Glancing out of the terminal window, all too often we mistake the private jet parked conveniently outside a dedicated terminal as the preserve of bigwigs and the rich and famous, something that none of us will ever experience. While this may have once been the case, the industry now serves a wider spectrum of corporate traveller.
Today, for many of us, flying is a low cost affair. While low cost airlines have facilitated easy access to many areas of the world, the low cost concept has, for the most part, concentrated on the needs of the leisure traveller and the cost conscious business traveller. But low cost travel does, however, have its limits. Why would a business jet therefore be considered a viable economic travel solution?
Boardroom responsibility and business jets
When you add in the hidden cost benefits of increased productivity, reduced waiting times, the possibility of flying to a business meeting and flying back the same day (try doing that on a commercial flight!) and the confidentiality that comes with using a private flight, it often works out cheaper than sending executives on scheduled flights. Executives today are under enormous pressure from their boards and have to make their pay packages justifiable from an economic perspective. All too often, we read about the “pay rows” that seem to ever intensify. In a report compiled by MM&K, a leading UK consultancy which focusses on assisting companies design and implement remuneration packages, it is revealed that one in four UK Executives took home a 41% rise in pay in 2012 compared to just 1% for ordinary workers. In the UK, for example, the average executive’s pay is in the region of £ 500,000 a year.
But what does this have to do with Business Aviation?
Time is money: An Executive’s pay must be justified. In other words they have to earn it. It is said that an Executive is expected to bring in business worth 10 times their salary. This translates into a revenue potential of around £2,404 per hour (using the average UK executive’s pay as a base). Clearly, with such a high revenue potential, shareholders would struggle to accept their executives being kept waiting in line to catch a flight to an important meeting in, say, Frankfurt.
Enter Business Aviation: Consider the twin costs of a round trip in business class from London to Frankfurt as being in the region of £ 2,200 for the ticket as well as the obligatory time wasted at the airport at either end on check in and security procedures (on average 4 hrs in total). Factoring in an executives £ 2,404 per hour revenue potential, the total cost of the flight would be £11,815.
The same trip using a business charter company such as Privatefly, a specialist in empty leg flights, would be £7,350 for the flight. Bearing in mind that the average time to board a flight at a business airport (or terminal) is 1 hour, the total cost of the trip would be £ 9,754. *These calculations have been made using assumptions (average cost of flight, airport wait times etc).
The more you fly the more you save: Business Aviation providers have in recent years developed increasingly sophisticated “flying programs” for customers. In order to attract repeat sales, Business Aviation providers such as NetJets in the USA offer a “Jet Card” which allows executives to purchase, for example, 25 hours of flying time with no long term commitment. Other operators offer the possibility of “fractional ownership”, a method of owning a private jet in much the same way as a holiday time share operation works.
Time, anything else? There is more to it than just the cost and time savings. Business Aviation offers something that commercial aviation is simply unable to offer -“reach”. While technology has certainly played a large role in extending market opportunities in Europe and beyond, business as an activity often only functions with human interaction no matter how advanced communication becomes. Sooner or later, commercial deals may need to be addressed through human contact. Business Aviation offers the opportunity to reach far flung places that are not served by commercial aviation.
The unlikely hero
Business aviation also serves an even wider use beyond the corporate and luxury world. It serves as a vital emergency response tool in times of crisis.
Air transport is a crucial part of humanitarian missions and as the number of missions grows year on year, so too does the demand for air charters. These air charters need to be flexible in terms of runway accessibility. Most humanitarian relief requirements are located in remote areas and are logistically complex in terms of accessibility. When commercial aircraft (and often road transport) cannot be used, business aircraft are uniquely suited to providing the first response to natural disasters and other emergencies.
Business aircraft can operate at short notice and can fly to outlying airports with short or even unpaved runways or even land on roads. This drastically reduces response times.
The National Business Aviation Association (NBAA) of the United States maintains a database of people who form part of a business aviation community directly involved in disaster response mobilisation efforts. Known as the Humanitarian Response Operator (HERO), the database provides information to organisations coordinating relief efforts.
The business aviation sector has in recent years reinvented itself and shaken off its old image of the past. The benefits of business aviation are virtually endless and it is now considered to be a practical business tool, a driver to economic growth which can also serve as a lifeline in times of crisis.
