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Metrics and Measurements

Individual business units need metrics. Profit centers involved with revenue generation- such as manufacturing or professional services- typically have measures of success similar to those that apply to the overall corporation. Performance of business units that do not deliver a profit (in the traditional definition of that word) is more difficult to measure- save for comparing budgeted vs. actual costs.

David Wyndham   |   1st April 2014
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David Wyndham David Wyndham

As an Instructor Pilot in the U.S. Air Force- Dave's responsibilities included aircrew...
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Metrics and Measurements:
Key Components of Governance
Basic parameters required to manage an enterprise apply to your company’s flight department- notes David Wyndham.

Individual business units need metrics. Profit centers involved with revenue generation- such as manufacturing or professional services- typically have measures of success similar to those that apply to the overall corporation. Performance of business units that do not deliver a 'profit' (in the traditional definition of that word) is more difficult to measure- save for comparing budgeted vs. actual costs.

Metrics- by definition- must be measureable. But they must also be valid. A metric that is valid can be used as a predictor of performance. Measuring the performance of your company’s flight department is essential- just as it is for other business units.

Measuring The Flight Department
What metrics are available to help measure the success of your aviation assets? Relative to the corporation- the demographics of the Business Aviation unit are small. A Fortune 500 company may have three business aircraft- employ 15 aviation professionals- and be located in a single facility at the local airport.

But the dollars invested in that unit can be significant- and if properly utilized- the impact can be huge. Since the flight department is not directly generating revenue- how do you know if it is accomplishing its mission successfully and is benefiting shareholders?

Your company’s flight department certainly can provide numbers. Typical operational measures are hours flown and passengers carried. Further measures may be broken out into average passenger load passengers (i.e. deadhead). Costing may be done as a total budget- total cost per hour and perhaps variable cost per hour. Are these really telling the appropriate story? What does your company need to know that measures whether the business aircraft are being properly utilized? Hours flown and passengers carried is a good start.

Another metric is segregating hours flown for the corporation’s other business units or their customers. Do the hours associated with each business unit being supported match up with the focus or efforts of the company? Are the flight department’s activities aligned with the corporation’s priorities?

Passengers carried can be an important metric if the goal is to fill available seats once the main user has scheduled the aircraft. It is also useful to analyse load factor - the number of seats filled as a percentage of the total passenger seating. This metric is critical for a shuttle- and can indicate the potential need for upsizing the aircraft if load factors are so high that key passengers are denied service.

Another passenger-efficiency metric is passenger-miles. One passenger flying one mile is a passenger-mile. That may be useful to look at the relative value of a trip - a few passengers on a long trip may be more time-effective than a larger load on a very short trip- however.

Other Metrics
A critical metric is aircraft availability- the amount of time an aircraft is available to be flown or is scheduled to be flown compared to the total operating period (i.e.; actual hours that aircraft is available- divided by the total hours that a fully-functioning aircraft should be available- expressed as a percentage).

For a 24/7 operation- the operating period is measured as 24 hours per day- seven days each week. However- if the aircraft is only scheduled or flown 14 hours a day- six days a week- counting 'nights and Sundays' against the rate is not appropriate. A declining availability rate correlates to an increased maintenance load. A newer aircraft should have high availability- while older aircraft that require considerable unscheduled maintenance will have lower availability.

I know one operator that had such poor aircraft availability that five aircraft were needed to meet a two-aircraft per day flight schedule—clearly a metric that got management’s attention.

Aircraft costs are often expressed as a cost per flight hour. In many cases this is of little value. One operator has a Citation X- which can achieve a speed of 600 miles per hour. They also have a CitationJet that cruises at 450 miles per hour. Comparing a single cost per hour figure for these two aircraft is clearly misleading. We recommend a cost per mile for any point-to-point transportation. If the purpose is to fly from A to B- the cost to fly that trip is based on the trip length. If passenger loads are important- then another level of granularity - cost per passenger-mile - is important.

Business aircraft are flown to serve the company’s overall objective of increasing returns for shareholders. That fundamental is often overlooked in establishing metrics for the flight department- possibly because determining the bottom-line benefit to the company for having the right person in the right place at the right time to cement a big sale or negotiate a profitable partnership agreement is difficult and possibly subjective. Yet increasing revenues and personnel efficiency is the essence of Business Aviation.

Companies should capture the successes that are facilitated by using their business aircraft. The metrics of value will vary from company to company based on the main mission of the aircraft. Boards are wise to develop meaningful metrics that help measure the true value and effectiveness of the business aircraft.

 

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