Bachelor-Thesis
Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Presented to and supervised by Prof. Dr. Karsten Leibold International University of Applied Sciences Bad Honnef · Bonn Department of Aviation Management
Jürgen Willems Jülicher Ring 71 52388 Nörvenich Germany E-mail: [email protected] Student ID: 9031666
Nörvenich, 14 August 2006 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Acknowledgements
I would like to thank Prof. Dr. Karsten Leibold, my thesis supervisor, for many hours of helpful guidance and advice. He introduced me to the topic and helped me with formulating many of the ideas and concepts. Furthermore, his interesting lectures provided me with the basic skills to conduct the necessary research.
Many thanks to Prof. Dr.-Ing. Ulrich Desel for being a great advisor and supporting me during my work on this thesis.
My special thanks goes to Mister Reiner Eismann, Managing Director of Essen/Mühlheim Airport, for his generous support and for providing me with a great research opportunity.
I gratefully acknowledge the support of the following persons, who contributed their time to share their experiences and insights with me and provided me with further information sources. I truly enjoyed the discussions and I hope that I have accurately reflected their thinking in this thesis.
Wolfgang Vautz, Manager/Owner, VHM Flight Training and Charter Uwe Marx, Flight Operations Manager/Pilot, VHM Flight Training and Charter Guido Harling, Manager, BearingPoint GmbH
I would also like to give a special thanks to Norman, for the excellent and productive cooperation throughout the last three years and the valuable support for this thesis.
Finally, I would like to thank my wife, Beate, for providing me the necessary freedom to conduct my studies, and my kids, Merle and Jan, for providing me with as much distraction as was necessary to keep my perspective. I more than appreciate the unconditional love and support they give me throughout my endeavours.
ii Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Table of Contents
List of Abbreviations ...... v List of Figures and Tables ...... viii List of Appendices ...... ix Abstract ...... x 1 Introduction ...... 1 1.1 Motivation...... 1 1.2 Why Commercial Business Aviation?...... 1 1.3 Structure and Purpose of this Thesis ...... 2 2 Business Aviation in Germany ...... 4 2.1 The Business Travel Market ...... 4 2.2 Business Aviation...... 6 2.3 Regulatory Framework...... 7 2.4 Commercial Business Aviation...... 8 2.4.1 Customer Contracts ...... 8 2.4.2 Pricing Structure ...... 9 2.5 Business Aviation Aircraft ...... 9 2.5.1 Common Aircraft Categories...... 9 2.5.1.1 Multi Piston Aircraft ...... 10 2.5.1.2 Turboprops...... 11 2.5.1.3 Executive Jets ...... 12 2.5.2 Very Light Jets – A Revolutionary Innovation?...... 13 2.6 Benefits of Business Aviation...... 14 2.6.1 Personnel Time Savings ...... 15 2.6.2 Increased En Route Productivity...... 15 2.6.3 Choice of airport...... 18 2.6.4 Operational Flexibility...... 19 2.6.5 Improved Employee Morale and Loyalty...... 19 3 Finding the Niche Markets...... 21 3.1 Business Intelligence ...... 21 3.2 Methodology ...... 22 3.2.1 Availability of Data ...... 24 3.2.2 Analysis Tools...... 25
iii Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
3.2.3 Data Validity and Integrity ...... 25 3.2.4 Creation of a Master Data File ...... 26 3.3 Evaluation of Intra-European Airline Connections...... 27 3.3.1 Direct Connections...... 27 3.3.2 One-Stop Connections...... 28 3.3.3 Two-Stop Connections...... 29 3.4 Airline Schedule Evaluation Results...... 30 4 Cost-Benefit Analysis ...... 33 4.1 Accounting and Economic Principles ...... 33 4.2 Methodology ...... 34 4.3 The Value of Time...... 34 4.3.1 The Value per Man-Hour (VMH) Concept...... 35 4.3.2 Productivity Valuation Models...... 36 4.4 Time and Cost Calculations ...... 38 4.4.1 Time Calculation ...... 39 4.4.2 Cost Calculation...... 43 5 Sample Route Calculations ...... 47 5.1 Selected Sample Destinations ...... 47 5.2 Basic Assumptions...... 49 5.3 Route 1: Oulu, Finland ...... 50 5.4 Route 2: Vilnius, Lithuania ...... 54 5.5 Route 3: Katowice, Poland...... 58 5.6 What Type of Business Aircraft to Choose?...... 62 6 Conclusion ...... 64 References...... 67 Appendices...... 71
iv Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
List of Abbreviations
A/C Aircraft ADV Arbeitsgemeinschaft Deutscher Verkehrsflughäfen APG (Seabury) Airline Planning Group ATC Air Traffic Control BEW Basic Empty Weight BG Bulgaria BI Business Intelligence BRE Bremen Airport BUD Budapest – Ferihegy Airport CGN Cologne/Bonn Airport CZ Czech Republic DE Germany DST Daylight Saving Time DTM Dortmund Airport DUS Düsseldorf International Airport FI Finland FRA Frankfurt Airport ft feet GDN Gdansk – Lech Walesa Airport HAJ Hanover Airport HAM Hamburg Airport HEL Helsinki – Vantaa Airport HRA Human Resource Accounting HRM Human Resource Management HU Hungary IATA International Air Transport Association IBAC International Business Aviation Council Ltd. ICAO International Civil Aviation Organisation IFR Instrument Flight Rules ITIN VI Itinerary Variation Identifier JAA Joint Aviation Authorities JAR Joint Aviation Requirements
v Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? kg kilogrammes km kilometers km/h kilometers per hour KPI Key Performance Indicator KRK Krakow – John Paul II International Airport kts knots (nautical miles per hour) KTW Katowice International Airport lbs pounds lcl Local Time LV Latvia m meters MCT Minimum Connecting Time MDF Master Data File MTOW Maximum Take-Off Weight MUC Munich International Airport NBAA National Business Aviation Association, Inc. nm nautical miles NO Norway OSL Oslo – Gardermoen Airport OSR Ostrava International Airport OTP Bucharest – Henri Coanda International Airport OUL Oulu Airport O&D Origin and Destination Pax Passengers PCD Personnel Cost Difference PL Poland PPR Prior Permission Required PRG Prague – Ruzyne Airport RIX Riga International Airport RO Romania SAS Statistical Analysis System Software SOF Sofia International Airport SQL Structured Query Language SSIM Standard Schedules Information Manual
vi Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
STA Scheduled Time of Arrival STD Scheduled Time of Departure STR Stuttgart Airport SXF Berlin – Schönefeld Airport TEC Total Explicit Cost THF Berlin – Tempelhof Airport TP Turboprop TRF Sandefjord – Torp Airport TTC Total Trip Cost TVT Total Valued Time TXL Berlin – Tegel Airport UTC Coordinated Universal Time VAR Varna International Airport VDR Verband Deutsches Reiesemanagement e.V. VLJ Very Light Jet VMH Value per Man-Hour
VMHBE Average Break-Even VMH VNO Vilnius International Airport WAW Warsaw – Frederic Chopin Airport
vii Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
List of Figures and Tables
Figure 2.1: Distribution of Business Trips per Destination Region (2003 -2004) .... 4 Figure 2.2: Split of Total Business Travel Cost (2004) by Cost Sectors ...... 5 Figure 2.3: Usage of time aboard aircraft ...... 17 Figure 2.4: Passenger Productivity Aboard Aircraft Where FIVE Represents a Typical Office Hour...... 17 Figure 3.1: Creation of One-Stop Connections with SAS ...... 28 Figure 3.2: Creation of Two-Stop Connections with SAS ...... 29 Figure 5.1: Average Break-Even VMH Values (Oulu, Finland)...... 53 Figure 5.2: Average Break-Even VMH Values (Vilnius, Lithuania) ...... 57 Figure 5.3: Average Break-Even VMH Values (Katowice, Poland) ...... 61 Figure 5.4: Average Break-Even VMH for Choice between Business A/C Types 62
Table 2.1: Classification of Executive Jets ...... 12 Table 3.1: SSIM Date - European Airline Schedule 2005...... 24 Table 3.2: APGDAT - European Airline Schedule May 2006 ...... 24 Table 3.3: “There-and-Back-in-a-Day” options from the Rhine-Ruhr Area ...... 31 Table 4.1: Multipliers of Base Salary Resulting From Application of Methods of Computing Corporate Values of Employees For Typical Corporations ...... 36 Table 4.2: The Value of Executive Time...... 37 Table 4.3: Time Calculation Table ...... 39 Table 4.4: En Route Productivity and Total Valued Time ...... 41 Table 4.5: Cost Calculation Table ...... 43 Table 5.1: Time Comparison Route 1 (Oulu, Finland) ...... 51 Table 5.2: Cost Comparison Airline vs. Business TP: Oulu, Finland (3 pax)...... 52 Table 5.3: Cost Comparison Airline vs. Business Jet: Oulu, Finland (3 pax)...... 52 Table 5.4: Time Comparison Route 2 (Vilnius, Lithuania) ...... 55 Table 5.5: Cost Comparison Airline vs. Business TP: Vilnius, Lithuania (3 pax) .. 56 Table 5.6: Cost Comparison Airline vs. Business Jet: Vilnius, Lithuania (3 pax).. 56 Table 5.7: Time Comparison Route 3 (Katowice, Poland)...... 59 Table 5.8: Cost Comparison Airline vs. Business TP: Katowice, Poland (3 pax).. 60 Table 5.9: Cost Comparison Airline vs. Business Jet: Katowice, Poland (3 pax) .60
viii Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
List of Appendices
Appendix 1: Commercial Air Charter Companies in Germany Appendix 2: Air Charter Brokers in Germany Appendix 3: Listing of German Airports Appendix 4: “There-and-back-in-a-day” Options Appendix 5: Airline Bookings for Sample Routes
ix Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Abstract
The purpose of this thesis is to assess the potential impact of commercial business aviation on business companies in Germany. In other countries, especially in the United States, business aviation is accepted as a normal business tool that can contribute to the profitability of the company. In Germany, business aircraft are still afflicted with an image of luxury, and many right-sized and cost-conscious companies do not want to be associated with such extravagant expenses. It seems to be mainly a question of perception or nescience, why many German companies avoid contact with business aviation. Another possibility may be the way in which travel expenses are actually calculated. The benefits that can result from the use of a business aircraft are basically the same, no matter where the company is based. A difference obviously exists in the quantitative effect these benefits may have on the individual company budget. This again depends more on size and nature of the company than on nationality.
This thesis will give an overview of the main benefits and advantages that are unique to business aviation. On the other hand, deficiencies in scheduled airline services will be highlighted. The potential time and productivity gains that can be achieved by using commercial air charter are quantified and a model is created to evaluate the tangible benefits on an individual trip basis and in comparison to scheduled airline travel. The created model is applied to three business trips, based on a set scenario. The results clearly demonstrate the existing potential on the German market. However, honouring these benefits requires a comprehensive valuation of employee time. Especially in Germany, personnel is a major cost factor, not only in the service industries. Companies must recognize these costs, when calculating the full amount of travel expenses incurred. The created cost- benefit evaluation model provides a simple means to demonstrate that business aviation can be a valuable complement to scheduled airline travel.
x Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
1 Introduction
1.1 Motivation
In today’s economy, the growing globalisation of corporate activity has created the need to establish and maintain long-distance customer and company contacts. Despite modern communications technology, the need for business travel is still increasing. While phone, fax, video conferencing or email obviously are ideal under many circumstances, personal presence is often essential. When physically being there, the amount and quality of information that can be gathered or delivered face-to-face exceeds that of any other communication method. As being there obviously requires getting there (and back), time and cost efficient means of transportation are required.
Scheduled airline services can provide a valuable tool to perform this task. However, these services have undergone considerable changes throughout the last decade. Increased competition and fierce cost pressure caused by the liberalization of the aviation market forced many of the established airlines to right- size their operations.1 Hub networks were streamlined and services to and between smaller cities were reduced. Conversely, business continues to expand from large metropolitan areas to smaller cities. As this thesis will show in Chapter 3, there are obvious disparities in airline supply and individual business demand. These disparities are an opportunity for alternative transport solutions, like commercial business aviation.
1.2 Why Commercial Business Aviation?
Business Aviation, in general, is a flexible and useful business tool that can yield tangible benefits to the user. A study conducted in the United States found business aircraft operating organisations earned 146% more in cumulative returns than non-business aircraft operators. Furthermore, on a return to shareholder basis, business aircraft operators returned 343% to their shareholders between
1 See: Focus (2003). p. 15 et seq.
1 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
1996 and 1999 versus 177% for non-operators.2 Some companies in Germany have realized this potential by operating own corporate fleets or by using the on- demand service of commercial business charter companies. Yet, the general acceptance seems to be rather low. Business aviation is still widely perceived as being an expensive luxury item that goes beyond the scope of commonly tight travel budgets.
The results of this thesis are directed towards those companies that still rely on “traditional” means of air transport. As the operation of own corporate aircraft requires major investments and already existing knowledge of the business, emphasis will be placed on the commercial side of business aviation, because there are no commitments associated with on-demand charter.
1.3 Structure and Purpose of this Thesis
In Chapter 2, this thesis will examine the business aviation market and outline the existing framework for the air charter business. This chapter will also provide a qualitative description of the most important benefits and advantages of business aviation compared to scheduled airline travel.
In Chapter 3, it will then go on and look closely at the European airline schedules. The chapter will outline the disparities between scheduled airline services and business travellers’ needs for a set scenario.
Chapter 4 will draw on Chapters 2 and 3 to quantify the elaborated benefits and develop a generic model that can be used to evaluate on an individual trip basis, whether or not the use of a chartered business aircraft is economically favourable.
In Chapter 5 the generic model will be applied to three selected sample routes to demonstrate the possible financial benefits.
2 See: Arthur Andersen LLP (2001). p. 3.
2 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
The reader of this thesis will obtain an understanding of the peculiarities of business aviation and the potential cost saving opportunities resulting from its use. The findings may be used to convince companies that still rely on “traditional” transport modes to approach commercial business aviation without bias. Eventually, this may further encourage the use of general aviation aircraft for business travel.
3 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
2 Business Aviation in Germany
2.1 The Business Travel Market
Business Travel Business travel in the sense of this thesis is travel for a purpose and to a destination determined by a business company. Incurred travel costs are covered by that company.
According to a business travel analysis conducted by the VDR (Verband Deutsches Reiesemanagement e.V.) in cooperation with BearingPoint, German business companies with more than ten employees performed more than 146 million business trips in the year 2004.3 With regard to preferred destination regions, Figure 2.1 shows that the majority of business trips were domestic. While domestic and European business travel activity increased from 2003 to 2004, travel to intercontinental destinations declined to only 50% of intra-European travel activity.
Figure 2.1: Distribution of Business Trips per Destination Region (2003 -2004)4
million 120
100 104.75 106.63
80
60
40
20 24.49 26.49 18 . 17 13 . 2 4 0 2003 2004 2003 2004 2003 2004 Domestic Europe Intercontinental
3 See: Verband Deutsches Reisemanagement e.V. (2005). p. 6. 4 Source: Adapted from Verband Deutsches Reisemanagement e.V. (2005). p. 7.
