As noted earlier, matching your travel needs and budget to a specific aircraft is a complex exercise that is best performed by an aviation professional - either a consultant or a chief pilot - rather than aircraft manufacturer representatives, who may be biased in favor of their company's product.
Some business aircraft operators that have opted for a consultant to help set up their company flight department note that experienced aviators may not necessarily have the expertise needed to set up or supervise an aviation department. On the other hand, an increasing number of corporate pilots have received formal management training through NBAA and other organizations so that they can organize and administer flight departments in a professional and businesslike manner.
Still, accomplished consultants not affiliated with a specific aircraft manufacturer may have broader experience with more types of aircraft and different kinds of flight operations than many chief pilots. However, once a consultant has done the preliminary planning for a new flight department, many companies prefer to hand over the reins to a chief pilot who has extensive experience in the type of aircraft that the company is going to acquire. This not only allows the company to capitalize on the chief pilot's experience in operating that kind of equipment, it also gives the chief pilot a sense of ownership in the new organization.
How do you locate a good consultant or chief pilot? NBAA, the World Aviation Directory, the ABC Directory (for those outside the U.S.) and various trade publications provide lists of aviation consultants. Aviation personnel a gencies can recommend chief pilot candidates. You can also seek the advice of several companies that fly their own aircraft and have (or had) similar air transport needs. By talking to established flight departments, you can determine what traits to look for in a chief pilot.
The first task of your consultant or chief pilot is to study your company's current and projected travel patterns and requirements and recommend the type of aircraft suited to fulfilling those needs. Typically, the analysis will include a comparison of the time and cost of flying by private aircraft versus traveling by airline or other means.
The relative cost of business aviation compared with airlines depends upon several factors, such as travel patterns, time-sensitivity of travel requirements, number of passengers and type of aircraft selected. Commercial air carriers serve fewer than 600 airports in the United States, while business aircraft utilize more than 5,000 airports in America. In short, if you need to fly to many medium and smaller cities, business aviation may be the only form of efficient transportation.
Your chief pilot or consultant will be able to quantify the relative time savings, operating capabilities and costs of the different types of aircraft that could be used to satisfy your travel needs. But most important to you, the new operator, is the ability of the chief pilot or consultant to translate business aircraft manufacturers' technical data so that company managers will understand the relative strengths of the proposed competitive aircraft.
Analysis of your company's air travel requirements could indicate that you might not need full-time use of a business aircraft. In that case, you may want to consider several options, such as buying the aircraft and obtaining an Federal Aviation Regulation (FAR) Part 135 charter certificate so your aircraft can generate revenue when you are not using it. Making your aircraft available for charter can help defray the cost of ownership, but there also are added costs and requirements associated with being a charter operator.
On the other hand, utilizing an aircraft management firm is appropriate for those companies that want to purchase and use a business aircraft but do not want to assume the day-to-day responsibilities of operating it. For a fee, aircraft management companies perform operational duties associated with flying a firm's aircraft, including all requisite support services, from pilots to maintenance. If you desire, they will also charter equipment to other firms needing business transportation.
A third option for companies that may not need full-time use of a business aircraft is participation in a fractional ownership program. Typically, companies buy an eighth or a quarter share of a business jet, for which they receive an allotment of flight time per year. Participants also pay an hourly fee for flight time, plus a management fee that covers all costs of operation. Like aircraft management, this turnkey service offers the advantages of business aviation, while relieving users of the responsibility of management - and at a lower cost than purchasing an entire aircraft.
Another purchase arrangement is joint ownership, a contract under which one or more companies share the use of an aircraft to satisfy their air transportation requirements.
If you do choose to buy an aircraft, it is important to consider its operating, as well as acquisition, costs. As you establish your budget, use NBAA guidelines to calculate direct operating costs: maintenance, fuel, crew, etc. Be sure to include an engine reserve, which, based on a projected number of total flight hours, is the per-flying-hour cost of overhauling the powerplants at the prescribed maintenance interval.
An increasingly popular way to make maintenance costs more predictable is for aircraft operators to enroll in one of the fixed-cost maintenance programs being offered by airframe, engine and avionics manufacturers. By paying an annual fee that covers the upkeep of major aircraft systems for a specified number of flight hours, operators can avoid the large expenditures associated with overhauling or performing major maintenance on an engine or other primary aircraft system.
