In-House Operation? How to Set Up for Success (Part 2

IS-BAO training covering a number of areas such as Safety Management Systems (SMSs), training and proficiency, emergency response planning, environmental management, and occupational health and safety).

A decision should be made as to how often pilot and cabin crew training needs to be undertaken (e.g. twice-yearly, or annually?). The mechanics employed by the flight department should also receive regular training, while other areas that may require training include for international aircraft operations, security, first aid, CPR, and more.

Those buying a factory-new aircraft will receive initial training for two pilots and a maintenance technician (if required) free of charge from the OEM. But recurrent training will be necessary, for both pilots and a licensed technician in Year 2, and should be budgeted for.

When buying a pre-owned aircraft, training will need to be contracted from Year 1, and is likely to cost between $35k and $100k annually for two pilots.

Maintenance Considerations

Aside from safety and training, the flight department will need to have access to spare parts. Either seek to enroll the airplane on a parts-by-thehour inventory program that the OEM will offer for brand-new aircraft, or negotiate an agreement with a third-party provider.

In addition to your ongoing spare parts needs, there will be a requirement to purchase a small stock of other parts to cover expendables, Aircraft On the Ground (AOG) events, and the parts that are not covered by the parts-by-the-hour program. The OEM should provide you with an accurate idea of the cost of those parts.

The flight department will also need the relevant tooling and Ground Support Equipment (GSE), but it is wise to make the minimum necessary investment in these, instead utilizing the capabilities of the home-base airport’s ground services.

Maintenance contracts, fuel supplier cards, catering, aircraft handling (at the home-base), aircraft cleaning, credit cards, and navigation data subscription services should be negotiated and agreed prior to the aircraft entering service, as should hull, liability, and hangar insurance.

Now would also be a good time to negotiate a preferred rate with a local charter provider for whenever supplemental lift might be required. If you anticipate needing a specific number of supplemental lift hours over the course of the year, purchase discounted block hours/jet cards.

Finally, specialized software and equipment need to be considered. Computers, office equipment, and software (including the licensing) will be needed, and is likely to include accounting software, dispatch software, maintenance tracking software, and others – especially if you will keep digital logbooks.

Measuring Success

As a business unit, the in-house flight department should track escalating costs, aligning these with the company’s priority to enhance productivity of its employees with more efficient mobility and faster response times to customer needs.

To track the success and ROI of the flight department, the flight department manager should meet with company executives to better understand how performance will be measured (see ‘How to Measure BizAv’s Value to Shareholders’, AvBuyer, December 2020, p76).

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One metric might be aircraft availability versus maintenance down-days. Another could be enhancements in employee productivity versus other modes of transportation (e.g., scheduled airlines), and the reduction of nights spent away from home.

Be prepared to annually build a case for the flight department versus the airlines. Ascertain how much employee productivity would have been lost without the corporate aircraft, and what the impact would be in terms of related “extra” cost to the company (see ‘How to do a Corporate Travel Profile Analysis’, AvBuyer, November 2020, p58).

In addition, capture how instrumental the business aircraft has been in expanding sales to new territories, how quickly the company was able to handle a customer emergency event, and how many shorter road trips were successfully completed compared to the time and cost it might have taken when using other modes of transportation. Conclusion

The key element, perhaps, to establishing a successful in-house flight department is choosing the right people with the proper soft skill set, selecting the aircraft that meets 80% of the mission, and building an internal structure with the right processes, software, and procedures.

Ultimately, the in-house flight department should be managed as another business unit within a company and, like any other business unit, its endgoal must be to optimize the corporation’s returns, enhance employee productivity, increase personnel mobility, and bring an extra layer of flexibility to the company’s personnel.

Finally, don’t forget that experienced attorneys and consultants in Business Aviation can assist you in properly setting up your in-house operation from a taxation, asset acquisition, regulatory, and operating cost perspective. ❚

RENÉ ARMAS MAES

is Vice President Commercial at Jet Link International LLC, an international aviation consultant. He has built a successful track record for delivering Business Aviation consulting projects for Fortune 500 companies, Venture Capital firms, and HNWIs in North America, the Middle East, Europe and Latin America. His expertise includes corporate travel assessments, business aircraft analysis, aircraft financing and sales.

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