During a recent visit to Phuket in Thailand, I had the opportunity to have a chat with Dream Yacht Charter (Thailand) base manager, Joel Llas. He was kind enough to take the time and answer a few questions about yacht maintenance, ownership programs, reliability and much more.
After all, this guy has over 35 years of experience in the industry, all over the globe. Used to crisis management as a fire fighter in his early career to professional yacht builder in between, Joel has been there. So whom better to ask: ‘How does your team look after my boat?’
Before I recount our conversation though, a little background into my own experience with maintenance and keeping a schedule:
I have been working in the airline industry for over 25 years and like the yachting bases, we are faced with very similar issues before every flight….
What do the yacht charters and the airline industry have in common? Quick turn-arounds, the challenge for ongoing maintenance!
Aircraft arrive from somewhere and have approximately 1 to 2 hours to turn around, meaning all the people and their bags as well as freight need to get off. The plane needs to be cleaned from front to back, fuel for the next flight needs to be loaded. Catering needs to offload the old and restock for the new flight. So much for the easy stuff.
What about the maintenance? The engineers look over the airplane to a prescribed schedule. Top up oil, check gearbox fluids, check the brakes, do a visual inspection etc. If they find anything wrong, or the pilots from the inbound flight advise them of a defect prior to arrival, they have to decide what they are going to do with the defect.
A) Fix it. Best option if time permits and parts are available. Many items are just plug and play. Sometimes it’s a computer reset and all is well. Naturally there are procedures they follow to check and recheck that indeed all is good to go.
B) Ascertaining the severity of the defect. If for example the defect is part of the cabin equipment, i.e. a broken armrest, then defect can be deferred. Meaning it gets fixed in a specified period of time. There are books and procedure for ascertaining what can be deferred and for how long. Usually they are only minor items that don’t effect the safe operation of the airplane or its level of inbuilt redundancy.
C) Ground the plane until the issue is resolved. This one hurts, especially if no replacement aircraft is available. Meaning that people will have to wait until the issue is rectified, checked and rechecked and finally certified as being airworthy again. Trust me, this is a slow and diligent process, probably part of the reason why air travel is so safe (with the right operator).
My point is, the charter yacht industry faces exactly the same issues and constraints. Base managers have to make the same decisions as our aircraft engineers. Go or no go. To fix or to defer and if deferred, when to schedule the repairs in order to guarantee long term reliability.
So, what did Joel have to say? “Preventative maintenance, good documentation, established procedures and a hint of flexibility!”
“Preventative maintenance is the key. If a boat breaks whilst on a trip, it’s hard to repair and it upsets the customer. Sometimes things happen and in many cases we can talk to the clients over the phone and resolve the issues, like ‘operator induced issues’. If it’s more serious, we have contacts around the region that can come out and fix the problem, but as previously mentioned.. it’s expensive.
There is a prescribed maintenance schedule for when boats return. That’s the same across all bases. There is also an annual maintenance schedule. There are checklists that get followed and here in Thailand, pictures are being taken of the yacht before and after each charter. All the data is entered into the company’s computerized maintenance system.
Parts used for repairs should be original spares wherever possible. However, bases a long distance from Europe would have to wait too long for spares to arrive, so a little creative maintenance might be required. Sometimes this is a temporary fix, sometimes locally made parts just work better in this environment because they can be modified as required.
Also, boats need to be adapted for the regions they operate in. Compare the Asian Tropics to the Mediterranean for example. One is humid with water temperatures of around 30 deg C all year around, the other has cooler seasons or it is hot and dry. That causes different issues and puts strain on different systems, like A/C, water-makers and filters.”
Different ownership programs … different commercial values. Is there a conflict of interest?
There are different ownership programs. In my case, the yacht is virtually yours for the time of the contract. Meaning, I don’t pay for any maintenance or insurance but you don’t share any of your revenue either. On the other hand, there are owners who pay for their maintenance but in return receive a large portion of the income.
My yacht will give you maximum ‘bang for buck’ because you don’t have to share the profit… However, every maintenance item eats into your profit. On the self maintained yacht you have to share your profit , so it only makes economic sense to use my type of contract yacht first. Help me understand the balance you take…
“Different bases have different ownership agreements. As a base manger here in Thailand, I don’t know which yacht is in what contract. I treat them all the same. They need to go out and come back with no issues. Good maintenance is the key to achieve that. In the end, every boat has to make money. Broken boats in the marina don’t make money.
Finally, some boats (brands) are more reliable than others. Later hull numbers have ironed out many of the issues in earlier versions.
As for charter: Solid is good.”
Keeping the yacht at the end of the charter contract and a thought on phase out maintenance:
“Your contract has a clear definition of what is required by us to ready the yacht for handover at the end of its charter contract. Fair wear and tear still means it has to work well. Remember, the yachts are working right up to the end of their contract. Cosmetic items are cheap to repair, so presenting a nice looking boat isn’t hard to achieve. The more money you get for your yacht if you decide to sell, the more you will have available to reinvest in bigger one – preferably with us.
Did you know that only 30% of owners keep their yachts at the end of the contract for personal use? Most owners sell and put a new yacht back into charter, then take the benefits of the program. After all, a yacht that doesn’t move gets older just as quick as a busy one.. if not faster”
If you do a lot of chartering, it could actually makes sense…
I am part of the management at CYOA Yacht Charters in St Thomas. As a smaller charter company I wear many hats from lead technician, salesman, customer service the list goes on and on.
If you are considering Charter Yacht Ownership you do need to know who you are dealing with at any particular base. You also need to understand financially what you are getting yourself into. Long after the Carnival atmosphere of the boat show is over you are going to own your yacht. For better or for worse as they say. Yes it is much like a marriage with three partners you, the yacht and the management company.
A few things you should be aware of.
I have spent the last eleven season managing charter boats. When we talk to prospective new owners this subject comes up on a regular basis. Any operator that does not talk about wear and tear. Or the possibliltiy of accidents is selling snake oil. How your boat is maintained, who is allowed to rent it., what is the checkout process and who pays for damage when it occurs. All of these are just as important as revenue projections. They directly effect you net bottom line in sixty months when the boat leaves. If you keep it and don;t have to repair or replace a bunch of broken bits that is a net to you. If you sell it and it is in better shape than other boats of similar vintage and useage. That is a net to you as well. The year before last we took hull number 2 of the Helia. Wide Ranger to the Annapolis Boat show and parked it inbetween brand new boats. She was a three year old charter boat at that point. We did it to prove that very point.
Anyone buying a boat as an investment is kidding themselves. I have and continue to tell buyers this. The reason to buy is because you want a boat. There are multiple reasons to do it in charter. Tax advantages and charter revenue that help offset some of the costs of ownershiop. There are no free boats. Anyone that says otherwise fall into the snake oil sales people category mentioned above.. Also do not discount the ability to fly into St Thomas be on your boat after a ten minute cab ride sail it for a few weeks then hand the keys and laundry back to a professional operator. Most people pre-retirement simply do not have the time or skill set to properly maintain a complex yacht and use it enough to justify owning it for private use while still working. A large portion of our owners fall in the category of three to five years from retirement and using this a springboard to cruising either full or part time.
There can be great joys in boat ownership. Priceless time spent with friends and family. Adventures beyond most peoples wildest dreams. Like most things worth doing it is neither cheap or easy.
Jay
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