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Budgeting - Tracking Costs Makes This Easier

by David Wyndham 3. August 2016 12:04
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My wife and I just made some changes in our investments for retirement. As part of the review was looking at all our expenses and estimated what we'll need to budget in our later years. Good news - I don't own a boat/airplane/antique car. Bad news, I do like my personal technology products and high-speed internet.  My new iPad is cheaper than a Waco UPF-7, even if less fun!

So with my recent financial planning exercise fresh in my mind, I'm visiting budgeting again. 

As a reminder: A budget is a best estimate looking forward at what you think expenses will be. At the corporate level, the aviation department budget may be buried deep within the Corporate HQ budget, or if attached to a group like Human Resources or Legal (I've seen both), then it is further down the visibility chain. One Fortune 100 company flight department reports their budget in three categories: Transportation, Facilities, Personnel. While that my be sufficient for a CFO to manage, you can't manage your flight operations on such broad data. You need to have more detail.

The key thing to having a usable budget from the point of view of the aviation manager is to track and report your costs in detail.  You need sufficient details in your costing and budgeting so that small variances in the budget versus actuals get your attentions before they become major financial issues. Tracking, reporting and understanding your costs are necessary to avoid financial surprises.

Many costs in your budget are outside your direct control.  While you can join fuel discount programs and negotiate a discount at home base, neither you nor the FBO can accurately state that the price per barrel of oil will remain at current levels for the next year. You can query your users to estimate how much flying there will be next year, but you can't control the Board's decision to aggressively pursue a merger opportunity that pops up. You need to make a number of assumptions regarding things like utilization, fuel costs, etc that factor into those costs. While guaranteed hourly maintenance programs make maintenance budgeting easier, the annual cost of those programs varies with utilization. 

Document these assumptions so that if fuel goes up $1 per gallon during the next year, our your utilization goes up 10%, that you can revise the budget accordingly.  Your budget should be reviewed and updated as the year progresses. Planned versus actual should be a standard metric. A Revising the budget with clear explanations should be allowed. If not, do it internally so that at least you maintain some sense of control.

As an example, take fuel. Just tracking a single fuel amount for costs and budgeting leave you with little insight as to what is going on. At a minimum, what is fuel at home verse fuel purchased on the road? Usage and cost per gallon, and gallons per hour per aircraft  type versus trip length are much more helpful. If a fuel farm is involved, does the cost of the facility fall under fuel or another account, such as facilities or hangar? 

Budgets should be a financial tool that you use to manage the fiscal resources of your operation. It should not be a once and done exercise. Used appropriately, a budget should provide you with operating cost metrics that you can use to measure and manage your aircraft throughout the year.

Start the budgeting process early, or better yet, keep track and keep a running budget that gets updated periodically. While the formal budget presented to management may be fixed for 12-months, your management budget for running the aviation department needs to change with your operational changes. 


 

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Aviation Fuel | David Wyndham | Flight Department

Pilots: Are You Forgetting These Preflight Tasks?

by Sarina Houston 15. February 2015 23:29
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One of the benefits for pilots in the general aviation world is the ability to just “pick up and go” on a moment’s notice. General aviation, including business aviation, is less regulated than charter or airline operations. As such, the preflight preparation involved in a general aviation flight can often be quick and dirty, and familiar flights might only include a brief check of the weather and a quick walk-around of the aircraft.

Pilots are required by federal aviation regulation, specifically FAR 91.103, to become familiar with certain elements of preflight planning. There’s even an acronym – NWKRAFT – meant to help pilots remember the required items they must become familiar with before flying. The required preflight knowledge, and the meaning of the letters in NWKRAFT, include:

  • NOTAMs
  • Weather
  • Known ATC Delays
  • Runway lengths
  • Alternates
  • Fuel Requirements
  • Takeoff/Landing Distances

It’s easy for pilots to become so familiar with their routes and aircraft that they feel that they don't need to perform anything more than these required items to conduct a safe flight. But in addition to the basic requirements, there are a few other preflight items to consider. If you aren’t already incorporating these items as part of your preflight planning and preparation, consider adding them. After all, FAR 91.103 also states that pilots must become familiar with all available information prior to the flight. And isn't it just better to be prepared?

Winds aloft:
Although this one can be coupled with the generic requirement for checking the weather before a flight, the winds aloft are particularly important for those operators who hope to save fuel. Choosing a cruise altitude based on winds aloft can help save fuel, and alternatively, a quick check of the winds can also prevent you from running into a fuel shortage situation.

GPS NOTAMs and RAIM:
If you’re using GPS as a primary navigation aid, then you should be sure to get GPS NOTAMs from flight service before your flight. Approaches go well as long as they’re predictable. Losing GPS would be a bad day for any pilot that relies on it. It probably won’t happen, but a quick check of the NOTAMs and RAIM availability will ensure that it’s even less likely.

Fuel
The regulations require pilots to have enough fuel reserves for safe operation. But while you’re planning, you’ll want to scope out your fuel options, including where to find the cheapest fuel along your route (try MaxTrax) or which FBOs will take your fuel card (look them up in our Airport Resource Center). It’ll make it easier on everyone if you know ahead of time which FBO you want to use and if the FBO will honor your fuel card.

