On the Quora.com website one can ask any question and get a response. In one of the Q&A sessions, we have interesting comments on the benefits of business aviation for companies and consequently to the economy. A string of responses by corporate executives from different fields in the US give an insight into what business jet travel means not only to their businesses, but to themselves as well. The question was, “Does frequent private jet travel truly impact business productivity significantly for the entrepreneur, the CEO?” One response was that one can only squeeze a half extra company conference which one can manage on the laptop these days, into that time gap that others are forced to wait in airport security.

The responder adds: “If you are a CEO who lives in New York and has a R&D lab in San Francisco, commercial air travel makes sense. Instead you have got a shipyard in Maine, another in Louisiana, a pipeline maintenance operation in Oklahoma and a big contract in Alaska, then it would make more sense.”

The mining industry in India is one example where the mining barons for instance in Bellary in Karnataka, have used general aviation aircraft to good use in developing their business. Of course, they have upped their status too by owning private aircraft. The mining barons fly their executives, other personnel and business partners to the mining sites for many reasons: one, lack of proper transportation network; and two, faster travel and quick closure of business meetings, deals, etc.

On Quora.com, the comments are interesting, though they are all urban-centric. Another respondent gives the example of how the American hub-and-spoke air travel system works. “We have been in New York City for a board meeting and now we need to put out some fires at the various locations. New York to Portland is only 500 kilometres and as luck would have it, there is a non-stop flight. First flight does not leave until 9:59 a.m. though, so by the time we get to the plant it will be around 1:30 p.m. And that’s assuming that the flight is on time, which pretty well never happens in the summer due to thunderstorms or in the winter on account of snowstorms. So we get to the plant at about 3:00 p.m., have time for a couple of quick meetings, take the retiring manager out to dinner and are ensconced in the lovely Embassy Suites by 9:00 p.m.”

“First day gone. Portland, Maine, to Baton Rouge, Louisiana, is 6 hours 33 minutes. Figure an hour of driving at either end and an hour at each airport. Boom. There is 10 hours 33 minutes or the whole second day, wasted.

Day three and we have got time for meetings and dealing with the crises from days one and two. Then we need to pop up to Cushing, OK. Good news! Up at 5:00 p.m., only 3 hours 13 minutes on the plane. Except that’s is to Oklahoma City (OKC), then two hours drive each way to Cushing. Most of day four wasted. Now OKC to Fairbanks, Alaska. 12 hours 33 minutes, plus the two-hour drive from Cushing. A total waste of day five and plus you are so bagged when you get in you just collapse. But that’s OK, if you are keeping track it’s now the weekend. Day five done.

“Now back home, let’s say for tax reasons our corporate HQ is in Nevada. That is “only” nine hours and change from Fairbanks down to Las Vegas. Another day shot, but hey, you can do it on the weekend. It comes with the job, too bad you’ll have to miss the school play.”

It’s all about time

That is when the corporate jet travel makes business sense. If your legitimate corporate requirements cause you to waste more than 20 per cent of your time travelling, a corporate jet makes sense.

Business On Board

You can have truly private discussions and also do official business on board a private jet that you could not risk having aboard a commercial aircraft. You can call clients, vendors and suppliers and not worry about being overheard by people outside of your business group.

Another respondent states that for a single individual, charter makes economic sense below 240 flight hours or so per year in the same type of plane and whole ownership of a plane makes sense above that point.

As to whether using a charter, owning a plane even fractional, another comment was that it all depends on your business model. If you are a highly regionalised company with many operations within three to ten hours of driving time between each other, a small private jet charter may make good financial sense.

NBAA Endorses

Almost over a decade ago, the National Business Aviation Association (NBAA) of the US had commissioned Andersen to come up with a white paper on the benefits of business aviation for the corporate world. The report states that many Standard and Poors (S&P) 500 executives with whom Andersen spoke were aware of these trends. However, corporate silence about business aircraft use, the general rule in business today apparently stems from three concerns. Firstly, several companies using business aircraft do so for competitive advantage. Not surprisingly, they do not seek publicity for this practice. Secondly, others assume that the business press, shareholders or the public at large perceive corporate aircraft as costly or unnecessary and so avoid unneeded public or shareholder relations exposure. Thirdly, lacking a definitive analysis to support the use of business aircraft and the resulting value to shareholders, companies are also unlikely to publicise their use of business aircraft.

Dated Thinking

All of these reasons, however, are dated by today’s economy, which is transforming the way companies value their assets. In today’s economy, increased productivity and the effective use of time as well as a company’s intangible assets such as relationships, knowledge, people, brands and systems are taking centre stage and driving shareholder value. Successful companies are utilising and developing both old and new economy assets. In fact, it is the combination and interaction of all of a company’s assets more than any other factor that will determine its economic success.

In this environment, the value of a business aircraft does not depend solely on their net benefits, but also on whether they enable a company to improve the efficiency or effectiveness of its intangible assets. Such assets include its people, their talent or specialist knowledge and even relationships. How people use time influences business success. Aircraft are leveraged by increasing employee productivity, accelerating speed to market, improving customer responsiveness, building employee satisfaction and retention, driving supply chain collaborations, knowledge sharing or other improvements.

Optimal Performance

The report mentions that companies winning in today’s economy are mobile, able to move goods, people, information and capital around the globe quickly and efficiently. Business aircraft like computers and telephones, become ‘value enablers,’ tools that enhance an organisation’s ability to transfer knowledge quickly and easily.

In today’s economy, can business aircraft contribute to better company operating or financial performance and therefore, to higher shareholder value? The NBAA and the General Aviation Manufacturers Association (GAMA) asked Andersen to investigate this question. The two associations mention that they have learned that business aircraft can be remarkable aid to business under certain circumstances, including during economic downturns.

The decision to use business aviation has generally been intuitive, a common-sense feeling by the CEO that the choice of greater mobility would be good for business because of strategic competitive urgency, accelerated transaction value, improved productivity, practical realities, or some other reason typically not quantified.

One underlying motive for business aircraft use is recognition of the value of face-to-face communication. Although business travel undulates with the economy at some companies, many long-standing business aircraft operators have concluded that the amount and quality of information that can be gathered or delivered face-to-face exceeds that of any other communication method.