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Negotiating Aircraft Management Agreements

Negotiating Aircraft Management Agreements

Posted by June 2019 Aerlex Newsletter: Amanda Applegate

Most aircraft owners who own an aircraft elect to use a management company to manage the daily operations and maintenance of their aircraft. This allows the aircraft owner to focus on what they do well and hire someone else to handle something that is complex and highly regulated. Aircraft owners expect that the management company knows how to maintain an aircraft so dispatch reliability will be good, safety is not compromised and costs are reasonable.

Once the management company is selected, it will provide its standard management agreement (“MA”). In general, the MA will state how the aircraft and records must be maintained, when the owner must approve maintenance work, fees for the services, insurance requirements, and if the owner elects to allow the management company to charter the aircraft. I am fortunate to have the opportunity to work with a number of great management companies who have invested time and money into creating good MAs. However, once in a while, I am asked to review a MA for a company I haven’t worked with before and I am sometimes shocked with what I find. Here is a list of some of the key items to focus on when reviewing the MA:

  1. Aircraft Records.

  2. Charter usage.

  3. Payment Terms.

  4. Storage.

  5. Scheduling.

  6. Crew.

  7. Maintenance.

  8. Insurance.

  9. Indemnification and Limitation of Liability.

  10. Term.

 Aerlex Related Article: Preparing for an Aircraft Purchase >

Aerlex Law Group provides a wide range of services to all sectors of the aviation industry, representing the needs of business and corporate aviation, manufacturers, airlines, and airports.  Aerlex attorneys provide expert assistance with whole aircraft purchases and sales, leasing, financing and management, fractional jet ownership, regulatory issues, and tax, corporate, real estate, employment and litigation issues: