Corporate Jets: Luxury Or Necessity?

Jets Have Become A Symbol Of Corporate Greed, But Small Businesses Say They Rely On Them As Manufacturers Struggle

(CBS)  Private jets flown by CEOs have become symbols of excess. But for many, these small planes are vital to their businesses and their rural communities, as CBS News correspondent Mark Strassmann reports.

These days, the use of corporate planes by business executives is cause for public scorn.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo," said Rep. Gary Ackerman, D-N.Y.

The winds shifted last November when the CEOs of Detroit's Big Three automakers flew hat-in-hand to Washington to request government bailouts - arriving on fancy company jets.

Many Americans saw a new symbol of greed and arrogance.

"'This time CEOs won't be able to use taxpayer money to pad their pay checks or buy fancy drapes or disappear on a private jet. Those days are over," President Barack Obama said on Feb. 24.

Orders for new planes nosedived and aircraft manufacturers slashed jobs. Cessna cut 40 percent of its workforce - 7,400 jobs; Hawker Beechcraft cut 2,800 jobs, Gulfstream 1,200.

Citigroup cancelled its new $50 million dollar jet. Others companies sold their fleets.

But Wes Stowers is no fat cat. And his company plane, a King Air 350, is no ego trip. He also owns a private jet.

"It's comfortable and functional. But not exactly luxurious," said Stowers, chairman of Stowers Machinery Corporation.

Stowers' Knoxville, Tenn. Caterpillar dealership has been his family's business for almost 50 years.

On his company plane, Stowers flies customers to caterpillar factories, in remote places commercial carriers don't fly.

In fact only 500 American cities are served by the major airlines, whereas private planes can access 5,000 smaller airports across the country.

So the mayors of 70 small and medium-sized cities have written to President Obama urging him to help change "toxic perceptions" about this "crucial lifeline to rural America."

They urge the president to save the industry's 1.2 million jobs, and the $150 billion output per year.

Fat cat CEOs are the stereotype, but 85 percent of people flying on private planes for business work for small or mid-sized companies.

If having a private plane was just a fun perk, "We would get rid of it," Stowers said.

But the ridicule goes on and this industry continues to have a bumpy forecast.

[jcw2o]

Like a number of the individuals posting here I am a Private Pilot.
There are a few items that seem to be lost in a number of the comments posted.
Like most people I work hard for the money I earn and I like the ability to go flying as a hobby and when my work takes me to small communities that are difficult to reach using commercial airline service.
Secondly, why would anybody be concerned with Mr. Stowers and how he chooses to operate his business. Nowhere in the article does it say that his company accepted bailout funds. I know that Caterpillar equipment is expensive and if his clients want to go to the factory to see the expensive equipment they are buying being built more power to them. I like to know that the items I buy are the best quality. What better way to insure quality than to see the production process first hand?
For each of you who questions what general aviation is all about I encourage you to learn more at www.aopa.org or better yet stop by your local airport and see what happens there. You more than likely won't see a lot of high dollar jets off loading CEO's of Fortune 500 companies, but you will probably see Fedex, UPS, and other work horse aircraft keeping things moving throughout our world.
No matter what the issue we face as a country or world education and knowledge is the first step. Please don't deride industries just because media outlets jump to make news out of everyday happenings.

[pscosgrove]

I am not the CEO of any company. I am currently an unemployed (laid off) student. I am your typical working (if a job were available) citizen. I happen to have a Private Pilots License, and used to work in the aviation industry as a ground-handler. I have a very good knowledge of what General Aviation is and does, and find it very unfortunate that the news media is painting an ENTIRE (and by far the largest) segment of aviation with the same brush. The majority of General Aviation is NOT taxpayer funded!! The news media would like everyone to believe it is, and are KILLING a vital industry in the process. I have already stated it is inappropriate for large corporations to accept taxpayer money; they ought to be able to fund themselves! BTW, the biggest user of taxpayer money to fund a flight department is the US Government, they have well over 1000 aircraft used for such purposes, all operated under the guise of military flights. Maybe we should look into that spending too!!

[Propfly]

Either most commenters are envious or ignorant, I do not know which. General aviation keeps my business alive. To reach a customer via the airlines I need to go through a minimum of 3 airports, and depending on connections, take 8-12 hours in the aluminum tubes with lousy service and nasty TSA types, then rent a car and drive 2-4 hours to a customer. In my small plane, I leave when I want to, get there in 2-3 hours, and meet the customer at the airport office or bum a ride into town. I get there and back in one day, or on good days see 2-3 customers in the time it would take me to just reach the customer's town if I was stuck with using the airlines. Commercial aviation is great if you live in a big city, your customer lives in a big city, and both are on the same coast. Maybe some of the commenters might wish to see the country that is between the coasts and learn that businesses and business reside here as well. Cut the envy and overcome the ignorance by looking outside the big cities.

[jbar116]

Posted by pscosgrove at 5:22 PM : May 18, 2009

What company are you the CEO of?

I don't care what size company it is if it gets tax dollars they should be stripped of every perk and luxury without any hesitation. If they don't get tax dollars they can to do what they want and only have to answer to their stockholders. I don't care that another greedy corporation (airlines) are too inefficient for these companies to use, tough! They shouldn?t be allowed to squander tax payer money on luxuries.

