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LEADING
WITH ON-
DEMAND
TRANSPORTAT
Air Transportation Analysis for
Wilson enterprises
Michael Hicks
2500 Bill Jones Industrial
Dr.
Springfield, TN, 37172
Phone 413-673-6835
Email
MHicks@WilsonENT.com
LEADING
WITH ON-
DEMAND
TRANSPORTAT
Air Transportation Analysis for
Wilson enterprises
Michael Hicks
2500 Bill Jones Industrial
Dr.
Springfield, TN, 37172
Phone 413-673-6835
Email
MHicks@WilsonENT.com
1
Air Transportation Analysis
Summary & Analysis Objectives
The goal of this proposal is to provide preliminary information about on-demand travel and the
value it would bring to the company when paired with an in-house flight department. The
creation of a flight department will greatly increase the company’s abilities to conduct
business in an efficient manner. The current and future travel needs of the company will be
met by the flight department through the use of on-demand air travel. As a direct effect of the
flight department, the company will also benefit from reduced travel times, reduced air travel
costs, higher employee productivity, and improve the quality of life for employees that are
required to travel for business purposes.
Top
Man-
age-
ment;
22.00%
Other
Man-
agers;
50.00%
Techni-
cal/Sales
/Service;
20.00%
Other;
8.00%
Passenger by Job Title
Proposal Objectives:
1. Determine the travel needs of Wilson Enterprises, both current and future.
2. Provide a selection of aircraft options that have been tailored to meet the current and
future travel needs of Wilson Enterprises.
3. Compare the strengths and weaknesses of selected aircraft for company use.
4. Present a high-level overview of the Flight Department’s management structure, and
how it will fit into Wilson Enterprise current management.
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City-Pair Analysis
Travel Demand
Currently, our COO is spending a considerable
amount of time on commercial flights and away from
their family and the company. Each year, the COO
spends the equivalent of 31 days on commercial
flights, and an additional 55 days at hotels. Effectively,
the company is paying 1 years’ salary for 9 months of
productive work from the COO. With the acquisition of
a company aircraft, this wasted time and money could
be drastically reduced. The 31 days on commercial
flights could be reduced to 7 days, and the 55 days at
hotels could be reduced to 7 days.
With the likely expansion into Afton, continuing
with commercial flights would add an additional 5
days of flight time, and 8 days of hotel stays. A private
aircraft would only add 1 day of flight time and 5 days
of hotel stays.
Costs and Travel Miles
Aside from the
time spent
traveling, the
company is
also incurring
$70,577
annually in
airline travel costs. The Afton expansion would
increase this cost to an estimated total of $84,017 if
commercial travel is continued. Keep in mind, this is
the estimated travel cost for the COO only, not the
entire company.
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Commercial flights, while
valuable, do not provide the
atmosphere needed for working
with sensitive information.
3
333
Airline On-Demand
0
20
40
60
80
39
8
63
12
Total Trip Time (Days) Overnight Stays
Market Analysis
Ideal Aircraft Options
There are many different options available for
business aircraft. However, given historical usage
data and the potential increase in usage with the
Afton addition, four aircraft have been chosen as
viable candidates to meet the company’s current
needs as well as future demands.
1. Cessna Citation CJ3+
2. Cessna Citation CJ4
3. Avanti Piaggio P180 EVO
4. Beechcraft King Air 350i
The aircraft selected are all comparable in
speed, price, and range. There are considerable
differences in available payload with maximum fuel
and cabin volume between the aircraft. For example,
while the King Air has the lowest purchase price and
the highest available payload with maximum fuel, it
also has the slowest cruise speed.
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Selection Matrix
Valuation of aircraft characteristics
The employees and management were polled
on the importance of different aircraft characteristics
and asked to value them from 1 (least important) to 4
(most important). The values from this poll are listed
on the right, and those values were weighted to form
an overall aircraft score. A higher total score portrays
a more accurate representation of the desired needs
and a better fit for the company.
With the weighted scores applied to each
category, it shows that the Piaggio P180 appears to
be the best aircraft to fit the company’s needs by a
significant margin. While other aircraft might be faster,
or are able to carry more weight, the more important
categories selected by the company are highlighted
by the highest scores in DOC, purchase price, cabin
volume, value factor, and wing loading.
