A Needed Resource
Category: Business Aviation and the Boardroom
Author: Jack Olcott
A Needed Resource
The enlightened Board Member looks beyond the rhetoric that vilifies corporate jets and focuses on serving the company’s travel needs. Without Business Aviation, our nation’s transportation system would be limited and the economy would suffer, notes Jack Olcott.
Recently the New York Times published a front-page article about the loss of regional airline service in the USA. To illustrate the point that travel options between smaller cities are sparse and rarely nonstop, the Times reporter featured a trip between Mobile, Alabama and Cincinnati, Ohio—a distance of 720 miles—that required 12 hours and three stops to complete because the person traveling sought the lowest fare available. Also noted by the NYT reporter was the increase in airfares for flights that originate or terminate in smaller cities.
My travels often require flying between the New York area and mid-America. Direct flights are few to non-existent, and ticket prices are typically higher than the airfare between New York and the major cities in Europe. More significant than price, however, is the lack of business-friendly flights. Schedules typically preclude one-day trips, and often three days are needed to support one full day of meetings.
The USA has over 5,000 public-use airports, about ten times the number of locations served by the scheduled airlines. But over 75 percent of business friendly service is available to less than 50 locations. Often the only efficient way to reach rural America is via business aircraft—either a company aircraft or a charter flight. Certainly Business Aviation provides access to most of mid-America that the airlines are unable to serve. As the Times article illustrated, the traveler who depends solely on scheduled airlines faces considerable travel time and much hassle, whereas a light jet could have flown nonstop between Mobile and the traveler’s ultimate destination near Cincinnati in about two hours, and the aircraft could have carried up to five passengers.
COMPLIMENTARY, NOT COMPETITIVE
Business Aviation does not compete with the scheduled airlines. The enlightened company uses the scheduled airlines when the trip can be made efficiently and when there is no need to conduct sensitive discussions with business associates en-route. And they use business aircraft when the objectives of the trip are not well served by scheduled air carriers.
In fact, Member companies of the National Business Aviation Association (NBAA), the world’s most active users of business aircraft, purchase billions of dollars-worth of airline tickets annually. Robert Crandall, possibly American Airline’s most prominent former CEO and the originator of many innovations that are still used by airlines today, addressed the 50th Annual Meeting of the NBAA by expressing his pleasure to speak with his best customers.
The airlines offer a stellar safety record (as does Business Aviation), and the cost of travel is impressively low. As the result of a business model that focuses on cost rather than customer service, scheduled airlines provide attractive fares to the major hubs throughout the USA. Several decades ago the price of a round trip flight from New York to Los Angeles or San Francisco was several times today’s ticket costs, and that comparison does not consider that “then” dollars were worth considerably more than 2012 dollars. For those city pairs where frequent flights exist, the airlines often are the right business choice.
But much business throughout the USA originates in locations removed from the 35 hubs where most airline passengers enplane. Business Aviation provides access to commerce for many more locations throughout rural America than do the scheduled airlines. Nor do the airlines want to provide access to those smaller areas. Even with today’s system of regional airlines that were envisioned to link smaller cities with major hubs, thereby forming a hub and spoke transportation system, the economics of the airline business model is forcing the use of bigger aircraft operating between larger cities, leaving Business Aviation as the effective means of timely travel.
Consider Walmart, the retailer that Sam Walton started in 1962 from his home base in Bentonville, Arkansas. From that relatively remote location, Mr. Walton used a business aircraft to find sites from which Walmart outlets could serve the needs of consumers throughout rural America. The company is now among the world’s largest public corporations, and its payroll of over 2 million employees is the world’s largest.
In part because its fleet of about 30 business jets enables Walmart to connect efficiently with locations throughout the USA and the world, the company is still headquartered in Bentonville. Many people who may never fly in a business aircraft are employed because Walmart uses Business Aviation as one of its transportation resources.
Transportation is a necessity for business development. Without timely, efficient means for dealing with clients, partners and supporting counterparties, business cannot expand and the overall economy suffers. Jobs depend upon businesses being mobile.
The airlines and Business Aviation are safe, highly effective and necessary tools of business. Shareholders are well served by Board Members who establish policies incorporating both forms of air transportation.
Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com