The Plane Truth: Business Aviation Is a Win-Win Solution for CEOs

That “poster boy” stigma still sticks today despite mounting evidence that business aviation is an irrefutably smart idea. It saves valuable time, enabling executives to travel to as many as four cities in a single day rather than wasting time on the ground at large airports and being hobbled by the need to navigate rigid airline schedules and booking procedures. Additionally, colleagues can discuss proprietary information en route without fear of eavesdroppers, communicate with their companies along the way and fly directly into communities commercial airlines don’t service directly. Often, these business flyers also need to safely transport items too sensitive for a cargo hold and too large for an overhead compartment.

“Your company may have business in New York and London, a factory in France and meetings in Germany, or somewhere on the African subcontinent. In almost all cases, it’s easier for executives to fly by private jet.”

All things considered, the argument for using business aviation is simple: “The larger the scale of your business, the more likely it is that your executives have to be all over the country or on multiple continents in a matter of days or weeks,” says Doug Gollan, editor-in-chief of Elite Traveler. “Your company may have business in New York and London, a factory in France and meetings in Germany, or somewhere on the African subcontinent. In almost all cases, it’s easier for executives to fly by private jet.”

The Right Wings
Lots of variables, from how often you fly to where you travel most regularly, factor into which of the many levels of service and layers of aviation options to choose. “Whole ownership of a plane makes sense as a company exceeds 400 hours of flying time per year, whereas fractional ownership typically is somewhere between 50-400 hours,” says Gollan. Fractional ownership is exactly what it sounds like—owners buy a “share” of a plane that entitles them to access (50–400 hours annually or a certain number of days of the year, depending on share size) to that plane, or a similar plane in the operator’s fleet, with as little as four hours’ notice. With a third option, jet cards, buyers purchase a block of 25 hours of flight time on a specified type of aircraft.

“Jet cards are good for those who need between 10 and 25 hours,” says Gollan, who adds that some more frequent travelers choose to restock their 25-hour card because fractional ownership typically requires a commitment of five years. “It’s the difference between renting versus owning,” he says. (See sidebar, “Which Wings Are Right for You?”) “For many, jet cards can be great because you lock in a price and the provider; they’re flexible enough to go wherever you
want and they give you guaranteed access to a certain class of jet within 6-24 hours,” says Gollan. Ultimately, however, it boils down to what your company’s mission is, where you need to go to conduct business, how frequently you need to go there and how many people will be traveling with you.

Shy About the Friendliest Skies
Many CEOs keep quiet about their reliance on business aviation (as opposed to commercial air travel) for fear of inviting the wrath of uninformed critics. However, the number and sophistication of available business aviation services and solutions continues to increase, and the sector itself is creating jobs in all 50 states and enjoying a healthy sense of optimism as its growth rises in direct correlation with the country’s strengthening economy. “There’s no doubt that there are critics of the private aviation industry,” says Jordan Hansell, chairman and CEO of NetJets.

“But I believe that if they examined the impact we have on local and national economies, they might feel differently. Our industry provides good-paying and stable jobs, contributes to local and national tax bases in the areas where we operate and, by its nature, provides a service that allows businesses and individuals to travel more efficiently and effectively.”

“We use it a handful of times throughout the year when we’re in a time crunch or need to get back to the office on a certain night and a commercial flight simply can’t get us where we need to be.”

In the meantime, however, CEOs still prefer to fly under the radar when flying privately. For example, the CEO of a southern California-based entertainment company with whom Chief Executive spoke for this article never mentions his private flights to clients, fearing they won’t understand how the time it saves him ultimately saves them money—and that, in fact, they will assume the opposite. “It’s like a time machine,” he says, explaining that he couldn’t stay competitive in his field without business aviation. “We use it a handful of times throughout the year when we’re in a time crunch or need to get back to the office on a certain night and a commercial flight simply can’t get us where we need to be.”

Business aviation can shave hours and even days off of the time it takes to travel via commercial airlines, he asserts. “If I were just flying from San Francisco to New York, there’s no reason fly privately, but if I need to go to an important conference or meeting somewhere remote that would otherwise take eight hours to reach by car, it’s a major help.”

Blue Skies Ahead
The business aviation industry as a whole is a lagging barometer for economic recoveries and a leading barometer for downturns, says JetSuite CEO and JetBlue founder Alex Wilcox. “It’s a big discretionary expense, so it’s one of the first things cut when companies are short on cash, but we’re seeing an upswing now, and the industry is creating tons of jobs.”

For example, Embraer, the manufacturer of JetSuite’s Phenom 100 executive jet, has moved production from Brazil to Florida. “The engines are made by United Technologies, the avionics are provided by Olathe, Kansas-based Garmin International and landing gear is manufactured by Goodrich,” says Wilcox. “It’s a huge U.S. manufacturing base, and anyone who owns a plane spends twice [as much] on maintenance to fly it 100 hours a month than it costs to buy the plane.” In JetSuite’s case, that has meant creating 200 high-quality, middle-class jobs that didn’t exist five years ago. “These are our workers who fuel, clean and maintain planes, and there are also third parties providing these services, too, so there’s no doubt that this industry is making a massive contribution to jobs,” he says.

If you consider that private jets have access to more than 5,000 U.S. airports, compared to roughly 500 available to commercial airlines, Wilcox’s assessment takes on much greater meaning. For instance, Van Nuys Airport, which serves Los Angeles and is one of the world’s busiest general aviation airports, pays more than $80 million in annual taxes and contributes over $1.3 billion to the California economy. Similarly, New Jersey’s Teterboro Airport accommodates the vast majority of non-commercial flights into the New York metropolitan area and contributes an estimated $500 million to the region’s annual economy. “If you’re looking for an efficient transfer of wealth from the wealthiest of wealthy
to the middle-class,” says Wilcox, “you’d be hard-pressed to find it occurring anywhere more than it is in this industry.”

" Michael Gelfand : ."