Private Aviation: Helping local businesses take off or a bumpy ride for the bottom line?
At airports and heliports and in the skies overhead, some people are fulfilling the wildest dream of every harried manager: They're adding hours to their day.
Their secret? Business aviation. No longer the exclusive domain of high-powered executives or giant metropolises, the chartering of helicopters and airplanes (or wholly or partially owning aircraft) is a trend that's touching down in smaller burgs like Traverse City and serving the likes of employees at all ends of the corporate ladder.
Dan Edson, president of Traverse City-based American Proficiency Institute, says he and his staff regularly use Air Services, Inc., a local charter flight provider flying out of Cherry Capital Airport. The company provides quality control training and services in private and public medical labs, and its employees routinely travel by air to visit clients throughout the country.
"If we have a meeting in Chicago and maybe two or three people who need to go to that, we can go down that morning, conduct our meeting, and be home that evening for dinner," Edson says. "That's better than making it an 18-hour day or an overnight stay."
Customers like Edson have kept the faith in business aviation despite what O'Brien describes as a "perfect storm" of recession and bad publicity, such as the aftermath following the Detroit auto execs corporate jet flights to Washington to plead for a bailout on Nov. 18, 2008. The fallout inspired legions of businesspeople in the upper ranks of U.S. industry to start driving or taking commercial flights to their destinations.
The aviation industry in northern Michigan felt the effects. "We have noticed that people are cutting back on their travel," either due to the recession or to the fear of appearing extravagant, says Sarah O'Brien, chief pilot at Air Services, Inc., an aviation services firm based at Cherry Capital Airport.
The purchase of aircraft has slowed as well. "Right now people with money are sitting and waiting and watching," said Kevin Nelson, owner of Nelson AeroDynamiX, a Traverse City-based firm specializing in helicopter-related services
To be fair to Detroit's automakers, their top execs had already begun to reduce their use of corporate aircraft-long a special perk for the larger-than-life figures astride the country's Fortune 500 corporations.
And, according to its advocates, in the hue and cry, no one seemed to recall that business aviation could be just like anything else in the corporate tool kit; at the right cost and in the right circumstances, advocates say, it can be used to great effect.
The cost of helicopter flights depends on a range of factors, such as weight of equipment, the availability of aircraft, and the amount of the time in the air. Still, it might be possible to take a short flight, for example, for anything from a few hundred dollars to $1,000 to $1,200.
Nelson AeroDynamiX doesn't own helicopters. But through its relationship with clients, it has access to them. If a commercial photographer, for instance, wants to take some aerial shots, Nelson AeroDynamiX subcontracts the helicopter from the owner, and a pilot-often Nelson himself-takes the individual up.
The goal isn't always to travel from point A to B, he said. The client might be scouting a land development site or performing surveys or scientific work, which usually means taking off and landing at the same spot.
For business trips, group travel makes longer-distance charter flights especially affordable. Edson said his firm generally has three to six people on its charter flights, reducing the costs per person. It also considers a charter if commercial tickets involve one or more stopovers.
Air Services has a variety of plane options that can accommodate larger groups. The fleet consists of nine planes, primarily jets, which can seat 4 to 10 passengers, with costs ranging from $950 to $5,700 an hour.
Unless it is an emergency trip or a major deal is on the line, charter travel for single travelers usually isn't normally considered cost-effective. But when the passengers come from the upper echelons of corporate America, money is a secondary issue, contends Christine Stapleton, owner of Stapleton Realty in Honor and formerly a corporate jet pilot based in Muskegon.
"If you are dealing with executives, it's how much time is being wasted in airports. Their time is probably worth $200 an hour, and they work a lot of hours," says Stapleton.
The apex of business aviation is having your own aircraft, but sharing the expense is probably the easiest path for many would-be aircraft owners. "Once you get into shared ownership, it is surprisingly affordable," Nelson said.
"I can make arrangements where people share ownership of the helicopter and then they share the costs and the expenses," he said. "In most cases, this arrangement works out because very few people need to use aircraft every day."
Prices for helicopters can range from $300,000 to $2 million. Under a shared ownership arrangement, four to six people could split the price, as well as the roughly $100,000 to $200,000 in annual operating expenses and then defray those expenses with money when non-owners contract to use the aircraft.
It's also possible to write-off many of your expenses for tax purposes, even if the aircraft is used for both business and pleasure, according to Aviation Tax Consultants, an Indiana-based accounting firm. For example, $200,000 in deductions at a marginal income tax rate of 35 percent will result in a federal tax break of $70,000. BN