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What is Business Aviation- and what are its benefits

As the pace of business increases and entrepreneurs seek exciting opportunities in an ever expanding global marketplace- travel by scheduled airliner is being augmented by the use of company- and privately-owned aircraft—an expanding transportation resource known as Business Aviation.

Aviation- the primary form of long-distance transportation for emerging and developed countries alike- is an enabling technology for economic growth and improved quality of life. Throughout history- transportation has been a necessity for expanding commerce and growing the economic wellbeing of a region.

China is very familiar with the importance of trade routes that enabled safe and swift passage of goods. Over 2-000 years ago the Silk Road linked what is now Xian in the East with nations along the Mediterranean Sea in the West- facilitating the economic development of villages and the cultural growth of people along that route. With the ability to link Asian craftsmen with Middle Eastern and Roman buyers- the Silk Road facilitated the wellbeing of those who took advantage of early forms of transportation.

Today- jet aircraft cover in hours what required months to travel the distance between China and the markets of Egypt and Rome. As the time required to conduct business and move goods was compressed- commerce between regions expanded. It has been ever thus- and it will be ever so—improvements in transportation lead to expanding commerce within a region and growing Gross Domestic Product.

The important role of transportation is universal. Halfway around the globe- in North America- the first president of the USA- George Washington- urged his Congress to build roads and canals to grow the economy. Perhaps the best-known US president- Abraham Lincoln- facilitated the completion of the first transcontinental railroad to bind his young nation together and expand commerce.

About 50 years ago- U.S President Dwight D. Eisenhower led the development of the nation’s Interstate Highway System- a landmark accomplishment that accelerated the economy and quality of life for millions of people throughout North America. In the early-1960s- jet aircraft designed specifically for use by entrepreneurs and corporations emerged- and the Business Aviation community began to grow impressively.

Regardless of whether people use aircraft to trade across great distances or simply participate in the local commerce that is facilitated by improved means of travel- benefits accrue to all when a region embraces more efficient forms of transportation.

Excellent examples abound in the USA- where Business Aviation is an integral part of the nation’s transportation system and provides access to ten times the locations served by the scheduled airlines. Since the most convenient airline flights are concentrated at fewer than 50 airports- business aircraft in fact offer access to nearly 100 times the number of locations with the scheduling flexibility that businessmen require.

Just as crossroads and seaports were centers of commerce over the centuries- airports of today are hubs from which business comes to an area and fosters economic development.

Varied in Shape and Size
Although the typical business jet is considerably smaller than an airliner used for international travel- Business Aviation involves aircraft of any size that are under the operational control of its owner (be that an individual or corporation) and flown to support the owner’s or company’s travel needs.

Some business jets are small- with interior space approximately the equivalent of a full-sized automobile. Most have the volume of a travel van- although the typical business jet is not as wide as an SUV- but has a longer passenger area.

Conversely- business aircraft such as the Gulfstream G550 have the length and volume to seat up to 19 passengers- and some entrepreneurs and companies own or lease airline-sized aircraft such as an Airbus Corporate Jet or a Boeing Business Jet to fulfill their travel needs. These machines are outfitted with custom interiors capable of duplicating the efficiency and effectiveness of the most capable executive office.

The development of Business Aviation in its current form is associated with the USA and is a reflection of the entrepreneurial spirit and quest for efficiency that often is linked with the economic strength of the USA.

Since the late 1960s- businessmen increasingly used the ability of business aircraft to provide transportation that enabled them to use their time productively. With Business Aviation- they traveled without being constrained by the characteristics of the scheduled air carriers and the airline’s requirement to serve established routes rather than locations where opportunity precedes popularity.

A Global Phenomenon
As Business Aviation was growing dramatically in the latter years of the 20th Century- approximately 75 percent of all activity in this category of travel was flown by US operators.

Business Aviation- however- is not solely a US phenomenon. Europe has an active community of business owners operating business jets and turboprops. In fact- one of the first jets specifically designed for this segment of transportation (and by far the most popular of the early entries) originated in England.

Know initially as the deHavilland Jet Dragon- it entered production as the DH-125. Although the deHavilland Aircraft Company no longer exists (having been absorbed by other aircraft establishments as the British aerospace industry underwent massive consolidation in the latter half of the 20th Century)- improved variants of the aircraft are still in production and in service throughout the world.

