Beyond good financial management, what could the Flight Department Manager be doing to establish his or her operation within the corporation? Aviation Director Andre Fodor discusses optimizing flight hours…
A reality for corporate Flight Departments is the continuous battle to stay meaningful and purposeful. Invariably, when the economy moves south, a corporation’s Flight Department is among the first to be trimmed (or worse).
As a matter of self preservation, Flight Department personnel should devote time enhancing and developing the services offered. One of the key places to begin is when planning the annual budget, establishing a goal of annual hours of utilization.
This becomes a reference to calculate an ‘all-in’ hourly cost, and to help establish some metrics for analysis.
By forecasting annual flight hours based on historical travel data it is possible to negotiate an engine care program that is as close as possible to the forecasted annual flight hours usage. Whatever the contracted engine program is, it will become part of the annual usage goal and represents a fixed monthly payment, whether you fly the contracted hours or not.
It is also good practice to develop techniques and habits to help increase hours flown towards meeting the budgeted goal, or better to exceed it (further diluting the hourly costs).
When I consulted for a new Flight Department in its first year of operation, I set the annual cap at 300 hours flight operations. In this case 300 hours was also the lowest number agreed by the engine coverage provider.
In formulating the flight hour estimate, I used whatever past travel history the organization had and, with the availability of a computerized accounting and reporting system, ran reports looking for invoices of charter flights.
I also factored in the previous airline travel of all high-level company executives, giving me a better understanding to capture the travel needs of the organization along with details of how often key employees were on the road.
Finally, I discussed previous personal and private travel activities with the on-staff executive assistants to help refine my estimates of future business aircraft utilization.
Meeting and Exceeding Utilization
As the first year of operations proceeded, I noticed they trailed the projected annual utilization, so we sought opportunities to increase utilization.
On the one hand, it meant discarding the plan to place the airplane on a Part 135 charter certificate (the principal neither required the additional income nor desired the liability exposure of having his asset transporting others for hire).
Instead, knowing that I had this pool of hours remaining, and that I would be paying engine reserves regardless of whether the aircraft was flying or not, I proposed the aircraft could become part of the CEO’s compensation plan, becoming available to his officers (with cost recovery) for their private use.
Utilizing the services of a VIP travel advisor, we developed memorable travel experiences for our principals that combined new locations and favorite leisure activities. A catalogue of travel adventures was developed, sometimes to places only private aviation could access. And we looked for business opportunities that could be combined with leisure, thus adding utility to the fun.
This concept became a success while flying hours increased significantly. The Flight Department became more valuable as a resource in the lives of the company’s principals.
Over time the aircraft became a tool that facilitated family connections and access to leisure, accommodated busy professional schedules, and opened opportunities for them to accept boardroom memberships and participate in industry gatherings.
There was one other, additional opportunity to explore, however. Philanthropic flying. Philanthropy is good business, fulfilling personal goodwill goals while developing opportunities for public relations and favorable media coverage.
As Flight Department managers, we naturally want job security and longevity in our operations. Our choice to be managers within Corporate Aviation exposes us to the challenges of operating aircraft in ways that ultimately make sense to the owners.
Simply looking at the financial bottom line may not be enough in giving our jobs longevity. It’s vital, therefore, to take a holistic approach to management.
That approach is a balance of good financial management and helping our principals become better at achieving their goals. I am all-in to create that balance.