loading Loading please wait....
Login

If you are a registered, please log in. If not, please click here to register.

THE CORPORATE CASE FOR BUSINESS AVIATION
A selection of results from surveys of users and non-users of Business Aviation

Travelers on the “Silk Road” of antiquity completed their trek on foot- or if fortunate- at times on beasts of burden. The journey was time-consuming- tiring and hazardous- and the growth in commerce was slow. Today’s companies regard the world’s airways as their “Silk Road.” Corporations use company-owned or chartered business jets to reach vibrant markets in mere hours rather than the months consumed by the merchants of yore. Consequently- the pace of commerce is exponentially quicker in the 21st Century than at any time during the previous 2-000 years.

The history of business abounds with examples of transportation’s profound impact on economic development. Over two thousand years ago Chinese merchants brought commercial goods as well as cultural insights to markets in southern Europe- and they returned to their homeland richer- facilitated in their ventures by explorers who pioneered the route between what is now Xi’an and cities located along the Mediterranean Sea.

In the past- time was consumed mainly to transverse thousands of miles. Not so today. Particularly with business aircraft- travel time has an additional dimension—it’s a means for achieving a business environment that facilitates productivity in addition to reaching distant places.

Corporate executives using Business Aviation travel in offices that fly- moving at speeds approaching 800 km/hr as they conduct business en-route. Strategy meetings with associates and partners are conducted in a secure environment where there is no risk of company plans being overheard by competitors or curious eavesdroppers.

Since the 1970s in the USA and perhaps a decade later in Europe- recognition of Business Aviation’s benefits has grown- as has the acceptance of this form of transportation. Business literature there is replete with examples of how and why companies select to operate or utilize business aircraft to augment their travel needs and conduct their business more profitably.

Using the USA as an example- currently there are over 19-000 turbine-powered business aircraft registered to about 11-000 owners. Worldwide- over 31-000 business jets and business turboprops are registered to over 18-000 operators. (Note- a turboprop aircraft employs a turbine engine that is connected to a propeller; a jet aircraft also uses a turbine engine but has no propeller. Hot gases expelled from the turbine engine propel the aircraft.)

Studies by the General Aviation Manufacturers Association (GAMA) and the National Business Aviation Association (NBAA) in the USA- conducted as part of their ‘No Plane No Gain’ advocacy program- have documented positive results obtained by users of business aircraft throughout many decades.

Business Aviation: A Recipe for Success For example- analyses conducted in the 1990s found that among the top 50 public corporations earning the highest returns in dividends and capital gains for shareholders for the 10-year period between 1982 and 1992- 92 percent either owned or operated business aircraft. Other studies published in the mid-1990s reported that companies acquiring business aircraft experienced greater sales growth following the purchase than companies that did not engage in Business Aviation.

Based upon multiple case studies conducted during the 1990s- GAMA’s and NBAA’s No Plane No Gain program asserted that the use of business aircraft provided corporations with more efficient use of time- greater flexibility in the conduct of their business endeavors- higher productivity and improved customer relations - all the while achieving a safety record that was as good as (and at times marginally better than) the outstanding performance of scheduled airlines.

Similar No Plane No Gain case studies were conducted during the last decade (between 2000 and 2010) and additional analyses are ongoing. These new analyses are yielding consistent results that continue to affirm earlier findings.

In its 2009 study of the public corporations that form the S&P 500- Nexa Advisors- LLC (under contract to GAMA and NBAA) reported that users of Business Aviation outperformed non-users in several important financial measures.

To quote from their report- ‘Business Aviation: An Enterprise Value Perspective. The S&P 500 From 2003-2009’- Nexa Advisors reported:

• Average annual revenue growth on a market capitalization-weighted basis was 116 percent higher for users [of business aircraft]. (6 percent on an un-weighted basis).
• Average annual earnings growth was 434 percent higher for users (253 percent un-weighted).
• Average annual EBIT [Earnings Before Interest and Taxes] growth was 81 percent higher for users (54 percent un-weighted).
• Average annual EBITDA [Earnings Before Interest- Taxes- Depreciation and Amortization] growth was 32 percent higher for users (minus 10 percent un-weighted).
• Total stock and dividend growth was 252 percent higher for users (88 percent un-weighted).
• Total share-price growth was 156 percent higher for users (93 percent un-weighted).
• Market capitalization growth as measured by market value growth was 496 percent higher for users (95 percent un-weighted).

These figures demonstrate that users substantially outperformed non-users in growing their market capitalization during the period analyzed. In addition to the quantitative results derived by Nexa Capital’s case studies- several worthwhile qualitative findings were uncovered. Again- quoting from the Nexa Capital study:

• “Among Business Week’s 2009 “50 Most Innovative Companies-” 95 percent of the S&P 500 companies on that list were users [of Business Aviation].
• Among Fortune’s 2009 “100 Best Places to Work-” 86 percent of the S&P 500 companies on the list were users.
• Among Business Week’s 2009 “25 Best Customer Services Companies-” 90 percent of the S&P 500 companies on the list were users.
• Among Business Week/Interbrands’s 2008 “100 Best Brands-” 98 percent of the S&P 500 companies on that list were users.
• Among Fortune’s 2009 “50 Most Admired Companies-” 95 percent of the S&P 500 companies on that list were users.
• Among The CRO’s 2009 “100 Best Corporate Citizens-” 90 percent of the S&P 500 companies on that list were users.

Transportation has been- and always will be an enabling technology for business. Regardless of when studies were conducted- the results are consistent. Use of a business aircraft is an effective means of transportation and the sign of a well-managed company.

Related Articles