Additional Aircraft Feasibility Study
I have been the head aviation department manager of First North Bank since 1985. This bank has branches in Waterloo, IA; Springfield, MO; Fayetteville, AK; and Colorado Springs, CO. For the past 12 years the company has been operating an eight passenger King Air B-200 that currently has 2500 flying hours on the frame.
First North Bank has recently acquired Banks R Us (probably because of the horrible name) and will be expanding their operations considerably. They will be changing the name of Banks R Us to the First North Bank name at the following locations: Madison, WI; Wilmington, NC; Lakeland, FL; Amarillo, TX; and Medford, OR.
I have now been assigned by my CEO to do a feasibility study to determine if the addition of an aircraft will benefit the company.
The purpose of this study is to determine the feasibility of adding additional aircraft to the corporations aviation department. This study will introduce what aircraft the company is currently using, how it is being used, and the current structure of the aviation department. A detailed analysis will be presented on the prices and costs of each aircraft as well as a recommendation of what aircraft should be purchased or leased. A newly developed structure of the aviation department will be presented along with a new recommended plan for the usage of the aircraft. The study will then conclude with a sum up of all the recommendations.
The company is currently operating a 1985 Beechcraft King Air B-200. This aircraft is a propeller jet aircraft. The definition of a propeller jet aircraft is that the engine is a jet that drives a propeller. The propellers spin at a constant rate and speed changes are made by adjusting the angle of the propeller. The aircraft seats eight passengers to include the pilot’s seat. The entire aircraft is in very good condition with only 2500 flight hours on it and has the potential of supplying many more years of trouble free service with proper maintainace. The performance charteristiccs of this aircraft is as follows:
Beech King Air B200 Characteristics
PERFORMANCE U.S. METRIC
Max Cruise Speed (336 mph) 292 kt 541 kph
Certified Ceiling 35,000 ft 10,668 m
Max Range 1,883 nm 3,487 km
ENGINES: Pratt & Whitney
PT6A-42 850 shp
Basic operating weight(Std. BEW plus one pilot at 200 lb) 8,420 lb 3,819 kg
Useful load 4,170 lb 1,891 kg
Wingspan 54 ft 6 in 16.61 m
Max airplane length 43 ft 10 in 13.36 m
Max tail height 14 ft 10 in 4.52 m
DIMENSIONS (Internal) CABIN
Length 16 ft 8 in 5.08 m
Height 4 ft 9 in 1.45 m
Width 4 ft 6 in 1.37 m
http://www.raytheon.com/rac/kab200/specifications.htm (2000, September 13)
The performance statistics that are tracked by the aviation department secretary is reliability rating, cost per hour, usage (broken down into days), maintenance time needed, airports flown to, and types of flights flown. Some of these tracked items are displayed below:
Beech King Air B200 Totals as of September 13, 2000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Reliability (Percent) 99 97 99 99 99 99 99 97 98 99 95 95
Hours Flown 75 215 215 200 201 400 400 500 100 100 95 75
Maintance Hours 100 75 60 78 65 50 50 50 100 33 35 100
The maintance upkeep of this aircraft has a couple of different facites. Every 200 hours the aircraft is returned to it’s manufacture’s maintance facility for various types of inspections. The normal everyday wear and tear maintance like light bulbs changes, tire changes, and normally everything else that is required to operate the aircraft is handled by contract maintenance. The company currently contracts the aircraft maintenance to Elliott Aviations Incorporated in Omaha, NE. The aviation department has been highly satisfied with the current contract and the personnel that have been completing the maintance on the aircraft. This company guarantees the most highly qualified FAA approved mechanics that hold the rating and class requirements for this type of aircraft. The company has been using this repair facility for the past 7 years. If an additional aircraft were added the department would like to continue this contract and just add the additional aircraft to the current contract.
Our fueling and storage of this aircraft is handled by the Omaha airport fixed base operations (FBO). By fueling with the local FBO we get a slight reduction discount of 100 dollars a year for our normal aircraft storage fee of 400 dollars per month. The aircraft is currently stowed in it’s own garage to secure it from other people and the weather elements.
The training requirements for both pilots for this aircraft are an annual reoccurring training from Flight Safety at Orlando, Florida. This training includes a three-day refresher course with three hours of simulator training. This course is required for each pilot to help him/her learn any new techniques that have been developed for this aircraft and maintain proficiency. The simulator training is used to create events that could possibly be life threaten if carried out on the aircraft.
The benefits that this one aircraft has contributed to this company are innumerable. To recount a few are as follows. This aircraft was the linchpin in our negotiations with Banks R Us. It would have taken much more time for face-to-face negotiations by flying commercial due to the hub and spoke system currently being used by commercial airlines. The hub and spoke system is the use of small feeder flights (spokes) that concentrate all the passengers in a central area for other flights (hub). This reduces the amount of empty seats airlines have and helps to simplify their scheduling at the customers expense. The use of commercial transportation would have added at least six hours per person per flight because of wait times and the indirect flight routes that would have been needed. Another benefit this aircraft has added has been for the transportation of funds and interoffice mail. The delivery times of those items were reduced by at least one to two days by the use of this aircraft.
