“Brilliant” M a y b e…Maybe Not So Much

That's Not Your CEO Is It?

Investors, hedge funds, and any other sources of funding interested in making money in aviation, keep the faith…“aviation” is not a dirty word.

Although corporate aviation has generally not proven to be the golden goose everyone has always been hoping for, do not blame the goose.

As I have pointed out many times, corporate aviation floats in a sea of money. Billions and billions are spent every year on corporate aviation.

Then whose fault is it if corporate aviation is not profitable?

Investors, the hard truth is many of the bad results seen in corporate aviation could actually be the fault of the investors who invested in those very aviation businesses.

Here is why. Investors know everything about money, how it works, what makes money and what does not. Investors have years and years of experience with money, investors totally comprehend money, they even have their own language about money, but what about corporate jet aviation? What do investors know about that?

Of course the investor is not going to run the aviation business, but then someone has to, and that decision determines if that aviation business is going to succeed or fail. The investor as two choices, one is a seasoned aviation professional that knows everything about aviation and very little about business, or an MBA who knows everything about business but nothing about jet aviation.

The decision is easy for the investor, the language of the investor decrees he must go for the MBA. That choice is where it usually goes badly wrong.

The investor language has distorted the issue. Would any investor ever allow any amateur to work with, or try to do any investments with their money? No, of course not. But that is exactly what investors are doing when they place untrained and inexperienced personnel in charge of their multimillion dollar aviation investments.

And how do real aviation professionals feel about being subservient to the amateur aviation CEO? Ask a tree how it feels about dogs. Investors, you really really need those professionals.wile_e_coyote_help

Aviation is far more complicated and regulated than money. Aviation has consequences far greater than running a chain of shoe stores. You cannot just learn the aviation business, you must have lived the aviation business for years to understand it.

Most of the amateur CEO aviation executives do not know the difference between a GPS and ILS, so how could they ever be expected to understand what it takes to successfully operate and make money with aviation operations?

Yet that is exactly how it works in today’s corporate aviation environment. Investors do not understand jet aviation. The inexperienced CEO they hired because he has an MBA does not remotely understand who or what jet aviation is. As a result the employees who work for the aviation company feel rudderless, so they lose confidence, and it all comes apart…and then the investor’s golden goose is cooked..

I understand the MBA knows what “tax depreciation”, “manufacturer’s warranty”, and even what “new” mean. Exactly the same words the investors understand.

“Tax depreciation” and “manufacturer’s warranty” are benefits, they are not profitable revenue streams. All those benefits which give the appearance of a successful operation will very quickly fade out, dry up, and disappear.

But guess what? That multimillion dollar aviation investment is still going to be there burning through your money. Now the business of aviation is going to require real aviation business knowledge and skills to be successful.

Aviation skills your CEO has no idea about. That is where the rubber meets the road when it comes to making money in aviation, and there is the problem.

So can that nonprofessional CEO aviation leader be successful in corporate aviation?

Sure, if the investor likes to lose money and his original goal was to create a massive tax write off. Then the aviation operation will be a complete success.

If the investor’s plan was to build a successful aviation business, make money, and grow. Then the investor is going to need another CEO, or another plan.

There is some good news though, your former CEO, the one that just killed your golden goose, now that he has worked in aviation as a CEO. He put that experience on his resume and took the CEO job with your former competition. Now he is making more money than you are, at least until he kills that goose. How can that be you ask? Because of his experience as the CEO of your former aviation business.

P.S. He is also blaming everything that went wrong on you. Plus he is writing a book about how to run and aviation company. And he will be on CNBC next week as their on-air expert aviation analyst.

So investors if you want to make money in aviation you need to do this. Lose the junior airman CEO, and let the aviation professionals run the aviation business. That is the only way you will ever get your aviation golden goose to do what a golden goose is supposed to do.

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Erudite Solutions for Business Aviation



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