Savvy savings for private travel
Besides the initial investment, ownership of a private aircraft or yacht involves ongoing operational costs. A Due Diligence Audit is a useful tool for understanding how these costs stack up and where improvements can be made.
Whether it’s an aircraft that supports a company’s corporate travel needs or a yacht purchased to charter, the running costs are considerable. No doubt a crew of professionals is employed to run the operations side - but who is monitoring and checking on them? Are the expenses justified and could they be reduced?
A Due Diligence Audit reviews the services rendered, analyses the cost of those services, and provides an assessment of the financial performance of your yacht or aircraft.
Due Diligence Audits are performed by third parties who have a thorough understanding of aviation or marine operations. This ensures they will catch any questionable expenses (over-charges, illegitimate add-ons, mark-ups, improper invoices) that can result in owners paying 5% to 25% more than necessary. They are therefore particularly useful tools for owners who do not have accountants or tax consultants who are knowledgeable about the yachting or aviation industries.
Audits also compare operations against similar sized aircraft or yachts for best practices, and are therefore critical to the proper management of your investment. By comparing your operations against other similar operations, you gain perspective and can better manage your costs, needs and expectations. Although published costs of operations (fixed and variable costs) are good for an apples-to-apples comparison of aircraft or yacht types, they are not that accurate for how you use your aircraft or vessel.
A useful audit should include a detailed analysis of expenses, such as:
• Maintenance: including routine and heavy checks, reserves, scheduling, refurbishment and upgrades
• Crew: salaries, benefits, vacations, schedules, etc.
• Fuel Costs
• Route Planning (outsourced)
• Communication upgrades and subscription
• Airport or harbour handling
• Navigation subscriptions
• Storage: hanger, mooring, berthing
• Crew accommodations and travel
A thorough review should include: enough detail to reveal any patterns; confirmed facts to support any recommendations; areas of potential improvement; and highlight exceptional performance.
The final report may well be an eye-opener for all readers, especially the financial team. A good report will show in full detail why current expenses and costs are where they are, and how they can be improved. Every operator’s savings will be different, but all will see savings as the details are flushed out.
The accounting team should be fully involved in the audit and debriefing to understand the operations and finances involved.
By learning how to review invoices, work orders and even insurance repairs, they will gain a better understanding of which charges
are legitimate, and which should be questioned further before payments are made.
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