Management Contracts: What Owners Rarely Negotiate
Five clauses that quietly shape five years of ownership economics — and how to put them back in your favor before signing.
Most management contracts are template documents with the operator's commercial interest already encoded. Five clauses are worth pulling out and renegotiating before signature.
1. Mark-ups on third-party services
Fuel, handling, and maintenance are often passed through at a fixed percentage mark-up. Whether that is 5 % or 15 % materially affects annual cost. Make it explicit, capped, and reviewed quarterly.
2. Charter revenue split
If the aircraft will be chartered, the split is rarely as favorable as the term sheet suggests. Insist on transparent cost build-up and an audited revenue statement.
3. Termination terms
Many contracts include long notice periods, transition fees, or repositioning costs payable on exit. Short, symmetric notice protects both sides.
4. Crew assignment and currency
Who pays for recurrent training, type-rating upgrades, and currency on subsequent aircraft matters. Get it on paper.
5. Reporting and audit rights
The owner should have the right to monthly variance reports, line-item access, and an annual independent audit. Without it, oversight is mostly trust.
A well-negotiated contract is not adversarial. It is the foundation of a long, calm relationship.