New software documents return on investment
GUILFORD — The use of private aircraft by businesses has been stunted by an economic downturn that forced companies to lay off workers, cancel orders for new planes or close down flight units to strengthen cash flow.
As the recession left the U.S. consumer with falling home values, job and investment portfolio losses and a credit crunch, automobile industry executives were lambasted for traveling to a congressional hearing via corporate jets.
But when the National Business Aviation Association gathers next week for its annual meeting and convention in Orlando, Fla., expect rigorous discussion on whether use of private aircraft amounts to executive privilege or essential business tools.
The event’s theme is: “Demonstrating the Value of Business Aviation.”
Michael Dwyer, president of Guardian Jet on the Boston Post Road, will be attending and unveiling the company’s new software program Guardian 20/20, designed to help executives show shareholders a return on investment in aircraft.
“Economic conditions, intense government scrutiny and recent negative news about business aviation have forced corporate flight departments to prove their value or eliminate their fleet,” Dwyer said.
Guardian Jet brokers the sale and purchase of planes and helicopters and offers consulting services.
Guardian 20/20 enables companies to analyze acquisition, fixed and variable costs of their fleets, how often trips are taken, distance, numbers of passengers and whether those investments bolster profits.
“This is not just a luxury. There’s a big cost savings and a big time savings,” said Michael Mikolay, executive vice president of Guardian Jet.
For example, Dwyer said, a client with $50 billion in revenue could spend $30 million a year to maintain six aircraft. “What’s the scale of that? It’s two-tenths of 1 percent,” he said.
According to the association, the types of business aircraft range from propeller-driven craft to jets to helicopters. They can be used to transport employees, customers or cargo and for medical emergencies.
“When you’re going to a sales meeting, time is of the essence. Sometimes you’d like an extra hour to prepare. Their last chance is while sitting on the plane,” said Stan Smith, director of technical services.
David Cadden, professor of management for Quinnipiac University, said it can appear as if executives are flying around in the lap of luxury, but there seems to be some evidence that productivity can be significantly improved. “The problem is proving that to your shareholders and to the media,” he said.
Angela Carter can be reached at 789-5752 or acarter@nhregister.com.
| READERS COMMENTS: |
"Those of us involved in the business use of aviation have always known that private airplanes used for business made sense because they provide a service that can't be filled by use of public transportation. I am glad that someone has finally come up with the methodology to articulate it in a way that puts the cost in the proper perspective. Those who own a business aircraft understand that it is not about the status or luxury as some would have the masses believe, but it is because they make good business sense. Airplanes are business tools not much different than a bulldozer to a construction company. No well run construction business would buy a new bulldozer unless it was going to make them more money than it costs. The same is true for well run businesses when it comes to owning a company plane. If it doesn't make them more money than it costs (like the bulldozer) then they probably won't buy one. In todays fast paced global business environment they pay for themselves many times over. Now It looks like 20/20 has found a way to prove it." - Tom P.
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