January 11, 2023
2023 Pre-owned Jet Pricing Outlook
The rise of the business aviation professional.
This is a topic that’s very near and dear to my heart because it’s very much aligned with the way we’ve tried to build our company—to help aviation leadership.
So, just for fun . . . the way we got started on this topic (because we knew we wanted to do some research on it) was that we got our hands on a 1972 NBAA membership list. We went through the leadership of all the members were pilots.
So that tended to be, back now 40 years, the way that flight departments were selected. Or it was the Chairman who hired a chief pilot who might have had some military background.
The flight department tended, even in very large organizations, to operate an autonomous standalone entity. Maybe a little dark hole. But it was it was not the well-scrutinized department that we find in most large companies today.
One of my favorite descriptions by a very "switched on" aviation business leader.
When he was a young pilot, he went into his boss and said, "Hey listen, I think we should do some fleet planning and, you know, start looking at this like a business."
And his boss had his feet up on the desk, and he was reading the paper, and said, "Listen, son, when we need new airplanes, the boss will tell us. Thanks. Now go back to work flying the line." Then he put up his paper.
That’s the kind of the way things were done in the "old days."
Today we’re seeing a dramatic shift in the leadership of aviation flight departments—from strictly flight ops, where of course you had flight operations, with an HR component. And there was some financial responsibility, but it tended to be building an annual budget.
We’re looking at a tremendous shift in that leadership. Now it’s moving away from just managing flight ops to managing a business unit.
Look now at the number of maintenance technicians that are running very sophisticated flight departments.
One of my favorite credentials are an ATP and an IA with a MBA and JD. I won’t mention any names as he’s a very humble individual (Pat), but he’s just an outstanding candidate.
By the way, in a Fortune 20 company, an aviation manager was selected from the business. He came into the department as the business manager for the flight department and rose up through the ranks and is now director of aviation.
So you’re seeing a real shift, thanks to NBAA, aviation universities, and other forward-looking companies, like ours, that are providing a lot of resources to aviation managers to help them become more sophisticated and speak the language of the senior business leaders.
As leaders of business aviation business units today, our financial responsibility goes well beyond creating a budget.
Now we’re even doing things like accurately inputting income for executives. We’re managing transportation solutions as opposed to flying airplanes. We look at charter. We look at fractional. We look at its role in their company as supplemental to the core fleet or as a replacement to core fleet. We look at it, and we make a business decision.
There’s a toolbox and all these components are tools that go in the box. That’s the difference from just driving airplanes and fixing airplanes in the old days.
We also look at creating fleet plans that are consistent with capital budgeting criteria–from P&L book reporting, life cycle cost, net present value (NPV) to associate the time-value of money with a fleet. There’s a lot more going on now.
The bottom line is that the aviation manager today wants to be integrated into the strategic vision of his company.
He wants to speak the language and present his case in the language in the format that business leadership speaks. And he earns the right to say, "this is what we think makes the most sense for our company in our flight department."
It’s just a very exciting time and we’re very excited to be a part of it.
Please get in touch with us if you think that we have some resources in our Learning Center that will help you.
The bottom line, we want to help you do your job better and that’s what we’re trying to accomplish.
Thanks so much.Contact Guardian Jet
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