GRAY STONE ADVISORS' BLOG

Is Your Flight Department at Risk?

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When you’re not feeling well, you see your doctor. Fortunately, modern medicine provides your physician with many ways that s/he can assess the problem.

Your doctor may ask how you’re feeling and if you’re in any pain. Your temperature and blood pressure can be checked and, if necessary, a blood sample can be drawn.


By Steve Brechter


man with head down - Is your flight department at risk?

But what about your flight department? If something is wrong, how do you determine the cause? And how do you fix it?

The answer may not be obvious.

In many cases the symptoms of an “unhealthy” flight department are misunderstood or, worse, ignored, placing the flight department at risk.

If you’re feeling like the unfortunate Aviation Director in the photo, take heart. We’re here to help you diagnose your way back to good health.

Following are five ways to assess the health of your aviation operation and make sure you’re not at risk.

 

Five Warning Signs that your Flight Department is at Risk:

 

1.  You’re Not Connected at Corporate

The first thing to do is to look carefully at how closely you’re connected with your corporate office.

You should be “joined at the hip” with your key corporate stakeholders and your executive travelers.

It used to be that many flight departments adopted “out of sight, out of mind” as an overt strategy. Tucked safely under the protective wing of the Chairman, life was good.

In those bygone days, the flight department was resourced beyond expectation and there was little accountability for business results.

Astute aviation leaders discovered somewhere in the 1980’s that doing so was a bad idea.

Lately, many flight departments find themselves reporting lower and lower within the parent company. Today, many report to executives who are not authorized users of the company aircraft.

To succeed in today’s corporate world, a flight department needs to think of itself as a business unit of the parent company. A senior executive recently said to me that for business aviation to “get a seat at the table, it needs to bring something to the table.”

How do you do that?

You do that by clearly defining what’s important to your parent company and delivering it on a consistent basis.

The value proposition for every company is different. Aviation needs to know very specifically what its parent company values.

Maybe the value proposition for Aviation in your company is time-savings over the commercial airlines. That’s a great place to start, but there could be more.

It could also be the creation of customer-facing opportunities, or quick and efficient access to emerging markets. (We know of a flight department whose parent company placed “Asia and back in 30-hours” as a key source of value creation.)

Whatever creates value for your parent company, you need to figure it out and make sure you’re delivering it . . . pronto.

 

2.  You’ve Lost the Confidence of Your Executive Travelers

We know of a flight department that saw its flight hours begin to dwindle year-over-year from historical averages. And nobody in the department could figure out why.

When we probed the key executive users, the answer was startling.

The perception was that their service was unreliable. Business-critical trips were scheduled and frequently cancelled at the last-minute due to aircraft reliability issues.

Worse yet, trips were getting cancelled on the road in the middle of a multi-city itinerary, leaving the executives stranded. The passengers had to scramble for more time-consuming commercial flights to complete their business.

In effect, the flight department was “fired” without even knowing it.

When you lose the confidence of your key executives, it’s a long journey back.

The best way to counter aircraft reliability issues is to get as good at “preventing problems” as you are at “fixing them.”

It used to be that flight departments prided themselves in being good “firemen.” That is, something would happen at the last minute and Herculean efforts would be expended to get the aircraft back on the ramp and save the trip.

But that’s actually a bad thing.

If there are Herculean efforts expended anywhere in your flight department, they should be aimed at preventing the technical issues that cause trip delays or cancellations.

That means tracking the most frequent unscheduled Maintenance issues with your aircraft and trying to prevent them.

Maybe it’s by replacing problem-prone parts sooner than the industry average. Maybe it’s working with the OEM (and their supplier base) to preclude the root cause of part failures.

Whatever it is, you should be expending significant effort on finding out. If you’re not, you’re at risk of losing your customer base.      

 

3.  Your Executives Don’t Understand How to Use Your Services

At another client, flight hours began to dwindle year-over-year from historical averages, but dispatch reliability was high.

When we probed the key executive travelers, the answer was once again startling.

What we heard was a widespread lack of understanding of what “acceptable use” of the corporate aircraft actually was.

