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Making the Airline Charter Industry Stronger, Faster, and Smarter with Cloud ERP

67 Solutions integrates charter-specific capabilities into NetSuite’s cloud ERP solution to help its customers save time, money, and manhours in this corner of the broader airline industry.

A business model centered on “renting” aircraft to users that prefer private over commercial air transport, airline charter has historically catered to a select group of travelers that range from corporate users to government officials to wealthy families. The COVID-19 pandemic impacted charter airline companies early and significantly, yet the industry subsequently benefited from a boost in private air travel as fliers looked to avoid large, crowded commercial planes and spaces. 

In addition to renting or leasing aircraft, airline charter companies also manage equipment maintenance, provide repairs and parts, operate flight schools and manage other owners’ planes. These multifaceted operations require careful orchestration and modern business systems that reduce manual processes, streamline operations, and improve efficiencies. 

Presently, many airline charter companies still rely on systems like QuickBooks for accounting plus a myriad industry-specific applications to run their divisions and operations. Without a cloud-based, unified business management system for handling intercompany transactions, managing revenue recognition and helping close the monthly books quickly, these entities waste significant time and money on manual processes, spreadsheet manipulation, and data re-entry. 

In this paper, we look at the key technology challenges that today’s airline charter companies are dealing with and show how cloud ERP with integrations into airline charter-specific solutions can help organizations overcome these issues. 

A Thriving Industry

Charter services are hired by individuals, corporations, celebrities, government officials, and more. Charter aircraft can also be modified to perform other roles, including emergency medical services, cargo delivery or equipment resupply. 

Air charter flights operate on the passenger’s schedule, which allows considerably more flexibility than a commercial airline’s schedule. Charters are able to fly in and out of more than 5,000 public use airports in the U.S.—more than 100 times that of the airlines—and they provide convenient access to destinations for passengers who can afford the additional cost.     

 The global air charter services market is valued at approximately $26.6 billion (USD) and expected to post a 4% compound annual growth rate (CAGR) between now and 2027. Companies operating in the space offer a variety of rental and ownership options that include (but aren’t limited to):  

  • Fractional Ownership:  This model functions like a time share, with airplanes instead of real estate.  Individuals or businesses can claim a part of the airplane and its crew when needed. There are additional complexities with charter companies having different but overlapping ownership with other entities like flight schools.
  • Jet Card Programs: Providers sell blocks of retail flight hours, similar to a prepaid phone card. 
  • On-Demand Charter: Providers don’t own or operate aircraft; they function as a broker in the jet charter process.
  • Fixed Fleet Operators: These are FAA-certified local private jet charter owners that provide “air taxi” services to their clients. 

In addition to air transportation services, charter companies typically provide all of the support services that come with using, owning, and/or maintaining aircraft. With annual revenues ranging from $30-$120 million, these companies offer their services on a menu basis to a wide swath of private aircraft owners and users. From repair services to spare parts supply to flight schools, these different entities are usually operated as part of the broader, airline charter ecosystem, but managed independently.

“One division may be a spare parts supply house while another manages airplanes for celebrities and pro athletes or teaches pilots how to fly,” said Livio Sgrignuoli, VP of Business Development at 67 Solutions, Inc., a Certified NetSuite Partner that specializes in the sector. “These multi-entity organizations are all run as different companies.” 

Out with the Old, In with the New

To manage multiple entities, most airline charter firms rely on basic systems like QuickBooks and Excel spreadsheets. One company that 67 Solutions worked with recently had 80 different QuickBooks files to manage its more than 80 different aircraft. “Each aircraft was treated as a legal entity, so it needed its own QuickBooks file,” said Sgrignuoli. “Trying to close out the books at the end of the accounting period was a complete nightmare.”

The same charter company was managing a high volume of inter-company transactions. When one of its own aircraft required maintenance, for example, that activity and the associated costs were recorded in a separate system run by the maintenance division. And, when the same aircraft was booked out, that activity had to be tracked by the charter division. To further complicate matters, charter companies also rely on third-party flight operating systems (FOSs) and the Quantum parts management application. Both of these can be integrated directly with NetSuite using 67 Solutions’ Airline Charter Bundle, complementary applications built for the needs of charter companies. 

Of course, multiple systems mean multiple databases have to be merged together in order to gain a complete view of the company’s operations, performance and profitability. 

Through shared ownership agreements, multiple owners receive the revenues generated when their planes are rented out. Tracking and allocating that income is tedious using spreadsheets and basic accounting systems, but it’s a task made much easier with Airline Charter Bundle, which utilizes NetSuite’s native functionalities to allocate the profits to the various minority interests. Some of the popular NetSuite functionalities that airline charter providers use include basic financials, intercompany management, and revenue recognition.

