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Importance of structuring the flight department as a business unit
Corporations are well advised to manage and measure their Business Aviation assets as they would other essential elements of their enterprise- asserts David Wyndham.
By enabling executives and specialists to use their time productively- Business Aviation can play an important role in the success of the corporation. Unfortunately- not all employees and shareholders appreciate just how important business aircraft can be to company profitability.
Aircraft and the employees who pilot and maintain them are based at an airport and therefore are geographically separated from the vast majority of the company. Even an executive helicopter seems remote sitting on the helipad at the corporate headquarters. Unlike other essential services such as Legal or Human Resources- the aviation department can easily be perceived as a separate entity rather than an important part of the corporation.
Corporations cannot function effectively without business units that reside within the corporate structure and are integrated within the daily functioning of the enterprise. Such organizational form is seen as fundamental and supportive of the mission. A client of ours in the natural resources industry uses Business Aviation to travel between its remote operating locations- thereby saving countless hours of travel for senior leadership. Facing low prices for a primary raw material that it mines- the company is examining ways to cut costs.
One area of concern to the Board of Directors was how the business aircraft is perceived by the employees. Among the leadership and the Board- the aircraft is seen as a valued business productivity tool. But among the employees- some may see it as an executive perk- in part because the aviation department is managed as an ancillary function by a senior vice president. It is not seen as part of the company’s core structure.
Us VS. Them
When aviation is seen as 'them' and the rest of the company as 'us”- it is easy to dismiss “them” as a perk or toy. If aviation is seen as an essential function in support of the corporation's goals- along the lines of HR- Legal and IT- the perception of aviation within the company is very different.
Aviation should be treated as a Strategic Business Unit (SBU). While difficult to manage as a profit center that focuses on product offerings with traditional profit goals- the aviation department is a Supporting Business Unit. Rather than generating profits for a specific market segment- it serves in a supporting role- enabling the professionals to be focused on their areas of specialization.
The aviation department needs to be structured along the same management lines as the other business units within a company- with clearly defined goals that support the overall corporate mission. It needs to have reporting appropriate to the department’s mission of providing safe- effective and efficient air transportation. For example- if the aircraft is used for C-level executive transport- then the department’s management should be directly connected to those persons- not attached elsewhere within the corporation as an afterthought.
I have seen several examples where the corporate aircraft is part of HR or Legal- although no one from those departments ever uses the aircraft. This organizational structure makes it hard for HR to determine whether the aviation department is doing a good job- as they are not a stakeholder in the process.
The entity that oversees the aviation function should have the following functions:
• Developing and maintaining the aircraft use policy;
• Scheduling the aircraft for the passengers- with oversight of the process;
• Internal accounting and billing for the use of the aircraft;
• Developing and tracking performance metrics appropriate for the mission of the aviation department;
• Oversight and reporting for the aviation function.
Whatever entity manages the aviation function- it should have an understanding of the aviation mission and appreciate aviation's role in the execution of the corporate mission. It should also have a stake in the success of the aviation function. If the aviation department is a stepchild to its reporting parent- the nature of that relationship places those personnel responsible for providing aviation services in a difficult position.
The aviation department needs to have routine and direct contact with its reporting-manager. For larger organizations- we recommend that the aviation manager have an office 'downtown' as that is where the department’s users reside. For Business Aviation operations involving multiple aircraft- day-to-day duties usually constitute a level of activity that demands full-time management rather than a dual assignment of pilot and manager.
In addition to typical budgets and reports of hours or passengers flown- the aviation department needs to be held to standards and performance metrics similar to other vital support functions. There needs to be a clearly defined- direct link between aviation and the department’s primary users if service levels are to be maintained and the mission of the corporation is to be efficiently served.
As we progress in this series of articles- I'll explore ways the aviation function can be a strong- supporting member of the corporate structure.