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What is Business Aviation

What is Business Aviation

WHAT IS BUSINESS AVIATION?

It’s a fact: Business aviation plays a vital role for citizens, companies and communities across the U.S. The industry is vital to the national economic interest, generating over a million jobs, providing a lifeline to communities with little or no airline service, helping thousands of businesses of all sizes to be more productive and efficient, and providing emergency and humanitarian services to people in need.

As a subset of general aviation (GA), business aviation is commonly defined as the use of general aviation aircraft for business purposes. General aviation, which encompasses all civil aviation activity except that of the commercial airlines,  is an integral and vital part of the world’s transportation system.

Business aircraft includes helicopters, piston-powered propeller-driven airplanes and turbine-powered turboprops and turbojets.  Although the worldwide fleet includes ultra-long-range business jets capable of flying 20 or more passengers nonstop between distant international business centers such as New York and Tokyo, the vast majority of business aircraft seat six passengers in a cabin roughly the size of the a large SUV and fly average trips of less than 1,000 miles.  To facilitate the conduct of business, many of these aircraft are equipped with phones and computers with internet access.

Business aviation is essential to tens of thousands of companies of all types and sizes that are trying to compete in a marketplace that demands speed, flexibility, efficiency and productivity.

WHO USES BUSINESS AVIATION?

Only about 3 percent of U.S. business aircraft are flown by Fortune 500 companies, while the remaining 97 percent are operated by a broad cross-section of organizations, including governments, universities, charitable organizations and businesses – large, medium and small.  Furthermore, most business aviation flights involve time-critical trips by sales, technical and middle management employees, not trips by top executives.

In fact, business aviation is essential to tens of thousands of companies of all types and sizes that must compete in a marketplace that demands speed, flexibility, efficiency and productivity. The vast majority of the U.S. companies that utilize business aircraft – 85 percent – are small and midsize businesses, many of which are based in the dozens of communities across the country where the airlines have reduced or eliminated service.  Thus, business aviation provides an essential transportation link – a lifeline – between thees smaller companies and communities and the rest of the world.

Several studies have shown that the productivity of efficiency gains from business aviation translate into tangible and quantifiable benefits for companies, shareholders and the national economy.

While the organizations that rely on business aviation are varied they all have one thing in common: the need for fast flexible, safe, secure and cost-effective access to destinations worldwide.

  • Many companies use business aircraft to transport personnel and priority cargo to a variety of far-flung company or customer locations, including sites overseas.
  • Business aircraft often are used to bring customers to company facilities for factory tours, product demonstrations or sales presentations.
  • Companies and individuals, such as salespeople and doctors, use business aircraft to cover regional territories within several hundred miles of their home bases.  While the overwhelming majority of business aircraft missions are conducted on demand, some companies have scheduled operations, know as “shuttles.”
  • NBAA Member Companies spend about $12 billion each year for employee travel with the commercial airlines.  Many of these companies do a sophisticated analysis before each mission to determine whether airline travel or business aviation is the mode of transportation best suited to the mission.

The terms “business” and “corporate” often are used interchangeably to refer to business aviation operations because they both entail use of a GA aircraft to support an enterprise. However, the Federal Aviation Administration (FAA) has slightly different definitions for “business aviation” and “corporate aviation.”

  • The FAA defines “business aviation” as “any use of an aircraft (not for compensation or hire) by an individual for transportation required by the business in which the individual is engaged.”
  • In contrast, the FAA defines “corporate aviation” as those flights that utilize professional pilots who operate, but do not own, the aircraft.

WHY USE BUSINESS AVIATION

A company’s decision to utilize business aviation depends on a variety of factors including the availability of commercial airline service, both at its headquarters and travel destinations; the number of sites to be visited in a single day; the number of passengers to be transported; the need to discuss proprietary matters en route; the requirement to move specialized and outsized equipment; as well as a host of other considerations. Reasons why organizations use business aviation to meet their transportation challengers includes:

