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BUSINESS AVIATION IN A CHANGING ECONOMY |
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EVEN IN A DOWNTURN, AIRCRAFT CAN HELP MAINTAIN AND GROW BUSINESS EXTRACTING THE MOST FROM AIR TRANSPORTATION FROM CHARTER TO OWNERSHIP TO MANAGING OTHER PEOPLE'S AIRCRAFT |
The U.S. economy
recently completed a long, unprecedented era of expansion, during
which business aviation, a barometer of economic activity, played
a significant role. As it became increasingly difficult to travel
on the airlines, a growing number of companies used business aircraft
to save time by flying directly to destinations, exercise greater
control over travel itineraries and improve the productivity of key
personnel. In addition, business aircraft helped minimize employee
time away from home and family, a key to retaining top talent in a
tight job market. Also, in recent years, traveling on a professionally
flown business aircraft has been virtually as safe as flying on a
major airline, and most owners of business aircraft have seen the
value of their flying assets appreciate substantially. But now that the overall economy has stagnated, how will business aviation fare? Historically, many companies desperate to cut costs in a downturn have slashed travel budgets, curtailed business flying and, in extreme cases, closed flight departments. Consequently, some business aircraft operators are asking themselves, “Can we continue to fly?” John Sheehan, president of Professional Aviation Incorporated, a consulting firm based in Wilmington, North Carolina, responded: “I tell them they are asking the wrong question. It is not ‘How much can you afford?’ It is ‘What are your travel needs?’ There is a theory in marketing that when business starts to slip, that is when you need to increase the sales department’s budget. And if you are going to do that, you are going to need on-demand air transportation because major deals are made by the top-level people face-to-face, not over the telephone.” Even if an objective assessment reveals that your need for air transportation is going to decline near term, you need to do a life-cycle cost analysis, noted Sheehan. “Never look at the cost of an aircraft operation for just one year. Look at it for the life of the asset.” You need to consider all direct and indirect operating costs, plus the financial and tax implications of the decision to buy or sell an aircraft. |
