Aircraft Management Billing: Owner Fees and Pass-Through Costs
Aircraft management billing explained: recurring owner fees, fuel and hangar pass-through costs, netting charter revenue, and when to use ACH over card.
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On this page 6 sections
Key takeaways
- Run the fixed management fee as its own recurring transaction so a dispute over a fuel or repair line can't pull it in.
- Tag every leg as owner or charter. Charter fuel and crew on the owner's bill means the owner pays for them twice.
- When an owner's charter credit exceeds the monthly bill, pay the difference by ACH or wire instead of refunding a card with no matching sale.
- Card fees on costs you pass through at cost come straight out of your margin, so steer the pass-through balance to ACH.
Aircraft management billing combines a flat monthly management fee with two variable lines. One is the pass-through of costs you paid to operate the owner's aircraft. The other is a credit for the owner's share of any charter revenue that aircraft earned. Each line needs its own payment method and its own approval terms. The statement also has to be clear enough that the owner's bookkeeper can check it against the flight log.
Plenty of management companies run operations well and set up payments poorly. The owner's large monthly invoice goes on a credit card, and the company absorbs the card fee on costs it never marked up. Or charter revenue gets mixed into owner billing so loosely that neither the owner nor the processor can follow the money. Both problems are cheaper to fix at account setup than after a dispute.
How Aircraft Management Billing Differs From Charter Sales
A charter sale is a single transaction. A client books a trip and pays by card or wire, usually before departure. Processors underwrite that volume as a large-ticket travel sale delivered in the future, which is why charter operators often face reserves and holds. Our guide to getting a private jet charter merchant account approved covers that underwriting in detail.
Management billing is a standing commercial relationship with one customer who owns a very expensive asset. You bill the same party every month for amounts that change, and much of that money reimburses costs you already paid on the owner's behalf. In payment terms, the owner looks more like a corporate client on net terms than a charter passenger.
The management agreement does most of the work. It should set the fee and list which costs pass through, with any markup stated plainly. Pair it with a standing payment authorization, either an ACH debit authorization or a card-on-file consent, that spells out how long the owner has to review a statement before you charge. Then use a statement format where every line ties back to a source record: a trip number for flight costs, a vendor invoice for everything else.
When you apply for a merchant account or review your current one, tell your processor you run both charter sales and owner management billing. Recurring charges to a known owner under a written agreement carry a different risk profile from one-off charter tickets, and underwriters should be able to see the two separately.
Setting up Recurring Monthly Management Fees
The aircraft management fee is the easiest line to automate because it rarely changes. It pays for oversight: keeping the crew scheduled and the maintenance program on track, plus the compliance work and recordkeeping behind both. Run it on the same day each month through your gateway's recurring billing feature, against either a stored card or an ACH debit authorization.
Card networks set rules for storing a card and charging it on a schedule. Get the owner's written consent, spell out the amount, frequency and how to cancel, and confirm the exact requirements with your processor before the first charge. Keep the signed copy somewhere you can retrieve it quickly if a charge is ever disputed.
Charge the fixed fee as its own transaction, separate from variable costs. If an owner disputes a fuel line, you don't want that dispute to sweep your management fee in with it. Stand-alone charges for a steady amount also read clearly on the owner's card statement, which cuts down on calls from a bookkeeper who doesn't recognize a charge.
Most management desks handle this from a virtual terminal for recurring and keyed charges, which covers both the scheduled fee and any one-off adjustment. Counter terminals rarely earn their place here, since owners aren't standing at a counter.
Fuel and Hangar Pass-Through Billing Owners Can Check
Owners rarely argue with a cost they can match to a flight or an invoice. Costs they can't match invite an audit. Sorting pass-through costs by how they behave makes matching easier:
- Trip costs move with each flight: fuel first, then the fees and services at each stop. Tag every line with a trip number and date.
- Fixed monthly costs stay steady. Hangar rent and insurance belong here, plus crew salaries when the owner carries them.
- Scheduled maintenance follows the inspection program, so you can warn the owner before a large bill lands.
- Unscheduled repairs arrive without notice and can run large. Attach the shop's work order to the statement.
Trip costs from foreign FBOs can arrive weeks after the flight. Our article on billing catering, de-icing and overnights after the flight covers collecting those trailing charges. On the owner side, you can issue a supplemental invoice or roll late items into next month's statement with the original trip date shown. Either approach works if the agreement says which one you'll use.
Owners often misunderstand who pays for fuel and crew on charter legs. When the owner's aircraft flies a charter, the fuel and crew expenses for that trip are charter costs and belong on the charter side of the ledger. If they also appear on the owner's bill, the owner pays for them twice: once on the invoice and again through a smaller charter credit. Your statement should label each leg as owner or charter and allocate costs to match.
Settle markup in writing. Some management companies pass costs through at exactly what they paid. Others add a handling margin or keep part of a fuel discount. Any of these can be legitimate when the agreement discloses it, but an owner who finds an undisclosed markup on a fuel invoice is likely to audit every statement that came before it.