4 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Business Travel is a high value market, not only for the air transport sector, but also for public and private ground transport providers and other service industries (e.g. hotels and restaurants). The total value of receipted travel expenses, as depicted in Figure 2.2, accumulates to 44 billion euros per year, with air transportation and accommodation costs accounting for more than 50%. Another important cost factor with a share of 17% are Other Cost (covering e.g. service fees for travel agents, credit card charges, or public transport and taxi costs).
Figure 2.2: Split of Total Business Travel Cost (2004) by Cost Sectors5
10,1 billion € 6,2 billion € (23%) (14%)
2,2 billion € 7,4 billion € (5%) (17%)
5,3 billion € (12%)
12,8 billion € (29%)
Total: 44,0 Billion €
Flight Train Rental Car Accommodation Catering Other Cost
In general, the Total Travel Costs valued in the VDR analysis, are calculated on the basis of individual travel expense reports. As these expenses are quite apparent and easy measurable, they are commonly considered being the only incurred cost of travel. In the course of this thesis, yet another cost factor – the personnel cost factor - will be introduced. Travel induced personnel cost is an important factor to consider and it should be valued when making the choice between different available transport modes.
5 Source: Adapted from Verband Deutsches Reisemanagement e.V. (2005). p. 14.
5 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
2.2 Business Aviation
The term business aviation, as used in this context, describes business travel with general aviation aircraft, whereby general aviation encompasses any flight other than a military or scheduled airline flight.
The International Business Aviation Council Ltd. (IBAC) classifies business aviation operators in three categories: Commercial, Corporate and Owner Operated.6
While Owner Operated already implies the operation of a fully owned (or leased) aircraft by the business owner, Corporate Business Aviation is defined as:
“A multi-engine or turbine powered aircraft transport operation on behalf of a company, other than commercial air transportation, in connection with the transport of passengers or cargo for that company, or another member of the same group of companies, when flown by a pilot or pilots paid for flying the aircraft.” 7
Some of the major companies in Germany that operate corporate fleets are: BASF, Bauhaus, Bertelsmann, BMW, Bosch, Liebherr, Viessmann, Volkswagen, and Würth.8
The cost-benefit analysis in Chapters 4 and 5 of this thesis will only concentrate on the Commercial (air charter) side of business aviation. On-demand charter is probably the easiest and cheapest way to partly start the shift from scheduled airline travel. No costly up-front investments or long-term commitments are required. Chartering an airplane for a single trip is similar to hiring a taxi. Therefore, commercial air charter operators are commonly referred to as air taxi companies. A more detailed description of this category will be given in Chapter 2.4.
6 See: IBAC (2000). 7 See: IBAC (2000). 8 See:HSH Nordbank (2005). p. 19.
6 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
A comparable cost-benefit analysis for other operating options cannot be performed on an individual trip basis. A review of annual corporate travel behaviour would have to be performed to determine the amount of travel required to amortise the cost of aircraft ownership, depreciation and operation.
A similar model would have to be developed, if only Fractional Ownership is acquired. Fractional Ownership programmes are normally offered only for turbojet aircraft, with the most important provider in Europe being NetJets. The minimum fraction to be acquired is 1/16 or 50 flight hours per year. In addition to paying the aircraft share for a 5-year contract, monthly charges have to be borne for indirect operating costs (e.g. crew, insurance, quality assurance) and variable costs (e.g. fuel, landing fees, maintenance). Doing so, aircraft availability is guaranteed at all times. Currently, NetJets’ fractional shares start at $ 406,250 (~ € 320,528) for a 1/16 interest in a Hawker 400XP.9
2.3 Regulatory Framework
The legal basis for any kind of commercial air transportation in Germany (and in Europe) is set by the Joint Aviation Authorities (JAA).
“JAR-OPS Part 1 prescribes the requirements applicable to the operation of any civil aeroplane for the purpose of commercial air transportation by any operator whose principal place of business and, [if any, its registered office] is in a JAA Member State.” 10
As opposed to corporate air services, air charter or air taxi companies are commercial air transport providers. Thereby, they have to conduct their operation, just like any commercial airline, in accordance with JAR-OPS 1 and the related regulations.
9 See: NetJets (2006). 10 See: JAA (2006). JAR-OPS 1.001 (a)
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2.4 Commercial Business Aviation
In Germany, there are more than 60 commercial air charter companies. Most commonly, these companies operate turboprop and light to midsize jet aircraft, with fleet sizes varying from one to more than 20 aircraft.11 A list of available air charter companies in Germany is contained in the Appendix 1 of this thesis.
2.4.1 Customer Contracts
The relation between air taxi operators and their customers is expressed by either On-Demand (Ad Hoc) Chartering or Contract Chartering (Block Charter). Chartering an aircraft on-demand is basically like calling a taxi. Customers usually make direct contact with the respective charter company. Arrangements can be made, even on short notice, according to the customer’s needs. However, as many charter companies operate rather small fleets, aircraft availability may not always be guaranteed. In such cases, the use of a broker may be useful. Meanwhile, several specialized air charter brokers (see Appendix 2) are available to search the market for suitable offers on behalf of the customer.12 Where several air charter offers are obtainable or market situation is unknown, this option may save time and money, despite the brokerage fee that has to be paid.
Contract Charters, as opposed to On-Demand Chartering, are based on longer- term contracts with a defined number of flight hours for the term of the contract. As the minimum flight volume required for block charters is usually 100 hours, a considerable amount of travel is required to justify such contracts. However, there are generally price advantages connected with longer-term contracts.
11 See: Figgen, A. (2006). p. 46 et seqq. 12 See: Figgen, A. (2006). p. 56.
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2.4.2 Pricing Structure 13
Generally, the prices for aircraft charter14 consist of two components: a fixed rate per flight hour and additional charges.
The actual amount that is charged per flight hour depends on the type and size of the aircraft that is chosen for the trip. The hourly rate is used by the operator to cover the cost of ownership as well as the direct and indirect operating costs (e.g. crew, fuel, ATC charges, catering). Additional charges depend on the characteristics of the individual trip and usually contain the landing and potential handling charges at the destination airport. A supplementary fuel surcharge, common for many airlines may also be applied. For trips that require an overnight stay, crew accommodation (around € 500) has to be covered separately.
In contrast to fractional ownership companies like NetJets, the regular air charter or air taxi companies are fixed base operators. In general, all flights originate from and return to the operator’s home base at the end of a mission. If a customer requires his trip to start from (and return to) an airport different than the operator’s home base, additional flights are required to bring the aircraft to the customer’s location and back to home base. These positioning flights will also be charged to the customer.
2.5 Business Aviation Aircraft
2.5.1 Common Aircraft Categories
The portfolio of aircraft available in business aviation is much wider than the choices offered by scheduled airlines. Aircraft built specifically for business use vary from four-seat, short-range, piston-powered airplanes to two- and three- engine long range executive jets that can carry up to 19 passengers more than 12,000 kilometres non-stop. Some companies even use airline-type jets, and also
13 All information based on personal communication with air charter service providers. 14 Just like scheduled airline flights, charter flights with general aviation aircraft to non-domestic destination are exempted from sales tax.
9 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? helicopters are sometimes used for business transportation. It is the operator’s task to select the right aircraft for the required number of passengers, the stage length, the purpose of the flight, as well as the status and the budget of the customers. The categorisation of aircraft commonly available for business charter is listed below.15
• Multi Piston Aircraft • Turboprops • Executive Jets • Airliners • Helicopters
Especially the first three categories deserve a closer look, when concentrating on smaller passenger groups using commercial air charter for business travel within Europe. The following chapters provide a short description of these three categories of aircraft that are commonly used in business aviation. Nevertheless, for the sample route calculations performed in Chapter 5 of his thesis only one turboprop and one jet aircraft will be selected to make a comparison with airline schedules and costs. A short description of the two aircraft models selected is included in the following chapters.
2.5.1.1 Multi Piston Aircraft
Aircraft in the multi piston segment are propeller driven and powered by reciprocating engines. Although engine technology is quite old and average cruising speed is rather slow, twin piston aircraft are still common with a lot of air charter companies. Not suitable for much more than carry-on baggage and usually not equipped with on board lavatories, multi piston aircraft can only be used for short distance flights.
15 See: Aircraft Charter World (2006).
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The big advantage of multi piston aircraft however is the low acquisition cost, which results in comparably low hourly rental rates. Nevertheless, the mentioned limitations in size, speed and range basically restrict the use of multi-piston aircraft for commercial business aviation to short distance flights with small passenger numbers. Above all, the acceptance of the rather old technology in the business travel sector is rather low.
2.5.1.2 Turboprops
Just like piston-powered aircraft, turboprops are also driven by propellers. The main difference however is that the propellers are driven by turbines. This technology in turn enables turboprops to reach considerably higher speeds. Turboprop aircraft combine the low-cost advantages of the piston aircraft with the ability to reach higher cruising speeds. Cabin comfort advantages generally consist of pressurized passenger cabins, satellite telephone and a semi-private lavatory. Furthermore, turboprops are often able to operate from runways that are not suitable for turbojet aircraft. The economic advantage of turboprops is most visible on short to medium range flights, where the speed advantage of the turbojets is less dominant.16
The Raytheon Beech King Air B20017, able to accommodate up to eight passengers, is chosen as typical example from this category. The King Air B200 has a maximum cruise speed of 292 kts (541 km/h) and a maximum range of 1,837 nm (3,402 km). Even with eight passengers almost any destination in Europe can be reached non-stop from Germany. The aircraft can even operate from airfields with a runway length of less than 2,600 ft (792 m). Average hourly rates charged for a Beech King Air B200 are generally between € 1,500 and € 1,600.18
16 Information researched on business aircraft manufacturers’ websites. 17 See: Raytheon Aircraft Company. (2006). 18 Average rate derived from air charter company quotations and websites of air charter brokers.
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2.5.1.3 Executive Jets
Aircraft in the Executive Jet segment are the most time efficient way of travel and are mainly suitable for medium or long distance flights. With average non-stop ranges of anything from 1,300 nm (~2,400 km) to 6,750 nm (~12,500 km), jets can travel further and faster than most non-jet aircraft, while operating in and out of airports that are often not accessible by the major airlines. In the lighter jets, amenities often include a pressurized passenger cabins, satellite telephone and a semi-private lavatory while mid size jets often have a private lavatory and external baggage storage.19
As can be derived from Table 2.1, purchase prices - not surprisingly - increase with the size of the aircraft. This however is translated to the hourly rates that have to be paid for chartering the respective aircraft. While hourly rates in the entry segment are still somewhere near € 2,000, a light medium size jet will usually not be available below € 4,000 per hour.20
Table 2.1: Classification of Executive Jets21
Segment MTOW [lbs] Seats Range [nm] Price [million $] Entry 10 K – 13 K 4 - 7 1300 - 2500 2.4 - 6 Light 13 K – 20 K 6 - 8 1450 - 1970 6 - 8 Light Medium 20 K – 33 K 7 - 9 1940 - 2700 9 - 14 Medium 33 K – 50 K 8 - 12 2000 - 3400 13 - 24 Long Range 50 K – 80 K 5 - 19 3100 - 4500 21 - 34 Very Long Range 80 K – 100 K 8 - 19 4800 - 6750 32 - 46 Source: Rolls Royce
For the purpose of this study, the Cessna 525 Citation Jet, a member of the entry segment will be used for the sample route calculations in Chapter 5. The Citation Jet can accommodate up to 5 passengers. It has a maximum range of 1,485 nm (2,750 km), which is sufficient for the routes that will be evaluated. The maximum cruising speed is 380 kts (704 km/h).22 The average hourly rate for chartering the aircraft is approximately € 2,000.23
19 Information researched on business aircraft manufacturers’ websites. 20 Average rates derived from air charter company quotations and websites of air charter brokers. 21 Source: Adapted from HSH Nordbank AG (2005). p. 5. 22 See: Flug Revue (2006).
12 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
2.5.2 Very Light Jets – A Revolutionary Innovation?
A new category just about to enter the market is classified as Very Light Jets (VLJ). Positioned between the Turboprops and the Entry Segment Executive Jets, the low-priced VLJs are said to be a revolutionary innovation able to boost the air charter market. To evaluate this statement, posted mainly by the respective aircraft manufacturers, VLJs will also be examined as a fourth category. The Eclipse 500 is supposed to be one of the first models to enter the market, with first deliveries scheduled for autumn 2006. The purchase price as stated by the manufacturer is currently set to $1.52 million,24 which is about one third the price of an average conventional entry segment jet (see Table 2.1).
Evaluating the performance of the new VLJs is rather difficult, because they are not yet operational. Performance data published by Eclipse Aviation25 state a maximum IFR range of 1,300 nm (2,408 km). However, looking at the specifications of the aircraft, the inherent limitations concerning the useful load26 are quite obvious. When operated with two pilots, the full fuel load can only be carried with no more than one passenger27. With four passengers, holding only hand baggage, the available fuel28 is already reduced by almost 30%. This will most probably reduce the maximum range of the Eclipse 500 far below the one of a Citation Jet.
This is just an estimation, based on the presently available data. A true evaluation will only be possible after the first operational experiences have been gathered. Nevertheless, a question mark should be placed behind the revolution potential towards the European air charter business. Unlike the USA, most European
23 Average rate derived from air charter company quotations and websites of air charter brokers. 24 See: Eclipse Aviation Corp. (2006). 25 See: Eclipse Aviation Corp. (2006). 26 Useful load = Maximum Certificated Takeoff Weight (MTOW)- Basic Empty Weight (BEW) 27 For pilot weights, see: JAA (2006). JAR-OPS 1.615 (a) (2). For passenger weights, see: JAA (2006). JAR-OPS 1.620 (e). 28 Available fuel = Useful load – (pilot weights + passenger weights)
13 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? countries currently require two pilots for all commercial turbojet flights29. This not only doubles the crew cost, but given the already limited useful load of the Eclipse 500, this further reduces the payload/range. As flexibility in range and passenger group size is rather low, the economic arguments for VLJs may not be as convincing in Europe, particularly for air taxi operations. Furthermore, the comfort level with four passengers in the relatively small cabin can probably not be compared to that of other business aircraft.
“A King Air would have a longer range, although it would be slightly inferior in speed. However, it certainly would be a lot more comfortable for passengers; you wouldn’t feel like you were cramped into the back of your dad’s Pontiac.” 30
The higher market potential for such an aircraft can probably be expected in the area of owner operation (where single pilot operation will be possible), as there is still a cost advantage arising from the low acquisition cost.
2.6 Benefits of Business Aviation
There may be several reasons for companies to use business aviation instead of scheduled airlines. Starting with the fact that a trip aboard a business aircraft is more comfortable and convenient than regular airline travel, regular users point to many more advantages.31 Several studies have already been made to elaborate this multi-layered range of benefits and advantages, mainly relating to the operation of corporate fleets.32 While many of these advantages are rather intangible, some of them directly translate into tangible benefits that can be expressed in monetary values. The following chapters will outline the most important benefits that are relevant for the subsequent cost-benefit analysis.