A
DOC/H
–
300NM
M .
C
P Hr.
P
P
R –
M
P
P
– M
F
C
V
V
F
W
L A T
S
CJ3+ 56 72 9 21 10 4 16 4 8 200
CJ4 48 72 9 24 14 4 20 5 8 204
Piaggio 72 72 12 18 12 12 22 8 8 236
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Weighted Values
Direct Operating Cost Per hour – 4
Maintenance per hour – 4
Purchase price – 3
Range-Max Payload – 3
Payload-Max Fuel – 2
Cabin Volume – 2
Value Factor – 2
Wing Loading - 1
Age - 1
5
555
0
500
1,000
1,500
2,000
2,500
CJ3+ CJ4
Piaggio 180 King Air 350i
matte
eee
King Air 68 72 12 18 18 6 10 4 8 216
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666
Cost of Operation
Financial obligation comparison
As with any investment, it must be determined
if the asset is beneficial for the company, and the
purchase of an aircraft is no different. All figures are
based on a 20% down payment on a 20-year loan
with 7% APR.
See Appendix A for full price breakdown.
Citation CJ3+
20% down - $1,659,000
Cost Per Hour - $4,125
Est. Hours of use – 327 hours
King Air 350i
20% down - $1,469,000
Cost Per Hour - $3,073
Est. Hours of use – 413 hours
While the Piaggio P180 is not the cheapest option, it does present the lowest annual
operating cost with an increase in usage, making it the most financially responsible option.
This aircraft also allows for reduced usage with no impact on cost effectiveness.
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Citation CJ4
20% down - $1,839,000
Cost Per Hour - $4,752
Est. Hours of use – 307 hours
Piaggio P180 EVO
20% down - $1,539,000
Cost Per Hour - $3,393
Est. Hours of use – 353 hours
Charter operations (red line) is only viable between 200 – 300 annual hours of use, dependent on aircraft.
selected.
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Flight Department Structure
Corporate Structure Integration
The Flight Department Officer is responsible for the efficient operation of the
department along with the creation and upkeep of an SMS for the department, and reports
directly to the CEO, CFO, and COO.
The Operations Manager is responsible for the flight crews and ensuring airworthiness
of company aircraft for daily operations.
The Service Manager is responsible for the scheduling of flights, crew assignments,
and aircraft availability.
The Safety and QA Manager is responsible for the overall maintenance and general
safety of company aircraft, the in-house maintenance crews, when the company decides an
in-house maintenance department is cost effective, ensuring all FAA advisory directives and
advisory circulars (ADs / ACs) are adhered to, and to assist in curating safety policies and
practices that are necessary and efficient.
The company aircraft is not intended as a top management vehicle, and it will not be
used for personal travel by any member of the company. Any person employed by Wilson
Enterprises that can articulate a reasonable business need for the use of the aircraft that is
acceptable to the FDO, COO, CFO, or CEO, will be granted permission, dependent on
aircraft availability.
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CEO/CFO/COO
O Manager /
C Pilot
F Crew
S Manager
F Scheduling
S Quality
A Man
M
T / Aircr
M
F Department
O
8
888
Appendix A
Cost Table
Aircraft Citation CJ3+ Citation CJ4 Piaggio P180 EVO King Air 350i
Purchase Price $8,295,000 $9,195,000 $7,695,000 $7,345,000
Fixed Cost $253,500 $261,200 $240,520 $234,800
Down Payment % 20% 20% 20% 20%
Original Principal $6,636,000 $7,356,000 $6,156,000 $5,876,000
Loan Term (Years) 20 20 20 20
Annual Interest Rate 7% 7% 7% 7%
Variable Cost $1,460 $1,668 $1,091 $1,183
Estimated Hours 327 307 353 413
Estimated Yearly Cost $1,347,699 $1,457,186 $1,198,859 $1,270,292
Estimated Cost Per Hour $4,125 $4,752 $3,393 $3,073
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References
Class Project Excel Sheet
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