Corporate Contrails

Although the answers are well known to existing owners and to those who research the matter on their behalf the popular misconception is that corporate aircraft are merely an ‘ego trip’ for the owner or CEO of the company concerned. Although there is a morsel of truth in this statement, it serves to hide the underlying reasons for owning and operating a business aircraft.

In a world of mass access to air travel and one in which security and personal privacy has been gradually eroded, the prime attractions of corporate aircraft are: security, privacy, comfort, convenience and efficiency. Each of these features is important, some more important than others, often related to scale of operations, countries to be visited and work schedules.

In the United States, for example, business aviation had its origins in the sales community where salesmen, wishing to expand their territorial coverage, used their own aeroplanes to achieve this objective in an efficient and private manner. Although in the early days some comfort was lacking, the convenience of being able to fly to an aerodrome, often not served by airlines, far outweighed the disadvantages. The ability to work to ones own schedule also proved to be a great advantage.

In Australia the resources industry led the way with the establishment of mines in remote areas which required air transportation of key staff. Indeed, many of the airports in Australia were established by mining interests as access points for their own corporate aircraft. Pioneering by the business aircraft user has led the way into today’s highly sophisticated jets with global capabilities. Many modern business aircraft are far more sophisticated than airliners and have led the way with global communications. Equally businessmen often travel to countries with whom we do not have diplomatic relations or airline links. It was, indeed, during the cold war with Russia that US businessmen started forging links which have stood the test of time.

Since the early days, the aviation security situation has deteriorated and equally with mass air travel, people’s privacy is difficult to maintain. Although the airlines have addressed each of these problems with substantial success, they are unable to match the standard of both security and privacy offered by owning your own aircraft. Indeed if one considers, for a moment, the value to a business of its leader, be he or she a visionary or an entrepreneur, all risks of personal and business security must be minimised.

Convenience is a factor that those who have not experienced corporate aviation do not appreciate. With airports becoming more congested, queues at check in desks lengthening and security measures becoming more restrictive, travelling by air lines has become more time consuming. Although airlines have, over the past few years improved their standards of service to business travellers, the pre and post flight procedures are both tiresome and time wasting. For those people who wish to maximise their time in productive effort, airline travel clearly wastes too much of their time. Equally, a point often forgotten is that airlines only serve a limited number of points and often it involves transfer from one flight to another, again time consuming. By way of example, if a Melbourne based person needed to do business in Toowoomba they would need to be at Tullamarine at 1120 to arrive in Brisbane at 1515 connecting to a flight to Toowoomba at 1535 (assuming this is possible) arriving at 1610 (only available two days per week). It is not possible to leave Melbourne earlier and get a connecting flight to do a day return, so the traveller is expected to stay overnight to undertake what may be just one hour’s business. Alternatively, using a corporate aircraft one could depart Essendon, with the minimum of fuss (no parking, access or queuing problems) at 1115, fly direct to Toowoomba arriving at about 1430 local, have the hour’s meeting and still be back in Melbourne at approximately 1845. This would be undertaken in privacy and, in the event that the meeting took a little longer, the aircraft would still be waiting. Far different than travelling by airline.

At what cost? Well, clearly, it is more expensive per seat mile but considerable research in the United States supports the view that executive time has a value to an organisation of the order of hundreds of thousands of dollars per hour. For every hour wasted, ie: not being productive, it is costing the company a commensurate amount. The accepted view, therefore, is that wherever hours can be turned into productive effort, the organisation gains.

Some companies who have acquired business aircraft over the past few years actually calculated the benefits but others simply took the view that convenience, privacy and security were reasons enough to opt for a business aircraft. The same principles apply to those who fly in the smaller twin engined piston aircraft as to those who fly the 727 or larger jet.

Although it is often fashionable to ‘knock’ the corporate aircraft mentality, it would be interesting for some research to be undertaken addressing the value to the nation of such ‘efficiency’. We often talk of the nation’s productivity as if some magic ingredient will change wasteful practices. Make no mistake, business aviation is making its contribution to productivity among a variety of business people ranging from managing directors of our largest corporations to owners of small business.

Trends in Business Aircraft Use

Within the ABAA, we regularly review trends in business aircraft use and the growth phenomenon in Australia is continuing within the corporate aircraft sector. Although there is growth at all levels from Cessna 414 up to the airliner size aircraft, it is the long-range aircraft which are becoming increasingly desirable.

Some of our corporations have used aircraft such as BAe125, Falcon 20 or Citations to great effect and have, indeed, used them to expand their national business bases. Over the last three years, however, and associated with the global expansion of Australian business, we see former owners of smaller aircraft supplementing them with 727, 737, Challenger and Gulfstreams of various models.

We believe this trend will grow as the domestic consumer base for Australian business is too small to sustain real growth. Expansion of our businesses into the large consumer markets of North America, Europe and Asia is a natural progression. With this expansion we will see larger corporate flight departments and an increasing requirement for facilities for corporate aircraft.

Airports such as Essendon will become even more important assets for the cities they serve. Cities whose airports, such as Sydney, cannot allow corporate owners adequate facilities will ultimately suffer. The inability of the FAC at Sydney to respond to the corporate owners’ needs will cause investment to take place elsewhere.