Corporate
aviation is an tool used by companies around the country, by having a businessjet, a company has proven themselves as being 'successful'. This has always
been accepted by the public in the past until recent years. The 'Big Three' car
manufacturers flew in their corporate jets to Washington to ask for 'bailout'
money, when in a hearing they were confronted on the matter, they were embarrassed.
Ever since then, the business jet has been, in the public's eyes, a sign of wasteful
spending and many corporate fleets have since been sold. Here we will discuss
this issue and break down the pros and cons of having a corporate aircraft.
Corporate
aviation has a long-standing history in this great nation, when executives have
to travel for business, they can quickly get to a customer when using a modern
business jet. This is an unparalleled tool that has helped commerce and
development throughout almost all industries. With an industry that relies on just
in time deliveries and shipments to keep running smoothly and efficiently,
there also needs to be quick response by management to keep ahead of the game
when doing business. This can only be done through corporate aviation, the
public thinks that these jets are used for leisurely vacations by the fat cats around
the country, but they are in fact essential tools to do business. Growth of an
economy can only be a reality with growth in commerce and the fastest way to achieve
this trading and commerce is with the use of business aircraft. To break it
down further, it would be wise for a company CEO to fly to a customer faster on
the company jet so he can finish his business and travel to the next customer.
This allows a company to do more business and grow, which in turn creates more
jobs and therefore commerce. If he had flow on an airline, then he may have
made it to one client in a day, instead of three or four meetings that would be
made available by the use of a corporate jet. I do feel that corporate aviation is vitally important for
our economy due to these reasons.
PresidentObama argues that corporate aviation is a luxury for the rich people and that
it should be taxed further in order to lower the debt limit. This is ludicrous,
the fact that he would even put that into the minds of the public is downright despicable.
"Studies show that closing the loophole would only generate about $3
billion over 10 years(Frank, 2013)." With our debt in the
trillions of dollars, Obama is attacking an industry that will only bring in $3
billion over 10 years, this is just a political move on his part to say that he
fought the good fight against all those 'fat cats with jets' and put the blame
of the economy on someone else. Without business aviation, there will be no
growth in the economy, everyone will be waiting to get through security at the
major airports instead of making deals with a client. The NBAA has fought for this
for years saying that "Business aviation is
a time multiplier allowing key employees to do more,
faster. Much like an investment in state of the
art computer software, a business airplane boosts employee efficiency and
productivity(NBAA, n.d.)." The 'tax break' that the president
speaks of is accelerated depreciation, this is when a company can use their aircraft
to realize the depreciation benefits of it more quickly("Bonus
Depreciation," n.d.). This means that the company gets to
write off some of the costs of owning and operating the aircraft.
On the other side of this issue, there are some
drawbacks to business aircraft, including high costs and misuse of the asset.
Yes jets are not cheap to operate and yes sometimes the boss may take a
vacation in Florida and use the jet to get there. This is no different than
anything else that the government subsidizes. There is misuse and wasteful spending
far more costly than this small percentage. The cost of the aircraft operation
and maintenance far underweight the benefits of profit and growth that the
company will see with its use.
Accelerated
depreciation was part of the economic stimulus package in 2009 because it would
encourage the use of more assets, such as business jets, by companies with this
tax break. This was one great part of the package when most every other part
was a complete disaster. Obama supported this until recently when he changed
his tone on the matter. Bolen, National Business
Aviation Association chief executive, accuses
Obama of having "denigrated" an industry that is "responsible
for 1.2 million American jobs and $150 billion in economic impact(Morrison, 2012)". Frankly I
am sick and tired of our presidents two-faced lies for political gain toward
the public and I believe that this affluence of aviation in business is
entirely justified.
Bonus Depreciation. (n.d.). NBAA. Retrieved October 13, 2013, from
http://www.nbaa.org/admin/taxes/depreciation/bonus/
Frank, R. (2013, February 6). New dogfight between
Obama and private jet industry.CNBC. Retrieved from http://www.cnbc.com/id/100439712
Morrison, M. (2012, October 5). NBAA condemns
President Obama for 'disparaging business aviation' NBAA
Condemns President Obama for 'disparaging Business Aviation' Retrieved
from http://www.flightglobal.com/news/articles/nbaa-condemns-president-obama-for-disparaging-business-aviation-377305/
NBAA. (n.d.). Warren Buffet And Business Aviation
Facts | No Plane No Gain. Warren Buffet And Business Aviation Facts | No Plane No Gain. Retrieved October 13, 2013, from
http://www.noplanenogain.org/index.php?m=47
I think you have well illustrated the some of the root causes to many of the corporate aviation industry’s problems. The public image that has taken hold and become popular opinion of the industry has effectively distracted the population from realizing the benefits that business owned jets provide for the economy. It will be a challenge getting these facts out there; most notably the industry creates jobs, allows businesses to grow and increases revenue. The tax cuts you mentioned, which Obama is trying to remove, will do more harm than good. Reducing jobs and cutting profits of smaller organizations trying to expand would likely not be an economy booster.
ReplyDeleteYou talked about the main issues that is in the midst of this Obama vs. Corporate aviation. Very well put together, shining light on both sides. You used an excellent point made by R. Frank, that if they were to end tax benefits for these corporate aviation department it would only generate $3 million over 10 years. This is only a fraction compared to the trillion of dollars that the country has put itself in. This is simply the government trying to make a big deal out of something to distract from the larger issues and careless spending that they are at fault for.
ReplyDeleteLike the post Scott. I think people who dislike business aviation because of its potential to be abused by their owners are not looking at the bigger picture. It employs a substantial amount of workers in our country and promotes economic development in smaller areas away from major airline hubs. You put it best in these two lines, “There is misuse and wasteful spending far more costly than this small percentage. The cost of the aircraft operation and maintenance far underweight the benefits of profit and growth that the company will see with its use”.
ReplyDeleteYou point out that many corporations have sold their aviation divisions. What I don’t understand is why, even though business aviation has the potential to save money, they decided to get rid of their program due to public perception. On the other side it does show that you’ve looked and understood the issue due to the fact that you pointed out that there is waste in some companies, and that this type of waste comes with anything that is subsidized. People will do what they think they can get away with, but I honestly don’t think it happens very often.
ReplyDeleteIt’s a shame that the CEO’s of the big three didn’t have a better response when asked why they flew on their jets to ask for a bailout. It really did make the problem worse, if they had been able to explain how those jets make doing more business possible, or how in the long run it can be cheaper than flying commercially and saves more time maybe they could have saved the image. I would also say the same thing to the president however, he wants to know these companies can afford to fly on their business jets and yet while the country has the largest deficit it has ever seen he still fly’s Air Force One. It seems a bit like the pot calling the kettle black.
ReplyDelete