How to Negotiate an Aircraft Management Agreement: Key Terms and Protections You Need

The aircraft management agreement is the legal foundation of your relationship with your management company. It defines what they are responsible for, what you are paying, and what happens if things go wrong. Signing a m

The aircraft management agreement is the legal foundation of your relationship with your management company. It defines what they are responsible for, what you are paying, and what happens if things go wrong. Signing a management agreement without understanding its key terms is a mistake that can be expensive to correct.

Scope of Services: Define Everything Explicitly

The management agreement must clearly define every service the management company is responsible for. Do not accept vague language about comprehensive management. Specify crew management, maintenance management, charter management, financial reporting, regulatory compliance, insurance management, and any other service you expect. If it is not explicitly included in the scope, it is not guaranteed to be delivered.

Fee Structures and What They Cover

Management fees can be structured in multiple ways: flat monthly fees, percentage of operating costs, per-flight-hour charges, or a combination. Understanding exactly what is covered by the management fee and what is charged additionally is essential to accurate budgeting. VMO Aero uses transparent fee structures with clear documentation of what is included, so clients always know what they are paying for and why.

Charter Revenue Sharing Terms

If your aircraft will be on charter, the revenue sharing terms must be clearly defined. This includes the percentage split, how charter costs are calculated before the split is applied, how and when revenue is paid to you, and what reporting you receive on charter activity. Protect yourself against a management company that maximizes their own revenue from charter at the expense of transparency to you as the aircraft owner.

Termination Rights and Transition Provisions

You must have the right to terminate the management agreement with reasonable notice if the management company fails to perform or if your circumstances change. The agreement should also specify transition provisions that protect you if you change management companies, including obligations around aircraft records, crew transition, and operational handover.

Dispute Resolution and Governing Law

Specify how disputes will be resolved, whether through arbitration, litigation, or another mechanism, and which jurisdiction's law governs the agreement. For aircraft management agreements in Nigeria, Nigerian law and appropriate dispute resolution mechanisms should be clearly specified. VMO Aero works with clients to develop management agreements that protect both parties' interests, built on a foundation of transparency and mutual accountability.