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Companies are traveling more and more places. In these times, major firms are no longer located in the heart of industrial regions. They move to more rural settings and away from the pollution, crime and over inflated land prices. Thus moving the market from the major airports. If many companies want to acquire the big sale or the big contract, they have to go to the client. In most situations airlines are the fastest of all available travel methods.
But are airlines the best way and the most economical way to do business in this time and era? Corporate aviation is a viable way for many companies to reach the few and far between potential clients without using the major airports. Therefore, wasting time by commuting to the major city where the airport is located is no longer necessary. By utilizing small aircraft and by landing at the small mom and pop airports, right to where the potential client is located, extra time can be spent selling the company. In this paper the idea of utilizing corporate aircraft will be discussed as well as choosing the right aircraft for the needs of a business. Also, there are many factors to decide upon once the aircraft has been considered and determined to be a viable option.
A company would have many options to consider in trying to acquire an airplane. Whether to buy or lease, or to hire a separate firm to handle all maintenance and management aspects of owning an airplane. All these subjects will be touched upon and thus selling the prospective. In order to do a comparison on which type of aircraft to buy, a base needs to be established. In this study a sample company and its travel habits will be used.
A company in Omaha, Nebraska is in the business of selling widgets. The company has been growing and therefore doing a fair amount of traveling to other states. Their travel habits have been one weekly trip to Colorado Springs. Also, to St. Cloud, Minnesota twice a week, 1 weekly trip to Dallas, Texas and finally one miscellaneous trip to any given metropolis hub, for example New York City, New York. A combined total of $ 3320. 00 is being spent on transportation.
This amount doesnt include the executives time that is being wasted during travel. The executive sales person makes $ 200, 000 per year not including yearly sales bonuses and an average 50 hour work week. The sales people make an average of $ 2, 000, 000 dollars a year in new profits for the company, thus making the salespersons hourly worth $ 845. 00 dollars per hour plus the assistants worth $ 400. 00. A combined total of $ 1245. 00 of revenue per hour.
Now, time that is spent in airports and taxi rides and other time consuming problems, such as delays, there is less time spent with clients thus making the earning potential less than what it could be. Now, by utilizing a corporate aircraft, time can be more effectively spent on the customer. How can that be so? The small aircraft can be utilized by bringing the salesperson to the client in a faster and more efficient manner. By landing at a smaller and closer airport, less time is being taken by driving to and from the air field, therefore making it a very cost effective choice for a company to utilize a small aircraft. By following the chart available, the cost of the airplane tickets and time usage can be determined.
Included in the time is layovers and driving times to and from the airport plus round trip air time. All prices are coach because there is not a business class or first class available out of Omaha. Destination from Omaha Price Time Colorado Springs $ 655. 00 5. 0 hrs As one can see, flying out of Omaha is no small task and is very expensive. One cost that is also not depicted on this chart is the amount of revenue per hour each trip costs. A combined total of $ 37, 800 of executive sales time is lost. All together the cost of flying commercial is $ 41, 120 per week.
How can this number be brought down? By the use of a corporate aircraft time can be saved. Roughly half the time can be recovered from this number. Most of the smaller, private air fields are located directly in, or close to the meeting city. This helps to avoid large crowds and the unwelcome layovers of the larger airports. All of which can save valuable company time.
Why choose to have a corporate aircraft? If the company executive using the airplane saves an average of five hours a week by using the airplane, it saves the company at least $ 6, 000 per week in just travel time by the executive. The cost of the average seat mile of a business aircraft is between. 30 to. 50 cents per seat mile. Therefore making it very affordable.
Also, in order to be more adequately prepared than the competition the corporate team can prepare on the aircraft for the up coming presentation. This is saving time, and as shown on the last chart, the company representatives time is worth a great deal of money. The first impression in any new business meeting is very important. The customer realizes that a company means business when they fly into town on their own airplane. The use of a corporate aircraft can also be a great bargaining chip to enhance a new salesperson to the company. Finally, the airplane is a great way to show progress to its competitors making them not likely to rival your corporation.
Since the company shows potential for a corporate aircraft, what type of aircraft should it consider, new or used? That is a very difficult question because the company is very new to the airplane business. There are many more variables that need to be looked at when deciding upon a used aircraft compared to a new aircraft. The company has decided to go with buying a brand new aircraft rather than buying used.
The company feels that a purchase of this size should be for an asset not a liability. They do not intend to use an aircraft brokerage firm, but decide to make the decision themselves. Another option they have available to them is whether to purchase a turbo jet aircraft or a turbo prop aircraft. The comparison of the two is needed to establish what the companys needs are in order to make a choice that will be most cost effective for the corporation, not just now but in the future also. Both aircraft are roughly the same size and can sometimes have a considerable difference in price.
For this study the two aircraft the company is looking at are the Beechcraft King Air 200 and the Beechjet 400 A. First, a summation of both aircraft and how they operate. The Beechcraft Super King Air Be- 200 is a twin turbo prop aircraft and a great starter aircraft for any small business. It has seating for eight passengers plus one pilot. Its true air speed is 294 knots and a maximum range of 1, 850 miles at 27, 000 feet.
The interior space is limited to a cabin width of 4. 5 feet, cabin height 4. 8 feet, and cabin length of 16. 7 ft. As one can see, this aircraft does not offer a great amount of space to get up and walk around in. The maximum load the aircraft can operate with is 2, 940. The draw bac...
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