Nov. 11, 2019
Business transactions are not always black or white, but industry associations can provide guidance regarding appropriate behavior.
TRUE STORY: Not too long ago, an engine was returned to an operator after having been over-hauled by an MRO. Attached to the engine was a $10,000 check made out to the department’s director of maintenance, who had not asked for – nor expected – any kind of finder’s fee or payment.
Was this a legal transaction? Probably. Was it ethical? Most definitely not.
To be sure, unethical transactions in the business aviation community are few and far between. But as Jad Donaldson, chair of NBAA’s Business Aviation Management Committee (BAMC), puts it, “All of us get measured by one bad actor.”
Donaldson has been leading NBAA’s efforts to promote ethical business aviation transactions, which includes providing guidance and examples, as well as the right questions to ask of service providers and others in the industry to help eliminate questionable business deals.
“Our goal is to shine a positive light across the industry and help business aviation professionals get it right the first time,” explained Donaldson. “Sometimes, business transactions are not always black or white, so we need to be careful about even the optics of impropriety.
“Ultimately, complete transparency is essential,” continued Donaldson. “Both the buyer and the seller – and everyone else in between – needs to be in the know.”
Donaldson, who was instrumental in helping develop NBAA’s Ethical Business Aviation Transactions statement, is quick to point out that the campaign is to raise awareness and provide guidance for conducting practices that can sometimes be murky.
“There is no policing or enforcement involved,” explained Donaldson. “We just want people to be think-ing, ‘How would my actions appear on the front page of a national newspaper?’ While an unethical transaction may not be illegal, doing things in a way that is not transparent – for example, such as an owner paying a bill where all the costs involved are not disclosed – can raise questions.”
STEPS TO ENSURE ETHICAL TRANSACTIONS
Mike Nichols, CAM, CAE and NBAA senior vice president
of strategy and innovation, suggests that business aviation companies of all sizes, in all sectors of the industry, consider the following steps to ensure ethical transactions:
- Review NBAA’s Ethical Business Aviation Transactions statement
- Review your own company’s code of ethics
- Discuss these policies with all of your vendors
- Review the guidelines in Appendix G of NBAA’s Business Management Guide
- Take any available pertinent on-demand learning modules
- Ask each member of your company or organization to read and make sure they understand the ethical transactions statement. Some businesses may want their employees to sign the statement, acknowledging that they have read it.
GUIDANCE IS AVAILABLE
In addition to the NBAA ethics statement – which is appropriate for companies that may already have some kind of ethics program in place, as well as for companies that may not currently have a code of ethics – various NBAA committees are contributing guidelines.
Josh Mesinger, a member of the BAMC Management Tools Subcommittee, has worked with NBAA commit-tees such as Maintenance, Schedulers & Dispatchers, International Operators and others to develop a new Appendix G to the NBAA Management Guide.
“Appendix G includes numerous examples of positive ethical transactions, as well as provides owners and operators with lists of questions to pose to help in sourcing service and product providers,” said Mesinger. “We want to give people the tools to support ethical behavior and transactions.”
A business aircraft broker, Mesinger has already developed some important guidelines for Appendix G on ethical aircraft transactions, including important questions to ask such as:
- How is your representative being paid?
- Is your representative paying anyone else or accept-ing payment from anyone else in the process?
- Will you contract with the actual buyer or seller on the other side of your transaction, or with a dealer in the middle?
Sonnie Bates, CAM, chair of the BAMC Management Tools Subcommittee, has been working on ethics guide-lines for auditors and air charter brokers.
“It’s most helpful to everyone concerned to promote professionalism by indicating the positive, the right way to do things,” noted Bates. “For example, when air charter brokers conduct their business ethically, they enhance aviation safety.”
Bates has developed a series of questions to ask brokers, as well as auditors, to make sure companies are selecting the right broker or auditor for their organization. A sample question for potential auditors would be, “How will the auditor ensure they will not disclose information concerning the confidential business aﬀairs or technical processes of your organization?”
Mike Nichols, CAM, CAE and NBAA senior VP of strategy and innovation, notes that in addition to the guide-lines in Appendix G, NBAA will also utilize on-demand education modules to cover various aspects of ethical transactions.
“Case studies and specific scenarios are a great way to learn how to ensure compliance with ethical behavior,” said Nichols, noting that OEMs, MROs, brokers and others are increasingly aware of the importance of transparent, ethical transactions.
Not only are ethical transactions the right thing to do, they may also be good for business. Donaldson, who recently was in the market for an aircraft broker, said that one in particular stood out from the rest.
“They attached the NBAA Ethical Business Aviation Transactions statement to the agreement and noted that they fully abide by it,” said Donaldson. “I must have full transparency, and that separated them from the crowd. It certainly influenced my decision to go with them.”
APPLYING BUSINESS ETHICS EVERY DAY
The senior management team of Duncan Aviation, a leading MRO company, has endorsed NBAA’s Ethical Business Aviation Transactions statement and is committed to encouraging others to embrace it and raise the bar on industry professionalism.
“Duncan Aviation has built a culture of integrity, and we support the ongoing industry discussion and education,” said Duncan Aviation Chair Todd Duncan. “We expect our team members to understand the proper actions to take in a wide variety of business interactions and transactions. And we ensure that our company leadership at all levels demonstrates and models those ethics.”
Duncan Aviation team members agree to a strict code of conduct that they review and acknowledge every year. Recently, the company contracted with a third party to provide a code of conduct hotline for team members to anonymously report potential violations of the code.
The MRO provider believes that business aviation companies should set ethical expectations for team members regarding conflict of interest, code of conduct, confidentiality, discretion, intellectual property and proprietary information, just to name a few. Then the company leadership at all levels must demonstrate and model those ethics in their everyday business interactions and transactions.
“We believe our most valuable and fundamental asset is our reputation, which depends on the integrity and judgment of each of our team members,” said Duncan. “The essential message underlying our code is that no one should ever sacrifice his or her integrity, whether for personal gain or a perceived benefit to Duncan Aviation’s business.
“NBAA’s statement will help strengthen our industry by promoting a positive image within the community and among the public at large. That will allow business aviation to continue to succeed and grow,” said Duncan.