SEPTEMBER / OCTOBER 2020
Cultivating a Safety Culture
Do You Know What’s Behind Your Hangar Door?
Cancelled Flights. Cancelled Jobs. Easing Lay-Off Pain for Your Employees NOSTRADAMUS MEETS COVID-19 THE AIs HAVE IT THE UPSIDE OF A DOWN MARKET STAYING HOME IS NOT AN OPTION A Business Aviation Media, Inc. Publication
W W W . B I Z AVA D V I S O R . C O M
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L E ADI N G T H E WAY
September / October 2020 • Volume 7 / I s sue 5
6
8
F E AT U R E S
Cultivating a Safety Culture 06 Do You Know What’s Behind Your Hangar Door?
by ROB E R T SU M WALT
Easing Lay-Off Pain for Your Employees
by S TE V E FUS H E LB E RG E R
08 Cancelled Flights. Cancelled Jobs. 10
14
Nostradamus Meets COVID-19
Predicting the Future of BizAv Compensation by C HR IS TOPH E R BROYHILL , PH D , C A M
10
16
The Upside of a Down Market
by BA A S TAFF R E P OR T
14
Demand for Aircraft Charter Soars
D E PA R T M E N T S
Publisher’s Message 05 Your Call Is Important to Us
18
by G IL WOLIN
Washington Report
Staying Home Is Not An Option by DAVI D COLLOG AN
The AIs Have It
How Artificial Intelligence and Data Are Transforming Flight
by J E AN de LOOZ
18
Above and Beyond 2020:
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The Information You Need, From Experts You Can Trust
www.bizavadvisor.com/podcast
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S e p t e m b e r/O c to b e r 2 0 2 0 B U S I N E S S AV I AT I O N A DV I S O R 3
Business Aviation’s Most Advanced Aircraft Valuation Tool Simply enter an aircraft’s serial number online: ■ Obtain Current Market Value and Residual Value figures. ■ Compare an aircraft with all units listed for sale. ■ Predict future maintenance events and expense. ■ Value the impact of any Hourly Cost Maintenance Program enrollment. ■ Forecast anticipated marketability – and much more. ■ All information is updated daily. The same methods, techniques, and processes an aircraft appraiser would use. eValues is the only valuation tool that runs on a true Artificial Intelligence platform.
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PUBLISHER’S MESSAGE ■ PUBLISHER Gil Wolin gwolin@bizavadvisor.com CRE ATIVE DIRECTOR Raymond F. Ringston rringston@bizavadvisor.com MANAGING EDITOR G.R. Shapiro gshapiro@bizavadvisor.com ASSISTANT EDITOR Michael B. Murphy mmurphy@bizavadvisor.com WASHINGTON EDITOR David Collogan dlcollogan@gmail.com CONTRIBUTORS Christopher Broyhill, PhD, CAM Citadel Consulting LLC chris.broyhill@gmail.com Steve Fushelberger fushelberger@gmail.com Jean de Looz MySky jdl@mysky.com Robert Sumwalt National Transportation Safety Board robert.sumwalt@ntsb.gov BUSINESS MANAGER JoAnn O’Keefe jokeefe@bizavadvisor.com BOARD OF ADVISORS Paul Cardarelli • Larry Flynn Anthony Kioussis • Dick Koenig Joe Moeggenberg • Louis C. Seno Nel Stubbs • Rolland Vincent Ryan Waguespack • Jack M. Young BUSINESS AVIATION MEDIA , INC . PO Box 5512 • Wayland, MA 01778 Tel: (800) 655-8496 • Fax: (508) 499-2172 info@bizavadvisor.com • www.bizavadvisor.com Editorial contributions should be addressed to: Business Aviation Advisor, PO Box 5512, Wayland, MA 01778, and must be accompanied by return postage. Publisher assumes no responsibility for safety of artwork, photographs, or manuscripts. Permissions: Material in this publication may not be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of the publisher.
Your Call Is Important To Us “Your call is important to us…” Or so they said. Or rather, as the recording repeated every two minutes – for two and half hours. That’s how long we held (on speaker phone, at least), waiting for a service representative to respond to our as-yet-to-be-voiced request to restore an essential household service. We began to wonder if anybody was in there. Granted, these are not normal times. And perhaps we weren’t the only ones experiencing a service interruption. So we selected their “call back at a specific time” option. And to be fair, they did call back at the appointed hour, by computer. We held for another half hour before a company rep came on the line. When the technician finally arrived, he fixed the problem quickly and efficiently, observing all company safety protocol, and – best of all – did so cheerfully. Now it’s probable that the company had its customer service reps working from home, ensconced in safe and familiar environs, online and using forwarded phone lines. But that’s not an option in business aviation. Your pilots, maintenance technicians, and FBO personnel cannot work from home. They must be on site for you, day in and day out – towing, fueling, turning wrenches – solving the inevitable and unexpected travel disruptions, so that you can keep flying safely, securely, and on schedule. That’s the service side of business aviation. Given your seven- and eight-figure investments in equipment, training, and personnel, being on hold simply is not an option. The same is true for safety, the other side of the business aviation equation. And that’s the focus of this issue. In Cultivating a Safety Culture, NTSB Chairman Robert Sumwalt explains why, to be effective, aviation safety must encompass more than a manual or simple checklist. And why your company commitment to that culture must originate in the C-Suite. There’s another segment of aviation professionals also committed to safety and service – the more than 40,000 FAA specialists who operate and maintain the hundreds of Air Traffic Control facilities around the country, monitoring and directing thousands of flights every day – even in this era of reduced flying. In his Washington Report, David Collogan explains why Staying Home Is Not An Option for them. In times of high stress, we sometimes forget that there’s a difference between “nice to have,” and “need to have.” Good service may be the former, but safety is always the latter. Our industry’s safety record is so good and so consistent, thanks to the skills and commitment of professionals working in both the public and private sectors, that it’s too often taken for granted. Let’s focus on gratitude for a moment, and say “Thanks” to all who make it possible for you to keep flying safely.
The views and opinions expressed in Business Aviation Advisor are those of the authors and advertisers, and do not necessarily reflect the policy or position of Business Aviation Media, Inc. Articles presented in this publication are for general information and educational purposes and do not constitute legal or financial advice. Postmaster: Please send address changes to: Business Aviation Media, Inc. PO Box 5512 • Wayland, MA 01778, USA ©Copyright 2020 by Business Aviation Media, Inc. All rights reserved
Gil Wolin — Publisher gwolin@bizavadvisor.com
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■ AIRCRAFT SAFETY
Cultivating a Safety Culture BY ROBERT SUMWALT
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National Transportation Safety Board robert.sumwalt@ntsb.gov
hen I was growing up, my dad was executive VP and partner in a commercial construction company. In the late 1960s, as their business expanded throughout the southeast, they did what many smart organizations do – they purchased a twin-engine airplane and hired a pilot. When I was around 13, Dad took me along on a business trip, where he was able to visit job sites in three cities in one day. We were back home in time for dinner. Inflight, while I was pretending to be the official copilot, Dad sat in the passenger cabin and dictated notes for each job. Dad always told me how much he loved being able to be so efficient with the company plane, and he always spoke so highly of the pilot. However, that changed on a cloudy morning in 1976 when my parents and another couple were traveling to a convention. While on approach to a foggy runway, the plane descended below the authorized altitude while still in the clouds, careened into trees, and caught fire. Looking at the pictures of the wreckage, even to this day 6 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
I am amazed and thankful that they were all able to get out with only minor injuries. The aircraft was destroyed completely. In the days following the crash, it was discovered that the pilot had not completed a recent flight review, as required by the Federal Aviation Regulations. When the aircraft was purchased, the sale was never recorded with the FAA – a violation of FAA requirements. There was no operations manual. There really was no true oversight over the operations and maintenance of the airplane. Yes, the airplane was shiny and glitzy, the pilot always appeared professional, and he made good landings. He could almost always get passengers to their destination. But, as demonstrated by this crash and many others, those aren’t the best metrics of a safe operation. In fact, after being involved with several accident investigations over the years, and looking back at this one, I’ve wondered: Do many business aviation owners really know what’s behind their hangar door? Do you know? Although there are no absolute assurances, there are a few questions that might help provide some important information about your operations. w w w. B i z AvA d v i s o r. c o m
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Do You Know What’s Behind Your Hangar Door?
