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1-800-Justify? No Apologies Needed!

Posted on: September 29th, 2012 by Pete Agur

1-800-Justify?  No Apologies Needed!

 

By Peter v. Agur, Jr., Managing Director & Founder

The VanAllen Group, Inc.

 

 

“We can’t make the economic numbers on business aircraft work.  But we know we need them,” flatly stated Roger, the CFO of a multibillion dollar company during a recent meeting.  Both his chairman and president nodded in agreement.

 

“We need business aircraft services so we can run our geographically disbursed operations.  Our division heads have to be able to get to all our job sites. And we want these same people home with their families early and often.  That’s why we need business aircraft,” he concluded.

 

“On the other hand, we will not have any personal use of our aircraft.  None, whatsoever,” declared Bill, his chairman.  Again, there were universal nods of agreement.

 

Roger’s point about cost justification can be tactically correct.  It is often less expensive to put staff members on the airlines, even when you consider the direct cost of their time.  The exceptions are when you have large numbers of people routinely traveling where there is poor airline service and high ticket costs.  These circumstances are fertile grounds for corporate shuttles.

 

Roger’s second point addresses their strategic concerns.  And that is where the “justification” of business jets is normally based.  Company aircraft are most often used as strategic tools.  This is the application where they can create the greatest value.  And therein lies the rub.  For many people it is much easier to express and understand tactics than strategies.

 

This CFO’s comments echo dozens of conversations I have been part of over the past forty-plus years.  Many companies delay their initiation into the use of business aircraft well beyond the point when logic dictates otherwise.  The chairman’s comments about “no personal use” may have been a sign of our post-Enron times.  Or, they may reflect a pre-existing no-nonsense corporate culture.  But the intensity of the emotion behind each of their statements is bothersome.

 

It is bothersome because so many senior decision makers are defensive about aircraft use.  They seem to be fighting their own, and their constituent’s, perceptions of business jets as perks.  The media heightens these anxieties by frequently connecting corporate and personal excesses with business aircraft.

 

Even so, the media does not dictate everyone’s opinions.  Some years ago I was sitting on an airliner next to a General Motors union shop steward en route toDetroit.  I asked if he was aware that GM had corporate aircraft.  He was.  I then stepped into the mine field and asked what he thought of top management’s use of business jets.

 

His response was stunning, “I think it’s great!  The more those guys travel the more deals they can put together.  That means more business for GM and we get to build more cars and trucks!”

 

He clearly understood that GM’s leaders have a huge impact on their company’s future… that their time-place mobility is a major competitive advantage.  This is even truer in our post-9/11 era.

 

Today, the average trip leg on the airlines takes about three hours longer, door-to-door, than if it is taken on a business jet.  That’s a minimum of six hours saved per trip, out and back.  Many executives work a sixty hour week.  If he or she takes one trip a week, it equates to at least a 10% increase in their available productivity.

 

But most companies are not run by a single individual.  They are run by a leadership team of five, six or more people.  Their ability to do business has a leveraged impact on the company’s success.  Most business jets fly two or three trips each week.  As a result, the leadership team is able to achieve even more in much less time.  That translates to reduced business cycle times and increased revenues: a strategy for success.

 

But, will it play in Peoria?  Well, it certainly played in Huntsville, Alabama.  John, the chairman of a multimillion dollar niche manufacturing firm had agonized for years about the use of business aircraft.  An engineer by education, he was both a practical and pragmatic decision maker.  He wanted irrefutable proof that business jet use made sense before he took the plunge.  No matter how hard he and his head of finance tried, they could not get the numbers to work.  The problem was they were trying to find a tactical answer to a strategic problem.

 

John was pushed over the edge one spring morning.  He and his CFO were en route to a must-make-meeting when their connecting airline flight inCincinnatiwas cancelled.  His company had its first jet before the end of the summer.  Late that fall, as John was preparing to retire, he quietly reflected, “Getting the jet was the best decision I ever made for our business.”

 

That was an amazing statement from a gentleman not given to exaggeration.  It expressed the extraordinary impact of time-place mobility a jet created for him and his team.  It made a dramatic difference in the success of their firm.  But just as important to John, the quality of their lives had improved because their stress levels had dropped and they were home with their families earlier and more often.

 

If business jets can have such a positive effect, why are so many contentious executives, like Roger and John, so cautious about making the commitment?  The difficulty of expressing the strategic impact of the tool is a part of the problem.  But there is an added barrier to the use of business jets that many companies and their leaders face; private and public image.

 

For decades the media has portrayed business aircraft as extravagant luxuries.  The hit TV show, “The Apprentice,” featured Donald Trump’s helicopter in its opening scenes of each show.  Additionally, they incorporated business aircraft and their use in many of their programs.  This reinforces an image of business aircraft as being vehicles for the rich and famous.  It is an image that many dedicated executives fight daily.

 

When Chairman Bill declared there would be no personal use of their company aircraft he was deliberately addressing his concerns about aircraft abuse.  He was making a policy statement that would help to fend off criticism of their acquisition of a jet.

 

Bill then asked me what other policies and controls should be in place to prevent aircraft abuse.  My response took him off guard, “A company jet will not lead good people astray.  They will use it judiciously and effectively, just like they use other business tools.  If you have some rampant rhinos on your team, your problem is not with the jet.”  It isn’t the tool that should be blamed.  It is the abuse, and its abusers, that should take the heat.

 

Aircraft use has been very slow to be fully accepted for the great tool it can be.  Most business tools go through an early adoption cycle when their cost-benefit is challenged by private and public perception.  Computers and cell phones were seen as expensive toys in their early years.  Today they are common tools of enterprise.  The same is so for business aircraft.

 

The leaders of nearly every major corporation in theUSuse business aviation.  It is proven a tool.  No apologies are needed.  If someone doesn’t get that, it is time for you to get off defense (pun intended).  Tell them they have the wrong number.


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