Aviation will always be in the cross hairs of those who do not fully understand the value of the benefits and see the plane as a luxury. While study after study has proven that those with a plane produce higher revenues, grow faster and have better returns for their investors, to a small vocal few, it falls on deaf ears. More needs to be done to incorporate modern productive/human capital valuations that can be used in NPV, IRR and CBA analysis. Methodology that investment bankers and accountants can use in valuing human capital in other business enterprises is in desperate need to be utilized in our industry.
The high visibility of the plane has always been a flash point for emotional versus objective decisions. The last 7-8 years we saw just how negative the politics of guilt by association can be with comments like “fat cats” and their tax savings and the Big 3 automakers huge blunder. The blunder wasn’t showing up in their planes, but not knowing how to defend their use in black and white terms that would have made the question of why they flew to the meetings silly even to the non aviation community. Private aviation became politically incorrect.
The National Aviation Business Association (NBAA) has commissioned studies regarding how to calculate productivity by time savings, work environment etc. and yet it never reaches mainstream benefit analysis in the form of calculating revenues. The story becomes a discussion of the chicken and the egg, which came first, success that allowed them to buy a plane or success because they purchased the plane?
Return On Investment (ROI) for human capital is not new, however it is getting much more refined for calculating the value of human capital in a company. The management axiom, “what can be measured can be managed” needs to become mainstream in the corporate aviation world. Developing productivity or human capital returns should be a goal to corporate aircraft operators to prove the value in more black and white terms. More productive time should not be as elusive as it seems to be to calculate and used for productivity measurements.
My challenge to those who are in positions of influence within our community is to continue to strive and update methods that can calculate the value of the plane. There are plenty of bright people who calculate various efficiencies and productivity in the business world. ROI of human capital is one method that should help. Our industry needs to develop an accepted model that companies can use to take the plane from being considered a toy to the real business tool it is.
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