5000Dassault Falcon 900DXDassault Falcon 900EXGulfstream 450




Price $35M - $48M

Passengers12 - 16



Representative Aircraft Shown HereBombardier Global 5000

SUPER LARGE JETS

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Bombardier Global Express XRSDassault Falcon 7XGulfstream 500Gulfstream 550

ULTRA LONG-RANGE JETS




Price $49M - $60M

Passengers13 - 19



Representative Aircraft Shown HereBombardier Global Express XRS

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Bombardier Challenger 850 / 870 / 890Airbus A318 EliteAirbus A319 Corporate JetlinerBoeing Business Jet / BBJ2Embraer Lineage 1000

CONVERTED AIRLINER




Price $30M - $70M

Passengers15 - 30




GLO

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S Air Ambulance - An air ambulance is an aircraft(fi xed-wing or rotorcraft) used for emergency medicalassistance in situations where either a traditionalambulance cannot easily or quickly reach the scene orthe patient needs to be repositioned at a distance whereair transportation is most practical.

“Average” Residual Value - The average value of thepre-owned business jet for the majority of its fi rst 20-years.

Air Carrier - A person who undertakes directly by lease,or other arrangement, to engage in air transportation.(FAR Section 1.1) The commercial system of air transpor-tation, consisting of the certifi cated air carriers, air taxis(including commuters), supplemental air carriers, com-mercial operators of large aircraft and air travel clubs.(FAA Statistical Handbook of Aviation)

Air Taxi - Air Taxi services are typically operated on a‘pay-as-you-go’ basis on a network of predeterminedroutes or within a geographic region. Services maybe on a per-seat or per-aircraft basis. On the per-seatbasis, you as a passenger have limited control over whoelse is on the aircraft. New air taxi business models areemerging, combining internet-based booking systems,advanced scheduling optimization software, and low-cost very light jets (VLJ), but these remain unproven atthis time.

Aircraft - A device that is used or intended to be used forfl ight in the air. (FAR Section 1.1) This includes airplanes,helicopters, gliders and others.

Aircraft Refurbishment - Replacement or recoveringof all or some of an aircraft interior and will often includeexterior paint.

ATC - Air Traffi c Control. A service operated by appropri-ate authority to promote the safe, orderly and expeditiousfl ow of air traffi c. (FAR Section 1.1)

Block Time - The time from the moment the aircraft fi rstmoves under its own power for the purpose of fl ight untilthe moment it comes to rest at the next point of landing.Also known as fl ight time. (FAR Section 1.1)

C of A - The “Certifi cate of Airworthiness” is an offi cialdocument, issued by the applicable authority in thecountry of registration to a registered owner or owner’sagent, which grants authorization to operate an aircraft infl ight. The United States certifi cate “FAA form 8100-2” isdisplayed in the aircraft. The FAA can revoke an existingairworthiness certifi cate if the aircraft no longer meets itsapproved design and/or is not in an airworthy condition.

Cabotage - Known as the fi fth “freedom of the air” inwhich an aircraft picks up passengers, cargo and mail atone point in a state, other than the state of its own registry,and discharges same at another point in the grantor’s state.

Carbon Offset Program - A program widely offeredby airlines, travel and tourism providers around the worldthat “neutralizes” a passenger’s greenhouse gas (GHG)emissions resulting from aircraft usage by fundingprojects in renewable energy and energy effi ciency thatwill reduce emissions occurring elsewhere.

Charter Auditing Company - A company such asARG/US or Wyvern Consulting who audit the safety,operations procedures and regulatory compliance ofcharter providers, issuing a “rating”. Ratings are oftenused in a providers advertising, but should always beverifi ed with the auditing company.

Charter Jet Card / Block Charter - Block Charter /Charter Cards typically enable you to purchase a block ofhours at a predetermined cost in fl eets of charter aircraftin increments of 25, 50, or 100 hours. Your account isdebited as hours are fl own based on the type of aircraftused, fl ight hours consumed, and any miscellaneouscosts. You will have guaranteed access to a fl eet of char-ter aircraft within a call out period (typically 4-12 hours),and only pay for occupied hours.

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CYAN MAGENTA YELLOW BLACK LAD7399090

We hope you have found this introduction to business aviation helpful. While the solutions offered today are many, ultimately the decision comes down to what is right for you, your travel schedule, and your peace-of-mind.

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Chief Pilot - When a Director or Aviation Manager is employed, the Chief Pilot will be responsible for imple-menting training, operations and regulatory requirements within the fl ight department. In the smaller fl ight depart-ment the Chief Pilot’s duties include those of the Director or Manager of Aviation.