  • Saving employee time.
    Efficient employee scheduling and employee time-savings are possible because business aircraft have the ability to fly on demand and nonstop between smaller airfields that usually are closer to a traveler’s destination than a major airport.
  • Increasing traveler productivity, safety and security en route.
    When traveling on business aircraft, passengers can meet, plan and work in a secure office environment, free from interruptions and distractions, which enable them to discuss proprietary information without fear of eavesdropping, industrial espionage or physical threat. Travelers can strategize before meetings and debrief afterwards or conduct meetings en route. Also, many aircraft are outfitted with advanced communications technologies – including phones, e-mail and internet access – that enable travelers to remain in constant contact throughout their flight with colleagues on the ground.  Most importantly, business aircraft are engineered and built to the highest standards and typically flown by two-person professional crews, all of which has enabled business aviation to achieve a safety record comparable to that of the major airlines.
  • Reaching multiple destinations quickly and efficiently.
    Companies that need to reach multiple destinations in a single day use business aviation because that type of mission is nearly impossible to accomplish using any other mode of transportation.
  • Accessing communities with little or no airline service.
    Business aviation serves 10 times the number of U.S. airports (more than 5,000) served by commercial airlines (about 500). The ability to use smaller less-congested airfields located closer to one’s final destination is a vital part of the utility and flexibility of business  aviation aircraft. t means companies can stay or establish plants or facilities in the growing number of small towns or rural communities with little or no commercial airline service.
  • Scheduling predictability
    About 3 percent of all commercial airline flights are cancelled, but nearly one quarter more are delayed.  If a commercial flight cancellation or delay causes passengers to miss an airline connection, the odds of getting on the next flight are substantially reduced.  Also, some companies are located in towns with very low frequencies of airline flights, leaving company employees with few or no alternatives if a flight is cancelled.  These types of concerns over delays or cancellations are virtually nonexistent on business aircraft.
  • Supporting the travel needs of many type of company employees.
    Surveys indicate that more than 70 percent of passengers aboard business airplanes are non-executive employees. Companies often send teams of employees to a given destination on a business aircraft because it is the most cost-effective means of transport.
  • Moving vital equipment.
    When companies need to immediately ship sensitive, critical or outsized equipment, business aviation is often the best solutions.
  • Exercising management control over scheduling.
    The near-total scheduling flexibility inherent in business aircraft – even changing itineraries en route- can be a powerful asset.  Business aircraft can arrive and depart on the passengers’ schedule, typically waiting for them in the ordinary course of business.  Thus, meetings can be moved up, back, or extended without penalty, risk or unnecessary scheduling pressures. In today’s business environment, companies need to be nimble.  Business aviation provides flexibility for companies that need to ensure employees can respond quickly to changing demands and circumstances.
  • Minimizing non-business hours away from home.
    Business aircraft enable flexible scheduling and quick and easy access to meeting locations, thereby minimizing time away from home and office.
  • Providing a return to share-holders.
    Studies have confirmed that companies that use business aviation to solve their transportation challenges return more to shareholders than companies in the same industry that do not utilize business aviation.
  • Charging the entrepreneurial spirit.
    By minimizing or eliminating many of the barriers to travel, business aircraft enable companies to quickly respond to business opportunities.
  • Supporting humanitarian and charity efforts.
    Business aviation supports people and communities in crisis by flying people with illnesses to centers for treatment, transporting blood and organs to hospitals, connecting military veterans with their families, and providing emergency relief services to victims of natural disasters.

STUDIES CONFIRM VALUE OF BUSINESS AVIATION

Surveys of companies using business aircraft have shown that:

  • More than 60 percent of survey respondents use their aircraft to support efficient schedules, including using them to reach remote locations not served by a schedule airline.
  • Passengers feel they are significantly more productive aboard business aircraft than they are even in their own offices.
  • Productive collaboration among company employees aboard business aircraft occurs nearly eight times more often than when those same employees are aboard commercial aircraft.
  • Productive collaboration with customers occurs nearly seven times more often than on commercial aircraft.

Perhaps most important, several studies have shown that the productivity and efficiency gains from business aviation translate into tangible and quantifiable benefits for companies, shareholders and the national economy.

BUSINESS AIRCRAFT UTILIZATION OPTIONS

Many business aircraft are owned by individuals or companies that typically fly with two-person, professionally trained crews whose primary, if not exclusive, responsibility is to operate the company aircraft. Some individuals and smaller companies that operate business aircraft, especially individual business people who own their airplanes, use one pilot to fly single-engine airplanes or light twin-engine piston, turboprop or jet-powered aircraft.

While most business aircraft are owned by the individuals or companies that fly them, they are also sometimes utilize business aviation through arrangements such as chartering, fractional ownership, leasing, time-share agreements, partnerships, aircraft management contracts or interchange agreements. The latter is an arrangement under which a person leases his airplane to another person in exchange for equal time, when needed, on the others person’s airplane, at not charge.

On-demand air charter provides companies with instant access to business aircraft.  Many charter customers are first-time users of business aviation. Air charter flights operate on the passenger’s schedule, which provides them with considerable  flexibility, as well as safe and convenient access to thousands more destinations than airlines can provide.

Companies that charter on a regular basis sometimes will purchase a block of charter time at discounted rates, a practice that is known as “block charter.”  Other business aviation customers participate in jet-card programs, which offer cardholders business aircraft access, typically in increments of 25 or 50 hours, without requiring any long term financial commitment.

Business aircraft users that have a greater need for on-demand air transportation but whose travel requirements do not justify the purchase of entire aircraft, often participate in fractional ownership programs.  Companies or individuals, purchase a fractions (as little as a 1/16 share) of an aircraft and receive management and pilot services associated with the aircraft’s operation.  Fractional ownership enables companies to experience man y of the advantage  of business aviation quickly and without many of the start-up considerations typically associated with traditional flight departments.

Some business aviation users, who need an aircraft to meet their travel need but are willing to allow others to use the airplane part of the time, enter into partnerships, time-share or interchange agreements.  Other aircraft owners who want to offset the expense of operating their airplane, offer their aircraft for charter under FAR Part 135 regulations.

Companies that purchase or lease an aircraft often setup a flight department – staffed by pilots, maintenance technicians and other aviation professionals – to handle all aspects of their on-demand air transportation operation.  However, these companies sometimes utilize vendors for a variety of support services from contract maintenance to turnkey aircraft management.  Business aircraft generally are not flown for compensation or hire.  Thus, the majority of U.S. – registered business aircraft are governed by Part 91 of the Federal Aviation Regulations (FARs). Most of the U.S. – registered GA aircraft that are flown for compensation or hire are regulated by FAR Part 135, which covers commercial operations, including air charter.

 

Source: National Business Aviation Association