Does Your Aviation Provider Have Written Policies and Procedures?
Charter and fractional operators are required to have these, but it is not an absolute requirement for private owners. In my time at the National Transportation Safety Board (NTSB), I have seen several aviation accidents which fall into one of two categories – the organization either does not have adequate written documentation, or if it does have such, it does not adhere to it rigorously.
A few years ago, we investigated the crash of a Gulfstream IV, which claimed seven lives, including the high-net-worth owner of the jet. On the surface, the aviation department had all of the makings of a very professionally run organization. After the crash, we learned that the pilots were not even following basic procedures such as using cockpit checklists and checking flight controls before flight – factors which were directly causal to the crash. How do you ensure compliance with procedures and regulations? External audits are a good start, but in this crash, the operator had received high marks during its last audit. Yet, our investigation found a completely different story. Another way is to insist on your operator having a flight data monitoring program, where data from flights are routinely downloaded and analyzed to look for noncompliance. Following a chartered jet crash in 2015 which claimed nine lives, the NTSB stated: “Operational flight data monitoring programs could provide… operators with objective information regarding the manner in which their pilots conduct flights, and a periodic review of such information could assist operators in detecting and correcting unsafe deviations from company standard operating procedures.” Major airlines have been doing this for years, as do several corporate aviation departments. Should your aviation provider be doing this?
How Does Your Aviation Provider Manage Risks?
It’s unlikely that you would be as successful as you are if you didn’t manage risks. Does your aviation provider have a formal means of managing risks to ensure your safety? Smart business aviation operators require pilots to complete a flight risk awareness assessment before flight to ensure the planned flight is not predicting an unwarranted level of risks. If the level of risk is higher than acceptable, how can those risks be managed so they are at an acceptable level? In a former life, I was recruited from an airline career to manage a small flight department for a Fortune 500 company. We routinely flew into a particular airport because it was near the company’s business unit in that town. When I took over the department, I realized there were hazards at that airport which didn’t provide a comfortable safety margin. The instrument approach did not provide the highest safety margins; the runway was relatively short, and there were ditches on either end of the runway; there were no airport rescue and firefighting facilities. We did a risk assessment and then presented that information to the senior leadership of the w w w. B i z AvA d v i s o r. c o m
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How Do You Ensure Compliance?
company. The leaders agreed that they were not willing to accept that level of risk, yet our pilots had always gone there because that’s what they thought the leadership wanted. Based on data, it was mutually agreed upon to use a larger airport which, as it turned out, was just minutes farther than the smaller airport. The point is that risks should not be blindly accepted.
What Is the Safety Culture of Your Aviation Provider?
Is there a collective commitment by everyone to emphasize safety over competing goals? Are they comfortable telling you no? (Listen to the BAA Podcast “When Your Pilot Says ‘No’”).
Do They Have a Safety Management System?
Although required for airlines, a Safety Management System (SMS) is not required by the FAA for business aviation operators or charter operators. Based on accident investigations, the NTSB has recommended that business aviation operators, including those operated for charter, have a SMS. SMS is a business approach to managing safety by providing a structured way to do so. Don’t be fooled by the answer of “we have SMS.” SMS isn’t just a manual on the shelf – it is something that must be actively practiced and incorporated into everything they do. Contrary to being something they have, it really should be something they do and live by. An effective SMS incorporates and addresses the questions raised above. Business aviation is a powerful tool which helps businesses succeed. I’ve seen those benefits with my dad’s company, and I saw that when running a Fortune 500 flight department. I’ve also seen how devastating an aviation accident can be to a business, to those involved, and to those they leave behind. Getting the correct answers to the questions may help ensure you know what’s behind your hangar door. BAA ROBERT SUMWALT is chairman of the National Transportation
Safety Board. In addition to his accident investigation and safety background, he knows first-hand the benefits of business aviation.
