Corporate Productivity Case Study

Transcription

1 BOMBARDIER BUSINESS AIRCRAFT Corporate Productivity Case Study April 2009 Marketing

2 Executive Summary» In today's environment it is critical to have the right tools to demonstrate the contribution of business aviation to corporations» Existing public tools lack the capability to perform indepth analyses of a flight department s operations» Bombardier Business Aircraft has developed the capability to extract time and costs savings associated with the use of business jets across an extended period of time» Drawing from the expertise of Bombardier s own Commercial Aircraft Division, the Business Aircraft Customer Analysis Group can assist customers demonstrate the value of their operations >>>> 2

3 Case Study on Business Aviation» The case study analysis outlines the potential benefits of aircraft ownership. It outlines an organization s travel patterns in comparison to commercial aviation» About the company: Headquarters in Tulsa, OK Multiple Business locations & Interests Company sites Key Customers, Suppliers & Partners Located across USA, Canada and Mexico Operates a Challenger 300 Flying 700 flight hours per year Average of 2.5 business trips per week Business trips across North America Short and long-range missions >>>> 3

4 Flight Analysis Challenger 300 is used to:» Connect Corporate Headquarters to satellite offices» Reach remote locations not extensively serviced by airlines (e.g. Alaska) * At an average of 2.5 business trips per week, or 5 flights per week Most frequent destinations: Ratio of 5:1 = New York, Los Angeles, Miami, Boston, Washington, Toronto Ratio of 3:1 = Seattle, Las Vegas, Houston, Montreal >>>> 4 Confidential

5 Efficiency Business Aircraft Commercial Flights Single hub: Tulsa / Direct flights: 100% Average travel time: 2 hr 41 min Multiple hubs: Tulsa, Denver, Chicago, Dallas, Houston, Atlanta, etc. / Direct flights: 11% Average travel time: 6 hr 01 min Company A would suffer significant inefficiencies by flying commercial >>>> 5 Confidential

6 Flexibility Commercial flight connections decrease efficiency & flexibility 6% 11% Direct Flights 2 Connections 1 Connection Commercial flights increase travel time & decrease 1-day business trips 6% 3-day business trip 2-day business trip 1-day business trip 35% 59% 83% Business aircraft 1-day trip: 8 hrs 38 min on-site* Commercial flights 1-day trip: 4 hrs 14 min on-site** Business aircraft enable 1-day business trips 100% of the time, increase time on-site, and allow for multiple destinations within the same day * Assuming a 14-hour-day. Business jet one-day mission average travel time (each way): 2 hrs 41 min ** Assuming a 14-hour-day. Commercial aircraft one-day mission average travel time (each way): 4 hrs 53 min >>>> 6

7 Time Savings Annual business aircraft travel time: 707 hrs Annual commercial aircraft travel time: 1,587 hrs Time Saving = 880 hrs per traveler Business aircraft scenarios and time savings Scenario A) Management tool: top 10 management flying 28,000 26,000 Management Hours 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 21,758 16,478 Regular working hours Business aircraft travel time Commercial aircraft travel time 8,000 6,000 4,000 2,000 4,242 9,522 Savings: 20% of management time 0 Business Aircraft Commercial Aircraft >>>> 7 Assumptions: 50 working hrs/week, 6 passengers per trip.

8 Time Savings Annual business aircraft travel time: 707 hrs Annual commercial aircraft travel time: 1,587 hrs Time Saving = 880 hrs per traveler Business aircraft scenarios and time savings Scenario B) Project-optimization tool: pool of 100 staff 14,000 12,696 12,000 Business aircraft travel time 10,000 Commercial aircraft travel time Staff Hours 8,000 6,000 4,000 2,000 5,656 Savings: 176 more working weeks, or 3 employees per year 0 >>>> 8 Assumptions: Pool of 100 employees sharing the corporate jet, 40 working hrs/week, 8 passengers per trip.

