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Governance: Always Necessary and Never Easy

Boards are obligated to develop and oversee policies that serve shareholders- even when dealing with areas that may be outside their fields of expertise. Regarding a company’s need for Business Aviation- Jack Olcott recommends focusing on basic objectives and seeking knowledgeable assistance.

Jack Olcott   |   1st November 2012
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Jack Olcott Jack Olcott

Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,...
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Governance: Always Necessary and Never Easy
Boards are obligated to develop and oversee policies that serve shareholders- even when dealing with areas that may be outside their fields of expertise. Regarding a company’s need for Business Aviation- Jack Olcott recommends focusing on basic objectives and seeking knowledgeable assistance.

The bounds of a Board’s responsibilities extend to all aspects of a corporation’s activities. Each area- even those as specialized as Business Aviation- must be subject to oversight. Directors- therefore- are obliged to generate effective policies regarding the use of business aircraft- whether they are company owned- leased- managed or chartered.

Even those companies that perceive little need for Business Aviation should understand the usefulness of this mode of transportation- since a requirement for timely and efficient travel exists with nearly every endeavor.

BUSINESS BASICS
When developing policy for Business Aviation- Directors should focus on management fundamentals. Creating an environment where employees are able to perform their best is basic to all businesses. Productive workers are more likely to be satisfied employees as well as fulfilled individuals- resulting in greater returns for shareholders and more stability within the workforce.

Employees who need to travel should know that their company values their time and effectiveness—and their wellbeing—sufficiently to authorize the most efficient means of travel- and that the set of available transportation tools includes Business Aviation.

Appreciating that employees are a company’s most valuable asset is another business basic that should shape a Board’s policies regarding Business Aviation. Time is also a fundamental asset. Using business aircraft to position the right person in the right place at the right time- and doing so with minimum use of travel time and maximum productivity while traveling- is a powerful policy- particularly in today’s competitive marketplace.

With the ability to reach swiftly and safely 10 times the number of airports served by scheduled airlines and 100 times the locations with business-friendly service- Business Aviation provides a dimension of travel efficiency unmatched by any other means.

SAFETY FIRST
In keeping with Board policy that addresses the wellbeing of its employees- Directors should know that Business Aviation is very safe and absolutely the most secure form of travel. Business jets owned or leased by a corporation for transportation of its employees and flown by two-person- salaried crews (the segment of Business Aviation identified as Corporate/Executive) have a safety record on par with the largest- most experienced scheduled air carriers. Accidents involving fatalities are very rare- and often there are no fatalities during 12-month periods. In 2010- the most recent year with fully vetted safety data and reported by Robert E. Breiling Associates- Inc.- there were no fatalities within the Corporate/Executive segment of Business Aviation.

Regarding security- no one enters a business aircraft unless he or she is known to either the aircraft’s captain or the lead passenger. Ask any safety professional: the ultimate security measure is personal recognition. More significantly- all the factors that influence safety and security are within the control of the corporation selecting Business Aviation.

For company-operated business aircraft- Board policy can and should be established regarding selection and oversight of pilots and maintenance personnel. Operational policy also falls within the Board’s ability and responsibility to set parameters for safety- such as augmenting the FAA requirements for private operators (FAR Part 91) with selected elements of charter (FAR Part 135) or scheduled air carrier (FAR Part 121) regulations.

Unlike public transportation where the user intrinsically delegates safety of travel to a third-party provider who is known by reputation and governed solely by governmental regulation- private transportation using business aircraft is subject to Board oversight at the policy level.

Even users of charter have the opportunity and responsibility to establish policy regarding the selection of suitable providers. Several well respected organizations vet FAR Part 135 operators- which are certified to offer business aircraft for hire. Their reports are available to Boards and should be reviewed as part of the corporation’s policy for using Business Aviation.

Enhanced productivity- safety and security for a corporation’s two most valuable assets—its people and time—are well documented features of Business Aviation. Directors are fulfilling their fiduciary responsibilities to shareholders to include this form of transportation as an element in corporate travel policy.

SEEK ASSISTANCE
Board Members are rarely experts in the details and nuances of Business Aviation- thus shaping meaningful and directive policy is not easy. But such difficulty is not an excuse for ignoring this form of transportation in governing a corporation. Specialists are available for consultation- and an increasing percentage of aviation professionals have management education in addition to technical knowledge of aviation.

Similar to any powerful tool- Business Aviation must be used correctly to be effective and safe. To overlook or discount the use of business aircraft is irresponsible and a disservice to shareholders. Directors are encouraged to develop transportation policy that is shaped by experts- includes use of business aircraft where appropriate- is institutionalized by Board directive and receives on-going oversight.

Incorporating Business Aviation in corporate travel policy is an effort that will yield dividends.

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

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