BlueSky: Inspiring investment
With the Season very much upon us, Patrick Margetson-Rushmore, chief executive of London Executive Aviation (LEA), one of Europe’s largest business jet charter operators, takes a timely look at the relationship between business aviation and corporate hospitality and explores their importance to national and regional economies.
There is an inextricable link between corporate hospitality and business aviation. Corporate hospitality tends to go hand-in-hand with major international events and, in turn, private aircraft are often used to fly people to and from these showpieces. The two industries are also linked in the sense that they suffer from the same misconception: both are often dismissed as being an unnecessary luxury reserved for the rich and famous, or ‘corporate junkets', when, in fact, they are significant economic contributors.
The European Business Aviation Association (EBAA) does a fine job in highlighting the economic contribution of business aviation. For example, in its recent report, ‘The Role of Business Aviation in the European Economy’, the EBAA revealed that each passenger on a business jet makes the same contribution to GDP as nine business passengers on a scheduled flight.
As for corporate hospitality, while some may characterise it merely as a corporate ‘knees-up’, the truth is that such events will always be vital to business relationships. Although transactions should always be decided dispassionately on their financial merits, there is one other crucial ingredient we look for in a supplier or partner: the ability to trust them. Being able to spend time with people in a relaxed environment gives the chance to read their characters in more detail and decide if they are who they profess to be. Business dealings don’t stop when you leave your office – our business and private lives are interwoven; it is therefore natural that overlaps between the notionally ‘professional’ and ‘personal’ arise as we forge and strengthen business relationships.
From personal experience, I know these informal meetings can have important business benefits. Earlier this year, I was invited by an OEM to attend a Six Nations rugby match between Ireland and England. Off the back of that event and the people I met on the day, I secured some valuable new charter business.
Such positive encounters are likely to be repeated many times over at major sporting occasions. Last summer we experienced a sharp rise in demand for our aircraft around the time of the Champions League final in Munich, where Chelsea played against Bayern Munich. Many of our passengers watched the match from corporate boxes in the Allianz Arena and, while they may have been there to watch the football, they would undoubtedly have been talking business too.
So, why is it necessary for people to fly to these events in a private jet? Well, as we all know, the people who frequent corporate boxes often don’t have time to fly on a commercial airline, due to the amount of time they have to spend away from the office. Flying in a private aircraft can significantly reduce the duration of a trip, which may well be enough to convince a busy CEO and other guests to attend an international event.
For the host country, major events provide a perfect opportunity to showcase the region. Take the 2010 FIFA World Cup, which was held in South Africa. Speaking at the New Age briefing in Johannesburg in May this year, South Africa’s sports minister said the event contributed $5.8 billion to the country’s economy and that surviving the recession was largely because of the “investments that took place around the World Cup”. According to the official rights holder of the FIFA Hospitality Programme, more than 140,000 hospitality packages were sold for the event – a figure that would undoubtedly have included numerous businesspeople who hadn’t previously visited the country.
Another example can be found in the UK, where horse racing is among the most popular sports for corporate hospitality. According to the ‘Economic Impact of British Racing 2013’ report recently published by Deloitte, the overall economic impact of UK horse racing stood at £3.45 billion in 2012. While international businesspeople might not have towns like Ascot or Cheltenham high up on their list of destinations to explore, corporate hospitality at the likes of Royal Ascot and the Cheltenham Festival provide an ideal means of attracting wealth to the region.
To the delight of naysayers, there will always be examples of people misusing or abusing corporate hospitality. However, to write off the entire enterprise on that basis is both naïve and short-sighted. If corporate hospitality is managed with appropriate care and professionalism, the economic benefits for those attending, and for the wider region, can be profound and long-lasting. Business aviation plays an essential role in enabling these important encounters and, as this wonderful summer of sport continues, that is a fact in which we should all take pride.
Published in: BlueSky 11 July 2013
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