Also, remember that an aircraft is a piece of capital equipment, so the tax consequences of owning or leasing an aircraft must be taken into account when calculating the total cost of flying a company aircraft, whether to justify ownership or simply to charge back company divisions for the aircraft's use. By making your budget as detailed as possible, you will be able to better pinpoint, control and justify costs.
A company should review the possible tax advantages of depreciating an aircraft, whether the company owns all or merely an interest in an aircraft. At the same time, a company also should review the possible tax disadvantage of any arrangement that exposes the company to the 10% commercial transportation excise tax. All forms of ownership, whether 100 percent, fractional or joint, are subject to the IRS rules related to depreciation.
Finally, the primary users of the company aircraft should take several demonstration rides on real business trips to make sure that the aircraft actually fits their needs.
NBAA, in conjunction with the University of Virginia's Colgate Darden Graduate School of Business Administration, has carefully examined the merits of leasing versus buying a business aircraft.
Usually, the decision to buy or lease an aircraft boils down to how it will affect the overall financial and tax situation of the corporation. If a company has ready cash, then it might be advantageous to buy an aircraft outright. However, there are many potential financial and tax advantages to leasing, especially if you can negotiate favorable lease terms. Leasing is particularly attractive to new operators since it usually gives them greater flexibility to trade in or trade up should the company's aviation requirements change.
Likewise, leasing instead of buying the ground facilities (hangar and flight department office space) needed to support a company aircraft is traditionally the way new flight departments start out. Because vacant corporate aviation ground facilities or land available for new development of such buildings is scarce and very expensive at many major airports, it is recommended that new operators lease space in existing fixed-base operator (FBO) facilities, unless they are absolutely certain that they will be basing a multi-aircraft fleet at one location for many years.
Proximity to the company's other facilities is a primary factor in deciding where to establish a flight department. A rule of thumb is to base the aircraft at an airport that is no more than 30 to 45 minutes driving time for passengers and flight department employees alike.
However, many flight department managers believe that the ability of an aircraft to fly in and out of a field unimpeded is paramount to maximizing the efficiency of a company aircraft. The keys to unrestricted access at an airport are the availability of sufficiently long runways for your type of aircraft in all weather conditions, 24-hour access to air traffic control (ATC) services, availability of precision instrument landing systems (which will allow flying in less than ideal weather), and the absence of airport or local roadway congestion or aircraft operating restrictions, such as curfews or noise limits.
In fact, aircraft noise regulations, which vary from airport to airport, can be a serious impediment to business aircraft operations. If, as is the case with many flight departments, you plan to schedule many early morning departures or late evening arrivals at your home airport, it is prudent to research the formal and informal noise policy at that field. Also consult NBAA's Airport Noise Summary, which is a compilation of noise regulations in effect at approximately 400 airports in the United States, before selecting a home base.
Although airport access is important, there are other factors to consider, including the quality of airport security, the ability to connect with airline flights, the availability of customs services (important for operators that fly internationally), the accessibility of aircraft parts and service (which is usually better at larger airports), the cost of landing fees, state and local taxes, and other miscellaneous operating charges.
In addition, there are at least two major financial considerations in choosing an airport: (1) getting a low-cost, long-term (15 years or more) lease on ground facilities and (2) having the ability to procure fuel at attractive prices.
Obtaining a good lease on hangar and office space, as well as getting a discount fuel contract from an FBO or building your own fuel farm (preferably an above-ground facility), can yield significant savings for your operation. Pumping your own fuel can mean tens of thousands of dollars trimmed from your budget annually, although new operators will want to consider the requirements of meeting increasingly stringent environmental regulations (especially for below-ground tanks) before building a company fueling center.
In order to be an effective business tool, a company aircraft must be managed efficiently. To maximize the flexibility and versatility of a corporate aircraft, clear lines of communication and authority need to be established regarding its operation. This usually is done by developing a flight department operations manual. NBAA offers courses that are designed to help operators develop comprehensive policies and procedures regarding the use of aircraft, from lines of authority to technical issues.
First, the company personnel authorized to utilize the aircraft should be clearly defined, although broad use of the aircraft should be encouraged. Don't forget that a corporate aircraft can be used to transport sales people, engineers and priority cargo, not just executives. Also, customers can be flown to your facility on company aircraft. Second, the procedures for routing, approving and paying the aviation department bills must be carefully delineated.
