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Benchmarking in a Corporate Flight Department

by David Wyndham 1. May 2007 00:00
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There are many benchmarks and ways to benchmark. A retail business may benchmark sales per square foot of retail space. An investment firm will benchmark a myriad of business statistics and financial ratios. In aviation, we also see different benchmarks in use as well. According to our client surveys, our own Aircraft Cost Evaluator has been used as a cost of operation benchmark for many years. The NBAA publishes a Benchmarking and Salary Survey that is very useful for corporate operations. For helicopter operators, the HAI publishes a survey of operating performance that has a lot of useful data for benchmarking helicopter operations of all types.

To get benefits from benchmarking, you need three things: a valid benchmark, one that is repeated over time, and actionable items that can be identified that lead to some sort of improvement.

Valid means accurate, precise, reliable, and relevant. Something that is valid is also logically correct. Saying that because my flight operation has four pilots and yours, eight, my operation is more efficient is not valid. However, if both our operations are on-demand flight operations, and my pilots average 425 flight hours per year, and yours 350, that is valid.

We also need to compare like versus like operations. Comparing an EMS helicopter provider with a heli-tour operator would not yield valid results. The closer the participants are in mission, the more the practices used can be compared.

A benchmark should be repeated over time. In any given year there may be abnormalities that skew the individual results. Over time, trends can be identified and more reasonable conclusions may be drawn.

What sort of items can be benchmarked in an aviation operation? For an aviation operation, you could define the types of services provided and then benchmark the costs to deliver those services.

Fuel costs when connected with how fuel is purchased yield good information. Crew ratios, utilization per aircraft, per pilot, all can point to efficiencies in an operation, once the mission is known.

Costs are important items to benchmark. However, too broad of a cost definition and the comparison is likely to include different costs depending on how each operation interprets that item. Too specific a definition and you may not find others with any data to compare. It is important to identify not only the cost categories to benchmark, but to define those categories so that comparisons can be made. The individual cost categories must include the same costs. If crew training is part of crew travel for one operator and not the other, the comparisons become useless.

One last key item is to design the benchmark study from the outset with the goal of improvement in mind. You should be able to identify action items that lead to improvements in how you operate. It may be in increased safety by having your flight operations inspected by a safety auditor every year versus every two, or by seeing if there are ways to increase efficiency by having your maintenance done during the hours/days you don't normally operate the aircraft. Carefully worded benchmarks can reveal how you are doing with others like you.

There is a lot of data that can be collected by benchmarking and much of it is interesting. However, if it doesn't lead to doing things better then you have what I believe is called "trivia."

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David Wyndham

Aircraft User Fees

by Jeremy Cox 1. May 2007 00:00
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There is a snarling knife and gun fight brewing, and if you haven't heard about, it is time for you to understand the issue that will be brought to head on September 30th, this year. The fight is about how the Federal Aviation Administration (FAA) are to be funded, a reasonable issue that is being perverted into a nasty argument by the cut-throat and inept management of the ailing legacy airline companies who have smelt blood and see expiration this September of the Congressional authorization and the mechanism of taxes that currently fund the FAA as another way of bailing water out of their sinking corporate vessels.

You may find that vernacular in this article is scathing and possibly even unkind, but first you must understand the argument before you pass judgement. The Aircraft Owners and Pilots Association (AOPA) and the National Business Aviation Association (NBAA) along with numerous other representatives of the General Aviation communities have very eloquently called the onerous claims of the airline companies mythical. Over the past five or more years, the airlines have received a $5 billion bailout, a $10 billion loan guarantee program, war risk insurance, and an unconscionable shift of some of their badly funded pension obligations to the federal governments Pension Benefit Guaranty Corporation, which will ultimately come out of the pockets of the US taxpayer; you and me. Even though several of the airline behemoths appear to be recovering from their mismanaged lot partly as a result of the aforementioned government intervention, but mainly by the shear volume of passengers that have a need to travel by air, they are seeking to offload billions more of their operating expenses and debts by promoting the implementation of a nationwide user fee program.

There are 15,000 business aircraft registered in the United States of America. About 3 percent of these aircraft are flown by fortune 500 companies. According to the NBAA, civil aviation contributed over $900 billion and 11 million jobs to the U.S. economy in 2000, at least 9 percent of the total U.S. gross domestic product. Of this contribution, one dollar in nine is contributed by General Aviation (GA.) Of the GA economic contribution, 80 percent is generated by Business Aviation. Fully 85 percent of Business Aircraft operators are small to mid-size companies using only one aircraft. Companies that own a Business Aircraft rarely use it as an exclusive travel option. Instead, trips are analyzed on a case-by-case basis to determine the best way to accomplish a given mission. This is why companies that use Business Aviation spend more than $11 billion on commercial airline tickets each year.

This nation's air transportation system consists of approximately 5,300 public-use airports. The commercial airlines serve about 550 of these facilities - fewer than 11 percent. The busiest airports handle the majority of all airline passengers in this country. As a result, business aviation operations at our nation's 20 busiest hub airports account for only 3.5 percent of the total activity at these 20 facilities. GA has always contributed to the aviation trust fund, the present system of funding the FAA, through fuel taxes that are easily collected and efficiently administered. The amount of fuel purchased has a strong correlation to the time, distance and facilities used by GA aircraft. The airlines are currently exempt from paying a fuel tax.

