Post #254,917
5/10/06 3:10:08 AM
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Executives Take Company Planes as if Their Own
[link|http://www.nytimes.com/2006/05/10/business/10jets.html?pagewanted=1&ei=5094&en=3b91cc9b8a4bf03a&hp&ex=1147320000&adxnnl=1&partner=homepage&adxnnlx=1147244514-uqCn6uYagrk4qxsCFIS5eg|Executives Take Company Planes as if Their Own]
...Chief executives' salaries have risen sharply. On top of that, new government data show, shareholders are paying more for executives' personal travel on corporate jets, long criticized as a symbol of excess.
Because the value of a trip counts as personal income for the executives, some companies are even paying the executives' taxes on trips.
...
"One chief executive told me, 'You can fool around with my stock options all you want, but don't fool around with my airplane,' " recalled Richard H. Moore, treasurer of the state of North Carolina, who oversees $72 billion in investments. "You can compare it to crack cocaine. Once they get used to having the plane there waiting for them, they don't want to go back."
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Executives are well compensated, some critics say, and such perks send the wrong signal to workers while diverting corporate resources that could be better used elsewhere.
"Personal use of corporate aircraft is almost always inappropriate," said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "We pay them enough so that if they need to use private aircraft, let them charter it."
At the very least, executives could have the value of the corporate jet calculated at charter rates for their income purposes, the critics suggest. Then the executives would pay taxes on something akin to a market rate for their personal travel.
...
Corporate jet travel is an especially delicate topic in Washington. Lawmakers travel heavily on corporate fleets for fund-raising, and their campaigns reimburse the corporations at very low rates. Under federal rules, they usually use the price of a first-class ticket, considerably less than the price of operating the private jet. Only if there are no commercial flights must a politician calculate the value using much higher charter rates.
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Post #254,939
5/10/06 11:11:27 AM
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Boy, is that backwards
Under federal rules, they usually use the price of a first-class ticket, considerably less than the price of operating the private jet. Only if there are no commercial flights must a politician calculate the value using much higher charter rates. If there is a commercial flight, they should be on it. To take a private plane is a convenience, and should be valued according to the charter rate. If there is no available commercial flight, then you have no choice but the private plane. Admittedly you then wouldn't have a commercial flight to compare the rate to. ===
Purveyor of Doc Hope's [link|http://DocHope.com|fresh-baked dog biscuits and pet treats].
[link|http://DocHope.com|http://DocHope.com]
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Post #254,985
5/10/06 4:14:42 PM
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Convert their salaries to wages.
Then calculate how much they are costing you at their $$$,$$$/hour rate to spend 2 hours getting through the Gestapo security screening, baggage check, etc. on each end of a business flight.
Private flight is almost always cheaper than commercial flight when these costs are computed. Quick example. We have an employee fly from Fort Wayne to a plant in Texas. He asks me to look at how long it would take in my airplane to go there. In my 172, a quick plan suggests 6.5 hours (there's a small GA airport next to where he's going). But, I tell him, if the company owned even a Cessna 210 (single engine piston plane, used price around $150,000), that time would be cut down to 4 hours. But he has to fly commercial. And guess what? The closest airport he can get to is 2 hours by car away from where he's going. And he's going to be there for a 2 hour meeting. But guess what number 2? He can't get a return flight until the next morning. So, instead of walking across the street, getting on a plane and in 4 hours being at his meeting, then flying home the same day he flys commercial (he's paid for a day), he rents a hotel (company pays that), he rents a car (company pays that), he eats for two days (company pays that) and he buys airplane tickets. He's gone for two days and incurred all kinds of expenses that he would have to incur if we owned a corporate aircraft.
So here's a partial list of savings:
Total Trip time: Company a/c 11 hours Commercial a/c 48 hours
Time at airport: Company a/c 10 minutes Commercial a/c 4 hours
Car Rental: Company a/c $0.00 Commercial a/c $75.00
Hotel: Company a/c $0.00 Commercial a/c $150.00
Corporate use of GA aircraft saves all kinds of money - and something you can't make more of - time.
bcnu,
Mikem
It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
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Post #254,987
5/10/06 4:29:30 PM
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If you look at it that way, Blue Star Jets makes more sense.
[link|http://www.bluestarjets.com/|Blue Star Jets]: Blue Star Jets is the worlds most comprehensive and efficient private jet brokerage company. With access to operators of the largest networks of luxury charter jets, we arrange access to the ideal private aircraft for any given charter flight to any destination in the world on a moment's notice.