Completion Center - A facility qualifi ed and certifi ed to manufacture and install a corporate jet interior. Most com-pletion centers are also approved maintenance facilities.

Completion Cycle - The 6 to 12-month cycle required to manufacture and install a corporate jet interior and paint the exterior.

Crew Rest Period - Rest period means a period of time that is free of all responsibility for work or duty prior to the commencement of, or following completion of, a duty period, and during which the fl ight crewmember or fl ight attendant cannot be required to receive contact from the program manager. A rest period does not include any time during which the program manager imposes on a fl ight crewmember or fl ight attendant any duty or restraint, including any actual work or present responsibility for work should the occasion arise. (FAR 91.1057)

Damage history - Any history of an incident or acci-dent that affected the airworthiness or structural integrity of the airframe or engine(s). An FAA Form 337 will be issued in cases requiring major repair and/or alteration. Damage history always affects the value of an aircraft.

Depreciation - Depreciation represents the cost or value of ownership. Aircraft have a fi nite useful economic or ser-vice life. Depreciation is the method used to spread the cost of the purchase price, less residual value, over an asset’s useful life. Depreciation costs depend on aircraft acquisition or replacement costs, useful life, and residual or salvage value. To calculate the cost of depreciation that shall be allocated to each year, subtract the residual value from the total of the acquisition cost plus any capital improvements and, then, divide by the estimated useful life of the asset.

Bonus Depreciation - To be entitled to the 50-percent Bonus Depreciation under the Economic Stimulus Act of 2008, you would need to enter into a binding contract to purchase a business jet in 2008, and take delivery and place the aircraft in to service in 2008 or 2009. The new act allows you to write off 50-percent in the fi rst year and then apply the normal depreciation schedule to the bal-ance, so in actual fact you are accelerating depreciation.

Direct Operating Costs - Direct Operating Costs are fuel, maintenance, inspections, overhaul, parts replace-ment and trip expenses (crew and aircraft).

Director of Aviation - The individual with overall responsibility for the administrative and operations function of the fl ight department. They may also be known as the Aviation Manager, Aviation Director and in a smaller fl ight department, hold the additional responsibilities of the Chief Pilot.

Director of Maintenance - The Director of Mainte-nance has administrative and management responsibility over the maintenance department.

Dry Lease - Refers to the lease of the aircraft only. The fl ight crew is not included in the lease package.

Duty Time - The total amount of time a fl ight crew member is on duty, beginning when the person reports for an assignment and ending when the person is released from that assignment. It includes all fl ight and non-fl ight related tasks.

FAA - Federal Aviation Administration (FAR Section 1.2)

FAA Form 337 - FAA Form 337 provides aircraft owners and operators with a record of major repairs or altera-tions indicating details and approval. A copy of the form is included in the aircraft records at the FAA Aircraft Registration Branch, in Oklahoma City, OK.

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Factory Service Center - Factory owned and oper-ated maintenance facility.

FAR - Federal Aviation Regulations. Title 14 of the Code of Regulations.

FBO - Fixed Base Operator. Vendor providing services at an airport to general and business aviation, such as fuel, parking, passenger handling, transportation, hangarage and catering.

FET - Federal Excise Tax applied to Charter and Fractional Occupied Hourly Rate and Fuel Surcharges.

Five Freedoms of the Air - (1) the right to fl y over the territory of a foreign nation without landing; (2) the right to land on the territory of a foreign nation for non-traffi c purposes (i.e., refueling, emergency repairs); (3) the right to put down in a foreign country passengers, mail and cargo taken on in the state whose nationality the aircraft possesses; (4) the right to take on passengers, mail and cargo in a foreign country for the state whose nationality the aircraft possesses; and (5) the right to put down/or take on in a foreign country passengers, mail and cargo from or for the territory of a foreign country. (Also refer-enced is an unoffi cial “sixth freedom” that allows total freedom from constraints.)

Fixed Costs - Fixed Costs / Indirect Operating Costs incurred regardless of whether the aircraft is fl own or not: crew salaries and benefi ts, hangar, insurance, training, management fee, aircraft modernization and refurbishment, operations services (weather, navigation) and depreciation.

Flight Attendant - A crewmember assigned to duty on an aircraft, whose primary responsibility is ensuring pas-senger safety and comfort, and whose training includes instruction in aircraft familiarization, evacuation proce-dures, emergency procedures and passenger handling.