“When the revenues are consolidated, and if someone owns 40% of the aircraft,” said Mike Walker, Principal and NetSuite Delivery Leader at 67 Solutions, “that will reflect appropriately in the balance sheet in terms of owner’s equity.” Previously, those calculations and the reporting had to be done using QuickBooks and spreadsheets. 

Key Benefits of Cloud ERP

Operating in a highly-regulated industry, airline charter companies need to know the fine details about the aircraft that they’re managing—right down to the number of times landing gear can “touch down” before it needs to be replaced. In most cases, they’re using disparate, industry-specific software solutions to run their front ends, and then adding on basic financial systems to run their back ends. 

“We solved this problem with our integration into NetSuite, that serves as a backbone and brings all these industry-specific software solutions onto a single system,” said Sgrignuoli. 67 Solutions, which specializes in NetSuite implementations, has developed Airline Charter Bundle to address the challenges outlined in this white paper (and more). 

Airline Charter Bundle also solves these entities’ intercompany transaction management issues. With a single, automated solution that uses aircraft tail numbers as identifiers, companies have all of the information related to that piece of equipment (e.g., usage, repair, maintenance, storage fees, etc.) in one place, and regardless of which division is managing the work. This, in turn, makes the month-end close process infinitely easier and faster for charter companies.  

For airline charter companies, 67 Solutions also created a customization for NetSuite that helps owners manage the responsibility of maintaining a plane and complying with FAA requirements. Most of this work is outsourced to the airline charter company itself, which also arranges the pilots, flight attendants, catering, fuel, and anything else that goes into chartering private aircraft. 

You can’t effectively track this information via spreadsheet, so 67 Solutions created an “owner’s statement” that pulls all revenues and expenses by aircraft tail number, and then through NetSuite generates a comprehensive report that can be submitted to the plane’s owner. “The owners can easily tell whether they made money or if they owe money during a certain period,” said Walker. “The charter company’s commission comes off the top, and the rest goes in (or, comes out of) the owner’s pocket.”

New Revenue Streams and Efficiencies

With an average implementation time of 4-6 months, Airline Charter Bundle + NetSuite also gives companies the power to: 

Create a new “loyalty card” revenue stream. In the charter sector, selling someone 50 hours’ worth of prepaid flights is a fairly common practice that creates more paperwork on both the front and backend. “We designed a solution in NetSuite that allows a customer to go ahead and buy a loyalty card,” said Walker. “Then, every time the customers uses the card, the balance available is drawn upon in the ERP.” That way, users can always see what’s left on their cards—a process that most charter companies have to manage manually. “Everyone likes the idea of being able to expand their revenue streams using loyalty cards, but managing them can be complicated,” said Walker. “We came up with this customization specifically to meet that need.” 

Connect with their existing FOS. A foundational piece of software for most companies that manage flight operations, the FOS is used to run preliminary flight plans, monitor weather conditions, track aircraft status and more. Reliant on many interconnected details, the FOS brings these disparate pieces of information together on a single platform. 

Improve inventory and parts management. Quantum Control Aviation software is another software platform of choice for airline charter companies, which generally use the platform for parts and inventory management. Knowing this, 67 Solutions developed a journal-based interface that transfers the expense lines (associated with the inventory/parts) directly into NetSuite. “The limitation of Quantum is that it lacks a robust backend,” Sgrignuoli pointed out. “We provide an enhancement that lets them use this industry software while also being able to leverage NetSuite functionality like revenue recognition and intercompany transactions.” 

Vastly improve information flows across multiple entities. With Airline Charter Bundle and NetSuite in place, airline charter companies can eliminate duplicate data entry and give users one set of accurate information to work with. One recent 67 Solutions customer revealed that it had increased its accuracy by 100% after implementing the ERP and the industry-specific solutions. “With everyone across all entities working from a single database, companies begin to see vast improvements in the information flows,” said Walker, “and a system that’s even more powerful than our customer envisioned.”

 

As the airline charter industry continues to grow, and as individual companies add new offerings to their menus, the need for a unified, cloud ERP system backed by industry-specific capabilities will continue to increase. For companies still operating with spreadsheets, disparate industry solutions, and QuickBooks, it’s time to take a closer look at how modern technology can help streamline operations, eliminate manual tasks, and improve profitability. 

“Competition among airline charter companies is heating up, which means individual providers need to more efficient,” Sgrignuoli points out. “That means you can’t take three months to get an owner’s report anymore. Customers want their information now.” 

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