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■ AIRCRAFT MANAGEMENT
Cancelled Flights. Cancelled Jobs. Easing Lay-Off Pain for Your Employees BY STEVE FUSHELBERGER usiness travel requirements, like business itself, can and do change – often dramatically and drastically. Unforeseen events, such as the onset of a pandemic, can quickly throw pilots, aircraft maintenance technicians, business managers, and even senior level executives out of work. According to Forbes Magazine, in mid-August approximately 30 million Americans (about 20 percent of the U.S. workforce) were receiving unemployment benefits or had given up seeking work. Regardless of how skilled and proficient individuals may have been in their respective disciplines, seeking new employment generally is one area where nearly everyone qualifies as a novice. The reason is simple – searching for a job is something that the majority of people have only done rarely, and usually not for quite some period of time. Assisting your valued team members whose departures are necessitated by circumstances beyond their control certainly is compassionate. But there are cogent reasons why doing so also is a smart business practice. Therefore, creation of well-conceived job search “flight plans” should be of critical importance for your organization, as well as for the departing employees. As an employer, you benefit in multiple ways by helping laid-off employees in their search for a new job: ■ It reduces transitioning and shifting job responsibilities challenges ■ It helps minimize remaining employees’ productivity-robbing anxiety ■ It contributes positively to your organization’s employment brand ■ It is simply the right thing to do.
Highly Effective Job Search Support Strategies and Tactics
There are two primary ways to help employees in the transition. The first is to hire an outplacement resource – either a talented and experienced professional consultant or a large firm specializing in transitioning employees from one organization to another. A second option is assigning an HR Business Partner in your firm, particularly a recruiting staff member, to provide outplacement assistance. Regardless of which alternative you elect, several key elements must be included: ■ Be prompt in providing support. Time off is time lost. Job searches nearly always take longer than expected. ■ Offer assistance to create a brief, yet comprehensive, resume that 8 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
quickly and fully showcases the value a job seeker offers prospective hiring managers. Previous roles should be concisely described, and, most importantly, two to four bulleted measurable accomplishments (metrics) listed for each position. ■ Aid the employee to develop a basic cover letter template that highlights the individual’s overall background and experience. Then each letter must be tailored to the specifics of that particular job. On average, a cover letter and resume only receive 20 to 30 seconds of attention. Brevity is the job seeker’s friend. ■ Encourage the employee to continually seek potential opportunities. The unwritten sales “rule of tens” is that landing the order (i.e., obtaining a new job) requires ten suspects to make a prospect, ten prospects to make a lead, and ten leads to make a sale. That number of potential opportunities must be growing constantly. ■ Use your contacts and extensive referral network on behalf of your employee. A generally accepted statistic is that 75% of all jobs are not publicized. Yet, three-fourths of all job seekers spend most of their time looking only at advertised jobs. The internet and job boards should never be the only arrows in a job seeker’s quiver. A former employee’s new job is to find his or her next job. Your job is to help them do so. The right support from a previous employer will sustain the positive attitude so critical for success. While it may seem so to the job seeker, a job search won’t last forever. When you support your employees to develop their job search “flight plans,” they can fly those flight plans effectively, and more quickly land at the desired new job destination. BAA STEVE FUSHELBERGER is a marketing and
communications consultant to the aviation, capital goods, consumer products, and service industries. He has assisted nearly 300 individuals from virtually every discipline and educational background with successful job searches.
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fushelberger@gmail.com
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■ AVIATION FINANCE
Nostradamus Meets COVID-19 BY CHRISTOPHER BROYHILL, PHD, CAM Citadel Consulting LLC / chris.broyhill@gmail.com