Flight Crew Member - A pilot, fl ight engineer, or fl ight navigator assigned to duty in an aircraft during fl ight time. (FAR Section 1.1)

Fractional Jet Card / Block Fractional - Block Fractional / Fractional Cards offer access to business aircraft with less commitment than fractional ownership. You will pay up-front for a year’s usage (typically beginning at 20-25 hours but may be as low as 10 hours per year) from a block fractional company, who acquires, repackages, and sub-leases fractional shares to custom-ers. Block fractional companies do not operate aircraft, and as a customer, you will not hold title to the aircraft. You will have access to a fractional fl eet of aircraft (with the quality and service consistency that fractional owners enjoy), but with some restrictions in operating fl exibility, required notifi cation times, geographic coverage without additional fees, etc. As with fractional ownership, you will pay only for occupied fl ight hours and not for positioning the aircraft before or after your fl ight.

Fractional Ownership - Fractional Ownership involves the acquisition of a partial interest in an aircraft from a fractional operator, who acquires, operates, and manages fl eets of similarly confi gured aircraft on behalf of multiple owners. In exchange for a one-time capital investment and monthly management and hourly opera-tional fees, you will have access with as little as 6 hours of notice (‘call out’ time) to your aircraft or one like it for a pre-determined number of hours per year. Fractions are typically sold in shares of 1/16th or greater, providing multiples of 50 fl ight hours per year for fi ve or more years. You will be charged for ‘occupied hours’, not for the costs of aircraft positioning. You will be able to fl y on multiple aircraft and different types within the fractional fl eet at agreed-to ‘interchange ratios’. At the end of the owner-ship period, the fractional operator has the right to purchase back your share at fair market value less an aircraft remarketing fee.

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Fuel Surcharge - Hourly charge levied on fractional and charter customers to compensate for the ever-changing price of aviation fuel. Prices are published and change monthly.

Full Ownership - Full Ownership involves the acqui-sition or lease of a 100% interest in a business aircraft. You may operate and maintain your aircraft within your own corporate fl ight department or through a professional aircraft management company. You will incur all benefi ts and costs in owning, operating, and disposing of the aircraft. When the aircraft is not used, you may elect to make it available for charter, providing an incremental source of revenue to you.

GAMA - General Aviation Manufacturer’s Association. An association of U.S. manufacturers of general aviation aircraft.

GDP - Ground Delay Program. GDPs are implemented to control air traffi c volume arriving at airports where the projected traffi c demand is expected to exceed the airport’s acceptance rate for a given period of time. Periods of demand exceeding acceptance rate are normally a result of the airport’s acceptance rate being reduced for some reason. The most common reason for a reduction in acceptance rate is adverse weather such as low ceilings and visibility.

General Aviation - The portion of civil aviation that encompasses all facets of aviation except scheduled air carriers, state-operated and military aircraft. There are over 4000 general aviation airports in the U.S, in contrast commercial airlines use at best 420.

General Aviation Airport (Public Airport) - Airport that is used for public purposes, under the control of a public agency, and whose landing area is publicly owned; these airports service aircraft owned by private individuals or fi rms that are used primarily for business and recreational fl ying.

Green Aircraft - Not to be confused with an environ-mentally-friendly aircraft - the term “green” comes from the green tint of the pre treated metal of the aircraft before it leaves the production line, receives it’s C of A (Certifi cate of Airworthiness) then enters the completion stage for interior installation and paint.

ICAO - The International Civil Aviation Organization, a UN Specialized Agency, is the global forum for civil aviation. ICAO works to achieve its vision of safe, secure and sustainable development of civil aviation through cooperation amongst its member States.ICAO Strategic Objectives for the period 2005-2010 are:

• Safety - Enhance global civil aviation safety • Security - Enhance global civil aviation security • Environmental Protection - Minimize the adverse

effect of global civil aviation on the environment • Effi ciency - Enhance the effi ciency of aviation

operations • Continuity - Maintain the continuity of aviation

operations • Rule of Law - Strengthen law governing interna-

tional civil aviation

IFR - Instrument Flight Rules (FAR Section 1.2)

International Airports of Entry - These airports that have been designated as international airports for customs purposes. They are open to all international aircraft for entry and clearance purposes without the necessity of obtaining permission. However, advance notice of arrival is required so inspectors may be avail-able. Designation as an international airport of entry follows application by the airport operator and fi nding by the U.S. Customs Service that the airport will generate suffi cient international traffi c. An airport of entry must provide adequate space and facilities for Customs and Federal inspection purposes and satisfy certain other requirements established by the U.S. Customs Service. (Advisory Circular 150/5000-5B)

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Joint Ownership - Under joint ownership, two or more companies are permitted to jointly own and use an aircraft under mutual agreements. Each of the parties to a join ownership agreement must appear as a registered owner on the FAA certifi cate of registration.

