Elit’Avia charts rise of ACMI arrangements
A “significant shift in business aviation access and ownership models” has been identified by Elit’Avia.
The Slovenian charter, management and operation services company says it has seen the aircraft, crew, maintenance and insurance (ACMI) arrangement become increasingly popular over the last year, particularly among people and corporations that can afford to buy an aircraft outright but choose not to do so.
The rising popularity of ACMI mirrors a decline in the total number of transactions, according to Elit’Avia CEO Puja Mahajan (pictured).
“Looking at the total number of inquiries from prospective clients during the last 12 months, the trend that we have seen is an overall reduction in the number of enquiries for supporting new or pre-owned aircraft sales and acquisitions, whereas interest in ACMI solutions has increased significantly in the same period,” she told Corporate Jet Investor.
Mahajan attributes the change to a number of factors, including business aviation being treated as a typical operating expense and people wanting to avoid the capital expenditure of owning a business aircraft. The potential tax benefits and extra discretion of leasing, rather than owning, are also contributing to the change.
“Client needs and preferences are constantly changing and evolving,” she said. “In general, we believe that there is greater openness to new structures based on the reasons discussed. Furthermore, the supply side of business aviation has also evolved, with more ACMI aircraft on the market from financial institutions and other lessors. Additionally, aircraft owners have come to appreciate the benefits that may be drawn from ACMI arrangements for assets that are otherwise under-utilised.”
“Increasingly discerning” individuals and organisations were also interested in arrangements that were more efficient than ownership.
Mahajan said that the business aviation industry needed to evolve continuously, as clients expected flexibility. “If ACMI is on the rise, it is critically important to acknowledge that fact and adjust service offerings consequently.
“While ACMI has become more prevalent, its is certainly not new. However, I think we can say with confidence that it is here to stay.”
She predicted that the business aviation industry, particularly the wide-body segment, will continue to grow during 2018. Elit’Avia aims to increase the number of aircraft under its new San Marino AOC and continue to develop its service offerings.
She added: “At Elit’Avia, we are uniquely positioned to manage these changes because we have more than a decade of experience with all aspects of business aviation, including crew support, ACMI and managing privately-owned aircraft.”