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hat is the future of business aviation compensation in the wake of the COVID-19 crisis? Before prognostications about where we’re going, it’s useful to understand where we’ve been. Combining the data from multiple compensation surveys, as shown in Figure 1, shows that business aviation compensation has risen an average of 3.7% per year since 2015. While there are downturns in the graph, these aren’t declines in the levels of compensation, but rather, declines in the rate of increase of compensation. That is, during the downturn years, compensation was still increasing, just not increasing at the rate of the previous year. But there’s a problem. By the time survey data hits the street, they are already at least six months old, and reflect the compensation state of the previous year. So, survey data are reactive, not 10 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
predictive, to the economic conditions that affect compensation. Survey data from this year, 2020, probably will not reflect the impact of the crisis on compensation, having been collected during the period immediately preceding and during the initial part of the COVID-19 shutdown. Odds are high that we’ll have to wait until the 2021 survey data are published before we see a reflection of that impact, assuming there is one. What do we do in the meantime? Every quarter, the Bureau of Labor Statistics (BLS) publishes a three-month statistic that provides the growth in private industry compensation. Figure 2 depicts the wage growth from Figure 1 remapped on a quarterly basis and compared against the quarterly compensation data provided by the BLS. Here, we see an interesting pattern. In nearly every case, the trend of the BLS data roughly parallels trends in survey data. In other words, because it is published more dynamically, BLS data can be a predictive indicator of the direction of survey data. Continued on page 12
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Predicting the Future of BizAv Compensation
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■ AVIATION FINANCE Figure 1
Business Aviation Compensation Increase Since 2015
6.0%
3.0%
1.5%
0.0%
2015
2016
2017
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Note the BLS data for Average Private Industry Wage Growth in Q1 and Q2 of this year. In Q1, pre-COVID-19, wages were growing at a rate of .8%, but then, in Q2, that growth rate decreased to .4%. The question is: how will that decrease affect business aviation compensation in the near term? The answer doesn’t lie in specific compensation numbers, but in the compensation ranges. Using a proprietary methodology to analyze compensation, survey data are aged from the time of collection into the present quarter using both survey trends and data from the BLS. The aged data then are regionalized using the same tools. For any one set of conditions, several numbers are generated. The low number is the low end of the range as depicted below. The high number is the high end of the range. The results from a sample analysis are in Figure 3. Here’s where we begin to see the impact of COVID-19. With the lower BLS wage increase statistic for Q2, the low end of the range, which typically is data aged with BLS statistics, will move lower than it was in Q1. If that same BLS statistic stays low, or goes lower, the range will continue to move lower, bringing the midpoint down as well. But the high end of the range will not change. This result will be a “flattening” of the increase trend over time, not a reversal into a decreasing trend. This pattern will be reinforced by the manner in which organizations consider the COVID-19 crisis as they review their compensation levels. Hopefully, most operators will focus on long-term personnel retention and continue to pay competitively, not changing their compensation patterns. But some will attempt to take advantage of the crisis to hire personnel, paying them at a bargain rate. It doesn’t take Nostradamus to predict that the problem for lower-paying organizations is that when the airlines fully recover, demand for pilots will be greater than it was pre-COVID-19, and there will be a mass exodus from these organizations. BAA 12 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
2019
2020 Q2
Average Survey Total Cash Compensation
Average Survey Base Salary
Continued from page 10
2018
Figure 2
Quarterly Wage Growth 2015 - 2020 1.60%
1.20%
0.80%
0.40%
0.0%
2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 2018 Q3 2019 Q1 2019 Q3 2020 Q1 BA Avg Base Salary Growth
BA Avg Total Cash Comp Growth
BA Avg Private Industry Wage Growth
Figure 3
Base Salary for Director/Manager of Aviation (Flying) Jet Class IV - DFW Area $300,000
$225,000
$262,148
$245,000 $224,111
$243,280
$150,000
$75,000
$0
Current Base Salary
Low End of Range
Midpoint of Range
High End of Range
CHRISTOPHER BROYHILL , PHD, CAM is the
Founder and President of Citadel Consulting LLC. His proprietary survey data are used here, and he is the author of Business Aviation Leadership: From the Traits to the Trenches.
