3 Simple Principles for Reducing Business Aircraft Operating Costs
This is a post by guest author Dave Weil, CEO and Founder of Flight Dept Solutions, LLC. Dave was asked to contribute to this blog because of his expertise in aircraft management and flight department issues. Any thoughts expressed below are entirely Dave’s and do not necessarily reflect the views of Universal Weather and Aviation, Inc.
Business aircraft operators looking for ways to reduce their operating costs can turn first to a few simple principles that can have a significant impact.
1. Preplan every mission with an eye on total cost savings
To reduce operational expenses, the following practices are valuable to follow every day, for every trip:
- ✈ Plan aviation fuel for your whole trip. Evaluate the fuel-cost situation for each leg of your trip to determine where it is best to tanker fuel and/or take minimum uploads needed to avoid ramp fees. Re-evaluate when your schedule changes.
- ✈ Use the most efficient flight planning software. Sometimes a free or low-cost service can actually be expensive as additional charges may apply. Use the flight planning service that generates the most time-efficient routings in order to minimize fuel consumption.
- ✈ Plan to obtain contract fuel at every stop.
- ✈ Minimize “deadhead” use of the aircraft. After considering all of the costs, sometimes it is more efficient and cost effective to use a fully trusted and vetted charter operator to supply supplemental lift rather than ferrying the aircraft long distances.
2. Adopt a partnership with your service provider
A common approach to reducing aircraft costs is to constantly play one service provider off against another. This technique can be used in almost all operating cost areas. However, is it really the best approach over time? Given the extreme importance of service in our industry, strategies that emphasize both low costs and superior service are frequently preferred.
Treating your service providers as partners is the most effective way to achieve the best combination of low costs and superior service. Your service providers in the key areas of aviation fuel, ground handling and training can all do a better job for you if you work with them collaboratively. By concentrating your volume with fewer vendors, your costs can be reduced and the service level you receive can improve.
A few things to keep in mind:
- ✈ Aviation fuel – Partner with providers that will always quote you all-in fuel costs (i.e. all taxes included) and assure you that the quoted price will be the invoiced price, subject to clear warnings as to when exceptions apply.
- ✈ Ground handling – Team up with a ground handler that will help you avoid and/or obtain a rebate for European Value Added Tax (VAT) and mineral taxes on fuel, when applicable.
- ✈ Training – Utilize a training company that rewards your loyalty with both reasonable pricing and preferred scheduling.
3. Take risk avoidance measures
An emphasis on flight safety is an obvious risk management area. However, there are several other basic risk management practices that can minimize unexpected costs and unfavorable surprises.
- ✈ Ensure that the appropriate professionals review contracts before signing. It is quite common for agreements covering hangar, ground handling, and maintenance services to be signed without any type of risk management review. Frequently, the standard version of these contracts calls for all risk of loss, regardless of fault, to be borne by the aircraft owner. Be sure to provide all such contracts to your aviation-insurance broker and other appropriate professionals before they are finalized. Your broker should ask your aircraft insurer to approve them or recommend changes to limit your exposure to uninsured losses.
- ✈ Provide your aviation-insurance broker with full disclosure. If your broker doesn’t know that an employee of the company commutes to work in his/her own aircraft, or your aircraft owner sometimes trades time with another owner on the field, or you use independent contractor pilots and mechanics, then you may have inadvertent areas of non-coverage. Tell your broker all the facts to be sure you’re fully insured.
- ✈ Maintain a safe employee work environment. Most likely any investment you make in safety equipment and training will be easily recouped from workers’ compensation savings due to a safer work environment. Also, such actions reinforce a philosophy of safety.
- ✈ Protect your maintenance records. Be sure to maintain a duplicate set of records and/or store them in a fireproof container or in the cloud. Losing your records can be very expensive and a huge hassle.
- ✈ Take precautions to avoid and mitigate risk for times when your aircraft is on the ground. Unsafe ground movement of aircraft can be costly and adversely impacts the availability of the aircraft. Unfortunately, it is not uncommon for an aircraft to experience hangar rash due to being moved with improper equipment, without wing walkers, and/or by untrained personnel. Be diligent working with both your home base Fixed Base Operator (FBO) and transient FBOs to ensure proper precautions are taken. NATA and your aviation insurer can assist in this area. It is also a good idea to have 24-hour video surveillance of internal hangar activity at your home base and have access to video data at transient facilities, just in case an incident occurs.
While these three principles are typically considered common knowledge, it is surprising how often they are not followed. By consistently employing these three principles, operators can reduce their operating costs.
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