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The company’s travel demands never cease – but the reliability and cost of airline travel leave something to be desired. You can’t afford not to go; but making the trip puts extra pressure on the bottom line.
   Such circumstances help drive the growth in business aviation as more businesses explore flying corporate as an alternative. When companies take the time to compare- many find that private jet ...

Dave Higdon   |   1st June 2007
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Dave Higdon Dave Higdon

Dave Higdon writes about aviation from his base in Wichita Kansas. During three decades in...
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Corporate Travel: What to do?

For every situation there’s a solution.

The company’s travel demands never cease – but the reliability and cost of airline travel leave something to be desired. You can’t afford not to go; but making the trip puts extra pressure on the bottom line.

   Such circumstances help drive the growth in business aviation as more businesses explore flying corporate as an alternative. When companies take the time to compare- many find that private jet aircraft for sale in travel provides the best solution to their company’s travel needs.

   These convert companies also learn that weighing their company’s needs versus its resources isn’t as simple as picking a company car. In most of the world- drivers must operate their automobiles in adherence with local speed laws- negating the benefit of a faster car over a slower one. That said- however- auto buyers often make discriminating choices based on ownership costs – purchase price- fuel and maintenance costs – and- of course- comfort. Whatever fits the budget will do.

   Similarly- corporate jets for sale in today’s business environment generally need to justify their existence- but not solely in dollar-and-cents terms of aircraft ownership. Other factors affecting the financial impact of business aircraft use also include time saved for the company- a reduction in the costs of supporting the traveling executives and greater flexibility.

   Adding up the sum of the elements and differences in speed and range capabilities- operating and fractional ownership will allow potential buyers to objectively weigh the value of the purchase under consideration… if- in fact- purchasing a business aircraft actually comes out as the best option.

   Not every company will actually need to own an aircraft to benefit from private aircraft travel- which raises a question: How do you know when it’s smartest to buy – or- instead- to business charter or aircraft lease?

   Not only are there ways to assess these options- there are people who are able to provide help in making the assessment and any subsequent decisions – up to- and including- shopping for the best deal for the solution you choose- be that finding an airplane- a charter provider or a lease deal. Let’s begin by looking at the factors to consider when weighing how to solve your corporate aircraft equation.

Defining the mission
Seldom do you find that different companies share identical needs for their corporate travel. For some- moving sales or support people among the locations of customers or company facilities drive their travel budgets.

   At other firms- however- the main need involves moving significant numbers of staff between company operations – and the numbers of people- frequency of trips and distances involved all help define suitable aircraft candidates.

   For still others- travel needs involve a small number of key executives who may need the flexibility to travel anywhere – domestically or internationally – in support of their responsibilities.

   Identifying the needs for those who will need to fly- and to where- underlies the foundation on which a solid decision making process is built.

   History should also play a factor – travel history- that is. Researching how many people traveled how many trips and to which destinations also comes into play. Roll into a single analysis details like this and a company may discover that too few people travel too few times to justify owning a corporate aircraft. They may find that mission-matched charters can fit the bill instead.

   Moving large numbers of people among a set of fixed locations may bring executives to understand that a long-term shuttle deal with an air-taxi operator satisfies both the company’s travel needs and its travel budget.

   If need is somewhat higher- the destinations are more widely varied and the travel decisions come largely on short notice- the prospective corporate operator may find that owning a share of a corporate aircraft covers their needs. But if the company needs frequent transportation for several people across an unlimited number of destinations- maybe owning a business airplane for sale outright is the smartest solution.

   A savvy staff can start the assessment process by identifying past travel patterns- costs and total travel-time requirements.

Time lost influences total costs
While every company’s needs may be specific- there are many common factors to consider beyond the time and ticket prices of past travels. For example- if company personnel made 100 trips a year on commercial airlines and lost 350 hours en route- a company should consider the value of that time lost as part of its travel costs.

   If regular trips to fixed destinations frequently involve overnight hotel stays because airline scheduling precludes same-day out-and-back trips- the cost of those rooms and meals should also be factored into the mix.

   Another cost: sending out company personnel on the airlines only to have them face two or more hours of rental-car travel from their arrival to their ultimate destination. Now you’re paying for lost time- a rental car- plus an overnight stay and the additional meals required.

   By comparison- the chances are a general aviation aircraft can get those key people to within 30 minutes of their ultimate destination – and do so in fewer hours- since they don’t have to “hub through” a connecting airport – and allow those people to return home the same day. Make that trip on anything less than a 30-day advanced purchase ticket- and you’re looking at higher fares; book the airline travel within seven days and the corporate wallet usually takes an even bigger hit.

