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Survive Tough Times

by David Wyndham 1. October 2008 00:00
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Given the recent financial turmoil and bloodletting on Wall Street, I think there are three options to survive these tough times:

  1. Ignore the bad news and hope it goes away.
  2. Be proactive and have a plan (and revise it as needed).
  3. Convert all your assets to gold and head to a cabin in the woods with lots of canned food and candles.

Option 1 won't help and we are not even close to Option 3. You want to be proactive for your company. Here are three ways to try and survive tough financial times with your aviation department.

Stay Competitive.

Remind folks of the time saved. Remind them that time saved is allowing a person to do more in the same amount of time.

Remind your executives how much more productive they are while on their aircraft. Privacy and the ability to get uninterrupted work done on the aircraft is also valuable.

Try to expand the access to the company aircraft by one-tier lower executives. Think of the aircraft as a workforce multiplier: do more with fewer people, productively, and in teams. Finding new opportunities just got tougher and the aircraft allows you to act quickly.

Measure and Understand Your Costs A quick review:

A variable cost will vary in proportion to the level of activity. As activity increases, the total cost will increase but the cost per unit will remain constant. An example of this is fuel. Increasing utilization increases fuel used.

A fixed cost remains essentially constant for a given period or level of activity. Hangar and insurance are fixed costs. Whether I fly today or not, I need to pay my hangar and insurance costs. Keeping the aircraft flying keeps the average cost per hour down as it spreads the fixed cost over more hours.

If I decrease my aviation budget 10%, my fixed costs don't change, so my variable costs must decrease more than 10%. Similarly, if I fly one more hour, my cost increase is only the cost of the next hour: fuel and maintenance.

You need to know your costs, how they behave, and what/where cutting costs can have the desired effect on your overall budget.

Have A Plan

A strategic plan is a long term, forward looking plan for the aviation department. It should cover most likely scenarios, and also worst case scenarios.

What is your most important mission? Least important? What if utilization drops off, what happens to your costs? If you know where the flight department's priorities are, you can be better prepared if cuts are inevitable. Know your costs, your missions, and your people.

One question that can come up is "Are we operating the best aircraft for the job?" A strategic plan addresses this question with the reasoning and justification as to why you fly the aircraft you do. It also should tie directly into the company's mission statement.

No plan covers all contingencies, but a good plan has enough information so that you can react with knowledge and wisdom versus fear and panic. It also allows you the time to adjust to the times with a measured response.

Are many of you facing significant reductions in your flying requirements? Click reply and let me know.

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David Wyndham



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