There are no membership fees, acquisition costs, or monthly maintenance charges and reserving a private charter flight couldn't be easier. No matter what the size or length of the trip, BSJ arranges straightforward access to jet charter service on the ideal private charter aircraft for each and every trip. Because we have access to the largest selection of operators of private jets in every size and performance range, you can be assured that every flight will meet your needs. (No personal experience with them, Caveat Emptor, etc.) There's no doubt that commercial aircraft flights are hugely inefficient from a time perspective these days. I don't think it then follows that companies should have their own planes. :-) Cheers, Scott.
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Post #254,996
5/10/06 6:24:04 PM
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Yes, this is something that should be outsourced
And to answer Bill Patient's point about costs being $10/mile, the case where a corporate jet makes more sense is when an entire team has to be flown somewhere. If you're flying 6 people at once, then the cost per mile is competitive with commercial aircraft, and when you add convenience, it is worthwhile.
However most companies don't have these needs very often. Certainly not enough to justify owning their own jets.
Cheers,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #254,999
5/10/06 7:03:00 PM
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I've seen this once
and here was the scenario. One team, 12 members, needed to be in Philadelphia, then Wichita, then Kentucky and they wanted to do this in one day...max 2.
The cost of the charter made the one day trip possible when commercial could not (connection, then connection made one day impossible).
The saved time and hotel expense in addition to the 12 open-jay multi-airline itineraries (essentially all at full coach when it was expensive) made the cost of charter viable.
We chartered the jet.
---------
I also chartered a jet to tranfer 12 executives to Paris and 12 back. First class airfare would have been 72k. Our corp at the time only allowed business class so commercial would have been 48k. Charter cost, 85k. It would have taken alot of hours for these 200k types to make up the nearly 40000 difference. Why did we charter? Chairman was one of the execs.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,004
5/10/06 8:34:48 PM
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Wanna bet the chairman made more than 200K? :-P
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #255,005
5/10/06 8:42:22 PM
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Yes he did. I did the budgets.
It still wasn't cheaper :-p
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,006
5/10/06 8:44:37 PM
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But it was for you. :-P
You had to balance losing money for the company and keeping your job, versus saving the company money and finding a new job.
Easy choice,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #255,009
5/10/06 9:21:19 PM
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Too low on the totem poll to bitch
and smart enough to realize it.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,624
5/16/06 5:05:16 PM
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Random thought...
If I am a business and I hire an employee, I pay that employee a salary, I probably pay that much again in benefits, and I expect that employee to generate enough business to justify that expenditure with plenty to spare.
Therefore even if salary for lost time doesn't cover the difference of having an employee on a private plane, it still can be a good business to put them there.
(But I'll agree with you that usually it is a status symbol and isn't worthwhile.)
Cheers,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #254,992
5/10/06 4:43:10 PM
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True, but ...
How many trips exactly like that does it take to amortize the cost? Modify your estimate for: - Multi-day trips
- Trips to places with airports nearby
- Times there more people travelling than will fit on your Cessna
- Times multiple people are flying to different places
What is the pilot's salary? Are there parking fees at the airport? How about maintenance costs? I don't doubt that a lot of people could fly GA cheaper than commercial, but I don't think owning your own company plane is likely to work for small companies. And in any case the calculation is a bit more complex than you presented. ===
Purveyor of Doc Hope's [link|http://DocHope.com|fresh-baked dog biscuits and pet treats].
[link|http://DocHope.com|http://DocHope.com]
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Post #254,995
5/10/06 6:15:18 PM
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Sorry. No. You are not correct.
Corporate aircraft, jets specifically, have a bundled cost of nearly $10/mile to operate (including maintenance turns, pilots, etc) measured against commercial that is generally between 17 and 50 CENTS per mile.
If it is a 10 million per year exec..MAYBE you can justify based on a time saved argument...since their time cost is about 2500-3000 per productive hour...but contrary to popular opinion, there aren't that many of those executives around.
It is a perk and possibly a security tool...but it is NOT a money saving device.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,614
5/16/06 2:58:21 PM
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If time is money, it most certainly is more efficient.
VLJ's don't cost $10/mile. But I'll concede that fractional ownership for non-regional travel is more efficient for most businesses. In my company's case, however, one of the upcoming VLJ's could easily be cost justified. Most of our travellers zoom around the southeast and midwest and only rarely travel abroad. We have about 30 people who regularly fly commercial and piss away plenty o'time in airports and hotels. The 30 don't travel in unison and typically only 3-5 of them are going anywhere at any one time - just right for a VLJ. They're frequently gone 4-5 business days for 2-3 days of actual work. Getting 40% more out of them would be a worthwhile endeavor. But, what my company does is fairly unique.
bcnu,
Mikem
It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
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Post #255,617
5/16/06 3:15:40 PM
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VLJs are not corporate jets.
for the most part, corp aircraft are Bombardier (Lear), Hawkers or Gulfstreams. And they do cost that much or more.