29 See: JAA (2006). JAR-OPS 1.940 (b) (1) 30 Richard Aboulafia, vice president of the Teal Group. See: di Piazza, K. (2004). 31 See: PRC Aviation. (1995). p. 4.3. 32 See: Arthur Andersen LLP (2001). p. 12 et seqq. See: PRC Aviation. (1995). p. 3-1 et. seqq.
14 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
2.6.1 Personnel Time Savings
TIME – for many people it is just another four-letter word, but for a fast-paced, right-sized company in a globalised economy there is never enough of it. Time is a finite good. It is in short supply and there is no way to manufacture more of it. On closer examination, at last, there may as well be ways to manufacture more time, or something that looks a lot like it: the productive use of available time.
Employee time is a tangible cost, as salary and bonuses pay for it. By providing an opportunity to compress total door-to-door travel time, productivity is improved and travel related employee cost can be noticeably reduced.33 Business aviation can provide this opportunity by offering passenger-directed schedules for direct point- to-point connections. For economic reasons, scheduled airline networks normally consist of a hub-and-spoke structure, with only a few lucrative direct point-to-point connections.34 Most frequently, at least one transfer has to be accepted when travelling from or to non-hub airports.
Schedules that require late night travel, or longer than necessary trips, often result in post-trip fatigue, damaging productivity in the day(s) after the trip. Because they can facilitate more efficient scheduling, business aircraft can minimize this loss. Above all, unwanted and costly overnight stays may be avoided by the ability to custom-fit business aviation schedules.35
2.6.2 Increased En Route Productivity
En route productivity, meaning the incremental work output completed by employees when travelling on an aircraft, strongly depends on the prevailing and perceived working conditions aboard the specific aircraft. Commercial airliners usually operate in a high load factor environment. Thereby, they can only provide
33 See: Arthur Andersen LLP (2001). p. 10 et seq. 34 See: Pompl, W. (2002). p. 402 et seqq. 35 See: PRC Aviation. (1995). p. 3-20 et seq.
15 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? a constricted amount of personal space to the passenger, limiting his ability and willingness to work productively.36
Lack of privacy and the associated risk of revealing secret information are further hampering factors. Highly visible laptop screens make it easy to read over another’s shoulder or from halfway down the aisle. In the attempt to protect industrial security, some companies even urge their employees not to work on sensitive projects aboard scheduled commercial aircraft. Other companies even forbid their executives to discuss any business en route.
In contrast, the office-like environment on a business aircraft enables employees to be more productive en route when compared to a scheduled commercial airliner. Many business travellers use the flight time aboard a business aircraft to hold meetings in an interruptions-free, secure meeting space, typically featuring comfortable, usable work surfaces with ample room for both a laptop and papers in a secure and private atmosphere. The proposition that work en route is the rule rather than the exception is one of the key attractions of business aircraft.37
In a survey conducted in 1997 by Louis Harris & Associates, 346 frequent business travellers in the United States were questioned about their en route productivity aboard scheduled and business aircraft. According to the survey, productive collaboration among company employees aboard business aircraft occurred nearly eight times as often as when those same employees were aboard commercial aircraft. Productive collaboration with customers occurred nearly seven times more often than on commercial aircraft. Furthermore, employees aboard commercial aircraft were more than twice as likely to be resting or reading non work-related materials.38 The specific results concerning the individual usage of time aboard aircraft are shown in Figure 2.3 below.
36 See: Arthur Andersen LLP (2001). p. 18. 37 See: Arthur Andersen LLP (2001). p. 18. 38 See: Louis Harris & Associates, Inc. (1997). p. 11.
16 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Figure 2.3: Usage of time aboard aircraft39
Employee 41% Meetings 5%
Customer 7% Meetings 1%
Individual 28% Work 38%
13% Non-Work 32%
11% Rest 23%
0% Other 1%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Commercial Aircraft Business Aircraft
These same passengers also were asked to rate their in-flight productivity while travelling, benchmarked against an average or typical hour in their office (see Figure 2.4).
Figure 2.4: Passenger Productivity Aboard Aircraft Where FIVE Represents a Typical Office Hour40
7 6.2 6 5.2 5 5
4 3.2 3 2.1 2
Mean Productivity Rating Productivity Mean 1
0 Office Business Business Airline Jet Commuter Jet Turboprop Turboprop
39 Source: Adapted from Louis Harris & Associates, Inc. (1997). p. 11. 40 Source: Adapted from Louis Harris & Associates, Inc. (1997). p. 13.
17 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
According to the survey, the passengers felt they were significantly more productive aboard business aircraft than they would be even in their own offices. Business aircraft passengers rated their productivity in a business jet at 6.2 on a 0-10 scale, which set 5 as the productivity level in an average or typical office hour. Average productivity in a business turboprop was reported as 5.2 while productivity aboard airline jets was rated as 3.2 and commuter turboprops as 2.1.41
2.6.3 Choice of airport
When using business aircraft, the additional access to general aviation airports is another valuable advantage.
“In 2005, nearly 100,000 different airport pairs were flown by business aviation [within Europe]. Of these airport pairs, only 5% had a scheduled alternative: at least one scheduled flight per working day.” 42
In Germany alone, there are more than 170 civil use airports with a paved runway length of more than 2,000 ft (610 m)43. Apparently, not all of these airports qualify for scheduled airline operation, because of potential limitations in runway length or general airport infrastructure. The majority, however, is not being served because the demand is not sufficient to ensure profitable airline service. In 39% of all cases, the reason for the use of a business aircraft is to reach destinations with no or infrequent scheduled airline service.44 Serving these niche markets is not only a great opportunity for the business aviation sector. It also represents a tangible benefit for their customers, as origin and destination (O&D) selection is no longer restricted to airline offerings.
41 See: Louis Harris & Associates, Inc. (1997). p. 13. 42 See: EUROCONTROL (2006). p. 22. 43 See Appendix 3. 44 See: Louis Harris & Associates, Inc. (1997). p. 9.
18 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Choosing the departure and arrival airports closest to the place of business can drastically reduce the ground access times and thereby result in considerable door-to-door travel time reductions. Moreover, general aviation airports and general aviation terminals at scheduled airline airports are characterized by short ground processing times. More convenient parking and quick-access passenger facilities account for essentially reduced ground times, especially considering the laborious post 9/11 security measures implemented at scheduled airline airports.
2.6.4 Operational Flexibility
As opposed to the fixed commercial airline schedules, business aviation schedules are designed to meet the individual customers needs. More than 60% of the business aircraft passengers use business aircraft to support their tight business schedules that could not be efficiently met using commercial airlines.45 Idle time at the destination and mindless time hanging around airports can be avoided. Above all, if the planned business is running long, scheduled carriers will not wait, but a business aircraft will. This lets employees pursue their business, without having to be concerned about missed planes or unplanned overnight stays.46
Furthermore, as air service fares for business aircraft are independent of the number of passengers, additional specialists or trainees can be taken along on short notice without creating remarkable increases in direct travel expenses.
2.6.5 Improved Employee Morale and Loyalty
Using business aircraft to provide easy access to markets that are poorly served by the scheduled airlines can motivate especially those employees who frequently have to travel to destinations that are inherently isolated and relatively inaccessible.
45 See: Louis Harris & Associates, Inc. (1997). p. 8. 46 See: PRC Aviation. (1995). p. 3-21.
19 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
“Employees being required to travel in the public transportation system to remote or difficult to reach locations might find the first trip an adventure, the second a chore and the third a factor in quitting (or finding excuses for not servicing the client). The opportunity to reach markets such as these quickly and efficiently can recharge work force morale, and re-motivate the affected.” 47
Furthermore, the cumulative effect of non-business hours spent away from home, “The Divorce Factor” as it is sometimes called, should not be underestimated. “Family Time” before and after traditional business hours is critical to most employees. Constantly pushing travel time into this area can have an acute effect on employee morale and productivity. It is up to senior management to decide how important employee time away from home and family really is to the company. Ultimately, these soft factors will influence employee satisfaction, which in turn affects productivity and loyalty. Providing a comfortable working environment including hassle-free travel opportunities is one of the key conditions that are required to retain key personal that is expensive or impossible to replace.
47 See: Arthur Andersen LLP (2001). p. 22.
20 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
3 Finding the Niche Markets
3.1 Business Intelligence
Business Intelligence (BI) can be defined as:
“The processes, technologies, and techniques needed to turn data into information, information into knowledge, and knowledge into plans that drive profitable business action. Business intelligence encompasses data warehousing, business analytical tools, and content/knowledge management.” 48
It is the process of analysing and exploring the information hidden in data to deliver better strategic solutions for the business user. This process normally requires extensive data warehousing. A data warehouse is generally a collection of computerised data that is organised to most optimally support reporting and analysis activity. The first step in creating a data warehouse is the collection of the relevant information from either primary or secondary data sources49. All too often, business data (both primary and secondary) that need to be derived from external sources are hard to get, and data quality may vary depending on the credibility of the source. Therefore, integrity and validity of the data need to be investigated, before trying to turn mountains of data into valuable and reliable business information. Furthermore, database tables need to be normalized50 to ensure that redundant data are eliminated and existing data dependencies are meaningful. In the next step, adequate analytical tools are required to uncover important data patterns that can contribute to business strategies, knowledge bases or scientific researches.51
48 See: Loshin, D. (2003). p. 6. 49 Primary Data is information collected directly from first-hand sources, specifically for the investigation at hand. Secondary Data has been compiled for some purpose other than the current investigation. 50 The concept of database normalization was first introduced in 1970 by Edgar Frank Codd in his paper “A Relational Model of Data for Large Shared Data Banks”. 51 See: Han, J., Kamber, M. (2001). p. 3 et.seqq.
21 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
3.2 Methodology
When trying to find the niche markets for business aviation, one first has to define the criteria that describe such markets. The aim of this chapter is to geographically identify target regions or target destinations that best fit the characteristics of business aviation.
The major advantages of business aviation over scheduled airline travel are increased flexibility and time saving aspects as described in the previous chapters. The magnitude of time saved is different for every single O&D, and may also vary depending on the day of week.
As outlined in Chapter 2.1, the majority of business trips performed by employees of German companies are domestic. However, the German domestic travel market is characterized by relatively short distances and a high density of scheduled airline flights. Furthermore, ground transportation infrastructure is quite sophisticated. Domestic air travel in general faces fierce competition, especially from an increasing number of high-speed train connections. Still there are a lot of opportunities for business aviation in the domestic market. Depending on company location and airline connectivity, business aviation can yield valuable time savings as a feeder for international airline connections. The time saving potential is even more obvious concerning trips from and to non-metropolitan areas. Access to major airports may require extensive and inconvenient ground transportation. Quite frequently, travel times can be considerably shortened by using general aviation airports that are often more conveniently located, but not served by the commercial airlines. Choice of airports, as explained before, is one of the main benefits of business aviation.
Even with regard to the airports served by commercial airlines, the offered schedules cannot always satisfy the business traveller’s need for flexible and most direct travel opportunities. Besides accessibility of airports, the main decision criteria for the choice of airline connection in business travel are:52
52 See: Maurer, P. (2003). p. 335.
22 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
• Total en route time • Time of the day • Frequency • Short and convenient hub transfers • Attractiveness of the hub • Ticket price.
These criteria have to be used to identify possible niche markets for business aviation. To actually find these potential niches in Europe, the European scheduled airline network must be analysed with regard to the needs of business travel. The scenario used here is based on time saving opportunities. The basic idea is to find valuable business destinations, to which the scheduled airlines cannot provide a “There-and-back-in-a-day” option with sufficient time between arrival and departure to efficiently conduct business. Business travellers are mainly looking for timely connections that are offered daily and with high frequency, especially in the morning and late afternoon. Because not all destinations are served by direct flights, the analysis also includes multi-leg connections routed through hub airports. For the purpose of this analysis, a maximum of three legs is considered to be acceptable. The connectivity of flights is limited by the Minimum Connecting Time (MCT), the shortest possible transfer time between two flights. The MCT varies between airports and may range from 25 minutes up to more than two hours, depending on airport size and efficiency of processes.53 Above that, an acceptable Maximum Connecting Time is defined. The applied criteria for a “There-and-back-in-a-day” option as used in the course of this analysis are as follows:
• Arrival at destination airport at or before 11:00 lcl • Existing return option at or after 17:00 lcl • Return to departure airport before midnight • Minimum Connecting Time: 00:45 hrs54 • Maximum Connecting Time: 3:30 hrs.
53 See: Sterzenbach, R. Conrady, R. (2003) p. 290. 54 See: Sterzenbach, R. Conrady, R. (2003) p. 290.
23 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
3.2.1 Availability of Data
Seriously evaluating all possible airline connections between Germany and any European destinations, including multi-leg hub connections, requires handling of a vast amount of data. However, before the data can be examined, the question of where to get these data needs to be answered. Manually extracting flight data from airline schedules or airport websites is not a feasible solution. A tremendous amount of time would be required to create a database that will most probably not be complete. Fortunately, compiled airline schedule information is available from different professional sources. Unfortunately, all of these sources do not provide the information for free. Fortunately again, access could be gained to two of these sources. The first data set contained direct intra-European airline connections for the year 2005 in the SSIM55 format. The set contained a total of 323,315 lines. Table 3.1 shows a data sample. The format is already converted for better readability.
Table 3.1: SSIM Date - European Airline Schedule 2005
The second set of data was an extract of all direct intra-European airline connections for May 2006, derived from APG56 Data. The data were compiled in an Excel table containing 43,486 lines. A data sample is shown in Table 3.2.
Table 3.2: APGDAT - European Airline Schedule May 2006
Schedule Full Extract Report for all Airlines for flights between Europe and Europe in May06
Al Flight Alliance Op Al Org Dst Departure Time Arrival Time Block Mins Op Days Tot/Wk KMs Equip Seats BA 715 ONEW BA ZRH LHR 1520 1605 105 .2....7 2 789 319 126 BA 717 ONEW BA ZRH LHR 1715 1805 110 .....6. 1 789 321 176 BA 717 ONEW BA ZRH LHR 1715 1805 110 12345.7 6 789 319 126 BA 719 ONEW BA ZRH LHR 1915 2005 110 12345.7 6 789 321 176 BD 323 STAR BD ABZ AMS 0715 1000 105 123456. 6 705 ER4 49 BD 325 STAR BD ABZ AMS 1155 1440 105 12345.7 6 705 ER4 49 BD 327 STAR BD ABZ AMS 1630 1915 105 12345.7 6 705 ER4 49 BD 363 STAR BD ABZ EBJ 1020 1240 80 1234... 4 687 ER3 37 BD 363 STAR BD ABZ EBJ 1425 1645 80 ...... 7 1 687 ER3 37
55 SSIM files (IATA Standard Schedule Manual, Chapter 7) form the backbone of schedule exchange in the airline industry. 56 Seabury Airline Planning Group, LLC. See http://www.seaburyapg.com/tools/apgdat.html
24 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
3.2.2 Analysis Tools
Working with such an amount of data requires a powerful software tool. The primary software used for the analysis was SAS57 for Windows, which is a very flexible and stable analysis programme. The raw data sets described above were imported into SAS for further handling. As the available schedule data only provided direct connections, all possible multi-leg connections had to be created from the given airline schedule data sets. A valuable feature in SAS, used frequently in the course of the analysis, is the possibility to create new tables based on available raw data or existing SAS files. SAS tables, or only parts of tables, can then be joined based on specified matching criteria.58 The join is performed in the SAS programme using PROC SQL59. In theory, when a join is executed, SAS builds an internal list of all combinations of all rows in the query data sets. Conceptually, SAS evaluates the newly created table row by row, selecting only the rows that satisfy the defined matching criteria.60 Further details on the process of joining the tables and the relevant matching criteria are shown in Chapters 3.2.2 and 3.2.3.
