Business aviation has once again proved its worth as a powerful tool for America’s best-managed companies, according to a new studyamong S&P 500 companies.
Whether in today’s growing economic environment, or during the nation’s most challenging economic conditions, evidence repeatedly finds that business aviation continues to be a powerful tool, contributing meaningfully to a company’s enterprise value, according to Dr. Tulinda Larsen, an economist with NEXA Advisors and author of the report ‘Business Aviation and Top Performing Companies 2017’.
The NEXA study examined the financial performance of the S&P 500, which represents America’s 500 largest publicly traded companies and reflects all sectors in the economy, between 2013 and 2017. The group is widely regarded as the single-best gauge of large-cap US equities, and represents approximately 80 percent coverage of publicly traded market capitalization.
When sorted into “users” versus “non-users,” those companies deploying aircraft to support their missions out-performed those that did not in several metrics, according to NEXA’s findings.
The most important measure of impact is a company’s enterprise value, by both share amount and share appreciation.
As shown in Figure 1, S&P 500 business aviation users outperformed non-users by about 70 percent over the past five years. Business aircraft leverage key employee productivity, accelerate transactional closings and boost customer interaction. The significant growth in business aviation volumes in recent years is, therefore, not surprising. The 34 percent increase in bizav operations over the past five years and an estimated doubling of flight hours over the next 20 years, confirm that top companies increasingly realize the undeniable advantages provided by business aircraft.
NEXA also examined qualitative, non-financial measures of the impact of business aviation on the S&P 500.
The company set out to determine whether the best-managed companies in America depend on business aircraft for top
performance in categories such as: “Best Brands,” “Most Innovative Companies,” ‘Best Places to Work” and “Best Corporate Citizens.” This report provides results for 10 non-traditional measures of greatness for increasing importance to today’s socially conscious investors and consumers. Individual measures of the “Best Of” lists are shown in Figure 2.
The report carries a powerful message to corporate boards, government policy makers and industry leaders: business aviation is the sign of a well-managed company and a tool that provides unique advantages for American companies.
For many businesses, there is often no ready substitute for business aircraft without diminishing performance or losing new business opportunities. However, it is important to note that the use of business aircraft is not appropriate under all conditions. Business aircraft often co-exist as a complement to scheduled commercial service or to facilitate airline
connections. The true challenge for progressive companies is to determine how business aircraft can best maximize shareholder and enterprise value through the support of company goals.
In a world where time is increasingly valuable, business aircraft are time multipliers. “Using our jets, we can accomplish in one eight-hour day what would otherwise take twelve-hour days using the airlines. Our employees are home at night. They come to work the next day rested and refreshed,” said one senior S&P 500 executive. And, in the digital age, many executives find that getting people together physically in a room sparks the creativity that can only come from personal connection. Arne Sorenson, Marriott CEO, said, “We’ve got to understand that business planes are about people meeting, creating ideas and building their cultures.”
This year NEXA will examine the business aviation/airport ecosystem. Many small US airports are under threat of closure. Land values are soaring as cities become more congested and some politicians want to develop airport land as residential or commercial communities with an eye toward increased property taxes. Yet business aviation airports serve a critical role in keeping major employers in the area, generate jobs and taxes and provide access for emergency services.
The Business Aviation Airport: Vital Economic Ecosystem spotlights various airports and will provide new analysis to advocate with airport stakeholders, including governing authorities, press and community organizations, in support of the airport’s overall mission. Airports will learn both why and how general aviation can become an airport’s brightest growth prospect.