9 Costs Efficiencies $5,000,000 $4,500,000 Business vs. Commercial Aircraft Costs Business Aircraft Commercial Aircraft $4,335,155 $4,000,000 $3,500,000 $3,251,366 Annual Costs ($) $3,000,000 $2,500,000 $2,000,000 $2,597,640 $2,167,577 $2,780,762 $2,964,591 $1,500,000 $1,000,000 $500,000 $ Number of Travelers per Business Trip In addition to cost advantages, business aircraft can generate additional opportunities and revenues, with 20% more management time or 176 more staff working-weeks * Business aircraft assumptions: Total cost = direct and fixed operating costs (using Conklin & de Decker 2008 Vol.II assumptions) + 50% of employees travel time ** Commercial aircraft assumptions: Total cost = tickets + hotels + extra meals + 100% of employees travel time >>>> 9 *** Operating costs do not take into account aircraft acquisition and depreciation. Commercial tickets were economy class purchased 3 days prior Confidential to departure (from Flat rate of 250$/hr per employee, hotel charge of 150$ per night per employee, meal charge of 50$ per employee per additional day on-site

10 Indirect Benefits Business Aircraft (new level) Etc.. Greater comfort for less fatigue Morale of travelers (more time home with family) No lost luggage Productivity Gain Greater availability (commercial flights could be sold out) Increased flight schedule flexibility Less time between arrival airport and true final destination (time saving not considered in this study) $$$ Well being Time Work efficiency (real work environment, meeting capability) Commercial Aircraft (reference level) These benefits, although harder to quantify, bring significant added value to business aircraft users >>>> 10 Confidential

11 Back-up and Methodology Confidential >>>> 11

12 Methodology» Commercial flights were economy class tickets purchased 3 days in advance using Roundtrip price was selected, and divided equally for the inbound and outbound legs» A total of 60 minutes was added to each commercial flight for security checkpoints and baggage pick-up» For overnights missions, an extra 200$ (hotel:150$, meals:50$) was added per traveler per day» Average total cost of 250$/hr per employee. 50% of business jet traveling time was credited as working hours from a cost point of view, but not from a direct travel time point of view (time on-site was privileged instead)» Challenger 300 routes studies were performed using airways distance, 85% Boeing annual winds, typical BOW, M0.80 cruise speed and NBAA IFR 200 nm reserves. Costs were derived using Conklin & de Decker 2008 Vol.II assumptions, and the appropriate average mission length and annual utilization >>>> 12 Confidential

13 Statistics General:» Period covered: 6 months» Number of missions (roundtrips) during period: 66» Number of missions (roundtrips) per week: 2.53 Commercial aircraft:» Total commercial flight time (min) 47,611 min» Total commercial flight time (hrs) 794 hrs» Average commercial trip time (min) 361 min» Average commercial trip time (hrs) 6.01 hrs» Average "one-day mission" travel time (min) 293 min» Average "one-day mission" travel time (hrs) 4.89 hrs» One-day business trip 23» Two-day business trip 39» Three-day business trip 4 Business aircraft:» Total Challenger 300 block time (min) 21,211 min» Total Challenger 300 block time (hrs) 354 hrs» Average Challenger 300 block time (min) 161 min» Average Challenger 300 block time (hrs) 2.68 hrs» Average Challenger 300 ESAD (nm) 1,085 nm» One-day business trip 66» Direct flights 132» Annual utilization (hrs) 707» CL300 Hourly Cost (4 pax)* 3,174 $/hr» CL300 Hourly Cost (6 pax)* 3,183 $/hr» CL300 Hourly Cost (8 pax)* 3,193 $/hr >>>> 13 * Excluding acquisition cost and depreciation Confidential

14 Commercial vs. Business Aircraft Travel Time 600 Commercial 2 connections Commercial Aircraft Travel Time (min) Commercial direct flights Commercial 1 connection Ratio 1: Business Aircraft Travel Time (min) >>>> 14 Confidential

15 BOMBARDIER BUSINESS AIRCRAFT Corporate Productivity Case Study April 2009 Marketing