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Governing Specialties

Knowing when and where to find help with Business Aviation is a fundamental Board responsibility. So- too- is the necessity to heed the advice of your professionals- notes Jack Olcott.

Jack Olcott   |   1st August 2012
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Governing Specialties
Business Aviation and Corporate Governance
Knowing when and where to find help with Business Aviation is a fundamental Board responsibility. So- too- is the necessity to heed the advice of your professionals- notes Jack Olcott.

Corporate governance is a challenge. Being responsible for the success and reputation of an enterprise- regardless of whether the corporation is publically owned or privately held- is a heavy load for Directors to shoulder. Especially today when Boards are required to establish and oversee policies that encompass complex disciplines- the task is not easy. Furthermore- failures in governance are often significant.

As we have read in news coverage of dramatic and costly missteps in the financial sector- failure to understand sophisticated instruments such as derivatives and other exotic investments is no defense for Directors. Nor can a Board’s unfamiliarity with different elements of company activities negate the need for comprehensive policy and oversight. Short-term benefits- such as substantial profits from questionable transactions- also offer no excuse. Neglect and poor judgment can (and usually will) result in loss- including shareholder dollars- company reputation- and employment of senior executives and Board Members.

Because safe operation of business aircraft impacts the wellbeing of a company’s employees and associates- failures of governance related to Business Aviation include a dimension far beyond those of other areas of Board responsibility. While blunders in financial governance are usually costly- they rarely (if ever) result in loss of life and limb. Serious miscues in the operation of business aircraft can have catastrophic consequences- however.

Board policies that fail to address inappropriate or profligate use of business aircraft also hold significance since Business Aviation impacts company productivity- which like botched financial policy affects the ability of a company to produce profits and remain financially viable.

Business aircraft provide capabilities that are unique. When used appropriately- they enable a company to expand market penetration- use time more efficiently and leverage the talent of employees. In addition to facilitating greater revenues- no other form of business transportation provides a better record of safety and security.

Conversely- business aircraft used inappropriately or managed poorly can consume company resources without generating gains. Not all business trips require Business Aviation when other means of travel- such as frequently scheduled airline flights- are available. Masking a personal trip as business is neither good business nor smart. More significantly- mismanagement can be dangerous. Considering the sophisticated and technical nature of business aircraft- failure to appreciate the need for thoughtful policies and procedures can lead to big problems- including tragedy.

In particular- Directors must respect the technical nature of operating business aircraft safely. There can be no compromise or naive amateurism regarding maintenance- comprehensive training and respect for the weather and the challenges of operating miles above the earth’s surface while traveling at hundreds of miles per hour.

Business Aviation is safe and effective because skilled pilots and aviation managers are committed to their profession. Good governance requires that Directors insist on staffing the company’s aviation department with knowledgeable experts who possess a record of unquestioned integrity and insightful management. Good governance also demands that Boards pay careful and respectful attention to the advice offered by their aviation manager.

Business Aviation has grown since companies first engaged in this form of transportation. Traditionally- flying experience as represented by hours flown and ratings earned were the metrics used for hiring and advancement. Management skills were the product of years spent operating business aircraft. Such an approach is changing.

Today- there are over 300 two- and four-year colleges offering degrees in aviation- many with flight components that enable graduates to obtain their certification as pilots or maintenance technicians. Thus younger aviators are entering the profession of Business Aviation well prepared academically. The community- however- still demands hands-on experience with business aircraft before an employee is considered for management responsibilities such as chief pilot or Director of Aviation.

Thus an aviator pursuing a career in Business Aviation must find a balance between gaining experience in the cockpit or the maintenance shop and learning management skills that prepare him or her to lead an aviation department and communicate effectively with a Board in areas of aviation policy. Fortunately- the National Business Aviation Association (NBAA) launched an educational program in the late 1990s known as the Professional Development Program (PDP)- and has perfected the curriculum in subsequent years to prepare individuals for career advancement in Business Aviation.

Through a combination of seminars and online programs- an individual can expand his or her knowledge and skill in the art and science of management as it applies to Business Aviation. As a capstone to such education- NBAA created its Certificated Aviation Manager (CAM) program- which is to Business Aviation what certification is to professionals in other fields such as public accounting and financial planning.

Before standing for the CAM examination- applicants must document their completion of numerous courses and years of professional experience. The testing is rigorous- and successful applicants are awarded the Certificated Aviation Manager designation.

Board Members are wise to encourage company flight personnel to pursue NBAA’s Professional Development Program and to seek CAM designation. Having qualified personnel transporting your company’s most valuable asset—its personnel—is good governance- as is listening to your aviation professionals and soliciting their input in governing your company’s approach to air transportation.

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