3.2.3 Data Validity and Integrity
When working with secondary data, it is imperative to investigate the validity and integrity of the data sets.
SSIM DATA The SSIM Data set contained the flight schedule for the whole year 2005, whereby most flights/flight numbers appeared several times with different Itinerary Variation
57 Statistical Analysis System Software by SAS Institute Inc. (for further information on SAS see http://www.sas.com) 58 See: Delwiche, L., Slaughter, J. (2003). p. 302 et seqq. 59 SQL (Structured Query Language) is a very popular language used to create, update and retrieve data in relational databases. 60 See: Wieczkowski, M. (1999).
25 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Identifiers (Itin_VI)61. In the process of normalization, a sample week (16 – 22 May) was defined and entries with validity dates outside this sample week were deleted.
To investigate the integrity of the data set, a few O&Ds were chosen and checked against current schedules, published on airport and airline websites. The investigation showed that the available SSIM data set was corrupted. A lot of available connections were missing, and the given differences between UTC and local time did not in total reflect the time changes during Daylight Saving Time (DST) periods. Although the problem concerning UTC differences could be rectified, the data set was rendered unusable because the exact number and type of missing connections could not be specified.
APG Data The second data set containing all intra-European flights for May 2006, derived from APG, did pass the integrity checks against current airline schedules as described above and was used as the basis for further analysis.
3.2.4 Creation of a Master Data File
Although the APG Data were considered to be usable, some important information was missing and had to be appended. The APG data did not show indicators for the departure and arrival countries, as well as no specification of the difference between UTC and local time. As this information was contained and previously corrected in the SSIM data set, the relevant entries were retained in a separate table and joined with the APG data with the use of the SAS programme.
61 “An itinerary is a single flight or a series of identical flights defined by a continuous Period and Day(s) of Operation (and Frequency Rate if applicable), each of which consists of one or more contiguous legs, which taken together, describe a complete routing of that flight. The Itinerary Variation Identifier is a number between 01 and 99 used to differentiate between itineraries having the same Flight Designator […].” See: IATA (1998). p. 45.
26 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Further normalization required a split of the multivariate entries for Days of Operation (Op Days)62 into separate entries for each operation day. Records for the respective arrival day as well as combined departure- and arrival-datetimes63 (UTC) had to be created to enable the calculation of Minimum and Maximum Connecting Times. With these modifications incorporated, the data set contained a total of 125,690 direct intra-European flights64 for the selected sample week (15 – 20 May 2006). It was used as a Master Data File (MDF), and will be referred to as such in the following chapters.
3.3 Evaluation of Intra-European Airline Connections
After having created the MDF, the actual investigation of the airline schedule was divided into three parts, relating to:
• direct connections, • one-stop connections, and • two-stop connections.
The qualification criteria for a “There-and-Back-in-a-Day” option, as outlined in Chapter 3.1, were applied in SAS to retain only entries that can fulfil the given prerequisites. The individual results, all related to the “There-and-Back-in-a Day” option, were finally exported from SAS to Excel and compounded in a synoptic table for better visualisation.
3.3.1 Direct Connections
To extract the possible direct connections, the Master Data File was subdivided into a separately evaluated outbound and inbound section, applying the following restrictions to the MDF:
62 See Table 3.2. 63 Datetime format defines (UTC) time at a specific day: dd.mmm.yy hh:mm. 64 Not including flights with origin and/or destination in Russia.
27 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
• Outbound: Departure Country = DE and Arrival Country ≠ DE STA ≤ 11:00 lcl • Inbound: Departure Country ≠ DE and Arrival Country = DE. STD ≥ 17:00 lcl and STA ≤ 24:00 lcl
The result showed a weekly total of 2,873 direct flights departing from Germany and arriving at the destination before 11:00 lcl. The number of direct return flights to Germany, leaving at or after 17:00 lcl, was 3,852.
3.3.2 One-Stop Connections
As only direct flight connection data were available, the creation of possible connecting flights required the direct flight tables to be joined. The tables used for the join were copies of the Master Data File. In addition to the respective “There- and-back-in-a-day” criteria, further restrictions were applied to the individual files during the join to reduce the amount of data to be processed. The resulting principle for the creation of the one-stop connections and the additional matching criteria used are illustrated below.
Figure 3.1: Creation of One-Stop Connections with SAS
Outbound (Leg 1) Outbound (Leg 2)
MDF MDF Departure Country = DE Arrival Country ≠ DE
Arrival Airport (Leg 1) = Departure Airport (Leg 2)
Inbound (Leg 1) Inbound (Leg 2)
MDF MDF Departure Country ≠ DE Arrival Country = DE
Arrival Airport (Leg 1) = Departure Airport (Leg 2)
28 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
The created files showed a total of 27,239 possible one-stop connections from Germany to European destinations, whereas 52,944 connections met the return flight criteria.
3.3.3 Two-Stop Connections
Creation of two-stop connections is similar to the process described in Chapter 3.2.2 above. To create the additional leg, yet another copy of the Master Data File had to be joined in-between the first and the second leg. This was achieved by joining the MDF onto Leg 1 and then joining the final leg onto the previously created file (Leg 1+2). The joining principle for the two consecutive joins, the restrictions applied to the individual MDF derivates, and the matching criteria on top of those for a “There-and-Back-in-a-Day” option are shown in the following diagram.
Figure 3.2: Creation of Two-Stop Connections with SAS
Outbound (Leg 1+2)
Outbound (Leg 1) Outbound (Leg 2) Outbound (Leg 3)
MDF MDF MDF Departure Country = DE Arrival Country ≠ DE
Arrival Airport (Leg 1) = Departure Airport (Leg 2) Departure Airport (Leg 1) ≠ Arrival Airport (Leg 2)
Arrival Airport (Leg 1+2) = Departure Airport (Leg 3) Arrival Airport (Leg 1) ≠ Arrival Airport (Leg 3)
Inbound (Leg 1+2) Inbound (Leg 1) Inbound (Leg 2) Inbound (Leg 3)
MDF MDF MDF Departure Country ≠ DE Arrival Country = DE
Arrival Airport (Leg 1) = Departure Airport (Leg 2) Departure Airport (Leg 1) ≠ Arrival Airport (Leg 2)
Arrival Airport (Leg 1+2) = Departure Airport (Leg 3) Arrival Airport (Leg 1) ≠ Arrival Airport (Leg 3)
29 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
After joining the tables a total of 7,821 possible connections were created for the outbound portion and 22,005 for the return option.
3.4 Airline Schedule Evaluation Results
The intention of the airline schedule evaluation was to find valuable O&Ds with no “There-and-Back-in-a-Day” option as potential niche markets for commercial business aviation. Having extracted all the connections that satisfied the stated criteria, a synoptic table was created to visualise the results. As not all possible O&Ds could be displayed, further confinements were made regarding the examined origins and destinations.
Ten major origin airports in Germany were chosen for further analysis: Cologne/Bonn (CGN), Dortmund (DTM), Düsseldorf (DUS), Frankfurt (FRA), Hanover (HAJ), Hamburg (HAM), Bremen (BRE), Munich (MUC), Stuttgart (STR), and Berlin (SXF, THF, TXL)65.
For these origin airports, ten destination countries in Northern and Eastern Europe were chosen to exemplify the deficiencies in airline connectivity. These ten selected countries were: Finland, Norway, Estonia, Latvia, Lithuania, Bulgaria, Czech Republic, Hungary, Poland, and Lithuania.
Because not all the flights were operated on a daily basis, separate entries were provided for each day of the week. A green coloured flag was assigned to those O&Ds and days of the week66 where at least one round-trip connection existed that met the “There-and-Back-in-a-Day” criteria (i.e. both inbound and outbound). The results were quite surprising, as the total number of possible connections was far lower than expected.
65 For the purpose of the analysis, the three Berlin airports were considered to be one single origin/destination. 66 Days of the week are numbered from Monday (1) to Sunday (7).
30 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Table 3.3 is an extract of the synoptic table showing only the available “There-and- Back-in-a-Day” options from the selected airports in the Rhine-Ruhr area (CGN, DTM, DUS). The complete tables are available in Appendix 4.
Table 3.3: “There-and-Back-in-a-Day” options from the Rhine-Ruhr Area
from CGN DTM DUS to 123456712345671234567 FI HEL OSL NO TRF SOF EE E BG VAR EE OSR CZ PRG HU BUD LV RIX GDN KRK PL KTW WAW RO OTP E
There-and-back-in-a-day option E Departure from DE before 04:30 lcl
From the ten destination countries investigated, Estonia and Lithuania do not show a single possible connection. Moreover, the posted results for Bulgaria and Romania are unsatisfactory, as not all the days of the week are covered, and the few existing connections from Cologne/Bonn are afflicted with rather unpleasant departure times (between 00:40 lcl and 04:25 lcl). For Finland, 21 destination airports were investigated, with only Helsinki meeting the criteria from Düsseldorf (and Frankfurt). Overall, no more than three destinations per country are served according to the prescribed requirements from any of the selected German airports.
All the white spots in the table are potential market opportunities for the operation of business aircraft. By including all the general-aviation-only airports not served by scheduled airlines into the table, the colour white would become even more
31 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? dominant. In reverse, this does not imply that the green sectors of the table are inaccessible for business aviation. Depending on the individual business situation and booking status of the airlines, there may as well be valuable opportunities in those areas.
But which of the blank spots are the most valuable for a specific origin airport? As many companies may not be aware of the potential benefits that can result from the use of business aircraft, a detailed analysis of the economic situation in the catchment area of that specific airport has to be conducted. The goal must be to identify companies in the catchment area with the need for travel to any of the mentioned blank spots in airline schedules. A detailed cost-benefit analysis, based on actual company requirements, can then be used to evaluate potential cost saving opportunities resulting from the use of business aircraft.
In the following chapter such a cost-benefit model will be developed. However, as the purpose of this thesis is more generic, the destination examples used in Chapter 5 to demonstrate the potential degree of savings are not related to specific company relations and must be viewed in a more general context.
32 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
4 Cost-Benefit Analysis
4.1 Accounting and Economic Principles
According to cost accounting principles, cost is defined as a resource sacrificed or forgone to achieve a specific objective. Such objectives are called cost objects. They can be anything for which a separate measurement of costs is required (e.g. products, machines, services, processes, activities). Depending on their relationship to a particular cost object, costs are classified as direct or indirect. Direct costs are directly related to the particular cost object. They can be traced to it in an economically feasible way. Indirect costs (e.g. overhead costs) are also related to the particular cost object but cannot be traced to it in an economically feasible way. Therefore, a cost allocation method must be used to allocate the indirect costs to the related cost object. The cost-allocation base (e.g. labour hours or kilometres travelled) is the common denominator that must be specified to establish the link between indirect costs and a specific cost object.67
Calculation of total cost is done differently by economists. Total accounting cost generally equals explicit cost, defined as actual cash payments. The key principle underlying the calculation of economic cost is the principle of opportunity cost. The opportunity cost of something is basically what is sacrificed to get it. Quite often opportunity cost is incurred by not using a limited resource in its best alternative. Total economic cost equals explicit cost plus implicit cost, where implicit cost is defined as the opportunity cost of improper use of resources (e.g. time, money).68
A Cost-benefit analysis is a quantitative economic comparison. Economic performance can be evaluated by defining Key Success Factors, commonly called KPIs (Key Performance Indicators). These operational factors directly affect the economic viability of the organisation or specific cost objects within the organisation. They can be related to cost, time, quality or flexibility. By any means,
67 See: Horngren, C. et al. (2005). p. 36 et seqq. 68 See: Case, R. Fair, R. (2004). p. 132 et seq.
33 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? they have to be quantifiable to yield measurable and meaningful results that can be used for internal or external benchmarking.69
4.2 Methodology
To examine and evaluate the tangible, monetary implications of a potential switch from scheduled airline travel to business aviation a cost-benefit analysis is performed. The analysis is a quantitative economic comparison of selected business trips. The comparison depicts the differences in travel time, explicit travel costs and implicit costs (i.e. personnel costs) on an individual trip basis. The challenge in creating such an analysis model is to find a meaningful method to translate the tangible benefits described in Chapter 2.6 into monetary values. The valuation of intangible advantages is different in every company and depends on the individual employees personal situation and position within the company. It is therefore hardly quantifiable. The cost savings calculation method used to quantify the productivity benefits through time savings is outlined in the following chapters.
4.3 The Value of Time
In today’s world of business and commerce, time means money. The relation paraphrased in this piece of wisdom can be quantitatively expressed in several ways. Traditional accounting usually treated people as a period cost measured in terms of salary.70 Thereby, the easiest and most common way to translate employee time into a direct hourly cost metric is dividing the total annual salary by the number of hours worked annually. This however does not reflect the added value that a unit of employee time yields to the company. Common business sense requires employees to generate more in revenue or profit improvement than they are paid.71 Thereby, the value of an employee’s time must exceed its compensation. Especially the value of a senior executive’s time often exceeds its
69 See: Brown, S. et al. (2001). p. 7 et seq. 70 See: Fitz-enz, J. (2000). p. 5. 71 See: Arthur Andersen LLP (2001). p. 13 et seq.
34 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? cost to the company by substantial margins. The field of Human Resource Accounting (HRA) recognizes people, their training, skills and experience as human capital assets, crucial to the company’s success.72 Complementing traditional accounting theorems, a valuation of these assets must be performed to determine the true economic value of employees. The main KPI used in this thesis to measure the benefits resulting from employee time savings is the Value per Man-Hour. It is a rather simple and efficient method of quantifying the actual value of employee time. The Value per Man-Hour Concept is perhaps most tangibly illustrated by the hourly billing rates found for personnel in service industries.
4.3.1 The Value per Man-Hour (VMH) Concept
When calculating travel expenses, the value of time is an important economic factor that needs to be considered. To quantify the contribution of human resources to a company’s profitability, HRA has established the principle that the value of an employee’s time to the employer can be expressed by applying a productivity factor to the employee’s salary. Again, the emphasis here is on value, not simply on what a person earns per hour. The actual Value per Man-Hour (VMH) can be calculated by dividing the average annual salary multiplied by the employee’s productivity factor by the average annual working hours. 73
Average Annual Salary * Productivity Factor VMH = Average Annual Work Hours
Generally, the productivity factor increases with salary because higher salaries are justified by increases in the employees contribution to company profitability. 74 The only challenge remaining is the determination of the productivity factor for individual employees or employee groups.