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(3) DATA S OURCE: C HRISTOPHER BROY HILL
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■ AIRCRAFT MANAGEMENT
The AIs Have It How Artificial Intelligence and Data Are Transforming Flight Operational Impacts
BY JEAN de LOOZ ou are surrounded by big data and Artificial Intelligence (AI), broadly defined as the capability of a machine to imitate intelligent human behavior. While you may have seen the IBM Watson ads, or enjoy the help of Amazon’s Alexa, do you understand how AI can transform the way you live and conduct business? And what does this mean for your flight operations and financial management? From movie preferences to shopping carts, an incredible amount of data is being compiled in real time. These data points are then analyzed using AI and machine learning. A computer can mine enormous amounts of data – both real and simulated – to extract an immense number of outputs, surpassing what would be humanly possible. While the business aviation industry has been slow to adopt this technology, all aviation stakeholders – from aircraft owners, to charter management companies and aircraft operators, to OEMs and Maintenance, Repair, and Overhaul facilities (MROs) – will be affected by AI and its applications in the coming years. AI will radically change the business aviation industry, including the management of a business aircraft. AI’s impact can be divided into two broad groups: operational and financial. Points to consider include: 14 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
Enhanced Maintenance – Given today’s digitally advanced and connected aircraft, combined with AI’s ability to quickly mine and draw insights from large amounts of data, you will likely see a change in maintenance intervals. For current aircraft, maintenance intervals will extend. For aircraft yet to be built, it’s likely that there will be entirely new maintenance intervals as a direct result of a superior analysis of maintenance data. Additionally, predictive maintenance will continue to improve. You will see better maintenance scheduling and enhanced maintenance operations, which means greater availability and reliability for owners and operators, alongside lower costs. As an example, through the marriage of optical technology and AI, which can be used to track and advise maintenance technicians, MROs will be able to optimize their work by using video data. Multiple cameras can capture work as it is performed, identify the most efficient work flows, and help troubleshoot. Here, aircraft owners will end up the big winners, with greater uptime, lower operating costs, and more consistent quality maintenance. ■ Reduced Pilot Workload = Improved Safety – While safety concerns have long hindered AI adoption due to insufficient computing power, the act of piloting or operating an aircraft is now ripe for change. The same technology that uses sites such as Grammarly ■
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Y
MySky / jdl@mysky.com
Financial Impacts ■ Accounting
Automation and Financial Enhancement – Today, accounting and financial management for aircraft owners and management companies are often inaccurate, slow, and fraught with errors. A single aircraft can generate more than 300 invoices in a given month, which then need to be verified and costaccounted. A host of financial problems can result from this antiquated process. The implementation of AI and Optical Character Recognition technology creates a lightning-fast virtual cost accountant. This w w w. B i z AvA d v i s o r. c o m
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and OpenAI can be employed to correct grammar and complete sentences, thereby reducing pilot communication workload. Textual communication will become more widely adopted as we transition to modern Air Traffic Control (ATC) systems and self-separation of aircraft. This means aircraft don’t rely on ATC to separate them, but maintain traffic separation themselves. Additionally, voice communication can leverage AI oversight to become suggestive and/or corrective, as needed. AI can listen in to communication and interject to correct miscommunication and/ or suggest replies. One example is a missed radio call. AI can prompt the pilot to respond to a missed call and actually tell the pilot the exact message they missed. The AI is always there to be sure mistakes or omissions are flagged and managed. This enhances crew resource management (CRM). You likely will see the advent of AI as a virtual third crewmember. You already are well acquainted with the simplest form of AI: autopilot. Looking ahead, Autopilot 2.0 will mean true crew member augmentation – an additional virtual person in the cockpit at any time. ■ Human Capital Management – Deep data analysis can help schedule flight and support staff more efficiently, and identify operating trends that lead to human capital inefficiencies. For management companies, this means delivering a better work-life balance to staff, with little or no corresponding impact on business outcomes. For owners, this translates into better ownership experiences and lower operating costs. ■ Improved Ramp and ATC Operations – No one likes to wait, especially when you have to taxi in or out of an FBO, or hold due to ATC delays. Using AI and imaging technology, FBOs can systematically monitor ramp and fueling activity, remove process inefficiencies, increase throughput (rate of fueled and handled aircraft per hour), enhance safety, and improve overall customer service. Similarly, ATC throughput (the rate of airport arrivals and departures per hour) can be greatly enhanced by AI. From bridging language gaps found in international operations, to monitoring and managing vastly more aircraft than a human ever could, to aircraft self-separation, AI will usher in a new era. ■ Increasing Flight Path Efficiency – Improved data analysis and computing power will allow management companies and operators, along with ATC, to always choose the most optimal routing and flight paths. Doing so will maximize fuel efficiency, ultimately resulting in lower costs.
