Accounting services for aircraft owners and operators
Are you ready for take-off?
Though business aviation was once considered a luxury which only the wealthy and top global companies could afford, it has today become indispensable for businesses of all sizes, government organizations and even charities to survive, compete and thrive in today’s competitive economy. Many businesses are taking to heart the adage “time is money” and are utilising business aircraft to reduce the time and stress which comes with travel using commercial aircraft, and hence increase the productivity and profitability.
Obtaining an AOC in Malta
Over the past few years there has been a remarkable growth in the business aviation sector in Malta. This is no doubt due to various factors which include Malta’s strategic location in the centre of the Mediterranean, ideal weather conditions practically all year round, availability of a highly trained, English speaking workforce, EASA membership and an attractive legal framework including fiscal and infrastructure incentives. The sector is regulated by the Malta Civil Aviation Authority, which is highly respected within the sector. All these factors combine to create an ideal environment for the registration, financing and operating of aircraft.
Aircraft owners and operators: more than an ordinary accounting client
It is important to bear in mind that an aircraft owner can spend more on operating and maintaining an aircraft than it does in actually acquiring the asset. A company’s executive leadership require specialised, detailed and tailor-made financial reporting to enable them to effectively manage their costs. Only an accountant with a sound aviation industry experience can provide the required specialised and customised reporting solution necessary for aircraft owners and operators.
Though maintenance (both scheduled and unscheduled), refurbishment and overhauls represent the major items of cost incurred during the course of the service life of the aircraft, management cannot lose sight of the impact and magnitude that the operating costs can have on the overall performance of the company. Therefore, the aviation management team requires a detailed analysis of outlays in order to effectively manage the company and control costs.
It is important to track the costs not only for each aircraft tail number but also for each mission. Management will be concerned not only with the variable operating costs of the aircraft such as fuel, handling and ground services, overflight and terminal charges, and flight operation costs but also with the fixed overheads such as aircraft insurance, crew training, crew salaries and hangar charges.
The duties of an experienced aviation accountant go beyond merely recording aircraft revenue and associated costs. The accountant must work hand in hand with the post holders and department managers to ensure that costs are being monitored and stringent levels of internal controls are being applied. Common tasks would include reconciliation of fuel uplifts with delivery slips and tech logs as well as ensuring that handling costs are not only aligned with agreements in place but ancillary charges such as weekend charges, towing, de-icing and GPU are all verified. Mission reporting should also be implemented so owners are guaranteed that they have the most up-to-date financials at their disposal allowing them to take considered decisions. Technology can of course play an important role in this and a number of solutions are available that have been developed by persons who have considerable knowledge of this business and who have done the deep thinking required to deliver solutions that work.
It is a common misconception amongst accountants that owning and operating an aircraft is similar to owning property. An accountant with aviation experience understands that aircraft and immovable property are not commodities which share the same characteristics.
Elizabeth Meilak is head of Accounting Services and has several years experience in Business Aviation. For additional information contact Elizabeth Meilak at [email protected]