Today- the fastest areas of growth for Business Aviation are outside the USA- in regions of rapid economic opportunity such as Asia- the Middle East and portions of South America. Enlightened companies- focusing on reaching new markets quickly - and meeting face-to-face with clients and business partners before the competition seizes the opportunity - are embracing Business Aviation.

Today- there is growing recognition worldwide that use of Business Aviation is the sign of a well-run enterprise—one that understands the precious value of time.

Chart A depicts the growth of Business Aviation over the last 36 years. Shown is the worldwide number of business jets and turboprops (private aircraft powered by a jet engine that turns a propeller). Also shown is the number of individual operators (predominantly companies- also some entrepreneur owners included) that own turbine-powered business aircraft. The growing acceptance of Business Aviation as an element in global transportation is evident.

Business Aviation Benefits
A business aircraft enables its user to obtain maximum productivity and utility from time spent traveling. Furthermore- with the ease of travel via business aircraft- businessmen are willing and able to explore new opportunities in previously untapped- difficult-to-reach markets. And they achieve greater linkage with business partners and clients- via face-to-face communications.

Because Business Aviation provides the owner or person chartering the aircraft control over schedule- choice of destinations and in-flight accommodations- entrepreneurs and business leaders can budget their time more efficiently. They can respond quickly to situations that are best handled by high-level contacts among decision makers- without concern that time spent traveling will be compromised by the normal characteristics of less efficient forms of transportation. The highest level of industrial security is also maintained- as is personal security.

While each person may value time differently- there is general agreement among economists and government planners that increased efficiency yields increased productivity; and increased productivity of people and time results in greater output of goods and service for the enterprise. The economy of a region expands- and the population living in that region of economic expansion benefits.

Workers who never fly in a business aircraft benefit from their employer exploring new regions for expansion and selling to new customers- using the greater mobility provided by Business Aviation. Economic expansion benefits everyone.

Companies that utilize Business Aviation generate greater revenues and returns- according to several analyses conducted in the USA. A study of Standard & Poors (S&P) “500” companies- conducted by Nexa Advisors- LLC of Washington- DC- found that users of business aircraft outperformed non-users in important areas.

Between 2003 and 2007 S&P 500 companies using business aircraft achieved the following results:
• Average annual revenue growth on a market-weighted basis was 116 percent higher for users compared with non-users;
• Average annual earnings growth was 434 percent higher for users;
• Total stock and dividend growth was 252 percent higher for users;
• Total share price growth was 156 percent higher for users.

In addition to quantitative indicators of benefit accruing to users of business aircraft- consider the following qualitative measure of overall acceptance of Business Aviation documented by Nexa Advisors:

• Among Business Week magazine’s 2009 collection of the “50 Most Innovative Companies”- 95 percent of the S&P 500 firms on that list were users;
• Among Fortune magazine’s 2009 recognition of the“100 Best Places to Work”- 86 percent of the S&P 500 companies honored were users;
• Among Fortune magazine’s 2009 list of the “50 World’s Most Admired Companies”- 95 percent of the S&P 500 corporations recognized were users.

Warren Buffet- CEO of Berkshire Hathaway- Inc. is possibly the World’s most respected investor. A leader noted for his ability to recognize value in a company- he is quoted as saying- “Berkshire has been better off by having me in a [business] plane available to go and do deals.”

Business aircraft help companies grow. The enlightened firm selects this form of efficient and versatile transportation to facilitate expansion- not to reflect past accomplishments.

Cultures vary throughout the globe- as do business protocols. Throughout all of commerce and human endeavor- however- time is a universal characteristic: For everyone- each day has just 24 hours. The earth revolves at the same speed regardless of where you live or do business. It is for each of us- in our professional lives as well as personally- to use the precious and irreplaceable asset of time as productively and wisely as possible.

Business Aviation is a tool that maximizes the productivity of people and time.

Possibly the world’s most recognized expert on the value of Business Aviation- Jack Olcott was the President of North America’s leading Business Aviation association from 1992 to 2003- and today Mr. Olcott’s network and personal knowledge of Business Aviation uniquely qualifies him to lead General Aero Company Inc. More information from www.generalaerocompany.com

Read more about: Business Aviation in China

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