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Boardroom 5 How do you Use it? Aug 14 Main Image
Use policies for the business aircraft
Good governance and efficient use of business aircraft require a clear and well-documented policy of how such an important resource will be used, advises David Wyndham.
My employee handbook documents how our company-provided computers will be used: "Computers, computer files, the email system, instant messaging and software furnished to employees are Company property intended for business use. Limited personal use is allowed as long as it is not disruptive to business operations." We go on to address the fact that all files on the computer are company property. My company policy is simple and clear.
Laptop computers, which individually cost less than $2,000 each, are critical for efficient workflow and productivity in most companies, and they contribute significantly to the total IT budget in a large company. Conversely the number of business aircraft in a company is quite few, but the total spent to acquire and operate such a resource is also quite significant. Your company probably has a computer policy. Does it have documented policy for using business aircraft? It should!
Whether the business aircraft is used by a few senior executives, or whether company employees can book seats on the corporate shuttle, the reasons for – and the use of - Business Aviation should be clear. A policy specifying usage shapes efficiency and appropriate return on the company’s investment in this form of transportation. Policy also prevents abuse as well as the appearance of misuse.
Few companies escaped financial hardships in the past recession. One client had a light jet it used for senior executive travel. The company, however, had no clear policy for the use of the jet but did have scheduling authority spread among a few senior executives. In the light of recent layoffs, everyone was very conscious of spending money. There were misgivings about the use of the business jet by some Members on the Board of Directors. The Board needed to know the aircraft was being used effectively.
My study looked at the costs of the business aircraft and the alternatives. The company’s operating locations were many, and neither driving nor Scheduled Airlines adequately served its transportation needs. The firm’s method of governance, while rather informal, had a chargeback algorithm that billed the business unit using the aircraft. Flight operations were well-run, minimally staffed, and costs were managed quite well. The executives who primarily used the aircraft were conscious of the appearance of usage (i.e., the optics of Business Aviation) and were comfortable in being able to justify their trips.
My client had unwritten policies and a shortlist of executives who could authorize use of the aircraft. The vast majority of travel on the company aircraft— 90%—was by the CEO and his management team. All of their trips were to company operating locations, and my report was helpful in documenting the cost-effectiveness of the business aircraft.
Missing, however, were elements of policy that established scheduling and use policies for the aircraft. Also, the company’s usage policy needed the blessings of the CEO, documented by his signature, thereby leaving no doubt that the aircraft would be effectively managed. Such policy was what the Board needed to see. Furthermore, the company achieved good internal PR when employees knew how the aircraft was used.
Good Policy Begets Good Optics
Misuse of business aircraft makes for tantalizing reading in business newspapers as well as the lay media. The vast majority of business aircraft use is for the furtherance of the business. But “dog bites man” is not news; neither is “business aircraft vital to company's growth”. Thus any misuse of the company aircraft is amplified, thereby fuelling mistrust of Business Aviation by the uninformed.
If 100,000 employees misuse their company computers, the total dollars lost to the enterprise in terms of expenses and lost productivity can be significant. But it was the trip to Washington DC by a handful of auto executives in 2008 asking for a bailout during the financial crisis that generated the news, and their refusal to answer questions about their use of business aircraft for that travel exacerbated the bad optics.
A considerably better approach would have been referring the press to their company use policies that gave solid reasons why business aircraft were necessary.
Checklist For Use Policies
The company use policy for a business aircraft should include the following items:
• Who authorizes aircraft use?
• Why can the aircraft be used?
• Who can fly onboard?
• What justification is needed?
• What priorities resolve schedule conflicts?
• How are costs allocated among business units or the overall corporation?
The “who, why and what” justification for each trip needs to be clearly delineated. Any significant business tool or process has its procedures. Aircraft use needs to be backed up with documentation so that the Board, CFO or designated executive can maintain oversight.
A Business Aviation use policy is essential for Board governance. Just as it is not possible to manage what cannot be measured, ad hoc actions that result from policy voids cannot be governed.