Considering Private Air Travel?

James Butler Explains Why You Must Have an Attorney on Your Side

Bethesda, Maryland • December 2016

If you are considering an investment in private flying, should you seek the advice of an attorney? The answer, in no uncertain terms, is yes!

Most private air travel arrangements, such as buying a fractional jet share or buying into jet card or block charter programs, involve rather complicated legal, regulatory and liability issues, and substantial dollars, and so deserve careful legal review.

As a general rule of thumb, I’d recommend that anytime you’re parting with more than $25,000 in exchange for a promise by a jet company to fly you sometime in the future, you should have an experienced attorney review the paperwork. Indeed, even if you’re just booking a charter flight, which may cost less than $25,000,, issues like cancellation fees, aircraft and crew specifications, safety standards, etc. are likely to be covered in the fine print that comes with most standard charter contracts. When we broker a charter flight for our clients, we pay close attention to these details.

Jet companies, fractional ones in particular, have a subtle way of making their contracts seem simple (and so non-threatening). They print them in a way that makes them seem short and full of “boilerplate.” Some will even tell you that they don’t change their contracts and, “Everyone signs the same documents.”(We recently negotiated over 150 changes to one such company’s contracts.)

The more risk – financial, legal, etc. - you assume (and there is always risk, contrary to what a jet company may tell you), the more important it is that you have experienced legal counsel review and negotiate these contracts. (Even in the case of some jet card programs, the contracts reflect complicated legal structures and can run to more than 90 pages, notwithstanding the fact that in their ads, they make them look like simple credit cards!)

As with any capital asset purchase, you want to make sure that the asset is liquid and that you can get a fair price for it when you sell, even more so in the case where the fractional company knows much more about the jet market than you do and when you’re almost forced to sell back to them. We hear from fractional owners every week who wish they’d paid more attention to the details of how they’d liquidate their fractional share and how the value of that share would be determined.

When you are putting thousands, or millions, at risk, you also want to make sure that the jet company’s promises are ironclad and that you have real and workable recourse if it doesn’t live up to its end of the bargain. Again, as you’d expect, the fractional companies draft their contracts in a way that gives them a great deal of latitude with respect to these performance standards.

You may first think to call on your in-house or family attorney. Bad idea. Your average attorney understandably won’t have experience with how these contracts work and so won’t know which aspects are negotiable and which are not. Faced with these circumstances, you may be inclined to just go ahead and sign the “standard” contract, only to find out later that you’ve made a costly mistake.

In the end, it seems to me that anytime you contract for a private jet flight—putting your dollars and, more importantly, your safety and that of your family and business associates at risk, you should have an experienced attorney, who specializes in aviation transactions, review the contracts.

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