Fred Haap is an IS-BAO accredited auditor and past Chairman of NBAA. During his distinguished career in aviation, Mr. Haap also spent nearly 30 years as a corporate aviation department manager & pilot, logging... Read More
Fred Haap and Jack Olcott conclude their 10-part series on Flight Department creation by summarizing the elements addressed in a Flight Department Business Plan.
Creating a Flight Department requires approval by a firm’s top management or owner. The key to securing approval is presenting a convincing business plan that addresses the issues and concerns management might have regarding operation of a company aircraft and also embraces the advantage of Business Aviation.
Most company executives and entrepreneurs, even those seriously considering the acquisition of a business aircraft and the formation of a flight department, have limited knowledge of Business Aviation. Perhaps they have flown on a customer’s aircraft, or they serve on the Board of firms that operate a business aircraft. But their detailed understanding often is minimal and their concern is huge, and what they think they know often is negative.
They know, for example, that an aircraft represents a significant capital commitment and if operated improperly the safety and security of the firm’s top people could be at risk. Directors and executives asked to approve the creation of a Flight Department also assume that they will be criticized by shareholders if the acquired aircraft is poorly managed. A prime objective of the business plan, therefore, is reducing management’s anxiety about aircraft acquisition and operation.
A secondary objective is providing a reference point for promoting the creation of a Flight Department. A new business unit needs a champion.
Presumably the senior officer seeking approval for the department will be that champion, advocating the value of Business Aviation, socializing the concept among key decision makers within the company and lobbying for implementation. Executives in favor of obtaining a business aircraft require a solid plan to understand and eventually support creation of a Flight Department.
Over the past nine months, we’ve addressed key elements of the Flight Department Business Plan (FDBP). In this summary, we fold the essence of each article into the outline of a complete plan to be presented to top management.
Cover and Contents
The FDBP is a formal document with a Title Page, identification of the plan’s author and a Table of Contents that lists each subject addressed in the presentation. Hard copies should be available for all executives who will participate in the go/no-go decision, and a digital version of the Plan is recommended.
While it’s tempting to write the Executive Summary first, it should be generated only after all elements of the FDBP have been prepared. As the name implies, the Executive Summary captures the essence of why the company needs a business aircraft and distills how it will be managed to assure safe and efficient operations.
This element of the Plan is concise—no more than half a page, if possible—and leaves the specifics of implementation to subsequent elements contained in the body of the Plan. This is the place to emphasize that Business Aviation will support the overall objectives of the company and should be included as a business unit within the firm’s organizational structure.
General Description of the Flight Department
This element of the Business Plan presents the Flight Department’s Vision Statement—namely the benefit that Business Aviation will bring to the company when the department is fully functional—as well as the department’s Mission Statement, which is more focused and less conceptual than the overarching Statement of Vision but is highly useful in guiding day-by-day operations.
Governing Principles (also known as ‘Values’) are presented in this section. These three concepts—Vision, Mission and Governing Principles—shape how Business Aviation will serve the company and its shareholders.
Applying Vision, Mission and Governing Principles as the guide, the Department’s structure and its place within the corporation’s overall organization is presented within the General Description section.
The proposed aircraft is identified (if not by specific make and model, at least by category such as light jet), its primary base of operations is specified, and the Flight Department’s personnel complement and organization are shown in sufficient detail to leave no doubt regarding the unit’s size and position within the corporation.
Departmental specifics are used subsequently in the Business Plan to budget funds for creating and implementing the Flight Department. This section describes how the business aircraft will be scheduled, including the identification of users who can be transported (preferably by job classification), who can request trips, and who has the authority to approve or deny such requests.
Procedures for booking trips (i.e., how users communicate with the Flight Department) as well as resolving scheduling conflicts are presented. The mechanics of scheduling are described in detail, stating clearly how the company aircraft will be booked for flights.
In the words of the late business guru Peter Drucker, “What’s measured improves”. From the onset, a Flight Department needs a means for measuring its output, which basically is transportation that benefits the corporation. The Flight Department Business Plan describes a system for measuring what the Flight Department produces and assigns a value to that product.