There may be some migration to VLJ in the future (continuous cost cutting)..BUT that may be short lived. The airlines want the FAA to redo the fee structure for VLJ and private aircraft. Their reasoning, there is no difference in an ATC slot for a 737 or a 4 seater so they don't deserve to pay the entire freight. Especially, in their opinion, because the overloading of the system is largely due to private aviation.
I can't say I completely disagree, either.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,621
5/16/06 4:48:37 PM
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Now you're completely wrong.
And showing a big jet bias, I might add. How much money did FBOs at small airports get when the FAA all but shut them down? Nada. How many taxpayer dollars went to the majors? And keep in mind the "little airports" that make a living off of pilots of bug smashers (like me) are also the airports that fire, police and medical a/c use.
I'm well aware of the majors trying to screw the little guy. I am one of the little guys. User fees in Canada are a disaster. The last I looked, all the VLJ's to be constructed through 2007 were sold. And I seriously doubt that none of them are going to small business.
That said, I think the whole SATS program is doomed to failure. The public perception is, (not too disimilar from yours, apparently), that VLJ's and piston a/c "aren't real airplanes".
bcnu,
Mikem
It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
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Post #255,626
5/16/06 5:40:09 PM
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Not really
understand all the dynamics but also understand the growth projections and the situation that puts the ATC system in...and nearly all the growth is in private aviation. The current structure cannot support that and must change. Current proposal isnt great...but something has to give.
You call it "screwing the little guy", but you aren't likely going to see the impact of the change as much as the vlj market and corporate aircraft...which must be tracked along with the big boys...so why should they bear essentially the entire burden of the system? They are calling it "getting screwed by the little guy"...and somewhere in the middle lies the truth :-)
I have no such perception that VLJs aren't real airplanes. Simply saying that they aren't "corporate aircraft" in the Fortune 500 sense of the term.
I am sure that some of these jets are going to small business owners and maybe even some fractional programs and will develop into a force in the market...but right now when some says "corporate jet", they are talking about something along the lines of a Gulfstream.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,773
5/17/06 3:49:02 PM
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Or Hawkers, Lears, Cessna Citations, etc.
Agree w/you about what "corporate jets" means to the non-pilot contingent. But you made a minor(?) mistake:
you aren't likely going to see the impact of the change as much as the vlj market and corporate aircraft...which must be tracked along with the big boys...
First, what the airlines are lobbying for is user fees for *any* atc contact. I enjoy flying, not yacking on the radio, but occasionally I will use VFR flight following and sometimes, if I can't avoid it, I have to call approach to transit Class C airports. That'd incur a charge for a service the regs say will be provided "workload permitting". That means I may be paying for nothing. And here's a really grand example: I'm flying direct to FGX from C62. My direct path takes me through Dayton's airspace. Here's a hypothetical conversation:
Me: "Dayton Approach, Cessna 7522 tango, 10 northwest, level at 3,500, direct to FGX."
Dayton Approach: "Cessna 22 tango remain clear of class charley airspace."
Me: "22 tango."
He just told me I can't enter his airspace, so I get to fly around it *AND* if the big boys have their way, I'll get charged $10.00 as a bonus because I used the radio. What could be more fair than that?
Second, if the VLJ's stay below 18,000 they do *not* have to be tracked at all. Nor do they have to use ATC.
bcnu,
Mikem
It would seem, therefore, that the three human impulses embodied in religion are fear, conceit, and hatred. The purpose of religion, one might say, is to give an air of respectibility to these passions. -- Bertrand Russell
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Post #255,030
5/11/06 3:03:18 AM
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Two Words
Video Conferencing
Yeah, there's times it won't do.
But most of the time, it will.
Peter
[link|http://www.no2id.net/|Don't Let The Terrorists Win]
[link|http://www.kuro5hin.org|There is no K5 Cabal]
[link|http://guildenstern.dyndns.org|Home]
Use P2P for legitimate purposes!
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Post #255,041
5/11/06 9:22:19 AM
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And there are some very cool solutions
[link|http://www.telesuite.com/products/204m.gif|http://www.telesuite...products/204m.gif]
For some reason, this tech is not catching on. The virtual meeting rooms like I linked to above are missing only the ability to smell the nasty breath of the people you're meeting with...but I guess folks just like stinky breath.
If you push something hard enough, it will fall over. Fudd's First Law of Opposition
[link|mailto:bepatient@aol.com|BePatient]
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Post #255,045
5/11/06 9:44:42 AM
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Two things they lack:
Security and deniability.
