Taxpayer Value - Shareholder Value
Category: Business Aviation and the Boardroom
Author: David Wyndham
Taxpayer Value - Shareholder Value
What’s Good for Government is also good for Business.
The Nexa Advisors report entitled Government Use of Aircraft provides valuable insights for Board Members considering Business Aviation, advises David Wyndham. In its latest study for the National Business Aviation Association, Nexa Advisors examined Government use of aircraft from a taxpayer perspective.
How more timely and provocative can you get - looking at government use of business aircraft here in the US with unemployment high and budgets tight? Nexa Advisors concluded that properly used, “aircraft provide taxpayer-value by providing public safety and security, more effective government, protecting public health and welfare, facilitating economic growth, improving tax dollar efficiency, promoting good government relations, and improving compliance.’’
While Air Force One is the most visible, and critical, application of air travel by the White House, the report discussed the other 99.9% of aircraft used by Federal, State and Local governments. Conklin & de Decker, the firm where I am a part owner, has done numerous studies justifying aircraft for individual agencies, and our own experiences mirror those of this report. Of primary significance for Boardroom readers, many of the findings in the Nexa Advisor studies as well as in our own work have relevance for private-sector businesses. Let’s look at a few.
A strategy is needed to determine how an aircraft can support the core mission of the business. There should be a written justification of the need for an aircraft and on the requirements of the aircraft to satisfy that need, and the document should be reviewed and updated on an as-required basis. The justification should outline the benefits to the organization in having an aircraft - connecting it to the company’s key missions.
The users of the aircraft, as well as the Board and those who oversee the aircraft fiscally, need to be aware of this justification, which should also provide the basis for managing the aircraft. Accountability must be identified, such as who is responsible for authorizing the use of the aircraft and who can request its use. Within many government agencies, not only do the high-level officials have aircraft access (governor/CEO), but many teams also use the aircraft when appropriate.
Travel costs can actually be reduced using a business aircraft. The State of Idaho found that for their travel, air transportation became less costly to the taxpayer over surface travel when there were three or more persons on the same aircraft. Their analysis took into account all of the costs of the trip, but made no allowance for productivity of passengers while en route. Accounting for the ability to use travel time as an extension of office time (since employees can continue to address business issues), the savings could have been magnified.
Aircraft enhance employee productivity: Few government agencies have the funds for hiring new employees. The aircraft, when used effectively, allows them to operate more efficiently with the employees that they have, thereby reducing staffing and saving money.
Aircraft use enables the better management of facilities: Whether it is a State Wildlife Refuge or your company’s factory, the management of the facility often requires direct involvement of senior management. Business aircraft enable more timely visits as well as less total time allocated to facility oversight.
Aircraft can boost economic development: If you are evaluating a location for a new or greatly expanded facility, there are many factors involved. One of Conklin & de Decker’s state clients reported that a tour of the proposed factory site was key in the company’s decision to locate to that community. By linking relevant parties, business aircraft can help facilitate the collection of information needed for a major financial decision.
Aircraft ensure the security of employees: Business aircraft provide a safe environment for sensitive conversions, as well as a productive work environment.
While the Nexa analysis stated that there is no universal definition of taxpayer value, any publicly-traded company has clear metrics for shareholder value. The aircraft is a tool that - properly employed - enhances the ability for you to be more personally involved in the success of your company, and that effectiveness translates to a better bottom line. Aircraft work for governments; aircraft work for businesses.
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