As for the organizational structure of a flight department, the chief pilot reports to the transportation, sales, or other major department in some companies. However, most flight department managers firmly believe that by reporting directly to a high-level executive - a senior vice president, president, or chairman of the board - the institutional bureaucracy is bypassed, and therefore the aviation department runs more smoothly.
Other firms feel it is important to set up the flight department as a separate company in order to minimize the liability exposure of the larger corporation. But legal experts disagree on how effective that strategy is in shielding a company from lawsuits. Although such an arrangement might yield some corporate tax advantages, depending on your company's financial situation, it could cause other tax disadvantages relating to the operation of the aircraft.
You need pilots in order to fly, but how many are enough? Certain types of aircraft require only one pilot, but for safety's sake, two pilots per aircraft is considered the minimum. To achieve the highest level of safety possible on each flight, good crew pairing practices should be observed; that is, care should be taken to ensure that at least one of the two pilots assigned to fly a mission is highly experienced in that type of aircraft.
The majority of corporate aircraft must legally be operated by two pilots, but the availability of a third pilot relieves the scheduling pressures caused by vacations, illnesses and training requirements. For business aircraft operators that fly internationally, the third aviator may be necessary on extended trips.Alternatively, some flight departments, especially those at airports where qualified aviators are available, use the services of contract airmen as necessary. The use of new-generation, extended-range aircraft capable of flying 10 hours or more nonstop requires even greater review of staffing requirements in light of aircrew duty time and circadian issues.
Likewise, some flight departments based at large airports feel they do not need to keep a mechanic on staff because of the availability of contract maintenance services. However, other aviation department managers believe you should have at least one maintenance person on the payroll - one specifically well-versed in your type of aircraft - in order to perform minor and emergency service and repairs, and take responsibility for overseeing contract maintenance work.
Some operators, especially those that travel overseas, take their maintenance technician on long trips, not only to troubleshoot and assist in fixing mechanical problems, but in some cases, to help passengers with cabin functions, such as meals. Other international operators retain or contract a dedicated cabin attendant. Many flight departments consider a knowledgeable scheduler/dispatcher integral to their operations, but in one form or another, this function exists in all flight departments.
Most companies have their flight department managers or chief pilots - not a consultant - do the hiring of flight department personnel. While worthy candidates can be attracted through classified advertising, some companies utilize the services of their in-house human resources department or an external aviation personnel service to screen and qualify job applicants.
Aviation jobs require exacting precision and constant refinement of skills, so virtually all flight department personnel undergo recurrent training, some of which is required by regulation. Most pilots and many maintenance technicians attend training sessions (including simulator instruction) twice a year and no less than once annually.
This is where the skills to deal with unusual flight conditions are practiced and honed.
In addition to reviewing basic piloting and mechanic techniques, flight department personnel often are trained in first-aid, CPR, survival and international procedures. A variety of organizations, including NBAA, offer seminars and management training courses in these and other disciplines.
Also, some aircraft operators offer their aviation department personnel the opportunity to participate in in-house management development programs, not only to help prepare them for leadership positions in the department, but so that these employees can qualify for other management jobs within the corporation.
In addition to renting or building a hangar large enough to accommodate your aircraft, you need a storage area for aircraft spare parts and supplies, as well as space for flight department offices. Air crews have many aviation-related responsibilities besides flying aircraft. Therefore, they need offices, telephones, computers and other equipment to fulfill these duties. An aircraft passenger/pilot lounge may be important, especially if you run an airline-style corporate shuttle operation.
The amount of office and lounge space you need will be dictated by how many aircraft passengers you normally handle and how many flight department employees you have. Regardless of size, flight department offices are just an extension of your company's downtown office and should be outfitted with the usual office equipment: desks, chairs, phone, answering machine, fax, computer, storage cabinets, etc.
As far as spare parts and supplies storage are concerned, many flight departments keep only key aircraft components on hand. Major parts that are replaced only when they fail, are expensive to inventory and would take many hours to install are usually not stocked. Likewise, it may not be necessary to buy and store expensive and/or bulky support or test equipment if they are seldom used.
