Measuring The Value Of A Business Aircraft
Winged – Dutchman

Measuring The Value Of A Business Aircraft

With the inevitable change of Board leadership, someone will eventually ask the question “Why do we have the aircraft?” They need to understand the aircraft is an essential business tool without which your company would be at a competitive disadvantage in today’s rapidly changing economic environment.

The tangible benefits to having an aircraft (among others) are:

  • Time Savings
  • Flexibility and Reliability of Operations
  • Productivity
  • Ability to attract and retain key personnel
  • Ability to support customers in an effective manner

Some, or all of these will apply to your situation. No one will deny the ability of the business aircraft to serve, but the question that still gets asked is: Are the benefits worth the cost?

As an example, assume a trip is needed from New York City to San Antonio. The bus fare is $219, and the travel time, 50 hours. Via the airlines, you can make the trip in 5.5 hours (plus airport time) for about an 8-hour travel day. Business airfare for last minute travel may run to $1,200 per person, or $4,800 for four persons.

On the business jet, a charter may take less than 4 hours total time and cost about $10,000 for up to six. No one will say that the bus is the “best value” way to travel, even though it is cheaper. However, many may question the value of the business aircraft. The business jet fee is eight times the airline ticket for a savings of just four hours. Yet, by evaluating the travel in greater detail, you may need an overnight stay (or two) at San Antonio versus having the ability to return late in the same day on the business jet. And there’s always the added value of privacy surrounding business matters in a business jet cabin.

In order to determine the value of the business jet over the airline, you need to understand both the total time needed for the travel and the lost opportunity cost of that travel. The business aircraft has but one master, you. It will travel on your schedule and thus, offers significant time flexibility. The airlines have set schedules in order to try and fulfill most traveler’s schedules.

While an executive is worth more than his or her salary, whether that value to a company is two times or five times greater is a subject for much discussion and controversy.

A senior executive with a high six-figure income and benefits package has to be worth at least $500 per business-hour to the firm. Business-hours spent in the office, with a client, or working somewhere quietly without disruption are more productive than business hours spent waiting at the airport. Essentially, analysis can show that the time spent not traveling can be put to productive use, and that increased productivity can offset the added cost of using the business aircraft option.