Having previously tackled the issue of ‘Value Proposition’ in relation to building the boardroom business case for owning and operating a company aircraft- this month Jay Mesinger looks at the next developmental step: the ‘Mission Profile Analysis’.
Jay Mesinger is the CEO and Founder of Mesinger Jet Sales. With over 40 years’ experience in the... Read More
This first and formative step towards owning and operating a company aircraft - assessing the ‘Value Proposition’ - allows the boardroom participants to vet the value of owning and operating a company aircraft- thereby giving Directors confidence to proceed with further analysis. The next developmental step- here referred to as the ‘Mission Profile Analysis’- helps focus the team on the process of choosing the best aircraft to meet the company’s needs.
The development of the Mission Profile is like creating a recipe for a meal. Without considering the number of people dining- or taking into account their specific dietary needs there may be too much of the wrong food or too little of what would make the meal perfect.
The same is true when determining the right corporate aircraft for your business application. What begins seeming an over-simplistic exercise ends yielding the analytics necessary for the decision-making process- which is now supported by facts- and defendable to shareholders.
The development of the Mission Profile begins by assessing and building the annual hours-flown equation and determining which category of business aircraft will fit the mission. Setting up this analysis requires the group to consider past travel use as well as future needs - potentially factoring fluctuating business markets such as international growth- or the corporate decision to allow greater depth in use by authorizing associates more access to the company’s aircraft.
Once all those who will have access to the aircraft have been interviewed- their input is committed to a form listing city pairs traveled- and the frequency said city pairs will be visited annually. Flight plans can then be created by either the aircraft sales professional helping in this process- or if this work is not being done to facilitate a first-time acquisition but merely a fleet transition analysis- the flight department can prepare the flight plans based on these city pairs.
Once each of these plans is created- they will yield the flight-time between the cities and the frequency each pair will be traveled. This study will provide the team with the proposed annual use of the aircraft- and provide the analyst with the necessary data to present to the management team- thus enabling decisions to begin to be made regarding size and capability of the aircraft being considered. Decisions about requirements for range and cabin size can begin to be formulated.
THE 70% RULE OF THUMB
One rule of thumb we use in strategic planning is that one should buy based on 70% of the projected use. If 15% of the proposed use is international travel and 15% is coast-to-coast domestic travel- but 70% of those trips are two hours (or less) in flight time- the target aircraft should effectively hit the mark of the two-hour flight requirement. On the coast-to-coast flights the choice might be to stop and refuel- and on the international legs the efficient answer might be to fly commercially or charter an aircraft.
If you buy an aircraft based on your 30% travel needs- you would probably be overbuying - and costs to buy and operate may well out-weigh the proposed value.
Consider cabin size also using the 70% rule. The group must bear in mind the number of passenger seats for that percentage of use as well as other comfort and cabin needs: Galley- full lavatory- and stand up cabin features must all be taken into account. Soon what begins to take shape are the categories of aircraft that can be considered. Small- medium or large cabin aircraft will need to be sorted through matching the 70% rule with the available aircraft choices.
FACTORING GROWTH ESTIMATES
Since buying and selling aircraft have distinct costs- some thought about growth estimates for the next three-to-five years should be considered carefully at this juncture. Given training costs- brokerage commissions as well as staffing requirements- changing aircraft frequently should be avoided.
Once the category of aircraft has been chosen- the Board-team can begin the final step in the analysis: development of the budget for purchase and operation- not only including capital costs for purchase- but also modernization and upgrade costs throughout the ownership period.
Next month- we will focus on helping the Board shape the budget for purchase and operation- and finally make the decision regarding aircraft ownership- as well as review other options available to the corporation. Each of these tools gives the Board vision and balance to maximize success.