North American Perspectives
By Jack Olcott
Business Aviation as it is practiced in the USA is the prime example of why government policies that encourage this form of air transportation benefit a country and its citizens.
The US economy is recognized as the world’s largest. Less well known, however, is the significant role that Business Aviation plays in the ebb and flow of commerce in the United States. Numerous studies and surveys by leading publications show that companies that transport their employees and customers via business aircraft generate greater profits and returns for their shareholders than nonusers. Business Aviation is recognized as a proven tool for improving the productive of people and time, and economists universally agree that improved productivity is a necessary component of economic growth. Among the top “large-cap” corporations with shares actively traded on US exchanges—known as the Standard & Poors “500” list--the firms that use business aircraft significantly outperform companies that do not.
For example, between 2003 and 2007 the average earnings growth of S&P 500 companies employing Business Aviation was 434 percent higher than their non-using counterparts. Total share price and dividend growth was 156 percent higher. Among Business Week’s compilation of the “50 Most Innovative Companies” for 2009, 95 percent of the S&P 500 firms were users of business aircraft. Ninety-five percent of Fortune magazine’s 2009 list of the “50 Most Admired Companies” within the S&P 500 used Business Aviation along with the scheduled airlines for transportation. Among the S&P 500 companies noted as the “100 Best Corporate Citizens “ by the Corporate Responsibility Officers Association in its publication, The CRO, 90 percent were users of business aircraft. The stellar success of companies employing Business Aviation is not a recent phenomena: a study conducted by Arthur Anderson for the National Business Aviation Association over 15 years ago reported that during the 1992-1993 timeframe 92 percent of US companies listed by Fortune magazine as generating the highest total returns in share appreciation and dividends over the preceding decade were users of Business Aviation.
Because commerce is facilitated by Business Aviation, citizens who never ride on a business aircraft also reap benefits. Not unlike other regions throughout the globe, scheduled airlines in North America concentrate flights between major population centers. Over 70 percent of airline passengers in the US travel between about 40 city pairs, and less than 600 locations have any scheduled service by major air carriers. In many area of the US, Business Aviation is the principle form of air transportation for companies and entrepreneurs, bringing the ebb and flow of commerce to cities and towns that would see their businesses disadvantaged if on-demand transportation using business aircraft were not available. Numerous examples exist where companies using Business Aviation have established factories or distribution points in rural America; thereby establishing jobs for local citizens that otherwise would not exist. Far from being a competitor to scheduled airlines, Business Aviation is in essence a “partner,” providing transportation to locations the airlines do not serve with sufficient frequency to meet certain needs of commerce and in many case do not want to serve due to lack of passenger demand.
No country does more than the USA to encourage free access to airports and airspace for business aircraft. Air traffic control clearances are issued on a “first-come-first-serve” basis and are not subservient to airline schedules. Furthermore, they can be submitted shortly before the intended departure time, not days in advance, and they are processed promptly. Airport fees are based upon aircraft weight, and user charges for airspace access are related to the amount of fuel consumed and collected in the form of a tax on the number of gallons purchased, a system that is very efficient and easily administered. Business Aviation is considered an integral component of the US air transportation system. American industry regards use of business aircraft as an ordinary travel option.
A significant statement of respect for the US approach to Business Aviation comes from half-way around the world—the Chinese Government. At the inaugural meeting of the International General Aviation Forum (IGAF) Chinese Deputy Administrator for the Civil Aviation Authority for China (CAAC), Mr. Li Jian, referenced the USA as an example of how using general aviation aircraft for business transportation—the sector known as Business Aviation—contributes to a region’s economy. He is reported to have said that Business Aviation would be a key economic strategy for China. Looking to the US model as a positive example, the CAAC is cooperating with US authorities in order to benefit from policies toward Business Aviation generated half way around the world.
While the USA’s Federal Aviation Administration (FAA) and the CAAC have been engaged in aviation matters for many years, the US-China Aviation Cooperation Program (ACP) recently hired the US firm Booz & Company to examine the outlook for China’s Business and General Aviation sectors. Presumably looking closely at US policy, the CAAC is formulating new policies and regulation affecting Business Aviation. Already airspace access in China has been eased for flights into lower altitudes, and lead time for filing flight plans has been shortened. Procedures for establishing Business Aviation operating companies in China are under consideration.
When considering Business Aviation policy, the world’s fastest growing economy is looking to the world’s largest economy for inspiration.