Pilot/crew currency
Don’t forget to check for your own currency requirements. Obviously, you’ll want to make sure you’re IFR current before flying in IMC or on an IFR flight plan, but don’t forget about the other currency requirements, like the flight review, and day and night requirements for carrying passengers, when applicable.

Avionics currency requirements
Along with your own currency, you’ll want to make sure your avionics are up to date. Your GPS database should be current for IFR flight, and your altimeter, pitot-static system, and transponder should be inspected every 24 calendar months. And don’t forget your VOR – the VOR needs to be checked every 30 days for IFR flight.

Local ops:
Bird conditions, noise abatement procedures and local airport and runway information should not be ignored during the flight planning process. (Did you know you can check the bird strike risk for major airports and routes on the Avian Hazard Advisory System website?)

TFRs:
Always check temporary flight restrictions before you fly. If you haven’t been surprised by one yet, you will be at some point. You can check them in a variety of ways, but online and through flight service stations are the most common.

Weight & Balance
Pilots who only fly one airplane become adept at doing weight and balance calculations for that aircraft in their minds, but when the load is heavier than usual or the flight is going to operate with different passenger or baggage loads than normal, nothing substitutes for an actual weight and balance calculations. Make sure you know the aircraft limits, as well as how the aircraft will perform when heavy.

Airport/FBO Operating Hours
Sometimes it’s the simple things that escape us, like whether or not the airport or FBO will be open when our flight arrives. It might not matter at times, but if you need fuel, restrooms or something to eat when you get there, you might want to double check the operating hours. In addition, it never hurts to call ahead and make sure there is ramp space available. This is especially important for larger aircraft at small airports.

Have preflight planning tips of your own? Share them with us in the comments!

Managing Aviation Fuel Costs in a Changing Environment

by Sarina Houston 15. September 2014 17:04
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As the cost of aviation fuel continues to rise, owners and operators of general aviation and business aircraft are faced with the unrelenting task of revamping their aviation fuel cost management initiatives - over and over again.

For aircraft owners, the rising prices are nothing new. On the contrary, it’s surely getting old. The ever-increasing operating costs associated with owning or renting an airplane affects businessmen and aviation enthusiasts alike. It affects owners, flight schools and FBOs. And it’s a problem that doesn’t seem to want to go away.

What do you do to keep fuel costs down? What can you do? For many, it seems like the options have been exhausted. Maybe you’ve invested in the most efficient aircraft for your type of operation: Maybe you’ve condensed multiple business trips into a single trip and longer days to save on jet fuel. Maybe you’ve even downsized the fleet.

Below are a few basic tips for saving money on aviation fuel. Perhaps you’ve implemented some or all of them already; maybe not.

According to the National Business Aircraft Association, a survey from an aviation consulting group found that 98% of aircraft owners and operators said fuel cost was a concern, and they responded with a variety of actions: Requesting more direct routes, tankering fuel, flying slower, or flying less often. And seventy-six percent said they had switched FBOs for lower-priced fuel elsewhere. Here are a few other ways to save money on fuel:

Slow Down: Conserving fuel by flying slower can be a good option for those who can allow a little bit of extra time in their travel plans, according to aviation consultant website Conklin & de Decker. “In a business jet, fuel is half to two-thirds of your variable cost. While the whole purpose of the aircraft is to save time, a bit slower speed and careful trip planning can keep your costs down. Reducing aircraft weight and drag can save on aircraft fuel, as well. Keeping the aircraft clean, using minimal takeoff flaps and installing winglets can all help decrease drag and improve efficiency.

Get Equipped for NextGen: The whole purpose of the FAA’s NextGen program is to increase efficiency throughout the air traffic system. Pilots and operators can take advantage of more direct routing by equipping their aircraft for NextGen. Depending on the aircraft and avionics already installed (or not installed) this can be a significant investment, but should save money in the long run.

Fuel Tankering: Some operators have experimented with fuel tinkering, which means buying fuel for cheap (such as at a home airport) and bringing it with you on board the aircraft to avoid high-cost fuel elsewhere. This only works if the added weight to the aircraft doesn’t decrease efficiency to the point where more fuel is used in flight than is saved by tankering, according to Conklin & de Decker.

Fuel Card Discount programs: Obviously shopping around for the best fuel discount program is an easy way to save cash – as long as you aren’t flying out of your way too much to get to an FBO that takes your card. These days, it’s not usually a problem.

Flight Planning: Perhaps the most easily controlled fuel-savings option is careful flight planning. By using resources like Max-Trax, which helps pilots search for the lowest-priced fuel along a route of flight or within a certain radius of an airport, users can easily identify the most efficient fuels stops, including airport and FBO information associated with that particular fuel stop. Over time, the fuel savings from this approach will add up.

As any pilot or operator knows, minimizing fuel costs is a weekly, monthly and yearly struggle. There are a variety of ways for aircraft owners and operators to be efficient, but the fuel industry an unpredictable and fluid one that constantly keeps us on our toes!