72 See: Paauwe, J. (2004). p. 186 et seqq. 73 See: Wells, A., Chadbourne, B. (2003). p. 182. 74 See: Ehrenberg, R., Smith, R. (2006). p. 369 et seqq.
35 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
4.3.2 Productivity Valuation Models
In a study conducted by PRC Aviation75 in 1995, productivity factors were elaborated to determine the exact hourly value an employee has to the organisation. The study concluded that an appropriate valuation of senior executives’ time results from applying a multiplier of 5.7 to that executive’s total compensation. For middle managers and professional employees, a multiplier of 3.8 was judged to be appropriate.76 These productivity factors are averages of multipliers taken from different valuation models as outlined in Table 4.1.
Table 4.1: Multipliers of Base Salary Resulting From Application of Methods of Computing Corporate Values of Employees For Typical Corporations77
Middle Management Method Senior Executives and Professionals All Employees Cost of average base salary 1.0 1.0 1.0
Value Methods Service Industries 5.0 - 7.0 2.5 - 5.0 2.5 Five Times Salary 10.9 - 12.2 4.8 - 8.0 - Ten Percent Rule Whole Life 4.9 - - Term Insurance 20 - - Benefit Term Insurance 5.0 - 7.0 3 - Replacement Cost Present Value of Term 5.0 - 5.3 3.5 - of Replacement Present Value of Term of Replacement Plus 6.4 - 6.7 4.8 - Inefficiencies Loss of Excess Earnings 13.1 - - Conference Board - - 2.3 PRC Aviation Evaluation 5.7 3.8 - of Several Methods
75 In 1997, PRC Aviation was acquired by Arthur D. Little, an international consulting firm based in Cambridge, Mass. 76 See: PRC Aviation. (1995). p. 3-1. 77 Source: Adapted from PRC Aviation. (1995). p. 6-9.
36 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Besides the fact that the elaborated productivity factors appear to be rather low, the results of the PRC study may only be used to get an impression of the approximate value of productivity for certain employee groups. A distinct link between annual salary and VMH cannot be established, as actual salary ranges for the mentioned employee groups are dependent on a lot of factors, such as kind of industry or company size.
A model that directly provides such linkages was initially developed by the Business & Commercial Aviation magazine. This model directly shows the VMH in conjunction with the related annual salary by establishing a linear relation between hourly pay and productivity factor.78 The model is shown in Table 4.2, with original dollar values converted to euros.79 Furthermore, a slight modification is applied. The originally used annual work hour base of 2,000 hours was raised to 2,300 hours. This seems to be a more appropriate number, especially for the service sector.
Table 4.2: The Value of Executive Time80
Productivity Yearly Salary Hourly Pay Value/Hour Factor 10,000.00 € 4.35 € 2.76 12.00 € 20,000.00 € 8.70 € 5.52 48.01 € 30,000.00 € 13.04 € 8.28 108.03 € 40,000.00 € 17.39 € 11.04 192.05 € 50,000.00 € 21.74 € 13.80 300.08 € 60,000.00 € 26.09 € 16.56 432.12 € 70,000.00 € 30.43 € 19.33 588.16 € 80,000.00 € 34.78 € 22.09 768.21 € 90,000.00 € 39.13 € 24.85 972.26 € 100,000.00 € 43.48 € 27.61 1,200.33 € 110,000.00 € 47.83 € 30.37 1,452.40 € 120,000.00 € 52.17 € 33.13 1,728.47 € 130,000.00 € 56.52 € 35.89 2,028.55 € 140,000.00 € 60.87 € 38.65 2,352.64 € 150,000.00 € 65.22 € 41.41 2,700.74 € 200,000.00 € 86.96 € 55.22 4,801.31 € 250,000.00 € 108.70 € 69.02 7,502.04 € 400,000.00 € 173.91 € 110.43 19,205.23 €
78 See: Wells, A., Chadbourne, B. (2003). p.182. 79 Exchange Rate: 1 EUR = 1.27005 USD 80 Source: Adapted from Wells, A., Chadbourne, B. (2003). p.182.
37 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
No matter which model or valuation scheme is used, the fact remains that when a manager or other key person is away from the office, the contact time with other subordinates or peers is shortened and issues that need immediate attention must wait. To improve this situation, the following chapter will provide a methodology to calculate required VMH values as the main decision criteria for an economic choice between airline and business aviation.
Given the fact that there are tremendous differences in the magnitude of the multipliers in the different models and especially in different industries, it cannot be in the interest of this thesis to base the analysis on a specific correlation between annual salary and productivity. It is the responsibility of the companies themselves to create their own valuation schemes to be aware of the actual value of their employees’ time. Nevertheless, tables 4.1 and 4.2 will be used in Chapter 5 to provide an indication for the salary ranges that may correspond to the calculated VMH values.
4.4 Time and Cost Calculations
When evaluating the cost of travel, it is imperative to consider not only the explicit (accounting) costs, but also the implicit personnel costs that are induced by the need to travel. This does not relate to travel expenses, like lodging or per diems, as these are treated as a part of the explicit cost package.
One might argue that personnel cost will arise no matter if the respective employee is travelling or not. However, implicit personnel cost are incurred because of:
• unnecessarily prolonged travel times that could have been avoided by optimised scheduling, and • reductions in employee productivity that can be experienced during different parts of the travel.
38 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
While employee productivity is considered to be 100% during times spent in-house or at scheduled out-of-office business, it can be drastically reduced by inherent restrictions associated with different segments of the travel. These productivity losses can be viewed as potential revenue forgone and must be treated as an opportunity cost. For this purpose, it is necessary to split the total travel time into individual segments and define specific marginal productivity/cost factors per segment that can be applied to the employee’s VMH. The travel time segmentation and the applied cost factors are outlined in the following chapter.
4.4.1 Time Calculation
An Excel table (Table 4.3) is used to perform the necessary time calculations81. All calculations are made for airline travel as well as for the use of a business turboprop and a business jet.
Table 4.3: Time Calculation Table 82
Elapsed Time (hrs) Airline Business TP Business Jet Outbound Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Outbound 3.00 2.00 2.00
Return Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Return 3.00 2.00 2.00
Total Travel Time 6.00 4.00 4.00
Add. Out-of-Office 0.00 0.00
Total Valued Time 6.00 4.00 4.00
81 Entries are required for the coloured fields only. Other times may be amended if necessary. 82 Time calculations adapted from Wells, A., Chadbourne, B. (2003). p. 183.
39 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Segment times for the outbound and return portion are stated separately. For the ground segments (all except En Route) standard time spans are already pre- defined for further use in the following analysis. These time spans are assumed to be realistic averages. Depending on the characteristics of the respective airports or personal experience these values may be adjusted.83
Office to Airport and Airport to Office Office to Airport and Airport to Office times include the drive time from office or home to the airport and the time from parking to the terminal. These times are strongly dependent on company location and airport choice. As the following sample calculations in Chapter 5 are not related to a specific company profile, a standard of 45 minutes (0.75 hours) will be used for all three aircraft options. However, general aviation airports are often more conveniently located than the major airports. Moreover, general aviation terminal facilities at major airports are usually easier to reach than airline terminals because of nearby and convenient parking opportunities. This will normally lead to further time savings on the side of business aviation. Working on a concrete example, the preset time values will have to be adjusted to reflect the local characteristics.
Terminal Boarding Terminal Boarding includes time at the ticket counter/baggage check-in, security screening, walk to the gate position, boarding and possible waiting times. An average value of 45 minutes is used for the airline flight. Depending on airport and time of the day, this value may as well be exceeded. For the business aircraft, average Terminal Boarding is set to 15 minutes (0.25 hours) due to lower time requirements for the abovementioned procedures.
Deplaning Deplaning includes the walk to the airline baggage claim area with typical waiting time (generally not applicable for the business aircraft) and the walk to ground transportation/parking facilities. Average times used are 45 minutes for the airline and 15 minutes for the business aircraft.
83 See: PRC Aviation. (1995). p. 3-14. See: Etterich, H.-J. (2006). p. 189.
40 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
En Route En Route times comprise the total block time, including hub transfer times for multi-leg airline flights.
Total Travel Time Total is the sum of Office to Airport, Terminal Boarding, En Route, Deplaning and Airport to Office times for both outbound and return portions of the trip. Summarizing only the set ground times (see Table 4.3) already shows a clear time advantage of two hours in favour of the business aircraft.
Add. Out-of-Office A row labelled Add. Out-of-Office indicates the number of business hours out of a regular ten-hour working day (08:00 – 18:00) and outside the abovementioned segments of total travel time, that are spent at the destination without being directly related to the designated purpose of the trip. This is used to value excessive time that could have been avoided by customized scheduling.
Total Valued Time (TVT) Total Valued Time, as opposed to Total Travel Time, is the sum of all individual travel segment times, including Add. Out-of-Office, multiplied by the respective Cost Factors stated in Table 4.4. Total Valued Time is used as the basis for further implicit cost calculations.
Table 4.4: En Route Productivity and Total Valued Time
Prod. Credit Cost Factor Office to Airport 0% 100% Terminal Boarding 0% 100% En Route - Airline 15% 85% En Route - Business A/C 75% 25% Deplaning 0% 100% Airport to Office 0% 100%
Add.Out-of-Office 50% 50%
41 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Prod. Credit / Cost Factor Different Productivity Credits are assigned to the various segments of the trip to cater for the corresponding possibility to work efficiently. For the time used to get to and from the airport, as well as for terminal boarding and deplaning procedures, the productivity is set to zero. As it is generally impossible to work during these phases of the trip, the Cost Factor used to value the respective man-hours (in terms of an implicit cost) is 100%.
But how much work can be accomplished while travelling en route in a commercial airliner or a business aircraft? As already stated in Chapter 2.6.2, the productivity of employees aboard a business aircraft is much higher than aboard a commercial airliner. The possibility and willingness to productively use this considerable part of the total trip time needs to be credited. An En Route Productivity Factor was initially introduced by the National Business Aviation Association, Inc. (NBAA) in its Management Aids article “The Management Accountability Factor”, providing a quantifiable answer to the question. The En Route Productivity Credit for the time spent aboard a business aircraft is estimated at 75 percent, whereas the value of time travelled on a commercial airliner is estimated to be as low as 15 percent. Thereby, the resulting Cost Factor for airline en route time84 is 85%. For the en route time aboard a business aircraft a Cost Factor of 25% is applied.85 Differences regarding the aircraft types used (turboprop or jet) as expressed in the Louis Harris Poll (see Figure 2.4) are not reflected in this model.
Additional out-of-office hours at the destination, resulting from rarely optimal schedules are credited with 50%, as opposed to 15% for airline en route and 75% for business aircraft en route. The reason for this valuation is that full privacy and an office-like environment, as provided on a business aircraft, cannot be guaranteed when spending idle time at the destination outside the planned business. However, possible availability of hotel rooms, lounges or even company facilities in combination with modern communication technology may still allow a considerable amount of work to be achieved.
84 Actual en route time for commercial airlines also includes possible hub transfer times. 85 See: Wells, A., Chadbourne, B. (2003). p. 182.
42 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Concerning the handling of overnight stays, it is rather impossible to find a monetary equivalent for additional after-office hours spent away from home. Evaluation and weighting of these criteria is strongly dependent on the employee’s position within the company and has to be performed on an individual bases.
4.4.2 Cost Calculation
Another Excel table (Table 4.5) is created to perform the respective cost calculations. In this table, the explicit costs of travel and the number of passengers travelling have to be entered.86 A value per man-hour will be calculated as the Key Performance Indicator for the economic efficiency. The variables and formulas used to perform the respective calculations are explained in this chapter.
Table 4.5: Cost Calculation Table
Routing Routing # Airline Business A/C Pax per pax per trip per pax per trip Air Service Lodging Per Diems Other Total Explicit Cost 0.00 € 0.00 € 0.00 € 0.00 €
Personnel Cost Diff. 0.00 € 0.00 € 0.00 € 0.00 € Total Trip Cost 0.00 € 0.00 € 0.00 € 0.00 €
Average Break-Even 0.00 € VMH (Airline - TP)
Total Explicit Cost (TEC) In the first part of the table, the Total Explicit Cost of travel is calculated by adding the Air Service fares, Lodging costs, Per Diems, and Other costs (e.g. rental car, taxi). Furthermore, the number of passengers needs to be indicated. For the business aircraft the air service fare per trip is entered, as this fare is fixed independent of the number of passengers. On the airline side, the individual ticket
86 Entries are required for the coloured fields only.
43 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? price is required. Total air service fare per trip will increase with increasing number of passengers.
Personnel Cost Difference (PCD) Personnel Cost Difference (PCD) is the implicit employee cost or opportunity cost caused by performing the travel. PCD (per passenger) is defined as the product of an Average Break-Even VMH (VMHBE ) and the Total Valued Time (TVT), specified before in the time calculation table.
87 PCDA = VMHBE * TVTA and PCDB = VMHBE * TVTB
The variable name contains the word “difference” to indicate that the respective implicit personnel costs are based on VMHBE, in order to achieve a break-even in Total Trip Cost for airline and business aircraft.
Average Break-Even VMH (VMHBE)
An Average Break-Even VMH is calculated for which Total Trip Cost Airline (TTCA) equals Total Trip Cost Business A/C (TTCB).
Airline Business Aircraft per pax per trip per pax per trip
Total Trip Cost
TTCA = TTCB
Total Trip Cost (TTC) is the sum of Total Explicit Cost and Personnel Cost Difference (see Table 4.5).
TECA + PCDA = TECB + PCDB
87 The subscript “A” relates to Airline, while the subscript “B” stands for Business Aircraft.
44 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Substituting PCDA and PCDB with the underlying calculations, the equation will look the following:
TECA + (VMHBE * TVTA) = TECB + (VMHBE * TVTB)
When solving the equation for the Average Break-Even VMH (VMHBE) the resulting formula is:
TECB – TECA VMHBE = TVTA – TVTB
To evaluate the result, an Actual Average VMH of all travelling employees needs to be calculated.
n
∑ VMH i Actual Average VMH = i = 1 n ; where n = Number of passengers.
As soon as the Actual Average VMH of the travellers is greater than the Average
Break-Even VMH (VMHBE), the business aircraft is the more economic option.
If Actual Average VMH of the travellers is above the determined VMHBE for both business turboprop and jet, the next question to be answered is which of the two options is the most suitable. A jet will yield bigger time savings, but higher hourly rates have to be paid. Another VMH value can be calculated, for which Total Trip
Cost Business Turboprop (TTCTP) equals Total Trip Cost Business Jet (TTCJet).
Business TP Business Jet per pax per trip per pax per trip
Total Trip Cost
45 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Applying the same logic as above, the resulting formula for this Average Break-
Even VMH (VMH (Jet – TP)) reads:
TECJet – TECTP VMH(Jet – TP) = TVTTP – TVTJet
Where cost is a trade-off against time, several other factors must be considered as well: the emergency need for travel to be accomplished, the perishable nature or deterioration rate of a situation, and any seasonal demand requirements.88 With regard to certain maintenance or servicing contracts this could as well mean that a company may require professional specialist teams to move quickly and thereby prevent an excessive loss of production. Potential contractual penalties for undue delays are additional time related costs that may have to be credited. As these factors are strongly dependent on the specific case, they will not be reflected in the following analysis. A separate evaluation has to be performed on an individual basis.
