16. How do we audit aircraft management costs and the real benefit of charter revenue?

Put this to: Nel Stubbs and Jeff Agur, alongside the owner’s aviation lead.

Why it matters: make this a reconciliation exercise, not a search for a universally fair management fee. The IRS distinguishes certain qualifying aircraft-management payments from taxable transportation, reinforcing the need to identify what each payment actually buys. (irs.gov)

Question: “Can you trace one owner mission and one third-party charter from the agreement through flight records, supplier invoices and the owner’s statement?”

A good answer should examine:

• Fixed management fees versus separately charged services.
• Pass-through expenditure, mark-ups, rebates and related-party purchases.
• Allocation of crew, maintenance, positioning and support costs.
• Charter receipts, commissions, retained shares and credits to the owner.
• The treatment of maintenance reserves and extra utilisation.
• Supplemental aircraft costs when the owner’s aircraft is unavailable.
• Owner-priority, audit and termination provisions.

Follow-up: “Show the net owner contribution from charter after the costs assigned under this agreement—not just gross charter revenue.”

Evidence to request: the management agreement, a permissioned invoice sample, flight logs, charter settlement statements and an explanation of allocation rules. Any proposed benchmark must state the aircraft, service scope, geography and period.

Publication boundary: no claim that charter income will cover ownership costs, and no allegation of overcharging merely because an invoice line is initially unclear.

Expert quote: [Pending interview, attribution and approval.]