Do you have any cost-saving tips or tricks to share with other aircraft owners? Share them with us in the comments section below!

 

General Aviation's Avgas Problem: Low Lead to No Lead?

by Sarina Houston 1. September 2014 15:01
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The general aviation industry is searching for an alternative for 100 low lead avgas (100LL). But it is really necessary?

By now we all know that human exposure to lead is unhealthy – most commonly, exposure to lead causes neurological problems in children and cardiovascular problems in adults. We’ve probably all made sure that our walls weren’t once painted with leaded paint and our lead pipes aren’t corroding and contaminating our drinking water. But have you considered that general aviation aircraft operations are the main source of lead pollution today? Those who work in and around small piston aircraft might be exposed to harmful lead pollution – and the EPA and FAA are ready to do something about it.

“Emissions of lead from piston-engine aircraft using leaded avgas comprise approximately half of the national inventory of lead emitted to air,” claims the EPA. The organization estimates that about 41,000 tons of lead from avgas was emitted between 1970 and 2007. And, According to an EPA factsheet, the concentration of lead in the air increases near general aviation airports due to the use of 100LL fuel.

But our air quality is fine, right? And people have been using 100LL for years without adverse health affects…right? This might be true, but general aviation’s lead problem, while seemingly minor, is not a small problem at all.

Lead emitted from general aviation flight operations not only pollutes the air in and around airports, but it’s capable of traveling great distances before accumulating on the ground and in ground water. And, because there is no level of lead that is said to be safe when it comes to human exposure, the EPA and other environmental groups are pushing for the aviation community to adopt a lead-free fuel.

While many in the industry agree that it’s time to make the switch to an alternative fuel, others aren’t quite sure it’ll be worth the price. To the author’s knowledge, there have been no studies regarding the amount of lead in humans that work or live around general aviation airports, nor has there been any actual emissions testing on aircraft that operate with 100LL fuel. The EPA and other organizations have assumed that the hazard exists based on the amount of lead in avgas, and the fact that avgas is the only leaded fuel out there, leaving some people wondering if the problem even exists at all.

Regardless of the lack of information, the FAA has declared its agreement with the EPA and is taking steps toward a lead-free future, noting that general aviation aircraft are the only type of fuel-burning transportation that still uses leaded fuel.

In July 2014, the FAA received nine proposals for alternative fuels that would replace 100LL avgas, including proposals from Afton Chemical Company, Avgas LLC, Shell, Swift Fuels, BP, TOTAL, and Hjelmco. For the next few years, the FAA will be testing and evaluating these fuels during a two-phase, six million dollar per year program called the Piston Aviation Fuels Initiative (PAFI). They hope to have a solution that satisfies the entire general aviation fleet of 100LL users by December 2018.

As an aircraft owner, you might not be worried about air quality around airports or exposure to lead through your own piston aircraft use. But the transition to lead-free fuel is happening, and the bigger problem here is that an alternative fuel will affect all 100LL users in the not-so-distant future. Before long, aircraft owners could be faced with buying a new engine or at the very least, a certification process for a new fuel type. While the FAA hopes to find a fuel that will keep all aircraft flying, there is bound to be a cost associated with keeping 100LL aircraft in the air in the post-100LL days. And if you thought today’s avgas is expensive, a new type will probably cost even more.

Diesel might be the way to go, after all.

What are your thoughts? Is the creation of a lead-free fuel a necessary step into the future for GA, or have environmentalist organizations created a problem that doesn’t really exist? Comment and let us know!

Landmark Aviation Completes Acquisition of Ross Aviation

by Ray Robinson 11. August 2014 11:51
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Image Courtesy Landmark Aviation

(Houston, TX – August 1, 2014) Landmark Aviation has completed the acquisition of Ross Aviation, a network of fixed based operations located throughout the United States.

Headquartered in Denver, Colorado, Ross Aviation operates in major cities and resort destinations within the U.S., including Denver (BJC), Santa Fe (SAF), Miami (OPF), and six locations in Hawaii. The acquisition has increased the size of Landmark’s network from 57 to 75 locations globally.

“We are very excited to welcome these 18 locations into our network,” stated President and CEO Dan Bucaro. “They are geographically a good fit with their strength in the west and Hawaii. We also look forward to building strong relationships with the various airport authorities and being active in each of those communities.”

The Ross locations will begin operating under the Landmark Aviation brand immediately.

About Landmark Aviation

Headquartered in Houston, Texas, Landmark Aviation operates a network of fixed base operations located throughout the U.S., and in Canada and Western Europe. The Company offers a wide range of services, including FBO, MRO, charter and management. Landmark is a portfolio company of The Carlyle Group. For more information, visit www.landmarkaviation.com.

About The Carlyle Group

The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with over $199 billion of assets under management. Carlyle's purpose is to invest wisely and create value. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Fund of Funds Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, technology & business services, telecommunications & media and transportation. The Carlyle Group employs 1,600 people in 38 offices across six continents.

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