enables companies to automate this painstaking process to eliminate errors, standardize financials, and deliver lower costs and higher accuracy for users. For owners, this translates into lower operating and ownership costs. For management companies, this means lower internal costs and increased client retention. ■ Increased Human Capital Efficiency – AI will allow management companies to multiply the effectiveness of their staff by automating rote tasks, allowing their employees to focus on value-add functions. Just as the Industrial Revolution vastly increased worker output, so will AI. ■ Better Selling and Revenue Management – A large part of aircraft management is focused on monetizing aircraft assets through charter, which largely is done via an antiquated sales and scheduling process through phone calls, emails, and basic IT systems. While other markets – including the stock market – trade automatically or algorithmically, selling charter remains mostly a manual process. From quotes and bidding management to intelligent price discrimination, AI will usher in a new era to supercharge selling for charter operators. ■ Customer Service Enhancements – A chatbot (AI software that can simulate a conversation via app, website, or phone) can emulate humans during off hours, and cover for employees if they are away from their desks. Through chatbots, emotion analytics, and predictive personalization, customer service truly will be available 24/7/365 – and much smarter. Companies such as Sprint and Pega already employed predictive and self-learning analytics to identify customers at risk of “churn” (rate of attrition), in order to proactively provide personalized retention offers. Essentially, AI can help foster stronger customer engagement through uninterrupted client services. In the coming years, you will see AI play a more prominent role in business aviation. As the industry continues to embrace the technology, the quality, speed, and accuracy of aircraft management and operations will improve, creating a better environment for all stakeholders. BAA JE AN de LOOZ is Head of Americas for MySky, the only AI-
powered spend management platform designed for the business and private aviation industry. An industry veteran, Jean has experience selling and managing private aviation services.
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■ ALTERNATIVE LIFT
The Upside of a Down Market Demand for Aircraft Charter Soars irtually all air travel ground to a halt in mid-March in response to the pandemic. As scientists learned more about the virus and its method of transmission (primarily by exhaled aerosol droplets), travelers slowly began flying again. But not on commercial airlines. Studies estimate that commercial air travel requires anywhere from 150 to more than 1,000 personal interactions with others from leaving home to arrival, including ground transportation, security check-in, airport workers, flight personnel, and other passengers. These days, who wants to take that risk unnecessarily? To lower expenses in the face of severely reduced revenue, airlines cut flight frequency, cities served, and seats available per flight, making air travel even less convenient. Today, “you can’t get there from here” applies to an ever-increasing number of destinations. In response, those who have the means to do so are far more likely to charter, encountering perhaps only six other people, including the flight crew. Mirroring airline travel, after an initial drop in March, business aircraft flights rebounded in April with an unexpected surge. Regular business aircraft users began flying again, at first to bring home remote family members to quarantine, and then for some occasional business travel. By June, while all business aircraft flying remained 25% below June of last year, it was up 40% over May, according to aviation intelligence company Argus International. Charter experienced the greatest jump: more than 43%. That trend continued through July, as all flying rose another 9.4% over June, with charter up an additional 12.3%. By mid-August, while commercial airline traffic remained more than 46% below August 2019, worldwide business aircraft flight activity was back to within 15% of 2019 activity levels, according to aviation data and software company FlightAware. Part of that recovery is understandable. As an owner, you understand the convenience and reduced risk exposure that business aircraft flying offers. The startling part is the sheer number of first-time business aircraft charterers who have begun flying since April. The initial surge in demand has been for light to midsize jet trips, not surprising as many of those trips were personal, moving family members to safety. But, as commercial airlines continue to cut cities served, and lay off flight personnel, the demand for nonstop transcontinental and intercontinental travel should also rebound. 16 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
What does this influx of new charter users mean for aircraft owners? While you may have curtailed your own flying in the past few months, others do have to, and will continue to, travel both for business and personal reasons. So, regardless of its size and range capability, if your managed aircraft is among the more than 8,800 turbine aircraft available for charter in the US alone, you already may be seeing a growing demand, and can look forward to increased revenue opportunities. Charter is the easiest point of entry to corporate aviation, as more and more new users are discovering. Clients can try one or more aircraft makes and models, to determine their best match. Having identified their preference(s), they may move to a prepaid card program offering those models, and eventually to a fractional share or aircraft purchase. That predictable pattern has held steady during the 50+ year history of jet charter. Once new users experience the convenience, time savings – and now the health advantages – of charter, they tend to continue to use it. So while your aircraft may have sat idle for a couple of months while you wondered what the world situation would bring, the call for charter is now up exponentially. That means the value of your aircraft will continue to be maintained, since there will be demand for it when the time comes for you to sell or trade. And in an uncertain world, that is a bit of good news for you indeed. BAA w w w. B i z AvA d v i s o r. c o m