88 See: Wells, A., Chadbourne, B. (2003). p. 188.
46 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5 Sample Route Calculations
Sample time and cost calculations are performed for three selected airline round- trips to European business destinations that showed a lack of supply according to the previously conducted airline schedule analysis. The airport of Düsseldorf (DUS) will be used as the origin for all airline flights. To obtain comparable results for routes representing different flight ranges, the regional airport of Essen/Mühlheim (ESS) - located about 27 km from DUS89 - is used as the flight origin for the comparative business aviation calculations.
The model described before will be used to elaborate the required minimum VMH that will make the use of a business aircraft economically favourable.
5.1 Selected Sample Destinations
The selected sample destinations used and the average ranges from DUS/ESS are:90
1. Oulu, Finland (OUL) ~ 1,850 km 2. Vilnius, Lithuania (VNO) ~ 1,287 km 3. Katowice, Poland (KTW) ~ 865 km
To outline the general relevance of the selected business destinations, only a short description of the economic characteristics is provided. To specifically identify the most valuable O&Ds for specific German regions and airports, further research will be required.
89 Distance derived from www.viamichelin.de 90 The specified distances are averaged great circle distances from DUS/ESS to the destinations, calculated with the use of “Great Circle Mapper” (http://gc.kls2.com/) and do no concur with actual flight distances.
47 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
1. Oulu, Finland The two main business centres in Finland are the triangle Helsinki-Turku-Tampere and the region around Oulu. The high-tech city of Oulu is mainly known for its Information and Communications Technology industries. Currently, Nokia is the biggest private employer, employing more than 4,500 people in the Oulu region. Nokia has established two divisions, Nokia Networks and Nokia Mobile Phones, a separate Nokia Ventures Organisation, and an internal research unit, Nokia Research Centre.91
2. Vilnius, Lithuania Vilnius is the capital of Lithuania. After the country had joined the European Union in May 2004, the economic relations to Germany were intensified and are still expected to grow. Meanwhile, Germany is, behind Russia, Lithuania’s most important trading partner. E.ON-Ruhrgas, Siemens and Nord/LB, the third-largest German bank, as well as many small and medium-sized enterprises have made large investments in Lithuania.92
3. Katowice, Poland Katowice is one of the most important business centres in Poland and the main city of the Upper Silesian Industry Area. The region is shifting more and more from traditional coal mining and iron and steel industries towards information technology and electrical engineering (e.g. Electrolux). Besides, the largest car manufacturers in Poland (e.g. Opel) can be found in the Katowice Special Economic Zone.93
91 See: City of Oulu (2006). 92 See: Auswärtiges Amt (2006). 93 See: The Śląskie Voivodeship (2006). See: Katowice Special Economic Zone (2006).
48 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5.2 Basic Assumptions
The following assumptions have been made to perform the calculations for the selected sample trips:
1. Purpose of the generic business trips is to attend a three-hour meeting at the destination, scheduled on Thursday from 12:30 to 15:30 local time. Arrivals and departures are planned to minimize total travel time and cost. 2. Origin for all sample airline flights is Düsseldorf International (DUS). 3. Origin for all sample business aircraft flights is the Airport of Essen/Mühlheim (ESS). Possible positioning flights are not included. 4. Business Turboprop used is a Beech King Air B200. Business Jet used is a Citation Jet. 5. Airline schedules and fares for Vilnius and Katowice were obtained from the Lufthansa website.94 For the destination Oulu, the website of Finnair95 was used, as no Lufthansa connection to Oulu is available. Bookings were checked against listings on the opodo website (www.opodo.de) to assure that the best available connection is chosen. 6. Airline fares are based on business class bookings. Bookings were made one week in advance to guarantee availability of flights. 7. Schedules and fares for business aircraft are based on actual air charter company quotations. 8. Lodging cost and per diems are derived from current travel expense compensation tables published by the German Ministry of Finance.96
While all the trips with business aircraft can be achieved within one day, the comparable airline trips may require up to two overnight stays. Screenshots of the airline bookings for the sample routes are available in Appendix 5.
94 www.lufthansa.com 95 www.finnair.com 96 See: Bundesministerium der Finanzen. (2004)
49 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5.3 Route 1: Oulu, Finland
Airline Schedule:97 STD STA STD STA Duration Wednesday DUS 11:30 15:00 HEL 16:00 17:05 OUL 04:35
STD STA STD STA Duration Friday OUL 06:00 07:00 HEL 07:35 09:00 DUS 04:00
Airline Travel requires a departure on Wednesday at 11:30 lcl (one day early). The returning flight leaves Oulu at 06:00 lcl on Friday (one day late) and arrives in Düsseldorf at 09:00 lcl. Both ways one transfer in Helsinki is required.
Business aviation schedules are custom-fit to avoid idle times at the destination and provide a direct “There-and-Back in-a-Day” option.
Schedule Business Turboprop: 98 STD STA Duration Thursday ESS 06:20 11:30 OUL 04:10
STD STA Duration Thursday OUL 16:30 19:40 ESS 04:10
Schedule Business Jet: STD STA Duration Thursday ESS 07:10 11:30 OUL 03:20
STD STA Duration Thursday OUL 16:30 18:50 ESS 03:20
Total Trip Duration: Airline: 48:30 hrs (including two overnight stays) Business Turboprop: 15:20 hrs Business Jet: 13:40 hrs
97 See Appendix 5/1. 98 For the Turboprop Crew, a possibility to rest will be required in Oulu to meet the Crew Duty Time specifications according to 2. DV LuftBO (§ 3 and § 5). See: http://www.luftrecht-online.de/ regelwerke/pdf/2dvluftbo.pdf
50 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Total Travel Times and Total Valued Times are summed up as shown in Table 5.1 below. As the airline flight arrives the day before and leaves the day after the actual business day, the idle time on Thursday from 08:00 lcl to 12:30 lcl and from 15:30 lcl to 18:00 lcl is counted as Add. Out-of-Office time.
Table 5.1: Time Comparison Route 1 (Oulu, Finland)
Elapsed Time (hrs) Airline Business TP Business Jet Outbound Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 4.58 4.17 3.33 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Outbound 7.58 6.17 5.33
Return Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 4.00 4.17 3.33 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Return 7.00 6.17 5.33
Total Travel Time 14.58 12.34 10.66
Add. Out-of-Office 7.00 0.00 0.00
Total Valued Time 16.79 6.09 5.67
The individual business class ticket price for the Finnair flight to Oulu and back is € 1,349,56. The total air charter fares for the roundtrip are € 12,850 for the turboprop and € 13,500 for the jet. Table 5.2 and Table 5.3 below show the resulting Average Break-Even VMH values for three passengers. For the business turboprop the required Average Break-Even VMH is € 241.11. With € 251.48 the
VMHBE for the business jet is only slightly higher.
51 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Table 5.2: Cost Comparison Airline vs. Business TP: Oulu, Finland (3 pax)
DUS-OUL-DUS ESS-OUL-ESS # Airline Business TP Pax per pax per trip per pax per trip Air Service 1,349.56 € 4,048.68 € 4,283.33 € 12,850.00 € Lodging 240.00 € 720.00 € 0.00 € 0.00 € 3 Per Diems 126.00 € 378.00 € 14.00 € 42.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,715.56 € 5,146.68 € 4,297.33 € 12,892.00 €
Personnel Cost Diff. 4,048.91 € 12,146.73 € 1,467.14 € 4,401.41 € Total Trip Cost 5,764.47 € 17,293.41 € 5,764.47 € 17,293.41 €
Average Break-Even 241.11 € VMH (Airline - TP)
Table 5.3: Cost Comparison Airline vs. Business Jet: Oulu, Finland (3 pax)
DUS-OUL-DUS ESS-OUL-ESS # Airline Business Jet Pax per pax per trip per pax per trip Air Service 1,349.56 € 4,048.68 € 4,500.00 € 13,500.00 € Lodging 240.00 € 720.00 € 0.00 € 0.00 € 3 Per Diems 126.00 € 378.00 € 14.00 € 42.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,715.56 € 5,146.68 € 4,514.00 € 13,542.00 €
Personnel Cost Diff. 4,223.06 € 12,669.18 € 1,424.62 € 4,273.86 € Total Trip Cost 5,938.62 € 17,815.86 € 5,938.62 € 17,815.86 €
Average Break-Even 251.48 € VMH (Airline - Jet)
Based on the productivity factors shown in Table 4.2, an average traveller salary of € 46,000, equal to a VMH of € 253.99, would already meet the criteria for the use of both business turboprop and jet.
Figure 5.1 shows the remaining Average Break-Even VMH values for other passenger numbers. The values obviously decrease with increasing passenger number. If the Actual Average VMH of the passengers is above the line, the use of
52 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? the specified business aircraft is economically justified. For eight passengers, the indicated value for the turboprop is zero. This indicates that already the Total Explicit Costs of the airline trip exceed those of the business turboprop option.
Figure 5.1: Average Break-Even VMH Values (Oulu, Finland)
1,100 1,000 900 800
R 700 600 500 400 VMH in EU in VMH 300 200 100 0 No. of Passengers 12345678 Av. VMH (TP-Airl.) 1041 441 241 141 81 41 13 0 Av. VMH (Jet-Airl.) 1060 454 251 150 90
53 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5.4 Route 2: Vilnius, Lithuania
Airline Schedule:99 STDSTA STDSTA Duration Wednesday DUS 17:25 19:05 WAW 19:55 22:20 VNO 03:55
STDSTA STDSTA Duration Thursday VNO 18:20 19:30 FRA 21:05 21:50 DUS 04:30
Airline Travel to Vilnius requires a departure on Wednesday at 17:25 lcl (one day early) and includes one transfer in Warsaw. The return flight via Frankfurt leaves Vilnius at 18:20 lcl on Thursday and arrives in Düsseldorf at 21:50 lcl.
Business aviation schedules are custom-fit to avoid idle times at the destination and provide a direct “There-and-Back in-a-Day” option.
Schedule Business Turboprop: STD STA Duration Thursday ESS 07:30 11:30 VNO 03:00
STD STA Duration Thursday VNO 16:30 18:30 ESS 03:00
Schedule Business Jet: STD STA Duration Thursday ESS 08:05 11:30 VNO 02:25
STD STA Duration Thursday VNO 16:30 17:55 ESS 02:25
Total Trip Duration: Airline: 31:25 hrs (including one overnight stay) Business Turboprop: 13:00 hrs Business Jet: 11:50 hrs
99 See Appendix 5/2.
54 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Total Travel Times and Total Valued Times are summed up as shown in Table 5.4 below. For the airline flight an Add. Out-of-Office time is counted on Thursday from 08:00 lcl to 12:30 lcl and from 15:30 lcl to 16:50 lcl (90 minutes prior STD).
Table 5.4: Time Comparison Route 2 (Vilnius, Lithuania)
Elapsed Time (hrs) Airline Business TP Business Jet Outbound Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 3.92 3.00 2.42 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Outbound 6.92 5.00 4.42
Return Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 4.50 3.00 2.42 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Return 7.50 5.00 4.42
Total Travel Time 14.42 10.00 8.84
Add. Out-of-Office 6.67 0.00 0.00
Total Valued Time 16.49 5.50 5.21
The individual business class ticket price for the Lufthansa flight to Vilnius and back is € 1,709.62. The total air charter fares for the roundtrip are € 9,450 for the turboprop and € 10,250 for the jet. Table 5.5 and Table 5.6 below show the resulting Average Break-Even VMH values for three passengers. For the business turboprop the required Average Break-Even VMH is € 117.85. For the business jet it is € 138.45.
55 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Table 5.5: Cost Comparison Airline vs. Business TP: Vilnius, Lithuania (3 pax)
DUS-VNO-DUS ESS-VNO-ESS # Airline Business TP Pax per pax per trip per pax per trip Air Service 1,709.62 € 5,128.86 € 3,150.00 € 9,450.00 € Lodging 100.00 € 300.00 € 0.00 € 0.00 € 3 Per Diems 54.00 € 162.00 € 9.00 € 27.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,863.62 € 5,590.86 € 3,159.00 € 9,477.00 €
Personnel Cost Diff. 1,943.54 € 5,830.62 € 648.16 € 1,944.48 € Total Trip Cost 3,807.16 € 11,421.48 € 3,807.16 € 11,421.48 €
Average Break-Even 117.85 € VMH (Airline - TP)
Table 5.6: Cost Comparison Airline vs. Business Jet: Vilnius, Lithuania (3 pax)
DUS-VNO-DUS ESS-VNO-ESS # Airline Business Jet Pax per pax per trip per pax per trip Air Service 1,709.62 € 5,128.86 € 3,416.67 € 10,250.00 € Lodging 100.00 € 300.00 € 0.00 € 0.00 € 3 Per Diems 54.00 € 162.00 € 9.00 € 27.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,863.62 € 5,590.86 € 3,425.67 € 10,277.00 €
Personnel Cost Diff. 2,283.40 € 6,850.19 € 721.35 € 2,164.05 € Total Trip Cost 4,147.02 € 12,441.05 € 4,147.02 € 12,441.05 €
Average Break-Even 138.45 € VMH (Airline - Jet)
Based on the productivity factors shown in Table 4.2, an average traveller salary of slightly more than € 34,000, equal to a VMH of € 138.76, would already meet the criteria for the use of both business turboprop and jet. Applying only a productivity factor of 5.7, as described in the PRC Aviation study (Chapter 4.1.2), an annual average salary of € 56,000 would be sufficient.
56 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Figure 5.2 shows the remaining Average Break-Even VMH values for other passenger numbers. Where the Actual Average VMH of the passengers is above the line, the use of the specified business aircraft is economically justified. For a group of six or more passengers, the required VMHBE for the turboprop is zero. This indicates that already the Total Explicit Costs of the airline trip exceed those of the business turboprop option.
Figure 5.2: Average Break-Even VMH Values (Vilnius, Lithuania)
900 800 700 600 R 500 400
VMH in EU in VMH 300 200 100 0 No. of Passengers 12345678 Av. VMH (TP-Airl.) 691 261 118 46 3 0 0 0 Av. VMH (Jet-Airl.) 744 290 138 63 17
57 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5.5 Route 3: Katowice, Poland
Airline Schedule:100 STDSTA STDSTA Duration Wednesday DUS 20:10 21:05 FRA 21:50 23:15 KTW 03:05
STDSTA STDSTA Duration Friday KTW 06:00 07:30 FRA 08:50 09:35 DUS 03:35
In order to be at the scheduled business in Katowice on Thursday, the existing airline schedule requires a departure on Wednesday at 20:10 lcl (one day early) for an arrival at 23:15 lcl. Earliest return possibility is a departure on Friday (one day late) at 06:00 lcl, arriving in Düsseldorf at 09:35 lcl. Both flights are transfer connections via Frankfurt.