To properly research this subject I have read the Budget Summary Reports for 2005, 2006 and 2007 (see an article that I wrote at this site, last year - click here for the article) All three documents do make very interesting reading indeed even for a layman like me. In 2005 the FAA requested and received $13.97 Billion US Dollars (yes, that's $13,970,000,000.00 US Dollars.) Last year's budget is 0.6% less than 2005, at $13.78 Billion. The budget requested for this year is lower again at $13.749 Billion. Since the FAA is being run "…to operate more like a business…" (Its own words) Only about 20% of their total budget (approximately $2.73 Billion in 2005) has to come from the coffers of the Federal Governments tax base. The FAA generates its own income, here is my summary of their statement of income report from last year:

INCOME = $11.24 Billion approximately
Passenger Ticket Tax
Passenger Flight Segment Tax
Waybill Tax
Fuel Tax
International Departure/Arrival Tax
Rural Airport Tax
Frequent Flyer Tax
Trust Fund Interest (FAA's Saving Account)
Sale of Facilities and Equipment
Sale of Research/Engineering/Devlpmt, Svcs.
48.75%
18.70%
04.15%
07.29%
13.97%
00.73%
01.39%
03.67%
01.20%
00.14%

TOTAL 99.99%

As you can see, the assertions of the airlines are not based upon fact. They in-fact are not paying a whole heck of a lot of the money out of their pockets that is needed by the FAA, while the lions share is being paid by their passengers. The current funding system works, but it would be fairer to go to an all-fuel tax funded system but the airlines need to be paying their share of a fuel tax. If user fees are implemented, GA will be lumbered with the lion's share, which is not fair or even ethical. This is my opinion and hopefully this is now your opinion too after reading this article. If like me, you now feel that the voice of GA must be heard above the whining lamentations of the airlines, please contact your local elected officials that hold office in the U.S. Senate and U.S. Congress. This is very important, so please act now. The longer that we delay in standing up for the truth to be told to the general public (there is no doubt that their opinion is subversively being won by the airlines), the closer we are drawn towards the flames, soon to be burnt to a crisp!

This is an important issue - If you have ever thought about voicing your opinion now is the time.  What are your thoughts and opinions regarding the issue of User Fees? Please make them known here. Any input that you care to make will be of great interest to all of the readers here at Globalair.com. So please don't be bashful and go ahead and write your comments and suggestions here. Please don't forget that whatever you write here, can be seen publicly by everyone that visits this page, so please be funny, be inspired, but most importantly of all, please be nice. See you next month when we tackle another aviation related topic.
 

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Jeremy Cox

The Aviation Safety Reporting Program

by Greg Reigel 1. May 2007 00:00
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Many airmen are familiar with the Aviation Safety Reporting Program ("ASRP"). Some view the ASRP as a "get out of jail free" card. Unfortunately, the program does have some limitations.

The Program

Under the ASRP, as explained in Advisory Circular 00-46D if an airman files an ASRP form (also somewhat inappropriately referred to as the "NASA form" since NASA is only the administrator of the ASRP) within 10 days of an incident, any sanction that may be imposed in a subsequent enforcement action can be waived. The program does not affect an actual finding of violation against the airman. Rather, it simply provides a waiver of any sanction the FAA might seek to impose for the violation.

However, the program does not apply in all situations. The sanction waiver will not be available when: (1) the airman did not file the ASRP form within 10 days of the incident; (2) the violation was deliberate or intentional; (3) the incident involved the airman's commission of a criminal offense; (3) the ASRP filing arose out of an accident; (4) the conduct of the airman giving rise to the violation exhibited incompetence or lack of qualification; or (5) the airman has another finding of violation against him or her within the last 5 years.

A Case Of Intentional Conduct

A recent NTSB case illustrates the consequences of an intentional or deliberate violation and the loss of the sanction waiver that would otherwise be available with a timely filed ASRP form. In Administrator v. Simmons, the FAA alleged that the airman violated FARs 91.13(a) (careless and reckless), 91.111(a) (causing a collision hazard), and 91.155(a) (VFR weather minimums) when he departed in VFR conditions, entered instrument meteorological conditions without activating his IFR flight plan or obtaining the appropriate ATC clearance and then created a collision hazard when he passed within 400-700 feet of a passenger carrying commercial aircraft.

After the airman failed to file an answer to the FAA's complaint, the ALJ granted the FAA's motion for summary judgment and affirmed the violations as alleged by the FAA. The ALJ also determined that a hearing was required regarding the 240-day suspension the FAA was seeking to impose upon the airman. However, after a hearing solely on the issue of sanction, the ALJ affirmed the 240-day suspension and refused to waive the sanction pursuant to the airman's timely filed ASRP form, finding that the airman's operation of the aircraft in the IMC environment was not inadvertent.

On appeal to the full Board, the airman argued that the ALJ's failure to waive the sanction was error. However, the Board agreed with the ALJ's conclusion that "when one places oneself at a significantly increased risk of committing a violation, then the violation is foreseeable and therefore not inadvertent." It observed "the ASRP will not obviate the imposition of a sanction when an operator's conduct is deliberate or intentional such that it reflects a 'wanton disregard of the safety of others' or a 'gross disregard for safety.'"

The Board then reviewed the facts underlying the violations and found that the close proximity to the other aircraft at the time of the relevant events presented a significant safety issue. Additionally, the Board felt that the airman's entry into the IMC area very soon after taking off, and his climbing over 2,000 vertical feet while in foreseeable IMC conditions without having activated his IFR flight plan or obtaining the requisite ATC clearance indicated that the airman's encounter with the IMC area was foreseeable and reckless. As a result, the Board concluded that waiver of sanction would be inappropriate.

Conclusion

The ASRP can provide a great benefit for airmen. I encourage airmen to file an ASRP form after any flight in which a potential FAR violation occurred or that involved circumstances that may have affected the safety of the flight. The ASRP forms are available through your local FSDO or you can file the form online here. However, keep in mind that the program is not without limit. Airmen are well advised to be familiar with and use the program, but to also understand the circumstances under which sanction waiver will not be available.

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Greg Reigel



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