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How to Cut BizAv Operating Costs Responsibly

What are the right areas of a flight department’s operations to target for effective cost savings? What is the best way to make those savings without adversely impacting the operation? Andre Fodor offers some thoughts…

Andre Fodor   |   13th March 2019
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Andre Fodor Andre Fodor

With a focused approach on global excellence and creativity, Andre Fodor has managed flight...
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What are the right areas of a flight department’s operations to target for effective cost savings? What is the best way to make those savings without adversely impacting the operation? Andre Fodor offers some thoughts…
 
Not long ago I received an inquiry that opened the door on an unusual consulting job. The inquiry came from a flight department in need of an aviation professional to advocate on their behalf. This was a committed team of pilots, maintenance technicians and support staff with a vested interest in their company.
 
Their objective was for their flight department to succeed. Collectively, they enjoyed their jobs, the equipment they flew, the geographic location of their home base and, above all, their camaraderie. What’s more, their employer was committed to General Aviation for the long haul. So what was the big concern for this flight department prompting their call?
 
As they spoke about their situation, it became clear that the recent arrival of a non-aviation manager to run the flight department following the retirement of their previous coach had become a worry to them.
 
The flight department had a good relationship with the new manager and wanted him to succeed.
 
But without any depth of aviation experience, his knee-jerk cost-saving measures had caused an ebb in morale and operational disruptions.
 
The flight department believed that if only they were represented by a seasoned aviation manager with experience in streamlining and budgeting they would have a better channel for impacting the changes without being perceived as ‘complainers’.
 
By offering solutions that would benefit cost reduction while maintaining high morale, they felt they could have a synergetic approach to problem solving. And since their employer had an open-door policy in place, once this concept was proposed, it was well received by this company’s forward-thinking management team.
 
When a company develops a culture of team focus toward common goals and successes instead of personal gains, the path to problem solving becomes linear, progressive and unencumbered.
 
This unique situation allowed us, as a team, to identify some savvy cost-saving measures, discarding the ones that didn’t work, and avoiding others that caused more harm than good. Following are some of the highlights that emerged from that team input…
 
 
Identify and Combat the High Cost Centers

A manager must have full visibility of the operational costs before making decisions that affect the budget. Data gathering and analysis is crucial to understanding the costs associated with flying. In this instance, the new manager had a narrow view of the charges associated with flight operations and viewed crew expenses (i.e. hotels, meals and airlines) as an easy way to reduce cost and show service.
 
In his attempt to generate savings, however, he affected one of the smallest percentages of the budget but inflicted serious morale loss, disrupting crew swaps and quality of life away from home for travelling staff.
 
A broader view of the financials, however, would have helped him understand that fuel represented 51% of the budget.
 
 
Gulfstream Private Jet on Airport Ramp
 
Therefore, developing a procurement program tied together with flight profiles for optimum burn efficiency and establishing a tankering policy would have yielded real tangible savings.
 
Analyzing the expenses and cataloging them into cost centers clearly identifies the high cost areas in the running of a flight department, narrowing the prioritization of where and what to audit, and where to implement the actions that increase savings.
 
As an example, having identified in-house maintenance was taking twice as long as it should have done (due to a lack of know-how) causing longer aircraft downtimes, we could create a plan of action for bringing an OEM technician to work alongside the in-house technicians and improve upon aircraft-specific skills that had been lacking.
 
The result (for a relatively small cost) was an improvement in the on-schedule return to service for the aircraft, and a significant gain of in-house technical knowledge.
 
 
Balancing Human Needs
 
Although some changes may be a matter of company policy (i.e. that business class airline tickets are only allowed on commuting flights in excess of eight hours), others should be beta tested before implementation.
 
For example, replacing an international flight planning provider with one that charges significantly less could cause unintended operational disruptions if the delivered product is significantly different or of lower quality.
Beta testing will give you the opportunity to assess the product’s quality without compromising your dispatch reliability.
 
 
Don’t Scrimp
 
There are ‘big ticket’ costs that may seem can be easily discarded. Within this operation, for example, the aircraft were meticulously cleaned after every flight.
 
The new manager attempted to reduce the cleaning cycle but reverted his decision after we discussed the costs of carpet replacements, interior refurbishments and the downtime and costs of corrosion repair. My argument was that cleaning should have been defined as preventative maintenance, not cosmetic upkeep.
 
A similar example included early tire changes. We discussed this, and decided it was better to replace an aging tire in-house earlier than to have to deal with the costs and headaches of a tire failure while on an international trip.
 
 
Applying the LESR Rule
 
Ultimately, a flight department manager must ask whether the cost cutting measure they are considering is legal, educated, safe and/or reasonable (LESR)? Make no mistake - taking a holistic approach to aviation cost cutting and savings is a part of any successful flight department.
 
But before making decisions that impact the smooth operation of your department, take a moment to analyze the effects of your cost saving using the LESR rule and take a hard look at how this will affect your people and the quality of the service you provide.
 
 
In Summary
 
I am glad to say that the flight department that contacted me succeeded. The new manager, seeing the benefits of teamwork, created an advisory team that included flight department employees.
 
His style of management changed from a vertical approach, to a more horizontal team-empowered process. Together that operation now identifies and implements effective cost savings without any adverse effect on morale, safety and the principal’s flight experience.
 
The manager’s role is one of coaching his team and tapping individual skills that focus and strengthen the common goal of success.
 
 
 
 
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Read more about: Business Aircraft Operating | Business Aviation Costs | Flight Department Cost | Flight Department Budgeting | Flight Department Business Plan

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