LOI - “Letter of Intent” to purchase an aircraft submitted to a Seller. The fi nal “executed” LOI will usually be supported by a deposit sent to the Escrow Agent.

Management Company - Provides all operational services to an owner in a Turnkey program whereby they take care of all the day-to-day responsibility and management of the aircraft including crewing, hanga-rage, and maintenance., In addition, some management companies can offer your aircraft for charter generating revenue while the owner is not using it.

Management Fee - Charged monthly and is specifi c to the type of aircraft and size of the fractional share owned. The fee covers the fi xed costs of establishing and main-taining the fractional program, including pilot salaries, and expenses, insurance, aircraft scheduling, overhead and other costs. Contract terms are typically for 5 or more years, and include escalation clauses based on the Consumer Price Index (CPI) or other indices.

Max Landing (MLW) and Max Takeoff (MTOW) Weight - The Maximum Landing and Takeoff Weight of an aircraft is the maximum weight at which the pilot of the aircraft is allowed to attempt to land or take off respec-tively. It is the heaviest weight at which the aircraft has been shown to meet all the airworthiness requirements applicable to it. The airworthiness requirements include many related to strength of the structure, and perfor-mance. At its Maximum Landing or Takeoff Weight an aircraft complies with all the structural and performance requirements applicable to aircraft in its class.

Mission - How many hours you plan to fl y. How many passengers you expect to transport. Specifi c airport/city/country destinations you expect to frequently visit. Acquisition and operating budgets.

NBAA - National Business Aviation Association. Founded in 1947, NBAA is the leading organization for companies that rely on general aviation aircraft to help make their businesses more effi cient, productive and successful. NBAA is a member of the International Business Aviation Council, Ltd.

Noise Abatement - Procedure for aircraft operating at an airport so as to minimize the impact of noise on the local environment. NBAA’s Noise Abatement Program is a set of objectives B41B37 and operating procedures used to reduce noise exposure for people on the ground. The procedures, established in 1967, are recommended as a standard for all aircraft whose manufacturers have not recommended specifi c noise-abatement procedures.

Noise Curfew - A “Noise Curfew” restricts non-military aircraft from fl ying over “populated areas” during “normal sleeping hours”, at low altitudes.

NOTAM - Notice to Airmen. A notice containing informa-tion concerning the establishment, condition or change in any aeronautical facility, service, procedure or hazard, the timely knowledge of which is essential to personnel concerned with fl ight operations.

NTSB - National Transportation Safety Board. The National Transportation Safety Board is an independent U.S. Federal agency that investigates every civil aviation accident in the United States and signifi cant accidents in the other modes of transportation, conducts special investigations and safety studies, and issues safety recommendations to prevent future accidents.

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Occupied Hourly Rate - Charged hourly as an owner uses the aircraft. It is also specifi c to the type of aircraft and size of share owned, refl ecting the costs of operating the aircraft, including fuel and maintenance. Hours are calculated from takeoff to landing, with most programs adding 1/10th of an hour on either end of the fl ight for taxi time on the ground. Most programs establish one hour as the minimum fl ight time charged, although some offer the fl exibility of “short leg waivers”. Occupied hourly rates are escalated based on the CPI or other indices, with a separate adjustment to account for the highly variable fuel component.

OEM - Original Equipment Manufacturer such as Bombardier Aerospace Corp.

On Demand Charter - On-Demand Charter services are essentially a ‘pay-as-you-go’ service provided by a 3rd party charter operator, where you hold no title in the aircraft. Pricing and quality of service are not pre-determined, and may be quite variable. The charter operator may or may not own the aircraft and employ the crews. You will have no guarantee of access to an aircraft, nor will you know for certain which type of aircraft you will fl y in until booking is completed and a deposit is paid. You will be expected to pay for positioning the aircraft before or after your trip, and you will be charged for any incremental costs associated with the trip.

Open Skies Policy - Concept that promotes unrestricted use of airspace and airports by all users.

Operational Control - With respect to fl ight, opera-tional control is the exercise of authority over initiating, conducting or terminating a fl ight.

Part 135 - Federal Aviation Regulations (FARs) Part 135 prescribes the rules generally governing on-demand pas-senger charter operations for aircraft for hire, with fewer than 30 seats and less than 7,500 lbs payload capacity.

