Selection of Aviation Services: The Tangibles
Shopping for aviation services is a challenging process. It incorporates both tangible and intangible decision elements. Pete Agur discusses the three key tangible elements for selecting the right services and resources for your company.
Governance of aviation services involves a comprehensive examination of why your company requires use of Business Aviation- and a definition of the missions to be accomplished and the resources needed to accomplish the desired results. Thus it is useful to consider the following tangible elements.
When it comes to successfully accomplishing your company’s Strategic Intent- aircraft services are not the critical resource. Your people are. Aircraft services leverage the speed and quality of your people’s efforts. However- defining which people have access to aviation services and for what purposes you will use those services- will form the basis for a critical discussion that provides appropriate direction and clarifies its justification.
Your challenge- as a Board Member- is to assure the effective definition- acquisition and hierarchy of the use of your business’ aviation resources. Your aviation services and resources must directly support the achievement of your business’ Strategic Intent enabling the right people- to be in the right places- at the right times- to do the right things.
The next tangible element is the purpose of the aircraft service. How many people will travel- how far- and to what airports? Airplane and car seating capacity are alike. If the vehicle seats five- it is probably comfortable for four or fewer people on all but the shortest of trips.
As an example- if as many as one in ten of your trips are likely to carry seven passengers- an aircraft with a normal capacity of seven or eight is probably a good fit. Don’t talk yourself into considering a belted potty as a normal seat. It is neither as comfortable nor as safe as the other passenger seats.
Your trip profile defines what aircraft performance you need- and includes two primary factors: Range (maximum distance you are willing to go without refueling); and Runway performance - the distance taken for an aircraft to accelerate to flight speeds and either stop on the runway or continue to fly away if an engine fails. Runway performance is significantly affected by airport elevation and temperature. Minimum length required for landing is also a consideration since it is affected by airport elevation- temperature and wind.
QUANTITY OF RESOURCES
How much flying you do defines your best aviation resource fit:
- 250+ hours per year is the typical financial hurdle for whole aircraft ownership.
- 50–200 hours is the sweet-spot for fractional ownership.
- Up to 50 hours calls for charter to be your primary resource- assuming a qualified vendor is nearby.
Remember: Even if you only need 250 hours per year from a single aircraft- that aircraft will be out of service for routine maintenance 10 to 15 days each year - some years less- some years much more- so you probably won’t be able to shape your entire travel calendar around the airplane’s availability. Therefore- supplemental lift will be needed.
If that need is for only a few days each year and is mostly for out and return flights- then charter is likely the best back-up resource for you. On the other hand- if you have a need for more capacity or multiple aircraft on the same day- or significant one-way leg coverage (like Board meeting days and connections with international airline flights)- then fractional aircraft ownership and charter (depending on the amount of days and hours involved) are probably your best fit.
What may not be a great fit are charter debit cards. First- their pricing includes a substantial premium. Second- the quality of service on debit card flights is reported to have a higher variability (understandable since services usually are from a variety of vendors).
The traditional metric for aircraft capacity has been flight hours- but these are not an adequate indication of an aircraft’s business capacity. A better business-use metric is “days used when the aircraft is available-” which excludes days when the aircraft is down for maintenance (normally 4-6% of the time).
The math is easy. If yours is primarily a weekday company- the number of business days in a year is about 250. Since many trips take two or more days- the ability to schedule the aircraft to 100% of its availability is limited by trip request overlap or conflicts. Thus- the maximum capacity of an aircraft is somewhere around 80% of its available days or about 188 days for a highly employed aircraft (250 work days –15 maintenance days x 80% = 188 days used). Much closer to the norm for business aircraft use is a benchmark of about 160 flight days per year (~65% of available weekdays plus some weekend days).
The first three elements in the selection of aircraft services are very tangible. Yet- anyone who has bought a car (or an airplane) realizes there are often overriding intangible components in making the final decision. Since there are numerous “buyers” (financial- user- operator- etc.) in the aircraft services selection process- the intangible side of the selection process has some very interesting nuances which will be explored next month.
Do you have any questions or opinions on the above topic? Get it answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com