Business aviation schedules are custom-fit to avoid idle times at the destination and enable a direct “There-and-Back in-a-Day” option.
Schedule Business Turboprop: STD STA Duration Thursday ESS 09:20 11:30 KTW 02:10
STD STA Duration Thursday KTW 16:30 18:40 ESS 02:10
Schedule Business Jet: STD STA Duration Thursday ESS 09:45 11:30 KTW 01:45
STD STA Duration Thursday KTW 16:30 18:15 ESS 01:45
Total Trip Duration: Airline: 40:25 hrs (including two overnight stay) Business Turboprop: 11:20 hrs Business Jet: 10:30 hrs
100 See Appendix 5/3.
58 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Total Travel Times and Total Valued Times are summed up as shown in Table 5.7 below. Add. Out-of-Office time for the airline option is counted on Thursday from 08:00 lcl to 12:30 lcl and from 15:30 lcl to 18:00 lcl.
Table 5.7: Time Comparison Route 3 (Katowice, Poland)
Elapsed Time (hrs) Airline Business TP Business Jet Outbound Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 3.08 2.17 1.75 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Outbound 6.08 4.17 3.75
Return Office to Airport 0.75 0.75 0.75 Terminal Boarding 0.75 0.25 0.25 En Route 3.58 2.17 1.75 Deplaning 0.75 0.25 0.25 Airport to Office 0.75 0.75 0.75 Total Return 6.58 4.17 3.75
Total Travel Time 12.66 8.34 7.50
Add. Out-of-Office 7.00 0.00 0.00
Total Valued Time 15.16 5.09 4.88
The individual business class ticket price for the Lufthansa flight to Katowice and back is € 1,454.79. The total air charter fares for the roundtrip are € 6,950 for the turboprop and € 7,850 for the jet. Table 5.8 and Table 5.9 below show the resulting Average Break-Even VMH values for a group of three passengers. Average Break-Even VMH values required to justify the use of the business turboprop are € 65.29 and € 93.12 for the business jet.
59 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Table 5.8: Cost Comparison Airline vs. Business TP: Katowice, Poland (3 pax)
DUS-KTW-DUS ESS-KTW-ESS # Airline Business TP Pax per pax per trip per pax per trip Air Service 1,454.79 € 4,364.37 € 2,316.67 € 6,950.00 € Lodging 140.00 € 420.00 € 0.00 € 0.00 € 3 Per Diems 72.00 € 216.00 € 8.00 € 24.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,666.79 € 5,000.37 € 2,324.67 € 6,974.00 €
Personnel Cost Diff. 989.88 € 2,969.65 € 332.01 € 996.02 € Total Trip Cost 2,656.67 € 7,970.02 € 2,656.67 € 7,970.02 €
Average Break-Even 65.29 € VMH (Airline - TP)
Table 5.9: Cost Comparison Airline vs. Business Jet: Katowice, Poland (3 pax)
DUS-KTW-DUS ESS-KTW-ESS # Airline Business Jet Pax per pax per trip per pax per trip Air Service 1,454.79 € 4,364.37 € 2,616.67 € 7,850.00 € Lodging 140.00 € 420.00 € 0.00 € 0.00 € 3 Per Diems 72.00 € 216.00 € 8.00 € 24.00 € Other 0.00 € 0.00 € 0.00 € 0.00 € Total Explicit Cost 1,666.79 € 5,000.37 € 2,624.67 € 7,874.00 €
Personnel Cost Diff. 1,411.86 € 4,235.57 € 453.98 € 1,361.94 € Total Trip Cost 3,078.65 € 9,235.94 € 3,078.65 € 9,235.94 €
Average Break-Even 93.12 € VMH (Airline - Jet)
Based on the productivity factors shown in Table 4.2, an average traveller salary of € 28,000 (equal to a VMH of € 94.11) would already meet the criteria for the use of both business turboprop and jet. Even by applying the average productivity factor of 5.7 for senior executives, as described in the PRC Aviation study (Chapter 4.1.2), the annual salary corresponding to the Average Break-Even VMH for the business jet will be only slightly more the € 32,000.
60 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Figure 5.3 shows the remaining Average Break-Even VMH values for other passenger numbers. Where the Actual Average VMH of the passengers is above the line, the use of the specified business aircraft is economically justified. For a group of five or more passengers, the indicated values for both turboprop and jet are zero, indicating that already the Total Explicit Costs of the airline trip exceed those of both business aircraft options.
Figure 5.3: Average Break-Even VMH Values (Katowice, Poland)
700
600
500 R 400
300 VMH in EU in VMH 200
100
0 No. of Passengers 12345678 Av. VMH (TP-Airl.) 525 180 65 8 0 0 0 0 Av. VMH (Jet-Airl.) 602 220 93 30 0
61 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
5.6 What Type of Business Aircraft to Choose?
To perform the sample route calculations, one turboprop and one turbojet aircraft were examined as a possible alternative to commercial airline travel. As expected, the VMHBE values for the jet are higher than those of the turboprop. However, the gap between the respective values decreases with increasing flight ranges. The greater the distance that has to be covered, the more time can be saved by higher cruising speeds. These shortened flight times will eventually compensate the higher rates that have to be paid for the jet, and the total air charter fare will drop below the one that is charged for the turboprop aircraft. For the aircraft types (Beech King Air B200, Cessna 525 Citation Jet) and the flight ranges (less than 2,000 km) evaluated in the examples before, this point has not been reached yet. On all three routes, the turboprop is still cheaper than the jet, producing lower
VMHBE values.
The VMHBE values required to close the mentioned gap and turn the still higher priced business jet into the cheaper option are shown in Figure 5.4 below.
Figure 5.4: Average Break-Even VMH for Choice between Business A/C Types
4,400 4,000 R 3,600 3,200 2,800 2,400 2,000 1,600 1,200 800 Break-Even inVMH EU Break-Even 400 0 No. of Passengers 12345 Av. VMH (Jet-TP) OUL 1548 774 516 387 310 Av. VMH (Jet-TP) VNO 2759 1379 920 690 552 Av. VMH (Jet-TP) KTW 4286 2143 1429 1071 857
62 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Only if Actual Average VMH of the travellers is above the line, the business jet will be more cost-effective. The lowest values are shown for the longest route, where the time savings are most dominant.
This does not consider the subjective quality perception of the customer, concerning travel comfort or safety with regard to turboprops or jets. Where both options are more economical than airline travel, personal preferences may as well be a decision criteria for the choice of the respective business aircraft type.
63 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
6 Conclusion
The potential use of business aircraft is based on their ability to make travel more efficient by reducing total travel time and increasing productivity for the given amount of time. Business aircraft are more flexible than airlines because they fly according to a self-determined schedule, quite often closer to the ultimate destination of the business traveller. Business aviation is the real point-to-point form of air travel, able to fill the large existing gaps in scheduled airline services: most business flights are between cities that are not adequately or not at all served by scheduled flights.
Business aircraft are productivity multipliers that allow passengers to conduct business en route in complete privacy while reducing the stresses associated with travelling on scheduled carriers. While flying with an airline, business basically stops. But the “office in the sky” in a business aircraft means business as usual, with confidential in-flight meetings and briefings with clients or associates.
Business aviation is not about taking top managers from the head offices of large corporations and flying them in “their own aircraft”. The Louis Harris Poll stated that only 14% of company employees travelling on board business aircraft were top management. Another 14% were senior managers, 49% middle managers and 19% professional staff.101 The sample route calculations performed in Chapter 5 as well proved that there is a great saving potential for small groups of lower salaried employees, especially on the shorter routes. This basically relates to the fact that airline ticket prices, other than air charter prices, are not necessarily dependant on flight ranges.
Overall, commercial business aviation is for sure a valuable alternative for companies in Germany. Simply stated, business aviation can help a company to obtain maximum productivity from its two most important assets - people and time. This makes it a commercial proposition, not a luxury. The proposition however is
101 Louis Harris & Associates, Inc. (1997). p. 5.
64 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany? based on a comprehensive valuation of employee time as an implicit part of travel expenses.
Many of the large corporations in Germany already have inherited these thoughts and acknowledge the benefits of business aviation by operating own corporate fleets. Independent of company size or travel volume, commercial business aviation can provide the same benefits on demand, without the need for long-term financial or contractual commitments.
The model developed in this thesis is an easy to use tool to evaluate the financial benefits, arising from the use of commercial air charter flights on an individual trip basis. However, it requires that companies appreciate their employees’ time as a valuable good that must not be wasted. For the three sample routes evaluated in this thesis, the Total Valued Time savings per passenger resulting from the use of a business aircraft were at least 10 hours (i.e. one complete working day) per trip. In other words, using the airline to perform the trip (for employees meeting the VMH criteria) would be a waste of valuable resources that cannot be tolerated by a profit organisation. On top of the pure micro-economic evaluation, the non- financial factors, e.g. non-business hours away from home (family time) that can influence employee motivation and loyalty should be given a thought.
The sample calculations were based on an artificial scenario. The results will be even more meaningful, when the model is applied to a specific company case. Again, honouring these benefits requires a comprehensive valuation of employee time. Especially in Germany, personnel costs are a major cost factor. Companies must, at least, recognize the opportunity cost of reduced productivity when calculating the full amount of travel expenses incurred.
65 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Areas for further research
Based on the European airline schedule analysis performed in Chapter 3 of this thesis, an economic research can be conducted for specific German origin airports. The aim should be to identify companies within the catchment area that maintain business ties to the “blank spots” as shown in the synoptic tables (Appendix 4). By analysing the travel behaviour of these companies and then applying the cost-benefit model to the specific cases, the respective companies may be convinced of the saving potential inherent to business aviation.
In a next step, for companies with higher travel demands, a cost-benefit model may be developed to determine the minimum amount of business travel required to justify the operation of own corporate aircraft.
66 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
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Appendices Appendix 1/1
Commercial Air Charter Companies in Germany 102
Name Location Internet Bizair Fluggesellschaft mbH 10589 Berlin www.bizair.de Windrose Air Jetcharter GmbH 12101 Berlin www.windroseair.de Private Wings Flugcharter GmbH 12521 Berlin www.private-wings.de Canair Luftfahrtunternehmen 20345 Hamburg www.canair.de ACH Hamburg 22297 Hamburg www.ach-hamburg.de earlybirds Jet Charter Company GmbH & Co. KG 22335 Hamburg www.early-birds.de atec Flugcharter KG 24159 Kiel - Flughafen Süd www.atec-flight.com FLM Aviation Luftverkehrsgesellschaft Mohrdieck mbH & Co. KG 24159 Kiel - Flughafen www.flm-aviation.de ohlair 24159 Kiel www.ohlair.de Hanseatic Aviation 25474 Ellerbeck www.hanseaticaviation.de Jet Kontor 25488 Hamburg-Holm www.jetkontor.de Luftverkehr Friesland Harle 26409 Wittmund-Carolinensiel www.inselflieger.de FLN Frisia-Luftverkehr GmbH Norddeich 26506 Norden www.reederei-frisia.de OLT Ostfriesische Lufttransport GmbH 26721 Emden www.olt.de Atlas Air Service GmbH 27777 Ganderkesee www.atlas-air-service.de Silver Bird Charterflug GmbH 28199 Bremen www.silverbirdcharter.com Aerowest GmbH 30669 Hannover www.aerowest.aero Advance Air GmbH 35789 Weilmünster www.advanceair.de JET EXECUTIVE International Air Charter GmbH & Co. KG 40472 Düsseldorf www.jetexecutive.com Air Traffic GmbH Executive Jet Service 40474 Düsseldorf www.airtraffic.de Triple Alpha GmbH 40474 Düsseldorf www.3A-online.de Vibro Air Flugservice GmbH & Co. KG 41066 Mönchengladbach www.vibroair.de Westavia Fluggesellschaft mbH 41066 Mönchengladbach www.westavia.de LGW-Luftfahrtgesellschaft Walter mbH 44319 Dortmund www.lgw.de VHM Schul- und Charterflug GmbH 45470 Mühlheim/Ruhr www.vhm.aero MSR Flug-Charter GmbH 48268 Greven www.msr-flug.de Excellent Air AG 48703 Stadtlohn www.excellent-air.com CCF manager airline GmbH 51147 Köln www.jetcharter.de Senator Aviation Charter GmbH 51147 Köln www.senator-aviation.de WDL Aviation GmbH & Co. KG 51147 Köln www.wdl-aviation.de
102 Source: Adapted from Figgen, A. (2006). p. 46 et seqq.
71 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 1/2 Commercial Air Charter Companies in Germany 103
Name Location Internet AirGO Flugservice GmbH & Co. KG 55126 Mainz-Finthen www.airgo.de Air Alliance Express AG & Co. KG 57299 Burbach www.air-alliance.de Avanti Air GmbH & Co. KG 57299 Burbach www.avantiair.com JetConnection Businessflight AG 60549 Frankfurt www.jetconnection.com Hahn Air Lines GmbH 63303 Dreieich www.hahnair.com AERO Business Charter GmbH 64625 Bensheim www.aerobusiness.de Cirrus Aviation Luftfahrtgesellschaft mbH 66131 Saarbrücken www.cirrus-aviation.de Silver Cloud Air GmbH 67346 Speyer www.silver-cloud-air.de transavia Fluggesellschaft 67346 Speyer www.transaviaflug.de DaimlerChrysler Aviation 70567 Stuttgart www.dc-aviation.com EFD Eisele Flugdienst GmbH 70629 Stuttgart-Flughafen www.eisele-flugdienst.de Rieker Air service GmbH 70629 Stuttgart-Flughafen www.riekerairservice.de Stuttgarter Flugdienst GmbH 70629 Stuttgart-Flughafen www.stuttgarterflugdienst.de Jetline Fluggesellschaft mbH & Co. KG 70794 Filderstadt www.jetline.aero ProAir-Charter-Transport GmbH 70794 Filderstadt www.proair.de ACM Air Charter Luftverkehrsgesellschaft mbH 77836 Rheinmünster www.acm-air-charter.de flugbereitschaft GmbH 77836 Rheinmünster www.flugbereitschaft.com Business Air GmbH 78166 Donaueschingen www.business-air-gmbh.de Dr. Schenk Flugbetrieb GmbH 82152 Planegg www.vip-flights.de CPI Air Service GmbH Carlos de Pilar 82166 Gräfelfing www.cpi-airservice.com Phoenix Air GmbH 85326 München www.phoenixair.de Air Independance GmbH 85356 München www.airindependence.com Comfort Air Luftfahrtunternehmen GmbH & Co.KG 85356 München www.privatejets.de Premium Aviation GmbH 85356 München www.premium-aviation.de Augusta Air 86169 Augsburg www.augusta-air.de FoxAir GmbH 86167 Augsburg www.foxair.de Donau-Air-Service GmbH 88512 Mengen www.donauair.de Aero-Dienst GmbH & Co. KG 90411 Nürnberg www.aero-dienst.de Jetair Flug GmbH 90411 Nürnberg www.jetair.de ALPHA EXEC Flugbetriebs GmbH 91126 Schwabach www.alpha-exec.de Comair Reise und Charter GmbH 94474 Vilshofen www.BergerBau.de mediair ambulanzflugdienst 94501 Aidenbach www.mediair.de Air Charter Picard Flugzeugvercharterung 97901 Altenbuch www.air-charter-picard.de Fly Point Flugservice Haufe KG 99819 Hörselberg www.fly-point.de
List may not be exhaustive.