Part 91 - Federal Aviation Regulations (FARs) Part 91 prescribes rules governing the operation of aircraft not for hire, (other than moored balloons, kites, unmanned rockets, and unmanned free balloons, which are governed by part 101 of this chapter, and ultralight vehicles operated in accordance with part 103 of this chapter) within the United States, including the waters within 3 nautical miles of the U.S. coast.

Peak Travel Periods - Pertains to fractional or jet card programs, when specifi c days such as public holidays will require advance scheduling or depending on the program details, may be considered as black out dates.

Pilot in Command - Pilot In Command (PIC). The pilot responsible for the operation and safety of an aircraft during fl ight time. (FAR Section 1.1)

Reservation - An authorization received in compliance with FAR Part 93, to operate to and/or from a designated high density traffi c airport (HDTA). A reservation is normal-ly allocated on an hourly basis. However, the total hourly reservation limit could be further broken down to a 30-minute time period limit. A reservation fl ight may operate only within the approved hour or half hour, unless the fl ight encounters a traffi c delay. (Advisory Circular 90-43G)

Rotorcraft - Helicopters.

Service Area (Primary and Secondary) - Primary area of operation for most fractional and jet card programs. Transportation to and/or from the secondary service area typically incurs higher hourly occupied hourly rates and positioning or ferry charges.

Share Acquisition Cost - A one-time, up front charge refl ecting the shareowner’s portion of the “sticker price” of the aircraft. Fractional operators typically have the right to repurchase the share at the end of the contract term for “fair market value”, less a remarketing fee, assuming the risk or reward if the value of the aircraft changes during the ownership period.

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SIFL Rate - Standard Industry Fare Level. An airlineindustry statistic maintained by the Department of Trans-portation, which includes specifi c cents-per-mile ratesfor three different ranges of statute mileage and a fi xedterminal charge.

Stage 1 - The lowest of the three aircraft noise classescreated in 1977, when the FAA amended FAR Part 36to provide for three levels of aircraft noise certifi cationstandards.

Stage 2 - The noise limit for newly designed largeaircraft imposed in 1973 following the establishment ofthe FAA’s fi rst noise regulation – FAR Part 36. The inter-national (ICAO) equivalent noise standard is known asICAO Chapter 2.

Stage 3 - A more stringent aircraft noise limit thatapplied to aircraft for which new type certifi cates wereapplied for on or after November 5, 1975. This categoryof noise certifi cation was created in 1977, when the FAAamended FAR Part 36 to provide for three stages ofaircraft noise levels. The international (ICAO) equivalentnoise standard is known as ICAO Chapter 3.

Stage 4 - The most recent and most stringent aircraftnoise certifi cation limit that applies to aircraft for whichnew type certifi cates are applied for on or after January1, 2006. The international equivalent noise standard isknown as ICAO Chapter 4.

Type Rating - A type rating is an allowance to fl y acertain aircraft model that requires additional trainingbeyond the scope of a Pilot’s initial license and aircraftclass training. What aircraft require a type rating isdecided by the country’s governing aviation authority.

Starting in 2006, the FAA in the United States requiresCo-pilots (Second-in-command, or SIC) to have a ‘SICType Rating’ for aircraft requiring a crew of two, and oth-erwise requiring a type rating to act as pilot-in-commandto fl y internationally, or over international airspace. This isin order to remain compliant with ICAO.

User Fees - A “Pay as You Fly” system (common inEurope) whereby charges are levied for use of each coun-tries airways, air traffi c control system, landing fees etc.Currently under much debate within the United States.

Visa Waiver Program - The Visa Waiver Program(VWP) enables nationals of certain countries to travelto the United States for tourism or business for stays of90 days or less without obtaining a visa. Unless authorityhas been granted to a private aircraft operator, all NonUS-citizen passengers arriving onboard private aircraftare not covered under this program and require a visa toenter the United States.

VLJ - Very Light Jet

Wet Lease - A “wet lease” arrangement is a leasingagreement whereby a certifi cate holder agrees toprovide an aircraft and at least one crewmember toanother air carrier.

Resources used in the Business Aviation 101Airclaims DatabaseAircraft Blue Book Price DigestAMSTATBlue Chip Economic Forecast, August 2007Bombardier AerospaceOEMs Financial Reports, Websites and Press ReleasesCap Gemini & Merrill Lynch 2007 World Wealth ReportEconomist Intelligence Unit (EIU)Federal Aviation Authority (FAA)General Aircraft Manufacturers Association (GAMA)International Monetary Fund (IMF)Jetnet DatabaseNational Business Aircraft Association (NBAA)National Bureau of Economic Research (NBER)US Bureau of Economic Analysis

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Documents

Business Aviation 101 low res