Business Aviation & The Boardroom - Buying The Right Business Jet

Last month we followed a client who identified the Value Proposition- built the Mission Profile and chose the best business aircraft to buy for their mission. Not every Board that goes down this exploratory path meets the same outcome though. Jay Mesinger shows how paths can be divergent in their outcome- yet similar in their process.

Boardroom

Jay Mesinger | 1st January 2011

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Jay Mesinger

Jay Mesinger is the CEO and Founder of Mesinger Jet Sales. With over 40 years’ experience in the...
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Business Aviation & The Boardroom - Buying The Right Business Jet

Buying the Right Business Jet:
Same process- different outcome.
Last month we followed a client who identified the Value Proposition- built the Mission Profile and chose the best business aircraft to buy for their mission. Not every Board that goes down this exploratory path meets the same outcome though. Jay Mesinger shows how paths can be divergent in their outcome- yet similar in their process.

I recently encountered a Board convinced of the Value Proposition of business aircraft. They were located in a small town not frequented with airline schedules to accommodate the service goals of the company. They had been driving over two hours to a commercial airport to catch flights that were all regional- and all took connecting flights to get to their closest customer.

This company was doing the traditional one-client visit in three days- instead of the three-client visits in one day. So ‘Value’ was never in question. Next- the client completed the Mission Profile work. As previously described- the key travelers were polled and destinations and frequencies were plotted. Flight plans were built- then annual hours calculated - at which point the client’s path began to diverge from aircraft acquisition.

The total hours calculated for annual use was 175 hours. The whole aircraft ownership rule-of-thumb I like to use is for an airplane to have a minimum of 200 to 250 hours of annual use. Not only did the annual utilization start to point the Board away from whole aircraft ownership- but the city-pairs also pointed to a solution that was not whole aircraft ownership-friendly.

REMEMBER THE 70% RULE?
Another rule-of-thumb I like to use when considering the airplane category choice is that it meet at least 70% of one’s travel needs (there is typically no such thing as an aircraft that meets 100% of one’s needs). In looking at the city-pairs it became clear very quickly that 40% of the trips could be covered with a turboprop category aircraft (since they were 500 miles or shorter) with only two to three passengers on board. The balance of the trips could then be made with a medium-size jet as they were all domestic trips within three hours of home base and the average passenger load was six.

Using these two rule-of-thumb indicators- buying the jet would not have delivered the efficiency in 40% of their trips- and the turboprop would not have provided the comfort or speed for the remaining trips. Total annual use did not dictate the need for two aircraft- nor did it dictate the justification of even one.

As mentioned- there was no question of the Value Proposition- based on the client’s goal of getting out ahead of their competition and in front of their clients. The company’s travel needs were being subverted by lack of commercial airline service impacting growth and deterring client contact. It seemed clear that having a business aircraft could immediately solve this dilemma.

The question now centered on what solution- or combination of solutions (given their mission- annual use and locale) would be the best solution.

TAILORING A NEW SOLUTION
Even though this client was in a small town without commercial airline service- the town does have a suitable airport- and there are two charter companies there - both with mid-size turboprops on their certificates. Both had ARGUS/Wyvern ratings and IS-BAO audits coming up. We visited the facilities- called their respective references and built budgets based on their respective block charter agreements. We had now found a great solution for 40% of the travel needs!

Next we called on two different fractional companies to build proposals for the remainder of the mission fulfillment. Proposals in hand- we then made the choice based on fleet make-up and reference input.

Today that company is enjoying greater access to clients with more time at home for its executives - resulting in growth for the company. Commercial air travel is still in the mix for the occasional international or coast-to-coast trip.

The process that was established in my first three articles – determining the Value Proposition- building the Mission Profile- and Choosing the Aircraft – helped create the blueprint for this client’s successful outcome. There is no one outcome for everyone- but there are several right results.

Now that the Board has built all of the profiles- the budgets and flight plans- the modeling is already in place to accommodate added need and change in mission. It will be very easy with these dynamic tools to predict with great certainty when the whole aircraft ownership solution will be right!
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