When faced with the possibility of an economic downturn, whether it’s a momentary “correction” or a larger and more damaging recession, corporate flight departments must consider their ability to offer the same benefits to their company or organization as during headier times. This comes down to determining the value your flight department brings to the company.
Regardless of the economy being in a downturn or a boom, capitalizing on your current clients is key to maintaining and growing your business. The best way to accomplish this is by staying front-and-center with your customers and therefore increasing your shareholders’ value, which is why many businesses continue to use – and even increase – their use of private aviation during a recession.
Certainly, this highlights the importance of employing a dedicated flight department ready to respond to your company’s needs. In fact, depending on your strategy and situation, it’s possible that your company’s use of private aviation will become more profitable during a recession if your competitors scale back on their flying, and with it their ability to meet personally with clients.
Given the importance of face-to-face time with new and existing clients, companies seldom cut back completely on private aviation. The use of business aircraft provides a competitive advantage by allowing business leaders to save time and run a more efficient schedule, along with providing many other benefits that ultimately positively affect the bottom line. However, there’s more than one way to utilize private aircraft to accomplish this purpose.
Dedicated Flight Departments Vs. Management Companies
Does your company operate its own corporate flight department, or have you hired a management company to operate and maintain your aircraft? Both approaches offer several benefits but also some unique risks.
One key advantage to using a management company is that you’ll generally pay less, as they‘re able to save on costs by sharing hangar space and buying fuel, spare parts and other consumables at discounted rates, making it a more cost-effective option than starting or operating your own flight department.
The potential savings are not insignificant. According to the respected aviation consulting firm Conklin & de Decker, the annual operating costs for an independent flight department flying a $1 million jet can be as high as $1.6 million per year when you factor in-flight crew wages and the costs of a hangar, insurance, and fuel. A management company helps amortize these expenditures, ensuring you only pay for the costs relevant to your specific flights.
However, with a management company, you’ll also give up some control of the aircraft, as it may not be available every time you may wish to use it. Maintaining your own flight department ensures your aircraft and team are ready to fly at practically any time, on your schedule, with known crewmembers and from a safe and secure hangar environment.
With an independent management company, you’ll need to book each flight – just like any other charter passenger – and it’s possible that your aircraft may simply not be ready when you need it. Crewmembers could also vary, and hangar space would be shared with other entities which would reduce privacy.
Certainly, both options can be expensive and carry their own demands on time and resources. While employing a dedicated flight department usually offers the ideal scenario for most companies, an economic recession or similar downturn in a company’s bottom line could lead aircraft owners toward the management route to reduce costs.
Such diversification is fairly common in private aviation during times of recession. Corporations may review their expenses and better determine which flights or clients are worth the investments and, furthermore, whether or not their current usage and costs justify their return on investment.
Employing a “Virtual” Corporate Flight Department
Even if your company plans to stay the course and retain its flight department during times of recession, it’s always a good idea to have a backup plan should your company require supplemental flight support services or decide at a later date to downgrade its corporate fleet and utilize a management company or “Virtual Private Jet Department.”
A virtual flight department is essentially a group of aviation professionals who transparently represent the interest of the client in the global market for a fixed trip management fee. This offers several advantages, including no acquisition costs, management fees, hangar fees, insurance costs, staffing expenses or financial risks of unexpected maintenance repairs.
Utilizing a Virtual Private Jet Department also allows companies to access the world’s vast fleet of private aircraft. In fact, the size of this fleet often increases in a down economy as more aircraft are made available for charter in order to recoup investments. The number of motivated sellers also increases the number of aircraft available in the charter market, further improving the selection and pricing of charter jets available for hire on a per trip basis.
What sets Paramount Business Jets’ Virtual Corporate Flight Department apart versus other providers offering supplemental lift is that our services are fully transparent – from the aircraft safety ratings to quality, reliability, wholesale costs and even the brokerage fees. Third-party safety checks are performed, and reports are provided to clients prior to every flight. All operators and aircraft have been vetted for superior service, quality, and reliability.
At Paramount, we designate an Aviation Consultant, Flight Safety Manager and a Charter Acquisition professional to service each account. These professionals are available 24/7, to source, secure, and manage client trips in the marketplace. Paramount team members also learn the client’s preferences, making the process of booking flights essentially seamless.
The use of a Virtual Private Jet Department is not without possible downsides, however. Availability is dependent on the worldwide fleet of aircraft; therefore, there is little consistency in the interior or age of the aircraft offered on a per trip basis. To combat this drawback, the Paramount team retains client feedback from over the past 10 years regarding the quality and comfort of the aircraft they’ve recommended to their clients, ensuring a better charter experience.
We certainly hope that companies won’t shut down their own flight departments should we again face an economic recession. However, should your company need to cut back, better control or reduce your costs, your personal Virtual Private Jet Department at Paramount Business Jets is here to support and provide additional lift to your corporation during a time when staying in front of your customers is a must, while also being sensitive to your budget.