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September 2005

We often define ourselves by how we resolve the age-old conflicts between ‘want’ and ‘need.’ From choices as plebian as clothes selection to home entertainment systems; from the cars we drive to the number of vehicles we own; home sizes to what we spend on furniture – we often pay for ‘want’ when ‘need’ alone would serve as well.

The same phenomenon sometimes surfaces in personal flying. Unable to settle for less than what they want- some pilots choose far beyond their needs – even though sticking with need alone would cost far less and is- in actual fact- far more practical – not to mention less risky for them.

In business aviation- however- frivolities such as unbridled want seldom come into play. Most companies opt for what they need during the depreciation cycle of the aircraft – not what would be nicer to have. More airplane than needed means more expense – to buy- to maintain and to operate.

Some savvy executives may opt to buy ahead of their current needs after looking at internal growth forecasts; nothing wrong with getting ahead of the curve if it saves the company money in the longer term.

Even though we call them ‘investments-’ business aircraft tend to depreciate in value. Unless an operator holds an airplane long enough to become collectable- no aircraft appreciates like land- stocks- or rare metals or jewels. Business aircraft earn their keep by moving people and goods more efficiently than rented airline seats.

The key to making smart choices rests largely in defining needs – then allowing need to actually dictate the ultimate choice. Defining need alone can be a significant challenge for any firm- partnership- or corporation with complex travel patterns.

You can define your needs by calling a business aircraft marketing executive- whether at a planemaker or dealer/broker - these folks live to help prospects understand the best fit for their needs.

However- you can start your own definition exercise by looking at a few key pieces of information that will help you better understand your own travel patterns and how they can be met by a corporate aircraft – and help you identify matches in the market. You may even find new efficiencies possible by employing the potential corporate aircraft in ways not previously recognized.

The goal

Being among those able to justify use of a business aircraft means a company already enjoys a measure of success - otherwise- the need wouldn’t likely exist. Deciding it’s time to own or otherwise use a corporate aircraft usually means that company staff travel often enough and far enough to reap the advantages of time saved- hassles reduced and increased conveniences. Only too often- the uninitiated want to dismiss the convenience aspect as unworthy because it can be intangible. So can job satisfaction and the feeling of reward that comes with working well – but few would dismiss their importance. Additionally- ‘convenience’ sometimes interchanges with ‘efficiency-’ particularly when dealing with factors such as the location of air carrier versus general aviation airports relative to office and regular destinations.

Convenience also takes on special importance in other time-oriented factors- such as the convenience of travel planned around your schedule and not timetables published in the Official Airline Guide.

The convenience – and efficiency – of making multiple stops along a round-trip route provides another option no airlines offer. What airline lets you opt to make a stop for your convenience- even though the stop is on the way? For that matter- how about flying a triangular route to string together two or three stops instead of one? Have your travel agent try to make that one as time and money efficient as a company airplane.

Here’s another hands-down winner for the business operator: bringing along on the company airplane a second- third or fourth staff member doesn’t entail second- third or fourth tickets. While not exactly free- in general the airplane costs the same to fly a given distance whether it carries one passenger or four.

The company airplane may even enhance personal and family travel – within the bounds- of course- of tax- legal and corporate-ethics considerations. Want to bring along the family on a trip? Reference the costs comment in the above paragraph. Yes- tax implications exist. But paying the taxes due on a corporate seat are based on air fares – and last I checked- even the taxes due pale compared to the airline ticket costs on which they are based. As you’ll see- these ‘convenience factors’ can be weighed tangibly. Still- the number must make sense for the purchase to make sense. That means selecting an airplane capable of satisfying the majority of the company’s regular travel needs - as defined by the company - the majority of the time: One that can cover the distances required with time and cost efficiencies intact- at a price that makes the aviation tax benefits balance out the cash outlay.

But as we noted above- remember it’s not just about the numbers for the airplane; it’s the numbers that go with life- as well.

Adding the numbers…

If- for example- the company spends $50-000 per year or more on staff travel- most marketing people will tell you it’s worth looking at the benefits of a company aircraft. If the company’s top executive is out of the office a day a week or more (on average)- some insiders will tell you that supports at least examining a business aircraft alternative… but the real story is usually in the details. History- as we’re often told- is usually a harbinger of the future – and in few places is that truer than in corporate travel. So to get a glimpse of the future- start by recalling the past. You can begin the process of defining your company’s business travel needs by examining travel from the past three to five years with these points in mind...

