Just how do you end up with a small fortune in an aviation business? Many would say to start with a large fortune!
Business, by definition, is an organization involved in the trade of goods and/or services to consumers. They are prevalent in capitalist economies, where many are privately owned and in some cases do exist as not-for-profit. Well-run organizations have a plan and supporting structure, which enables them to achieve predetermined goals.
The business aviation community consists of companies of all sizes that rely on many different types of aircraft – from single-pilot types, to turbine aircraft that fly internationally, helicopters that survey rush-hour traffic, transport executives, or manage agriculture or game. There are also the support organizations such as the fixed-base operators and other services that support flight operations at the nation’s 5,000 public-use airports. The vast majority of businesses utilizing aircraft are small- to mid-size companies.
Business aviation is considered the use of any general aviation aircraft for the purpose of conducting business and the Federal Aviation Administration considers a general aviation flight to be anything not operated by the military or scheduled airlines.
Many employed in technical fields tend to shy away from business as it brings to mind thoughts of accountants, lawyers, and layers of bureaucracy. However, employing sound financial and managerial tendencies in day-to-day aircraft maintenance operations does make cents ~ as in, watching the pennies will allow the dollars to take care of themselves.
Corporate assets
An aircraft needs to be viewed as a corporate asset and must be managed accordingly. While various companies employ unique strategies regarding treatment of their assets, it only makes sense that those responsible for continued airworthiness also be aware of preserving the value of the asset. In some cases companies will tend to keep equipment in service for a set number of years. This may align with warranty periods and even financial depreciation schedules. Some analysts recommend trading the aircraft at a specific age while others believe in reinvestment. Once paid for there is less debt and the cost of refurbishment may be only a fraction of a new acquisition. However, when the market for used business aircraft is weak, then decisions need to be carefully made regarding upgrades. It may not make good financial sense to invest in new avionics or cabin communications if the investment will never be recovered.
Corporate flight departments
Caring for a business aircraft is by no means standardized. Corporate flight departments have varying mission statements although most do concentrate on providing safe, reliable, on-demand transportation. In fact, the majority of member companies in the National Business Aviation Association (NBAA) do not have their own dedicated maintenance department. They depend on local maintenance organizations or individuals and service centers. Those operations that do include a maintenance department have varying capabilities starting with aircraft launch and recovery, correcting malfunctions and scheduling inspections. There are also those that can be totally self-sufficient. Manpower in these departments often is the key to capabilities. In the world of corporate aviation the A&P endorsements literally mean “All Purpose” which means a routine day could involve anything from changing a tire to troubleshooting a digital high-speed data network.
The traditional “need to know” for the aviation technician is rapidly being replaced by a new repertoire of capabilities requiring a vastly expanded level of technology insight. Enabling technicians to gather this new knowledge is not an easy task or a quick process. Qualifying technicians in service centers or those working for manufacturers is another challenge. Getting the word out has been slow. In fact the NBAA has very recently partnered with organizations such as the Aircraft Electronics Association (AEA) to create a new standard for technicians entering the field. This initiative is titled NEXTTECH for NEXTGEN.
In recent years the cabins of business aircraft have been transformed into a modern office in the sky where the basic machine has to be fit for flight, or airworthy, while the cabin must be fit for mission. This may include enabling the passengers' mobile communications devices to connect to the onboard networks. Advising users of the costs associated with use of satellite communications and discouraging portable electronic devices receiving automatic updates while airborne is often the responsibility of the flight crew but must be discussed with passengers to avoid unwanted charges for inflight data transfers.
Skill sets
What are the skill sets needed to succeed in the world of maintaining a business aircraft? First, the traits required in keeping the machine airworthy. These include many of the basic skills already known to the Airframe and Powerplant technician.
We are already recognized as craftsmen, mechanics, evaluators, and analytical thinkers. Most have learned we need to be communicators but the often unconsidered skills include; asset manager, negotiator and risk manager, cost analyst and in most cases with newer aircraft, network or IT manager.
When overseeing corporate assets such as a business jet and associated supporting equipment, value metrics are often applied. These include: passenger comforts, required dispatch reliability, aircraft availability, and operating costs. These metrics must be weighed depending on corporate culture. If dispatch reliability is essential then more preventative maintenance may be required along with a larger inventory of parts. This of course translates into higher operating cost. Having the aircraft available more demands performing ongoing maintenance around the prevailing schedule and may possibly require outsourcing work to service providers when the aircraft is on the road. Continuous inspection programs enable operators to accomplish segments or phases of inspections in either a flight hour block or a calendar block depending on predicted utilization. In a smaller flight department with an aggressive flight schedule this type maintenance can be a detriment to the personal lives of the technicians as it may require off-hour maintenance followed by normal launch and recovery operations.
Operating costs are measured differently based on corporate culture but mostly include; fuel burn, hull insurance and engine reserves, maintenance costs, and crew expense. Other incurred costs such as hangar, line services, and catering may also be factored in.
Aging aircraft
Technology is another driving factor when it comes to managing an aircraft. As aircraft age, they tend to require more maintenance and repair. Inspections become more invasive and required downtime to return to service tends to become unpredictable. Another driving factor is whether the model aircraft is still in production. Often when a manufacturer discontinues a particular type there is less incentive to provide high levels of product support. In some cases within a few years of being discontinued, readily available parts inventories begin to diminish and costs escalate. Often the most effective tool in predicting long-term operating cost of an out-of-production aircraft is subscribing to a service such as Conklin & de Decker that collect industry data to provide insight for budget calculations. There is also of course the crystal ball as it is challenging to forecast when certain high dollar components will require replacement. Predictability is a feature evolving out of MSG-3 maintenance programs and in the not-too-distant future it is anticipated many of today's unscheduled removals will be forecast.
Worldwide regulatory agencies also influence the viability of operating older aircraft. Advancing technology often mandates new equipment. Unfortunately upgrading an aircraft manufactured 20 years ago will be both challenging and expensive. Investing significant funds in an aircraft that may already be devalued due to market conditions may make the purchase of a newer aircraft more viable.
The most important asset in any flight department are the employees. They ultimately preserve and in fact increase the value in any aircraft operation. With the right mix of people, this human asset does not require management but leadership and guidance coupled with education, motivation, and congratulations.
Strange thing: how the companies with the happiest employees are most often the ones with profitability and longevity.
Strange thing, Business!
Jim Sparks has been in aviation for more than 30 years and is a licensed A&P. His career began in general aviation as a mechanic, electrician, and avionics technician. When not writing for AMT, he is the manager of aviation maintenance for a private company with a fleet including light single engine aircraft, helicopters, and several types of business jets. Currently he is head of the NBAA Maintenance Committee. You can reach him at [email protected].
