A Status Symbol

An aircraft in the corporate environment is not just a resource or a mode of conveyance but a potent weapon to be intelligently employed

For over five decades now, aviation has been aprominent signature on the corporate radar in India. The Tatas, Birlas and the more recent entrants such as the Ambanis, the Goenkas and the Singhanias have adopted aviation as an integral part of their corporate structure. However, aviation still remains only a status symbol or at best merely a speedy mode of transportation for the corporate honchos. The true strength of aviation and its potential to influence outcomes is yet to be understood by the corporate world.

A game changer, corporate a viation has been regularly patronised by highly experienced aviators retiring from the Indian Air Force, more so in recent years. But unfortunately, most have only treated this turf as a post-retirement sanctuary and not as an opportunity to enhance the status of aviation to a position where it can play a decisive role in the corporate world. From being just a jewel in the corporate crown, aviation has the untapped potential and punch of being a ‘game changer’ as well as a ‘force multiplier’. An understated resource for the owner and an underestimated threat for the adversary, aviation can prove to be the secret weapon in the corporate arsenal which can turn the tables on an unsuspecting adversary. Unveiling its potential should have been the task of the aviation think-tanks. Unfortunately, such perceptions amongst corporate aviators have been totally lacking. Aviation continues to languish in the columns of cost additions on the balance sheet while its true potential of ‘value addition’ continues to evade the ‘corporate czars’. Only with the discovery of the true potential of aviation, its role in the corporate game, its ability to influence decisions and transform the balance sheet from being a bloated entity in the expenditure column to a valued asset in the credit side, will aviation be considered an asset.

Choice of Aircraft

Aviation is a costly asset with extremely high capital investment; retention, management and recurring costs. At the outset, the fundamental question is ‘to have’ or ‘not to have’. Like Enterprise Resource Planning (ERP) solutions in the industry, a minimum size in terms of turnover is mandatory to even begin envisaging the acquisition of aviation assets.

For a manufacturing concern to fruitfully employ ERP solutions, an estimated figure of Rs. 150 crore is quoted authoritatively. Similarly, to employ aviation and to profitably interweave it into corporate management, a figure of Rs. 5,000 crore would make a good starting point. It is at this level that aviation begins to find the requisite space to weave its magic. However, even at this level, it is imperative for organisations to carry out a cost-benefit analysis before planning for the acquisition and eventual deployment of aviation assets. The nature and size of the enterprise, would not only dictate the turnover, but also have a significant impact on the type and number of aircraft to be inducted. Factors such as purpose, range, seating, location, maintenance facilities, dispatch reliability, geographical layout of the corporate assets, availability of trained manpower, distance from the manufacturer or his hub, onboard equipment, permissible resource allocation and frequency of revisiting and re-evaluating the decision merit consideration in the decision-making process.

As it is with every appreciation and decision-making process, a clear intent and purpose for acquisition of air assets is important followed by the selection and maintenance of the aim. The acquisition needs to be evaluated for the purpose. If the purpose is the symbolic representation of might, brand projection or image infliction then ‘the bigger the better’. Adding to that is a few eye-catching colours and an interesting logo and you have a great winning product. This strategy transformed the image of ‘Sahara’ from that of a little known banking entity to a leading corporate giant, not to mention the end product that was a bonus of Rs. 2,000 crore and a happy Roy family. However, if the purpose is to optimise the deployment as an important tool of management or a decision-making accessory, then the succeeding paragraphs need to be visited with a toothcomb.

Range is often dwelt upon and discussed, generally in hushed and regrettable tones, well after the acquisition and establishment of the aviation assets. Unfortunately, the significance of range in the choice of aircraft has been lost in most of the cases. Range is the definition and manifestation of the corporate vision. The choice of range is an indicator of the strategic vision, intent and dreams of the leadership. If the long-term interests lie within the boundaries of the subcontinent then aircraft with a range of about 3,500 nautical miles would suffice. However, if the leadership nurses global visions, then anything with a range less than 6,500 nautical miles could be a serious handicap. This could translate into one or more refueling halts, transgression of flight duty time limits of the aircrew, longer flights, fatigued passengers, lost deals and of course, bruised bottom lines in the balance sheets. In the subcontinent, there are only a few examples worth emulating. In most cases, range has been a sore point. It has also turned precious investments from being vehicles of change to show pieces in a museum; and in extreme cases, a symbol of disastrous decision-making and a reminder of lost opportunities.

Seating is an important aspect. The involvement of the leadership is all-important in coming to a conclusion on this subject. Imagine going for a merger and acquisition (M&A) and having to leave behind your Chief Financial Officer (CFO) just because the aircraft all-up-weight, seating capacity or payload does not permit an extra passenger. Strange as it may sound, at a conservative estimate, this actually happens more often than imagined. In addition, it could be a win-win situation for all, if the leadership involved itself in this aspect right from the inception stage. The layout of the cabin, the incorporation of conferencing facilities, the provisioning of sleeping quarters, bulkheads, partitions for privacy and toilets could play a disproportionately large role in the final reckoning.