The current aviation department has a total of three sub-departments. Below is an organizational chart of the aviation department.
The first department is the Chief pilot position. This department involves a multitude of various tasks. The first and most important task is to safely fly the corporate aircraft with passengers and cargo to its desired destination. Another task is that the department head along with the legal and accounting department is to negotiate contracts for maintence, fuels, and storage of the aircraft. The maintance contract is renegotiated on an annual basis. Currently there has not been any changes to the contract in reference to conditions, money, or any other terms. The fuel servicing contracting also influences the monthly storage fee. The FBO has an agreement with us that if we purchase at least 500 gallons of fuel per year with them that we will receive a 100-dollar credit towards our storage fee.
The first pilot position is currently staffed with only one person who is responsible for being a safe pilot first, safety director, flight publications, and FAA regulations changes representative. As the safety director the first pilot is responsible for formalizing the company’s flight policies in a specific manual. This manual contains policies and procedures for the operation of the company’s aircraft. It describes the duties involved with each position. Also, this manual describes the safety procedures that are used specifically by this aviation department.
The study is now going to present several aircraft that I believe would be good candidates for the company to look at purchasing. With the new addition of more branches to the company a proposed aircraft has to have a range of at least 1500 nautical miles to traverse the distance from the home office to the furthest branch which is the one that will be in Medford, OR.
I did investigate the option of leasing an aircraft. The costs per month and over the entire life of the lease would cost considerably more than purchasing and operating a new aircraft. I believe that it would not be feasible for the company to lease an aircraft.
The proposed aircraft for purchase will be listed by initial cost of procuring the aircraft.
http://www.aasiaircraft.com/SC_1250_specs.html (2000, September 20)
Price (new): $2.89 Million
Range: 3200 nm
Cruise Speed: 435kts
Max Passengers: 12
Price Per Hour of Use: estimated at $700/hr
Maximum take-off weight: 2571 lbs
http://jetsales.com/comp/types/jets/learjet31a.jpg (2000, September 21)
Price (new): $5.75 Million
Range: 1395 nm
Cruise Speed: 458kts
Max Passengers: 9
Price Per Hour of Use: estimated at $807/hr
Maximum take-off weight: 3044 lbs
http://www.jetsales.com/comp/types/jets/citationbravo.gif (2000, September 21)
Price (new): $6.4 Million
Range: 1900 nm
Cruise Speed: 390kts
Max Passengers: 11
Price Per Hour of Use: estimated at $756/hr
Maximum take-off weight: 3045 lbs
Raytheon Hawker Horizon
http://www.jetsales.com/comp/types/jets/hawkerhorizon.jpg (2000, September 21)
Price (new): $14.5 Million
Range: 3405 nm
Cruise Speed: 484kts
Max Passengers: 15
Price Per Hour of Use: estimated at $1100/hr
Maximum take-off weight: 3045 lbs
Aviation Department Changes
If an additional aircraft is added some changes will have to occur in the aviation department. As a minimum two new positions would have to be created. We would need to add an additional pilot slot and create a new position to handle flight records, contracts, and accounting.
With the addition of an aircraft and only two pilots both aircraft will not be available all the time due to the companies current policies regarding crew rest restrictions. To ensure maximum availability we would need another pilot to cover times when someone is sick or unavailable to fly. This new pilot slot will also be able to take on some of the duties currently assigned to the first pilot position.
The second position would deal with the accounting aspects, contracting, and flight records. This position would work hand in hand with schedulers to complete their duties. It will also help alleviate an over abundance of work falling upon the chief pilot position and making him unable to fly the aircraft and complete other training requirements in addition to running the entire department. This position will take some of the duties from the scheduler secretary section in terms of tracking flight hours and accounting items.
All of the other positions will remain but the job descriptions and responsibilities of each will have to change slightly. Below is an updated organization structure:
The aircraft presented earlier are just a handful of all the aircraft that were assessed. Of all the aircraft viewed I would recommend that the Stratocruzer 1250 would be the companies best choice to add to the air fleet. One of the most underlying reasons is due to the initial cost of the aircraft. As shown above the price of this aircraft is less than half of any other comparable jet. It has everything that this company needs in terms of range, seating capacity, and cargo weight ability. It also has the benefit of being much faster than our current aircraft. The addition of this aircraft will add some additional training to the pilot department but since both pilots hold a multi-engine jet rating the costs of this training will be minimal.
Using both aircraft together will probably result in the companies current aircraft being used for the short haul flights, or the flights that are close to the main office. The new aircraft would be used to transport on the longer flights or very time critical ones. This is due to the added speed and of course the longer range that the newer aircraft will have.
If you have any questions, comments, or recommendations on this study please refer them to Mike Herman, Chief Pilot, First North Bank Omaha, NE.
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