Netting Charter Revenue Against Owner Invoices
When the managed aircraft flies charter, the management agreement usually gives the owner a share of the revenue. That charter revenue share is a credit against what the owner owes for the month. Agreements differ on the base for the split. Some use gross revenue, others use revenue after direct trip costs, and the percentage is negotiated.
Keep the two money flows apart. Charter clients pay your company, the operator, through your merchant account or by wire, and that payment is your revenue. The owner's share is a payable from you to the owner, recorded as a line on the owner statement. Don't route charter passenger payments through owner billing, and never charge a charter client under the owner's name. Processors watch for money moving between parties in ways that don't match the underlying sale, and a clean ledger keeps your account out of that review.
Here is a worked example, and every figure in the table is illustrative. The assumptions: the agreement splits net charter revenue (after direct trip costs), the owner's share is the percentage shown in the table, and the pass-through line includes only costs from owner flights plus fixed monthly costs.
| Line | Illustrative Amount |
|---|---|
| Monthly management fee | $15,000 |
| Pass-through costs, owner flights and fixed costs | $65,000 |
| Total owner charges | $80,000 |
| Net charter revenue after direct trip costs | $40,000 |
| Owner credit (assumed 80% share of net charter revenue) | ($32,000) |
| Net due from owner | $48,000 |
Direct charter trip costs came out before the split. They never appear in the owner's charges, and that separation is what prevents the double-counting described above.
In a heavy charter month, the credit can exceed what the owner owes. Pay the difference by ACH or wire instead of sending it back to the owner's stored card. Processors generally expect a refund to tie back to an original sale, so a "refund" larger than anything you charged will draw questions. Confirm the right method with your processor.
Federal excise tax can apply differently to owner flights, management charges and charter fares, and this area is technical. Our guide to collecting federal excise tax on charter flights covers the charter side. For how FET treats your management fees and owner flights, check with an aviation tax professional before you build your invoice template. This article is general information, not tax advice.
ACH vs. Card for Large Monthly Owner Payments
Put the net balance from the example next to an assumed card cost. The rate below is illustrative only. Your real cost depends on the owner's card type, your pricing model and your processing contract.
| Payment Method | Illustrative Cost to Collect the $48,000 Net Balance |
|---|---|
| Premium corporate card at an assumed 3% all-in rate | $1,440 |
| ACH debit | A flat per-transaction fee, typically a small fraction of the card cost |
Much of that balance reimburses costs you passed through at cost. Paying a percentage to collect money you didn't mark up means losing on every dollar of it. A practical split is to accept card for the fixed management fee, where your margin can absorb the processing cost, and require ACH for the pass-through balance. Confirm your actual ACH and card pricing with your provider before you set the policy.
Some owners will want everything on a card for the rewards. You have two compliant ways to agree. You can price the card cost into the management fee, or you can use a surcharging program where state law and card network rules permit it. Surcharging carries disclosure requirements and is restricted in some states, so review it with your processor and counsel before you write it into an owner agreement.
Wires suit one-time large settlements, while ACH suits a monthly pull you schedule in advance. Our comparison of ACH vs. wire transfer for business payments goes deeper on that choice.
ACH debits are governed by network rules too. Get a signed debit authorization from the owner, and confirm with your bank or provider what notice you owe when the amount changes each month. As a matter of practice, send the statement well before the debit date and give the owner a defined window to raise questions. Disputes handled before the money moves cost far less than reversals after.
Owners who pay through a family office or corporate entity may route your invoice through an accounts payable team that wants remittance detail. That setup resembles billing corporate charter clients on net terms, including purchase order references and line-item data.
Software That Ties Trip Costs to Owner Statements
Statements hold up under scrutiny when every cost line traces back to a source record. That depends on your systems passing data cleanly from one to the next.
Flight operations software is the starting point. It records each leg with a trip number and tags it as owner or charter, and everything downstream hangs on that tag.
Your accounting system takes vendor invoices, codes them to an aircraft and a trip, and builds the owner statement from those entries. When payment data flows from your gateway through a QuickBooks accounting integration, your team stops rekeying owner payments by hand.
On the payment side, your gateway runs the recurring fee and any keyed adjustment. Each transaction ID can sit on the statement next to the line it paid, which closes the loop for the owner's bookkeeper.
The weak point is usually the handoff from operations to accounting. Fuel receipts without a trip number turn into judgment calls, and judgment calls turn into owner disputes. Require a trip number on every crew expense and vendor invoice before you pay it.
Start with the aircraft that flies the most charter, because netting errors show up there first. Rebuild its last few statements with owner and charter legs separated, then compare the results to what the owner was actually billed. If you find gaps, or your processor treats owner billing like charter risk, MannyPay works with jet and charter operators and offers virtual terminals and payment gateways for keyed and online payments. Request a free quote and a MannyPay specialist will respond within one business day.
This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.