103 Source: Adapted from Figgen, A. (2006). p. 46 et seqq.
72 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 2 Air Charter Brokers in Germany104
Name Location Internet Chapman Freeborn Airmarketing GmbH 12521 Berlin www.chapman-freeborn.de Nordavia Fluggesellschaft mbH 20144 Hamburg www.nordavia.de Air Partner GmbH 22453 Hamburg www.airpartner.com FlightTime GmbH 27721 Ritterhude www.flighttime.de Hellmann Air Charter 30669 Hannover www.hellmann.net Air Traffic Euro Charter GmbH 40474 Düsseldorf www.airtraffic.de Hunt & Palmer International 50353 Hürth www.huntpalmer.co.uk Pro Sky Airbroker GmbH 50667 Köln www.clickajet.de open sky air charter services GmbH 51147 Köln www.open-sky.com Air Charter Agency 53859 Niederkassel www.charteragency.de airport-broker aircharter 53859 Niederkassel www.airport-broker.de Aviation Broker GmbH 60313 Frankfurt www.aviation-broker.de Executive Jet 63110 Rodgau www.executive-jet.de Panda Flight Management GmbH 63329 Egelsbach www.panda-flight.de ProAir-Charter-Transport GmbH 64546 Mörfelden-Walldorf www.proair.de Global Flight Flugdienst GmbH 70629 Stuttgart [email protected] (email) EBAS International GmbH 85356 München www.ebas-international.de
List may not be exhaustive.
104 Source: Adapted from Figgen, A. (2006). p. 56.
73 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 3/1 Listing of German Airports in Germany 105
International Airports 106 Town Airport name ICAO IATA Rwy length (feet) Berlin Schönefeld EDDB SXF 9,800 Berlin Tegel EDDT TXL 9,900 Berlin Tempelhof EDDI THF 6,800 Bremen Bremen EDDW BRE 6,600 Cologne-Bonn Cologne-Bonn EDDK CGN 12,500 Dortmund Wickede EDLW DTM 4,700 Dresden Dresden EDDC DRS 8,200 Düsseldorf Düsseldorf EDDL DUS 9,800 Erfurt Erfurt EDDE ERF 8,500 Frankfurt/Main Frankfurt/Main EDDF FRA 13,100 Hahn Hahn EDFH HHN 8,000 Hamburg Hamburg EDDH HAM 12,000 Hannover Hannover EDDV HAJ 12,400 Leipzig-Halle Leipzig-Halle EDDP LEJ 8,200 Munich Munich EDDM MUC 13,100 Münster-Osnabrück Münster-Osnabrück EDDG FMO 7,100 Nürnberg Nürnberg EDDN NUE 8,800 Saarbrücken Saarbrücken EDDR SCN 6,500 Stuttgart Stuttgart EDDS STR 10,900
105 Source: Adapted from Aircraft Charter World (2006). 106 Classification according to ADV. See: Arbeitsgemeinschaft Deutscher Verkehrslughäfen (2005).
74 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 3/2 Listing of German Airports in Germany 107
Regional Airports 108 Town Airport name ICAO IATA Rwy length (feet) Altenburg Nobitz EDAC AOC 6,800 Augsburg Augsburg EDMA AGB 4,100 Barth Barth EDBH BBH 3,900 Bayreuth Bayreuth EDQD BYU 2,900 Bielefeld Windelsbleiche EDLI BFE 2,400 Braunschweig Braunschweig EDVE BWE 5,100 Chemnitz-Jahnsdorf Chemnitz-Jahnsdorf EDCJ 1,900 * Cottbus-Drewitz Cottbus-Drewitz EDCD 8,200 Cottbus-Neuhausen Cottbus-Neuhausen EDAP 2,600 * Egelsbach Egelsbach EDFE 2,900 Eisenach-Kindel Eisenach-Kindel EDGE 3,900 Essen/Mülheim Essen/Mülheim EDLE ESS 5,000 Friedrichshafen Friedrichshafen EDNY FDH 7,700 Gera Leumnitz EDAJ 2,400 Heringsdorf Heringsdorf EDAH HDF 7,500 Hof-Plauen Hof-Plauen EDQM HOQ 4,800 Jena Schongleina EDBJ 2,500 Karlsruhe/Baden-Baden Karlsruhe/Baden-Baden EDSB FKB 9,700 Kassel Calden EDVK KSF 4,900 Kiel Holtenau EDHK KEL 4,100 Lahr Lahr EDTL LHA 9,800 Lübeck Blankensee EDHL LBC 5,900 Laage Rostock-Laage ETNL RLG 8,200 Magdeburg Magdeburg EDBM 3,200 Marl Loemuhle EDLM 2,700 Meschede Schuren EDKM 2,900 Mönchengladbach Mönchengladbach EDLN MGL 3,900 Neubrandenburg Neubrandenburg ETNU FNB 7,500 Paderborn-Lippstadt Paderborn-Lippstadt EDLP PAD 7,100 Passau-Vilshofen Passau-Vilshofen EDMV 3,200 ** Rothenburg/Görlitz Rothenburg/Görlitz EDBR 8,200 Schwerin-Parchim Schwerin-Parchim EDOP SZW 9,800 Siegerland Siegerland EDGS SGE 5,300 Speyer Speyer/Ludwigshafen EDRY 4,000 Stendal-Borstel Stendal-Borstel EDOV 6,400 Strausberg Strausberg EDAY QPK 3,900 Welzow Welzow EDCY 4,900 Zweibrücken Zweibrücken EDRZ 9,600
* Unpaved ** PPR 4,100 ft
107 Source: Adapted from Aircraft Charter World (2006). 108 Classification according to ADV. See: Arbeitsgemeinschaft Deutscher Verkehrslughäfen (2005).
75 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 3/3 Listing of German Airports in Germany 109
General Aviation Airports (Paved Runway Length > 2,000 ft) Town Airport name ICAO IATA Rwy length (feet) Aalen-Heidenheim Elchingen EDPA 3,100 Allendorf/Eder Allendorf/Eder EDFQ 3,500 Allstedt Allstedt EDBT 3,900 Anklam Anklam EDCA 2,900 Arnbruck Arnbruck EDNB 2,000 Arnsberg Arnsberg EDLA 3,000 Aschaffenburg Aschaffenburg EDFC 2,700 Baden-Baden Oos EDTB 4,100 Ballenstedt Ballenstedt EDCB 2,200 Bautzen Bautzen EDAB 7,200 Bonn Hangelar EDKB 2,600 Borkum Borkum EDWR BMK 3,200 Breitscheid Breitscheid EDGB 2,900 Bremerhaven Am Luneort EDWB BRV 3,000 Bremgarten Bremgarten EDTG 5,400 Brilon/Hochsauerland Brilon/Hochsauerland EDKO 2,400 Burg Feuerstein Burg Feuerstein EDQE 3,100 Coburg Brandensteinsebene EDQC 2,800 Cochstedt/Schneidlingen Cochstedt/Schneidlingen EDBC 7,200 Dahlemer Binz Dahlemer Binz EDKV 3,500 Damme Damme EDWC 2,200 Diepholz Diepholz ETND 4,200 Dinslaken Schwarze Heide EDLD 2,900 Donaueschingen-Villingen Donaueschingen-Villingen EDTD 4,200 Drewitz Cottbus-Drewitz EDCD 8,200 Eggenfelden Eggenfelden EDME 3,800 Eisenhüttenstadt Eisenhüttenstadt EDAE 2,900 Emden Emden EDWE EME 3,200 Finow Finow EDAV 8,200 Flensburg Schäferhaus EDXF FLF 4,000 Freiburg/Breisgau Freiburg/Breisgau EDTF 4,000 Ganderkesee Atlas Airfield EDWQ 2,700 Giessen Lutzellinden EDFL 2,300 Grossenhain Grossenhain EDAK 7,800 Gunzenhausen Reutberg EDMH 2,300 Guttin Guttin EDCG GTI 2,900 Halle Oppin EDAQ 3,600 Hamburg Finkenwerder EDHI XFW 7,600 Hamm Lippewiesen EDLH 2,900
109 Source: Adapted from Aircraft Charter World (2006).
76 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 3/4 Listing of German Airports in Germany 110
General Aviation Airports (Paved Runway Length > 2,000 ft) Town Airport name ICAO IATA Rwy length (feet) Hartenholm Hartenholm EDHM 2,400 Hassfurt Schweinfurt EDQT 3,600 Heide Busum EDXB HEI 2,300 Herzogenaurach Herzogenaurach EDQH 2,200 Heubach Heubach EDTH 2,400 Hoppstädten-Weiersbach Hoppstädten-Weiersbach EDRH 2,100 Höxter-Holzminden Höxter-Holzminden EDVI 2,600 Juist Juist EDWJ JUI 2,200 Kamenz Kamenz EDCM 3,600 Karlshofen Karlshofen EDWK 2,200 Karlsruhe Forchheim EDTK 3,100 Koblenz Winningen EDRK 3,800 Köthen Köthen EDCK 2,600 Kulmbach Kulmbach EDQK 2,300 Kyritz Kyritz EDBK 3,200 Landshut Landshut EDML 2,900 Leer Papenburg EDWF 2,600 Lemwerder Lemwerder EDWD XLW 6,200 Leutkirch Unterzeil EDNL 3,300 Lüchow Rehbeck EDHC 2,100 Mainbullau Mainbullau EDFU 2,300 Mainz Finthen EDFZ 3,200 Mannheim Mannheim City EDFM MHG 3,400 Meinerzhagen Meinerzhagen EDKZ 3,800 Melle-Gronegau Melle-Gronegau EDXG 2,500 Memmingen Allgäu Airport EDJA FMM 7,800 Mengen-Hohentengen Mengen-Hohentengen EDTM 3,900 Merseburg Merseburg EDAM 3,700 Mindelheim Mattsies EDMN 2,300 Mosbach-Lohrbach Mosbach-Lohrbach EDGM 2,000 Mühldorf Mühldorf EDMY 2,200 Münster-Telgte Münster-Telgte EDLT 2,200 Neumarkt/Opf. Neumarkt/Opf. EDPO 2,100 Niederstetten Niederstetten Army ETHN 3,300 Norderney Norderney EDWY NRD 3,200 Nordholz Sea Airport ETMN 8,000 Nordhorn Lingen EDWN 2,900 Obermehler/Schlotheim Obermehler/Schlotheim EDCO 4,700 Oberpfaffenhofen Oberpfaffenhofen EDMO OBF 7,500
110 Source: Adapted from Aircraft Charter World (2006).
77 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 3/5 Listing of German Airports in Germany 111
General Aviation Airports (Paved Runway Length > 2,000 ft) Town Airport name ICAO IATA Rwy length (feet) Oberschleissheim Oberschleissheim EDNX 2,600 Oehna Oehna EDBO 2,700 Offenburg Offenburg EDTO 2,900 Osnabrück Atterheide EDWO 2,600 Peenemunde Peenemunde EDCP 7,800 Peine Eddesse EDVP 2,900 Pirmasens Pirmasens EDRP 2,600 Porta Westfalica Porta Westfalica EDVY 2,800 Rechlin-Larz Rechlin-Larz EDAX 7,800 Regensburg Oberhub EDNR 2,100 Reichelsheim Reichelsheim EDFB 2,300 Rendsburg Schachtholm EDXR 3,100 Riesa Gohlis EDAU 3,200 Rosenthal-Field Plossen EDQP 2,400 Rotenburg/Wümme Rotenburg/Wümme EDXQ 2,600 Rothenburg o.d. Tauber Rothenburg o.d. Tauber EDFR 2,600 Rottweil Zepfenhan EDSZ 2,600 Saarlouis-Düren Saarlouis-Düren EDRJ 2,600 Salzgitter Drutte EDVS 2,000 Schleswig Schleswig EDXC 8,000 Schonhagen Schonhagen EDAZ 3,900 Schwäbisch Hall Hessental EDTY 3,000 Schwenningen Am Neckar Schwenningen am Neckar EDTS 2,600 St. Michaelisdonn St. Michaelisdonn EDXM 2,200 St. Peter-Ording St. Peter-Ording EDXO PSH 2,100 Stade Stade EDHS 2,100 Stadtlohn Wenningfeld EDLS 3,200 Straubing Wallmühle EDMS RBM 3,000 Trier Föhren EDRT 3,900 Walldurn Walldurn EDEW 2,600 Wangerooge Wangerooge EDWG AGE 2,700 Werneuchen Werneuchen EDBW 4,900 Westerland/Sylt Westerland/Sylt EDXW GWT 6,900 Wilhelmshaven Mariensiel EDWI WVN 4,700 Winzeln-Schramberg Winzeln-Schramberg EDTW 2,300 Worms Worms EDFV 2,600 Wriezen Wriezen EDON 7,800 Würzburg Schenkenturm EDFW 2,100
List may not be exhaustive.
111 Source: Adapted from Aircraft Charter World (2006).
78 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 4/1 “There-and-back-in a-day” Options
from CGN DTM DUS FRA HAJ HAM BRE MUC STR SXF/THF/TXL to 1 2 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 67 HEL IVL JOE JYV KAJ KAO KEM KOK KTT KUO FI LPP MHQ OUL POR RVN SJY SVL TKU TMP VAA VRK AES ALF BDU BGO BOO EVE FDE FRO HAU HMR HOV KKN KRS KSU LKN LYR MJF MOL MQN NO NVK OLA OSL OSY RRS SDN SKE SOG SRP SSJ SVG TOS TRD TRF VDB XKI XUC XUI XZO
There-and-back-in-a-day option
79 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 4/2 “There-and-back-in a-day” Options
from CGN DTM DUS FRA HAJ HAM BRE MUC STR SXF/THF/TXL to 1 2 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 6712 345 67 BOJ BG SOF EE E E EEEE VAR EE BRQ KLV CZ OSR PRG ZDN TLL EE URE HU BUD PLQ LT VNO LV RI X BZG GDN E KRK KTW LCJ PL POZ RZE SZZ WAW WRO BAY BBU BCM CLJ CND IAS RO OMR OTP E E SBZ SUJ TGM TSR
There-and-back-in-a-day option EDeparture from DE before 05:00 lcl
80 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 5/1 Airline Bookings for Sample Routes
Route 1: DUS - OUL
81 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 5/2 Airline Bookings for Sample Routes
Route 2: DUS - VNO
82 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Appendix 5/3
Airline Bookings for Sample Routes
Route 3: DUS - KTW
83 Commercial Business Aviation: A Valuable Travel Alternative for Business Companies in Germany?
Declaration of Authenticity
Herewith I confirm that this thesis is my own work, which was written without unauthorized assistance and that all references are marked appropriately.
Nörvenich, 14 August 2006
Jürgen Willems
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