As it turned out, there had been a significant number of senior executive changes within the company. And with those changes, came new financial controls.

In an over-abundance of caution, many executives held back on use of the corporate aircraft under the impression that, in doing so, they were reducing corporate expenses.

In actuality, they were increasing the “unit cost” of the aircraft operation, as the total cost of the flight operation was being absorbed by a lower number of flight hours.

Some quick education on the most effective use of the aircraft (‘utilize the aircraft assets up to the point where more fixed cost, such as headcount, needs to be added’) helped free-up the capacity and brought back prior levels of utilization.

We also helped the company rewrite their Business Aircraft Use Policy so that a uniform understanding of appropriate aircraft use was shared among all the authorized users.

Better check if your Use Policy is ensuring the most efficient aircraft use—or unintentionally inhibiting it.             

 

4.  You Don’t Have a Handle on Your Numbers

Back in the halcyon days of business aviation gone by (described in the first warning sign), many flight department directors didn’t have a budget.

They got whatever they wanted.

When finally given a budget, some were insulted, as if they should be exempt from such activity.

Thank goodness those days are over. Today’s Aviation Director is much smarter and far more astute than that.

But truth be told, it’s often not easy to know exactly where your flight department stands in regards to your budget. (You know, the one that Finance sent you at the beginning of the year.)

Why is that?

It’s often because the account structure set up by the corporate accounting system (often SAP or Oracle) does not work very well in a business aviation setting.

Corporate accounting systems are set up to reflect the way the parent company purchases the goods and services that it needs to conduct business.

Usually, relatively low volumes of very high dollar purchases.

The problem is that we, in business aviation, purchase our goods and services in exactly the opposite way. We make more frequent purchases of lower dollar goods and services.

What’s the consequence?

The financial reporting we often receive from corporate places our budget in a relatively small number of large account buckets.

The net result is that it’s often very difficult to track actual budget performance to the plan. It’s even more difficult to allocate budget dollars among your functional group leaders.

The worst position you can be in is to be asked by your reporting executive (or the CFO) to explain your variances to the budget plan—and not be able to do so.

The solution?

At Gray Stone Advisors, we help our clients create a sub-chart of accounts that is workable for our type of buying and cost structure in Aviation. Then that gets mapped back to the larger corporate account groups.

Our service, called Budget Builder™, helps dozens of aviation directors completely understand their numbers (so there are no surprises).

To be on top of your game in business aviation, and ensure you’re not “at risk” with your parent company, know your numbers. Really well.   

 

5.  You’re Not Developing Your People

This is actually the most important piece of advice in this entire blog.

You must pay careful attention to the growth and development of your people. After all, they are the foundational element to everything you do.

As you’ve likely heard or have experienced, the “war for talent” in business aviation is fierce.

Over the last several years, we’ve seen the shortage of pilots and maintenance technicians grow by leaps and bounds.

And it’s not getting any better.

Attraction and retention of top talent is the most important thing you can do to ensure that your flight department is not at risk.

Among the top reasons that employees voluntarily leave is that they feel they can’t grow and develop where they are.

Certainly, compensation is an issue, but it’s often second or third on the list.

Find out what makes your flight department employees tick and help them identify their passions. Then, align those interests with the goals and objectives of the department.

If you do, you’ll have to chase them out of the Aviation facility on Friday afternoon. If you don’t, your department risk will grow exponentially.

Place a high priority on your people. When you do, pretty-much everything else falls into place.

 

In Summary

I hope you’ve found these five warning signs useful and that you’re “in the clear” with respect to your standing at corporate. But if not, and you fear that your department might be at risk (perhaps outsourced to a management company), you must act immediately.

Also, if you haven’t already done so, I encourage you to read Jim Lara’s post, “Wake Up: Don’t Lose Your Flight Department.” It relates a conversation he had with an aviation director who pretty-much ignored the signs outlined above.

 

Tell Us What You’ve Done

What have you done to ensure that your flight department is not at risk? Let us know and we’ll share them in a future blog.

 

 

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