Flight time is the secret sauce to success.
It’s like getting runs on base.
I wrote that headline because, “Sabermetrics for Flight Schools, Flying Clubs, and Anyone Who Wants to Make A Buck In Aviation,” just doesn’t roll off the tongue.
I find the movie “Moneyball” inspiring. It’s a movie as much about business as it is about baseball. Anyone managing an aviation business can find inspiration here too. Its how the business model of OpenAirplane came to be.
“It’s about getting things down to one number. Using the stats the way we read them, we’ll find value in players that no one else can see. People are overlooked for a variety of biased reasons and perceived flaws. Age, appearance, personality. Bill James and mathematics cut straight through that. Billy, of the 20,000 notable players for us to consider, I believe that there is a championship team of twenty-five people that we can afford, because everyone else in baseball undervalues them.”
– Peter Brand in “Moneyball”
The book, and the movie are the story of how the Oakland A’s, a team out spent and out gunned by it’s competitors, finished 1st in the American League West with a record of 103 wins and 59 losses, despite losing three free agents to larger market teams. They built a championship team like, “and island of misfit toys,” using sabermetrics.
Sabermetrics is the term for the empirical analysis of baseball, especially baseball statistics that measure in-game activity. So let’s look at how this discipline, which demystified the voodoo of the business of baseball, can be applied to the business of aviation.
Jason Blair, former Executive Director at NAFI, has spent a lot of time researching what makes flight operations tick. He offers up what he’s learned in his seminar for industry folks called, “Skills for Flight Training and Aircraft Rental Operators to Increase Profitability.” Using one of the handy spreadsheets Jason has been gracious enough to publish can be enlightening, (sometimes scary) and very useful.
Modeling profitability of rental aircraft yields our industry’s version of sabermetrics. It’s flight time. More specifically, its flight hours flown on an airframe, or utilization that makes or breaks the business. Like the focus on getting on base make a baseball team a winner, optimizing the business on number of flight hours flown by each airframe is the secret sauce to success in flying business.
To grossly oversimplify this…
Fly more hours = make more money.
The cost of getting the airplane doesn’t matter near as much.
Utilization is the single biggest influencer on price and profitability for airplanes. It’s this single metric that has the biggest impact on the business. The effect of utilization is significantly more influential than the effect of the acquisition cost of the airplane.
For example, let’s model utilization vs. cost…
If we decrease the hours flown by 25%, the rate for profitable rental increases by 17.3%. If we increase the hours flown by 25% the rate for a profitable rental falls by 9.4%.
If we decrease the acquisition cost of the airplane by 25% the rate for a profitable rate drops by 3.7%. If we increase the acquisition cost by 25%, the required rental rate also only bounces up by the same percentage.
Flight hours flown per year really is the single most influential metric on the profitability of the business that you can influence. This is why we built OpenAirplane from the ground up to do one thing at scale, which is to increase the number of flight hours and drive better utilization of the fleet.
Operators who optimizes their business to create more flying hours will win.