Business Aircraft Or Commercial Airlines?
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Advisory Series Business aircraft or commercial airlines? Why the answer changes with the mission When the distance is too far to drive to attend a conference or to meet your customer, do you travel by commercial airline or business aircraft? Smart companies know how to look at the question from all sides and then choose based on the answer that saves, money, time or both. What costs should I consider Industry comparison models show several factors affect the overall cost, including how many people are traveling, the average wages of those traveling, the prices of airline tickets, hotel costs, rental car rates and meal reimbursements. Also, when you need to travel makes a difference, too. Planning a trip at the end of the week could cost $1,000 or more in airline tickets than a ticket purchased weeks prior. Business aircraft offer convenience and flexibility — you fly when the opportunity arises. The models show indirect costs from airline travel can add up quickly, too. Consider Hard costs: Indirect costs: this example: sapping productivity from • Airline Ticket • Lengthy waits at the airport a company’s top three earners could • Hotel • Travel time to reach your final destination cost businesses more than $11,000 on a 1,000-mile, three-day trip from Boston, • Rental Car • Lost productivity of top earners Massachusetts. to Vidalia, Georgia. Fatigue • Meals • Extra days on the road due to distance after the trip could lose the business another $5,000 in productivity. Plus, you can’t reach Vidalia directly by airline. Getting there requires a flight into Savannah, Ga., followed by a 1.5- hour drive to the agricultural town best known for its sweet onions. In short, when going by commercial airline, it takes an entire day of travel just to get to the final destination. BOSTON 3-Person Trip: Boston, MA to Vidalia, GA Total Time Total Cost En route Trip Time Flying King Air® 350i $26,267 5 hours 1 day Flying commercial airline $28,425 14 hours 3 days 1.5 hours Commercial aircraft Private aircraft VIDALIA SAVANNAH Total costs include: lost production in transit, salaries in transit, hotel, rental car and meals. Business aircraft are more efficient. With pistons, turboprops and jets, you can reach 10 times the number of airfields than commercial airlines can, meaning you can get closer to your colleagues, customers and facilities in less time. In our Boston to Vidalia scenario, the cost of the trip favored flying a King Air 350i by about $2,100, and the length of the trip comes up shorter by two full days. Continued on page 2 COST BREAKDOWN FOR THE TRIP King Air 350i Commercial Airline Time in Transit (minutes) 1011.85 1206 Wait Time (minutes) 540 2160 Total Loss of Productive Time (minutes) 1016.74 3049.5 Total Travel Time (minutes) 1641.85 3606 Employee costs while waiting & in transit $3,446.88 $8,386.50 Fatigue costs first day after travel $2,062.50 $5,249.50 Production loss $3897.50 $11,689.75 Airline tickets/aircraft costs $16,560.58 $1,350 Rental car 0 $250 Hotel 0 $600 Meals $300 $900 Total Costs $26,267.46 $28,425.75 When does each option make most financial sense? For our 1,000-mile trip, calculations show the number of people traveling and how much they earn mattered most, followed by hard costs related to staying overnight. For example, if a company owns a King Air 350i and its highly- paid CEO and president travel together, it essentially costs the same to fly privately and commercially, but they save two days in transit with the business aircraft. In our Boston to Vidalia example, the same holds true if three high-level employees, such as general managers or vice presidents, take the same trip at the same time. Four key employees, including marketing directors and senior sales managers, or five staff members, including IT specialists and sales staff, would need to make the flight in order for the financial model to tip in favor of choosing the business aircraft. avg. avg. avg. avg. $225/hr $115/hr $70/hr $30/hr Two Top Executives Three High-Level Four Key Employees Seven Staff Members i.e. CEOs, presidents, Personnel i.e. marketing directors, i.e. IT specialists, sales staff legal counsel i.e. vice presidents, general senior sales managers managers Hourly wages are based on the employee’s total compensation, which includes basic wages, bonuses, profit sharing, insurance, taxes, etc. Of course, financial models can only calculate so much. They can’t project the costs of lost expansion when added travel time limits the number of opportunities team members can pursue. Those same models also can’t calculate cost savings that come when companies are able to retain top earners by reducing time away from family and other personal goals. It’s also impossible to calculate the security and ease of conducting confidential business in private en route. Continued on page 3 Most executives agree traveling two fewer days in an already-packed schedule is an invaluable advantage. Rather than default to a particular travel option, most companies that use business aircraft adopt responsible travel policies. They analyze each trip on its own merits and choose the option that makes most sense for profits and productivity. Textron Aviation Inc. is the world’s largest business aircraft manufacturer and home to the iconic Beechcraft®, Cessna® and Hawker® brands which account for more than half of all general aviation aircraft flying. Textron Aviation includes the businesses of Cessna Aircraft Company and Beechcraft Corporation, bringing together decades of unmatched experience in designing, building and supporting airplanes. It provides the most versatile and comprehensive general aviation product portfolio in the world through five principal lines of business: business jets, general aviation and special mission turboprop aircraft, high performance piston aircraft, military trainer and defense aircraft, and a complete global customer service organization. Its broad range of products include such best-selling aircraft as Citation® and Hawker business jets, King Air® and Caravan® turboprops and T-6 military trainer aircraft, all of which are backed by the industry’s largest global service network. For more information, visit textronaviation.com. ©2014 Textron Aviation Inc. All rights reserved. Beechcraft, Hawker and King Air are registered trademarks of Beechcraft Corporation. Cessna, its logo, Citation and Caravan are registered trademarks of Textron Innovations Inc., used by permission..