NBAA Convention News

Two studies highlight bizav’s value in real dollars

 - October 19, 2010, 4:33 PM

Two new studies underscore the value of business aviation–and the high cost of not using it. Nexa Advisors studied the value of business aviation to Standard & Poor’s Smallcap 600 companies from 2005 to 2010. Nexa found that companies within this group that used corporate aviation had three times or more the total return on growth, share price growth, EBITDA growth (earnings before interest, taxes, depreciation, and amortization) and earnings growth than other companies within this category that did not use business aircraft. Meanwhile, a new FAA-funded study released this week has pegged the annual cost of airline delays to the U.S. economy: $32.9 billion. The study, sponsored by the FAA’s National Center of Excellence for Aviation Operations Research (Nextor) and conducted by leading university researchers, analyzed data from 2007. It included the cost of passengers’ lost time due to schedule buffer, delayed flights, flight cancellations and missed connections. The report found that 25 percent of all domestic airline flights were more than 15 minutes late in 2007. The report warned that next generation air traffic control systems (NextGen) would not eliminate most airline flight delays: only one-third of airline flights were delayed by the inability of the national air traffic control system to handle flights, while almost all of the remainder was caused by “internal problems” at airlines themselves that had a cascading effect on subsequent flights. Basically, an airplane that arrives late de facto departs late for its next flight. The study also found that while scheduled airline flights increased by approximately 22 percent between 2002 and 2007, the number of flights arriving late more than doubled. Post-recession, that problem could get worse as the FAA predicts airline traffic will grow by 30 percent between 2012 and 2025. The study warned, “without substantial upgrades to aviation infrastructure, such growth would result in flight delays far in excess of any we have heretofore experienced” and noted that “Growing delays threaten the competitiveness of the U.S. in the world economy, by limiting the ability of the air transport system to serve the needs of the U.S. economy.” The study also cast doubts on the long-term financial prospects of the airline industry, noting that it lost $60 billion between 2000 and 2008 and experienced a $26 billion drop in market capitalization between early 2007 and December 2009. The Nextor study, like the one from Nexa, validated the positive rate of return on business travel. Citing Oxford Economics, the Nextor study noted that “a dollar spent on business travel earns a return of about $12 in increased revenue to the traveler’s employer.”<o:p></o:p>

June 2017
Concierge-level flight monitoring helps flight departments provide solutions before their passengers are even aware of a problem.