The most important document in a flight department is the operations manual, which should explicitly state lines of corporate authority, administrative processes, personnel procedures, all standard procedures and emergency plans regarding operation of the company aircraft. While it is not possible to list here all the items that should be included in an operations manual, because they will vary among corporate cultures, the flight department "bible" should spell out standard operating procedures and contingency plans, as well as basic operating procedures and guidelines. The NBAA Management Guide provides detailed guidance on how to write a comprehensive operations manual.
Other essential flight department documents include aircraft logs, passenger and employee data and scheduling sheets, maintenance forms and tax reports. Much of this paperwork can be simplified and automated through the use of commercially available computer software programs. The NBAADirectory of Member Companies, Aircraft and Personnel lists providers of aviation computer services ("avcomps"). Business and Commercial Aviation magazine lists avcomps suppliers in the "Product and Services Directory" of its annual May "Handbook" edition.
In addition, you may want to subscribe to the growing number of on-line computer services, which are sources of weather, flight planning and other information on business aviation. Some even have forums in which users can share information and strategies and discuss the challenges of aviation management.
It's important to have a travel reference library in the flight department as well - flight manuals, applicable regulations, an atlas, almanac and hotel guide - to help plan trips. A book entitled Corporate Aviation, published by McGraw-Hill, is recommended reading for new flight departments. It contains virtually everything you need to know about starting and operating a flight department. Also, subscriptions to a variety of aviation trade magazines will provide insight into dealing with the challenges of operating business aircraft.
Of course, flight departments need to subscribe to aviation navigation chart services, but there are a number of other support products that are vital to smooth flight department operations. A cleaning service to keep your office, hangar and aircraft presentable is a must. Also, it's important to establish charge accounts and credit cards, especially with discount fuel providers, in order to simplify accounting and consolidate travel charges.
In addition, companies that fly abroad should obtain a copy of the International Flight Information Manual (IFM) and international NOTAMs, now found in Notices to Airmen and consider using vendors that provide flight planning and ground handling services. You may also want to contract for security services, both at home and when on the road, especially overseas.
The most expensive support service is insurance, but many flight department managers warn against trying to save money by using an insurer that does not specialize in covering business aircraft operations. Not only are the reputable aviation insurers easier to deal with in case of a claim, they also can provide advice on important operational issues, from how to structure your new flight department and conduct aircrew training to how to select a charter company. In addition, some insurers provide discounts to flight departments that belong to NBAA or observe standard operating procedures as outlined in an operations manual. The major aviation insurers are listed in the World Aviation Directory and in the "Product and Services Directory" of Business and Commercial Aviation's May "Handbook" edition. Also, NBAA's Membership Directory lists a particularly large number of product and service providers specializing in business aviation, including insurance providers.
As one veteran NBAA Member Company flight department manager stated, "We are a service organization, and we've got to constantly find ways to do our job better." He recommends establishing a rapport with your passengers. Know and document exactly what each one is going to need, from medical requirements to favorite foods or drinks and preferred reading material. "We ask the passenger's spouse or secretary; we don't ask the passenger directly. Then, when he or she sees that we've done a lot of research on their personal needs, they know we're here to serve and please them." Undoubtedly, developing and updating a checklist of cabin supplies and special needs of regular passengers can be one of the most important tasks of flight department personnel.
Another longtime chief pilot said, "It's not good enough to just run an aviation department anymore. You have to be very active in local affairs, especially airport committees, because political decisions will be made that could have a direct impact on your flight operation. If you're not there to speak for your corporation's interest, government officials will make decisions that could affect your ability to operate. It's important to let local leaders know that you're interested and concerned, because then they are more likely to keep you informed and seek your input on issues that could affect your flight department. Another veteran manager of flight operations reflected the trend in business aviation today when he stated, "We are an extension of our firm's strategic plan. We must share the firm's vision, its mission and its values in order to serve shareholders effectively."
Business aviation enhances a company's two most important assets - people and time. A flight department adds to productivity and is a sign of a well-managed company.
Even before you prepare to take delivery of your first company aircraft, you should consider joining NBAA. As one manager of a Fortune 500 flight department said, "I think NBAA is a great help, and my recommendation for anybody starting a flight department would definitely be to join NBAA because there are so many questions that come up, and if you're an NBAA Member, a qualified answer is just a phone call away."
The following NBAA publications are designed to help you get your business aviation department up and running: