Key Terms in Aircraft Management Agreements (Part 1)
Part 1: John Farrish lays out the essential terms in aircraft management agreements—what safeguards owners, which costs matter, and how clarity prevents surprises.
Every jet owner needs their aircraft properly looked after for both safety and the protection of their investment. For most single-aircraft owners, this means a professional aircraft management company – ideally one that has experience operating the same aircraft type.
The owner's relationship with the aircraft manager should be in writing and clearly describe each party's obligations. Some of the key commercial terms are described below.
Term
Sometimes it can take a few tries for an owner to find a management company that is a perfect fit. What if your first management company doesn't work out?
This is why the term is essential. Many management companies ask for a one-year commitment from the owner. This is often because the initial onboarding and first year can be the most work for a manager. When representing owners, I prefer a thirty-day no-fault termination right for either party (sometimes sixty days during the initial year). This agreement keeps the parties on their best behavior, since they know they must keep each other satisfied. The manager must be responsive, while the owner cannot be overly burdensome.
Costs
Perhaps what owners pay most attention to is the cost of aircraft management. Initially, most owners focus on the monthly management fee itself. After a few months of ownership, owners realize that this is merely one piece.
Another "up-front" cost is often an operating deposit. An owner typically pays the manager one or two months' worth of operating costs, so the manager is not advancing owner costs on their own dime.
It is also incredibly important for owners to know exactly which costs they will be responsible for and which expenses are covered by the monthly management fee. Every owner would expect to pay for their own fuel and for the manager to pay for their own computers. But what about other items, such as crew phones, hangar fees at the home base, travel for the manager to oversee maintenance, crew training, and aircraft cleaning? All of these items should be described in the management agreement.
Further, for costs that are the owner's responsibility, how are they reimbursed? Are invoices passed on from the manager to the owner at cost? Or is there a markup added by the manager? There are occasionally good arguments for some markup (such as when a manager is inventorying parts or charging a below-market management fee). Either way, a prudent owner will know what they are agreeing to pay for.
Duties
Every owner needs to know exactly what the management company is responsible for and what the owner will be responsible for arranging. What the management company is performing vs. what is being outsourced should also be agreed to in writing. This can be difficult for new owners since they are unaware of everything that needs to be accounted for, which is why they should work with an attorney experienced in negotiating management agreements.
Some of the questions to include: who is responsible for finding crew? Is the maintenance being performed by the manager, or will it be outsourced? Is the management company expected to arrange ground transportation for the owner upon the plane's arrival?
Whatever the answers, they should be documented so that expectations are aligned, disappointment is avoided, and neither party needs to quickly invoke their right to terminate the agreement!
Stay tuned for next month's article, which will detail more key terms needed in every management agreement.
This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, and are purely informational. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.
Claims! and Adhering to Policy Language/Pilot Warranties
Tom Hauge explains why FAA compliance isn’t enough to ensure coverage. He shows how pilot warranties and training requirements can determine whether a claim is paid once an adjuster reviews the details.
In aviation insurance, there always seems to be confusion concerning what the FAA permits regarding aircraft operations and what the insurance requirements dictate via the policy conditions.
FARs and insurance requirements are always two entirely separate paths of compliance, and both must be adhered to. If you expect to have insurance coverage in the event of a loss, you need to be compliant specifically with your policy conditions and warranties. Conversely, you might be in violation of an FAR and suffer a loss but still have insurance coverage if you haven’t breached a policy condition.
A great example of this is found in the pilot warranty section of a policy—specifically turbine policies.
Almost all insurance policies for turbine aircraft require formal recurrent training every 12 months, while FARs do not mandate any formal 12-month, recurrent training is required for aircraft under 12,500lbs other than being BFR-current, 90-day landing-current, and IFR-current if flying IFR.
Virtually all light turboprops require formal recurrent training each year at a provider approved by the insurance carrier. So if you don’t adhere to the policy training requirements, thinking you are still compliant with FARs (which you very well might be), you will likely have no coverage should you suffer a loss during the policy period.
One of the first things an insurance adjuster will do after a loss occurs and a claim is filed is request copies of pilot forms/logbooks, training completion certificates, as well as medical and pilot’s license documents. While insurers generally do try to ‘find coverage’, if you haven't completed your current training in the policy-required 12-month period or did not complete an IPC as potentially required by some piston policies, you may find yourself without coverage, with the insurer citing that you breached the policy training requirement.
Piston policies in today’s market for higher-value pistons (think Cirrus) might also have an annual IPC requirement—even if you are compliant with the requisite 6-6-6-3 IFR currency FARs.
One thing you will always want to do when you place a new insurance policy is review the insurance proposal or binder with your insurance broker to make certain you understand any training requirements that the insurer specifically defines in the pilot warranty section.
The details could mean the difference between a covered loss and a claim denial.
Rate Reset: Where do aircraft loan rates sit going into the end of 2026?
Mike Smith explains where aircraft loan rates actually stand heading into 2026, beyond Fed moves and Treasury shifts, to show borrowers what’s really driving the market.
In light of the Thanksgiving holiday here in the United States, I want to start with a message of thanks to those who have joined us on the roller coaster that has been the US economy in 2025, along with our thoughts on its impacts on the aircraft finance side of the industry.
The trends in interest rates have been an interesting story to watch for a while now, but even more so with the Federal Reserve (“Fed”) actively considering whether they should continue to drop rates or not. Since the Labor Day holiday, the Fed has dropped its target rate by 0.50% in two 0.25% increments. These were the first rate changes the Fed made in 2025 after a period of drops at the end of 2024. They meet one more time this year and may or may not drop rates another 0.25%. Further complicating matters was the halt of updated economic data due to the government shutdown.
But does this Fed action (or inaction) have a direct impact on aircraft lending rates?
As discussed in previous articles, the Fed’s rate cuts do not necessarily mean aircraft loan rates drop by the same amount at the same time. This is because the Fed adjusts one specific rate tied to overnight bank borrowings. All other rates are driven by various market factors, primarily rooted in the US Treasury markets.
A proxy I often use to discuss aircraft loan rate conditions is the 10-year Treasury note. I use this benchmark because it tends to reflect the overall trend in aircraft loan rates. I don’t focus on the exact number—just the trend between numbers. For example, on December 31, 2024, that rate closed at 4.576%. As of October 31, 2025, it was 4.079%, gradually dropping since a May 21 peak of 4.605%. These decreases weren’t sudden; they happened over time as the market anticipated the Fed’s 0.50% rate drop.
What does this mean if you’re financing an aircraft? It means that rates overall have been trending down in the second half of the year, but they have largely priced in the adjustments the Fed has been considering at its meetings.
What will happen in December? Who knows. But as with all things this year, buckle up—and let’s find out together.
The Q4 Grind and the One Move That Breaks It
Dustin Cordier breaks down why one shift in how you recruit can turn frantic year-end chaos into consistent, predictable performance.
Every year, Q4 hits business aviation like a controlled burn.
Forty percent of annual business lands in these final weeks. Vacations vanish. Teams run hot. And by January, owners aren’t tired—they’re scorched.
The deeper issue isn’t workload.
It’s capacity.
And the capacity problem almost always traces back to one thing: sales hiring.
Jack Daly puts it plainly: “Sales talent is not readily available. You must always be recruiting.”
Most owners treat recruiting like an event, not a system. They wait until they’re desperate—then hope someone great appears. In aviation, finding one strong salesperson can take multiple attempts. That delay guarantees Q4 becomes a crisis instead of a strong finish.
Why Q4 Hurts So Much
Aviation deals require precision, speed, and constant communication.
When you’re understaffed—or staffed with the wrong people—three things happen:
- Pipeline quality collapses.
- Owners get pulled back into frontline selling.
- The company shifts from proactive to reactive.
Q4 doesn’t create these problems; it exposes them.
The right sales talent changes everything. With strong producers, Q4 becomes predictable, not punishing.
Jack Daly’s Recruiting Method
To break the Q4 cycle, Daly recommends an “always recruiting” operating rhythm:
- Treat recruiting like prospecting. Keep a steady flow of candidates year-round.
- Build a repeatable system: scripts, scorecards, testing, weekly reviews.
- Use multi-step interviews: phone screen → deeper interview → task demo → assessments → references.
- Validate behavior, not stories. Demonstration beats claims.
- Never lower the bar. Aviation punishes bad hires more than most industries.
This rhythm prevents the last-minute scramble that destroys owner bandwidth.
How Better Talent Solves the Q4 Problem
With the right reps:
- Pipeline builds earlier
- Deals qualify cleaner
- Fewer surprises hit late in the year
- Owners stay in their lane
- Teams finish strong instead of exhausted
Sales solves many problems.
The right salespeople solve almost all of them.