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■ WASHINGTON REPORT
Staying Home Is Not An Option The National Airspace System Can’t Be Managed On Zoom Calls BY DAVID COLLOGAN ir transportation is all about moving individuals and goods from one place to another. So while billions of people around the globe try to master working from home during the COVID-19 pandemic, most aviation practitioners aren’t able to perform their jobs while sitting at the kitchen table. Pilots are the most obvious example – you can’t get off the ground without someone at the controls. But there are scores of other folks who also must leave home and go to work so you can travel safely. You may interact briefly with some of them, such as ground transportation providers, FBO employees, and TSA personnel. Others, who perform vitally important safety missions, may never cross your mind. At the top of the list are air traffic controllers. Nearly 20,000 work in hundreds of FAA facilities equipped with radar and specialized communication systems, advising and directing the pilots of thousands of flights each day. Another 11,000 FAA system safety employees stay busy installing, maintaining, supporting, and certifying ATC and national defense equipment. They make sure communications, computer, and power systems are functioning, verify navaids and landing systems are properly calibrated, and oversee pilot and technician certification. FAA’s ATC nerve center is the Air Traffic Control System Command Center (ATCSCC) in Warrenton, VA. A visit to the ATCSCC is a real eye-opener. Displayed on a huge screen on the back wall are all the flights in positive control airspace, as many as 7,000 at once in normal times. The aircraft blips look like huge schools of fish streaming so closely together it is difficult to read the flight IDs and altitudes on the data tags. Command Center employees are tasked with planning and regulating air traffic flows nationwide to minimize congestion and delays. They work in a dynamic environment that changes by the minute as flight activity fluctuates. Convective weather moving across the map slows operations in busy flight corridors, forcing controllers to revise flight tracks and increase separation distances between aircraft, as adverse weather reduces arrival and departure rates at airports. Controllers in 22 regional ATC Centers and a variety of smaller facilities and towers at hundreds of airports handle most communication with pilots across the nation. Keeping all those facilities staffed and operating became more complicated March 17 when a major COVID-19 outbreak erupted 18 B U S I N E S S AV I AT I O N A DV I S O R S e p t e m b e r/O c to b e r 2 0 2 0
among control tower staffers at Chicago’s Midway Airport. FAA was forced to shut down the tower for a week and transfer traffic management responsibilities to nearby facilities. Midway’s ATC employees were quarantined and the facility underwent a rigorous sanitation protocol to eliminate any trace of the virus. Since then, the number of FAA ATC facilities affected has climbed relentlessly – from 35 in early April to more than 80 in July. By August 20, FAA’s listing of “facilities affected” by suspected exposure or confirmed COVID-19 cases since March had risen to 134. Included were 16 of the agency’s 22 regional ATC Centers and more than 100 TRACONs, towers, and other operating units. Many facilities have experienced repeat occurrences of the virus. Keeping the world’s largest and most complex air traffic control system operating 24/7/365 is challenging enough in the best of times. Doing so while ratcheting up sanitation schedules, trying to keep employees socially distanced, and shifting schedules and work assignments for those who may have been exposed to COVID-19 is even tougher. Despite the virus-related obstacles in FAA facilities, there has been little apparent impact on flight operations. The fact most passenger airlines have curtailed two-thirds of regular schedules obviously helps account for the lack of delays. Still, FAA’s highly skilled and dedicated workforce deserves major props for showing up three shifts a day during a pandemic to keep the ATC system humming. All of them are essential employees. BAA DAVID COLLOGAN has covered aviation in Washington, DC
for more than four decades. This award-wining journalist is known as one of the most knowledgeable, balanced, wary, and trusted journalists in the aviation community.
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dlcollogan@gmail.com
Cancer Patients
Fly Free Filling Empty Seats With Hope Corporate Angel Network arranges free travel on corporate aircraft for cancer patients traveling to and from treatment. Business jet travel makes it possible for patients, especially those in locations with minimal airline access, to travel to specialized medical centers.
Contact us today to learn more about patient travel services or to donate space on your aircraft.
It’s wonderful that organizations like the Corporate Angel Network are able to help connect those most in need of flights to those who are flying. -Henry Maier, President and CEO, FedEx Ground
corpangelnetwork.org | Westchester County Airport – White Plains, NY | (866) 328-1313