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A Saga of Success: A Company at a Crossroads and its use of Business Aviation

Posted on: February 19th, 2013 by Pete Agur

A three-part series that tracks a company’s use of Business Aviation.

The following is the first of a series of articles centered on the real results of one company’s use of Business Aviation from launch, 18 years ago, to today.  The topics covered include the company’s decision to embrace Business Aviation, its early activities as it started to use business aircraft, and the results achieved over its many years of involvement with this form of transportation.

The Decision

The Board of Directors of a mid-tier financial services company was faced with the retirement of their long-tenured Chief Executive Officer (CEO).  The company was in good shape.  Revenues and profits were fine.  Growth had been organic; slow and steady.  Even so, before the search committee was to begin their task, the Board made a bold decision: To use the change in leadership as a waypoint to a new corporate direction: dramatic growth.  They believed the market was ripe for significant change.  They could, with the right leader, take their company from the middle of the pack to more than double revenues and increased profit margin.

The leading candidate, David, was everything they wanted.  He was the brilliant 48-year-old Chief Operating Officer (COO) of another financial services company.  His vision, experience, energy and drive were exactly what they were looking for.  Following a thorough process, they made him an offer.  He accepted on one condition: the company must buy a small business jet.

David’s point was, if they were to achieve the growth goals the Board had set, his leadership team would need greater mobility than could be achieved on commercial airlines or by car alone.  He explained that he knew the greatest constraint on success was his people’s time and mobility.  They could not lead or create change from the ivory tower.  They had to see what was happening in the field.  They had to make their case face-to-face.

The Board sought a consultant to conduct a Business Aviation Strategic Planning Study.  Through referrals they found, interviewed and engaged my firm.  Our client was the Chairman of the Board, not David.  The Chairman’s charge to us was clear: conduct a thorough analysis and let the chips fall where they may.  For us, that was easy because that is our tenet.

The Study’s Charge and Objectives were as follows (quoted from the final report, with names extracted):

 

Study Charge

The Study is to determine appropriate public and business air travel resource and service options that maximize the travel services value for Company and it travelers.

Study Objectives

  • Determine the historic air travel patterns for the most recent 12 month period for which accurate data are available.

 

  • Gain insights and feedback from key travelers and executives about their air travel needs and the travel-related needs of the Company.

 

  • Compare the full and direct costs of public and business aircraft travel.

 

  • Provide Observations, Options and Suggestions that may enhance future air travel service performance for the Company and its travelers.

 

We conducted the Study, and I was asked to present its findings to a scheduled meeting of the Board.  The following, paraphrased to avoid confidential specifics, is what was presented:

Observations

  • Based on the Study’s findings, the Company has high strategic and operational needs for Business Aviation services.  This is underscored by the competitive and operating environment; the specific needs of key travelers; the limitations of commercial air travel and telecommunications services; and strong needs for time-place mobility of key people to assure the achievement of the Company’s strategic and operational goals.

 

  • The Company’s shift from a Cost Driven strategy to one of Value Driven is consistent with other companies that report substantial benefits from the use of Business Aviation.  The rate and effectiveness of the implementation of the Company’s new strategy will be a direct result of Top Executive face-to-face visits in the field.  Business Aviation services can play an important role in accelerating the success of the change process.

At this point in the meeting David excused himself to “get a cup of coffee.”  Actually, he was allowing the Board to hear and question the data, observations and recommendations without his presence.

Key Service and Data Points

  • The airlines make their best impact on long-range non-stop travel for one or two people.

 

  • The Study determined the average door-to-door time savings of Business Aviation, on legs of less than 1,000 miles, was 80 minutes per leg.  Note: That was in 1995.  Today, due to changes in airline services, security procedures, etc. the average time savings using Business Aviation has more than doubled to nearly three hours.

 

  • 98% of the Fortune 50 companies either own or routinely use Business Aircraft.

 

  • The Company’s most successful peers and competitors use Business Aviation Services aggressively.

 

  • Despite the intent to use Business Aviation as a Value-Added service, the average company aircraft load of 3.5 passengers per trip would incur 91% of the full costs of travel via the airlines (including time and tickets but not including estimated savings for overnight stays).  Note: There is usually a premium associated with using Business Aviation (except in cases of shuttle operations).  That is why we normally find the most successful applications associated with strategic, revenue growth and value-added goals.

Summary Statement

The Company has many of the attributes and business challenges typical of other companies that have achieved substantial benefits from investing in Business Aviation services.  We know of no reason that the Company should not experience similar positive results.

There followed a series of questions confirming our data and findings.  The ensuing thoughtful dialogue among the Board members was followed by a request that David rejoin the meeting.  As David puts it, he left for a cup of coffee and came back to find he had access to a business jet.

And that was the beginning.  The decision was made.  Now it had to be implemented.  And the results had to be achieved.  Those stories, again based in the facts of this company, will be told over the next two installments.

Continue reading Part II in the series.

 

 

 


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