   And hold on to your wallet if the travel need comes up three days or less before the needed travel date. In all probability- those tickets will cost the maximum. Suddenly- a multi-million dollar business jet or turboprop becomes far more competitive – even if it’s slower by a couple of hundred miles per hour.

To recap- you need to consider:
• Total number of travel days;
• Total number of people-days spent traveling;
• Total number of destinations – and total number of multi-destination trips;
• Distances involved to those destinations;
• Numbers for both ‘recurring’ and ‘one- off’ trips;
• Total costs of airline tickets- meals- rooms- cars- and personnel time;
• Differences in costs for arriving at the closest possible airport versus the closest airline facility.

   If that travel involved regular overnight stays because of the limitations of the airline schedules- give your company back the savings possible through traveling on private aircraft. Let’s look at some of the other factors worth considering before we examine the relative benefits of aviation charter- fractional or ownership.

Flexibility- in scheduling- in destinations
As of the latest numbers available- airlines in the United States serve fewer than 600 cities- including all the biggest business- financial and manufacturing centers. But for several years- business expansion has increased out in the so-called hinterlands. Big companies buy smaller ones and leave the newly acquired operations where they are for all those good reasons they sprouted there to begin with – costs- proximity to labor and/or raw materials- or market.

   More than 5-000 general aviation runways exist in the US with runways long enough to handle the smaller jets and the majority of propjets. A business aircraft can give a company cost-effective options to exploit new locales in the pursuit of success – with little reason to be concerned about airline access- because many holding companies choose to leave newly acquired operations in their original locations- increasingly successful companies are looking to smaller communities to establish new factories- offices and plants – for much the same reasons as mentioned above.

   Considering the growth potential available through a corporate aircraft should be another intangible worth factoring into the decision-making process. But enough on justifying corporate airplane travel- let’s look at weighing the various options should the analysis point toward embracing business aviation.

Add them up and compare
Now you’ve got the basis for comparing the costs of fulfilling the same needs using a variety of private aircraft and ownership options. With the help of your friendly corporate aircraft for sale marketing folks- you can get comparative numbers for fulfilling those same needs using a variety of different corporate aircraft solutions.

   Depending on the distances and people densities discovered- you can start to consider solutions in both the type of aircraft and the type of arrangement that makes the most sense – outright ownership- fractional ownership and charter.

   If what the assessment finds is that significant numbers of company staff traveled somewhere in the range of 350 to 500 hours per year- buying an airplane outright may make sense. Consulting with an aircraft marketing or operating firm can help tremendously in assessing whether the sundry investment- expense and tax implications help tilt the decision toward or away from ownership.

   Remember- though- that owning the aircraft means finding suitable qualified crew – flight deck and back cabin- if needed – as well as taking responsibility for the aircraft’s maintenance and upkeep. There are plenty of aircraft management firms out there more than willing to take those chores off your hands – for a fee of course. And those management companies often can help lessen the financial impact of ownership by operating the aircraft on charter flights- for which the owners receive a share of the income.

   If the travel times total 100 to 300 hours a year- one of the sundry fractional ownership plans may become more attractive. Again- a company needs to consider the investment- depreciation- cost and private jet aircraft for sale tax break implications of such a transaction- since they are much the same for share ownership as they are for outright ownership. The only real difference relates to the percentage of an aircraft purchased.

   A one-eighth share gets you approximately one-eighth of the tax benefits of outright ownership. And the fractional operator takes care of providing crews and aircraft maintenance for you as part of the operating fees paid in proportion to your share size.

   If travel totals are a few people and less than 100 hours a year- becoming a charter company customer would be a good place to start experiencing the benefits of business aviation. Fortunately- leasing or chartering both offer pretty much identical aviation tax benefits – both are 100-percent deductible for purely business trips.

More to talk about…
In our little treatise- we haven’t delved at all into some of the factors you need to consider when shopping for a corporate aircraft for sale - such as distances- passenger density and airport access- all of which influence the process of making a choice.

   We’ll deal with those factors in a subsequent issue of World Aircraft Sales Magazine. But remember- if all this seems exceedingly complex and complicated- you don’t have to face this process alone. There are plenty of professional- qualified folks out there ready- willing and able to help you navigate the process.

   Most of the best are represented in the pages surrounding this article. And we’ll deal with making a smart selection of a helper when we revisit the process of shopping for your best solution in corporate travel.

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