• Total number of travel days: As the number of travel days goes up- so- in general- does the number of airline tickets purchased – and the amount spent on the airlines.

• Total number of people traveling: If you have single people going off on individ- ual trips justification may be harder than if you have two- three or more traveling simultaneously to common destinations. Their total number of days out of the office- worked against the hotel nights- may reveal a pattern in which staff are spending one or more additional nights out because of airline schedule complica- tions. A common example: the inability to arrive at a destination early enough to keep appointments the first day- due to the long hub-and-spoke elapsed times of the airlines.

• Total number of destinations and multi- ple-stop trips: The ability to compare com- mercial and corporate aircraft travel times to these destinations may show how much time can be saved using a private aircraft.

• Distances to those destinations: Again- a way to compare prospective corporate air- craft travel times against the elapsed times published for airline routes.

• Numbers for both recurring travel and non-recurring trips: Provides a way to look at whether some trips might be blended in a corporate aircraft.

•Costs for the airline tickets- driving- and hotel nights and meals related to working with airline schedules (as opposed to days for appointments- trade show and event attendance).

• Rental-car expenses and arrival airports versus destination cities: These elements provide a way to examine how often company staff has to drive beyond the arrival city to another destination – because the actual destination has no airline service but is served only by a general aviation airport.

Adding numbers yields sums

From these examinations it’s possible to make comparisons and weigh the different travel times of a business aircraft. For example- the distances flown provide a basis for calculating flight times of a private aircraft and comparing those times to the published elapsed times for the most comparable airline routing. Private aircraft times are then used to calculate flight costs based on the per-hour costs of the aircraft – and- with all the past trips calculated on the basis of business aircraft costs- compared to the ticket expenditures.

Nevertheless- there’s more to examine – otherwise- this would be an easy determination to make. Using the same basic determinations- you can also compare the relative costs – or savings – of days saved and hotels and meals saved through the ability to travel on the executives’ own schedules- direct to their destinations- in enough time to make use of every day.

The number of travel days versus appointment days can help determine how many days out are courtesy of accommodating the vagaries of the airlines’ hub-and-spoke system – and- in turn- how many days might be saved by the shorter travel point-to-point flight times of a business aircraft. Ticket expenditure is certainly an element of the determination; but so also are other numbers. For example- what are the tax implications of owning the aircraft? Separate from the pure travel costs come the pitfalls and benefits of depreciation- operating cost deductions- and asset retention. After depreciation- the company may opt to sell off the asset and recoup some of its worthwhile value starting the aircraft tax implications anew with another aircraft.

Unanticipated advantages

Then there are the unforeseen benefits that often emerge with actual use; the new ability to cost-effectively move clients to where it benefits you – employing the same cost and time advantages available when moving company staff. Companies have been known to consider new lines of business or new locations because of their newfound independence from the constraints of airline travel. Opening a plant or office off the commercial airlines’ route maps is no longer a handicap – it’s now an advantage. Servicing customers beyond the reach of the airline routes offers some distinct competitive advantages – as does the potential of finding suppliers and vendors hungry for new business because of their isolation from the airline maps. And that difference may be the most tangible intangible of the lot.

A company restricted to its travel planning by the points on the airlines’ maps enjoys only about 550 destinations in the Continental United States.

A company open to general aviation runways 3-000 feet in length or longer enjoys more than 10 times the number of potential destinations – more if you count some private runways serviceable by light jets and propjets.

Professional help awaits

Even a company capable of performing the definition exercises described above may still benefit from seeking the help of a proven professional- be that professional a consultant- a broker or marketing executive.

Acquiring an investment like a business aircraft entails many other complex issues: whole or own fractional ownership; aviation financing; aircraft insurance; operating; maintaining. And these are ones dealt with after deciding on a budget- an airplane type and finding the best example of that type at a price that makes sense.

So it makes sense to consider this article not a primer on doing it yourself- but an introduction to the issues involved. In turn- you should be better prepared to understand the issues and provide the answers a professional will seek in helping you through the process of finding the airplane to make your company stronger- bigger and more profitable.

Also in turn- we plan to deal with those other issues in coming articles on financing- insuring- operating and maintaining. In the meantime- you’ve got a point from which to start examining your travel use and defining your needs in terms of a business airplane.

Whether you start with a mid-size business jet- a propjet or single piston engine- the money and time you save from using a corporate aircraft are all yours to keep.


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