For example, in addition to tracking classic measures such a passenger miles traveled, the value related to what is accomplished as a result of travel on the company aircraft is documented. When a series of customer visits results in a contract being awarded, the value of that contact is a measure of value for the Flight Department’s deliverable.
Similarly, the Flight Department delivers value when it transports the firm’s service specialists to a customer’s factory to address an emergency breakdown. Placing the right person or team at the right spot and at the right time has great value.
Performance measures of such value should be established, recorded for each flight, reviewed by the Flight Department Manager and included in ad hoc or annual reviews of the department.
Each company will have its own rules for tracking the productivity of aircraft activity, and those rules should be included in the Flight Department Business Plan. Although somewhat controversial, establishing measures of value and efficiency (such as David Wyndham presented in his October 2015 AvBuyer article ‘MOVE Documentation’ p64) demonstrate insightful management.
Operational Plan and Adherence to Industry Standards
The purpose of the Flight Department Business Plan is to convince top management that a Flight Department should be formed, and that once created it will be well managed. Management should understand that an Operations Manual specifying day-to-day flight and maintenance procedures will be prepared and will be followed by department personnel.
Details of how the company aircraft will be operated are not necessary or appropriate for the FDBP. It is sufficient to state that the department’s Ops Manual will be written and in use prior to an aircraft being placed in service, and that procedures presented in the Ops Manual will adhere to the regulations of the aviation authority where the aircraft is registered.
Furthermore, industry best practices—such as those specified in International Standards—Business Aircraft Operations (IS-BAO)—will be incorporated in the department’s Ops Manual and will be followed without fail. The business plan should state, however, how the Ops Manual will be generated—either by the Aviation Manager/Chief Pilot or by engaging specialists in generating Ops Manuals.
Safety & Security
Top management expects—indeed demands—that operation of the company aircraft will be safe and secure. The department’s Ops Manual addresses those concerns with detailed prescriptions of how flight and maintenance procedures will be handled. Nevertheless, it is wise to reference the role that safety and security of a company’s most valuable assets—its employees—play in the Flight Department’s daily operations.
Whether expressed or simply lingering in the background, the topic of safety and security is an ever-present issue on the mind of executives who are asked to approve creation of a Flight Department. Leave no doubt that the wellbeing of passengers will always be priority number one.
Describe how the Flight Department will be integrated into the overall management structure of the company in a manner similar to other business units. This section of the Flight Department Business Plan describes the reporting structure of the Aviation Manager to his or her direct supervisor, be that person the CEO, CFO, head of corporate transportation or other responsible party within the company’s hierarchy.
Human Resources and Personnel protocols that apply to other employees must be applicable to Flight Department staff, even though they work away from the firm’s headquarters or major facilities.
While providing great value, Business Aviation requires a significant investment. The Flight Department Business Plan must identify acquisition and operational costs, and outline a system for departmental cost accounting that is consistent with the company’s system of financial management.
For example, because the useful life of a business aircraft usually is longer than the limited time allowed to depreciate that type of capital asset, care must be taken to convey how the unique aspects of aircraft finance fit within the firm’s overall systems for valuing its assets.
Hence the importance of having a system for measuring the benefits that accrue from using a business aircraft, such as covered in the section above dealing with Department Deliverables. It is wise to consult with specialists in the CFO’s office when preparing the financial aspects of the business plan.
A well-presented Flight Department Business Plan expresses the benefits that will accrue to the company by acquiring a business aircraft. Be positive. Assume that top management will say yes. Convey that when they do give the go-ahead, the personnel tasked with implementing the Plan are ready and fully able to proceed.
Describe how an aircraft would be acquired and placed into service. Show that the newly formed Flight Department has a clear path to follow once top management makes the decision to proceed.
Appendix & Supporting Documentation
Even the best business plan will be challenged—such is the nature of launching something new within a company. Thus statements of fact should be supported by credible references.
A well-crafted Business Plan for the Flight Department addresses each element of the operation and leaves nothing to chance — a concept that is well understood by the experienced aviator.