You can't very well have a back-room meeting and then deny it if all of the support people know about it as well.
Regards,
-scott anderson
"Welcome to Rivendell, Mr. Anderson..."
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Post #255,046
5/11/06 9:46:16 AM
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Also, a key element, unacknowledged by many but definitely
there, is the social dimension of business meetings. That kind of tech would cause that to suffer, and one thing about human beings is that they will go to great lengths to maintain their social contact with other human beings.
--\n-------------------------------------------------------------------\n* Jack Troughton jake at consultron.ca *\n* [link|http://consultron.ca|http://consultron.ca] [link|irc://irc.ecomstation.ca|irc://irc.ecomstation.ca] *\n* Kingston Ontario Canada [link|news://news.consultron.ca|news://news.consultron.ca] *\n-------------------------------------------------------------------
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Post #255,048
5/11/06 9:57:09 AM
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Also, could be recorded!
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Post #255,052
5/11/06 10:46:54 AM
5/11/06 6:03:45 PM
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They are missing some other things as well
Like the ability to hand the other person a piece of paper.
But the biggest thing that is missing is a fact of geography. Suppose we have a meeting for 6 people, and 5 are physically present. The 6th person will only be there for the official meeting. The other 5 will discuss the meeting before and after, and those discussions will set a context for and around the meeting.
No video conferencing solution can get the 6th person to participate in that unofficial activity. So unless everyone videoconferences in, the ones who do are effectively left out of a significant portion of the meeting.
Cheers,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
Edited by ben_tilly
May 11, 2006, 06:03:45 PM EDT
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Post #255,053
5/11/06 10:49:27 AM
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That was exactly my point
--\n-------------------------------------------------------------------\n* Jack Troughton jake at consultron.ca *\n* [link|http://consultron.ca|http://consultron.ca] [link|irc://irc.ecomstation.ca|irc://irc.ecomstation.ca] *\n* Kingston Ontario Canada [link|news://news.consultron.ca|news://news.consultron.ca] *\n-------------------------------------------------------------------
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Post #255,137
5/11/06 5:55:53 PM
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So, to summarise:
The only people in a VC meeting are the people in the VC meeting.
And the people not in the meeting aren't in the meeting.
The needs of the person not in the meeting can be met by a device called a "telephone".
Peter
[link|http://www.no2id.net/|Don't Let The Terrorists Win]
[link|http://www.kuro5hin.org|There is no K5 Cabal]
[link|http://guildenstern.dyndns.org|Home]
Use P2P for legitimate purposes!
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Post #255,138
5/11/06 6:04:41 PM
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That wasn't a summary - that was missing the point.
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #255,140
5/11/06 6:12:00 PM
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No, I didn't.
You missed my point that I made in my initial post, which was that sometimes VC won't do, but most of the time, it will.
Peter
[link|http://www.no2id.net/|Don't Let The Terrorists Win]
[link|http://www.kuro5hin.org|There is no K5 Cabal]
[link|http://guildenstern.dyndns.org|Home]
Use P2P for legitimate purposes!
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Post #255,150
5/11/06 6:54:02 PM
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Look at who I was responding to
I was responding to Bill Patient's post, not yours.
In other words I wasn't saying that videoconferencing is not often sufficient, I was saying what videoconferencing doesn't provide that physically being there does. (Besides exposure to people's bad breath.)
As for whether videoconferencing is often sufficient, I'd say that that really depends on what you're doing. For instance for a sales person, the act of showing up demonstrates your seriousness. Using videoconferencing suggests that you don't really care. With a big sale, that could be the difference between closing or not closing. Physically shipping sales people around therefore makes a lot of sense.
However for trying to sort out project details, I agree that video conferencing is usually enough.
Cheers,
Ben
I have come to believe that idealism without discipline is a quick road to disaster, while discipline without idealism is pointless. -- Aaron Ward (my brother)
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Post #255,144
5/11/06 6:30:46 PM
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ICLRPD that wasn't a summary - that was missing the point. (new thread)
Created as new thread #255143 titled [link|/forums/render/content/show?contentid=255143|ICLRPD that wasn't a summary - that was missing the point.]
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep
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Post #255,240
5/12/06 10:15:01 AM
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Very hard to video conference golf
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Post #255,243
5/12/06 10:25:54 AM
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Golden Tee.
--\n-------------------------------------------------------------------\n* Jack Troughton jake at consultron.ca *\n* [link|http://consultron.ca|http://consultron.ca] [link|irc://irc.ecomstation.ca|irc://irc.ecomstation.ca] *\n* Kingston Ontario Canada [link|news://news.consultron.ca|news://news.consultron.ca] *\n-------------------------------------------------------------------
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