[pscosgrove]

Clearly a lot of misguided people commenting here. General aviation forms the back bone of US industry, and represents a large chunk of the economy. I fully agree that some large corporations have used their aircraft to excess, and it is inappropriate for taxpayers to fund their bad business practices. However, what the general public at large does not seem to understand, is that many businesses, including working and middle class run businesses, use general aviation as a means of efficiently conducting their business. Commercial aviation is probably the most inefficient way to travel these days; time-consuming security measures, flight delays, and the fact only around 500 airports in the country are accessible, make commercial flights impractical for the majority of businesses. Not all businesses use multi-million dollar jets that are capable of long-haul international flight. There are a great deal of business men & women using those "little propeller driven planes" to meet potential clients, survey potential work sites, and move key personnel around. Then there is law enforcement and emergency services who provide critical services using General Aviation every day. (Yes, Medivac flights, search and rescue, and highway patrol, are all a part of General Aviation). My point is this: Don't kill an entire industry just because of the excesses of the few. There are towns and communities all over the US that depend on General Aviation to survive. If we paint all non-commercial aviation with the same brush, we will do more damage to our economy than any of those "fat cat CEO's" have ever done.

[babooph]

The main thing the CEO has is control of his lobbyists,their bribes are needed to be sure capitalism does not rear its ugly head -the jet is no more needed for that than it is for the company janitors.

[sjc_1]

If you can write it off as a business expense, then it IS the taxpayer's business. If you get out of paying your fair share because you are flying around in your private plane, the taxpayers will drag you out of the plane and put you in prison where you belong.

[number1GI]

Corporate jets are a luxury..... period. However look at all the jobs they create. They keep the economy going. The question is a loaded one. You can't have it both ways.

[start99]

Just plant your carcass in a commercial jet liek the rest of us and enjoy the ride!! Im guessing if they do not want to give up their plush planes they arent helping their own company in these times....

[egresor]

it's a pride and status thing. all is vanity, but in this case the taxpayers are paying the bill for them!

[egresor]

by ramos1129 May 18, 2009 9:02 AM PDT
I own my own business. If I use my private plane, that is my own business as long as I do not accept bailout funds. Then it is a necessity and my own business. If I use bailout funds, then I am subject to federal rules. Then it is a luxury and the government's business..

===

think that pretty much sums it up!

[egresor]

100% sir!

[ddaryl1]

corporate jets are a luxury no matter what the situation.

Take the 50 million - 1 billion spent on corporate jets at any company and increase the wages and the benefit plans of the workers.

putting more money into the workers hands is the only way this ocuntry will become a better place. All other otpions will only make things woirse. Corporate greed and Wallstreet are very evil entities

[egresor]

putting money in the hands of workers IS the solution and at least there is some motion in that direction with obama.

you dont build a house from the penthouse down. you build it from the foundation up. and that foundation are the working classes of this country. the working poor are the foundation and the middle class is the living area. if it has a penthouse luxury apartment that comes last and only after the rest of the house is built and only then if your budget allows it.

something the republican trickle downers seem to forget, but i think i figured out why they seem to forget that. because they are generally the recipients of it.

see not so hard to understand after all!

:((

[ramos1129]

I own my own business. If I use my private plane, that is my own business as long as I do not accept bailout funds. Then it is a necessity and my own business. If I use bailout funds, then I am subject to federal rules. Then it is a luxury and the government's business..

[sjc_1]

"On his company plane, Stowers flies customers to caterpillar factories, in remote places commercial carriers don't fly."

Who says that they need to see the factories in the first place? This sounds like an excuse to write off an airplane so you can be a big shot and have lots of fun at taxpayer's expense.

[Gene5184]

Let me focus this a little better.

The aircraft are a business asset that is a catalyst to greater profitability.

?Among S&P 500 peer groups from 1992 through 1999, operators earned 141% more in cumulative returns than non-operators.?

-Business Aviation in Today?s Economy, A shareholders value perspective.
http://www.noplanenogain.org/Studies.htm?m=47&s=379

How does this work? For a 3 hours in the air on a commercial flight, 5 Executives being paid $150 hour spending 8 hrs at airports flying commercially making connections = $6,000 dollars in company funds for unproductive time not including the cost of 5 commercial tickets.

25 trips such trips a year = 150,000 dollars spent to pay people to hang out at the airport. That money comes out of the company coffers and could be used to continue to pay workers. That is 200 hours of lost productivity or five 40 hour weeks of sitting at the airport. That is time lost that our company is not earning money to pay its workers, shareholders, and grow our economy.

Let's ballpark the effect of removing the Jet in the above scenario.

150,000 = 3 employees making 50,000/year the company can no longer afford to pay.
200 hours lost productivity is a little harder but has a much larger effect.

Let's pick from the middle of the F500 Coporate list...500 million/year profit

Lets say our worker do 80 hours a week instead of a normal 40. After all they make the big bucks right at the top of the company right?

200 hours / 80 hours = 2.5 weeks of work

500 million/ year divided by 51 weeks/year = 9.8 million a week multiplied by 2.5 weeks = 24.5 million or ........

490 people that were making $50,000 a year now standing in the unemployement line along with the 3 others, Pilots, maintenance workers, Jet factory workers and their execs!

[hawksprings]

Politicians should have to ride commercial flights like us peasants they rule over have to.

[quapawsix]

My buying beer is more important than this what a waist of money they could have been paying the workers better wages but noooooooo they wanted to flaunt their wealth for all to see. And anyone who argues this is a necessity is sillier than they sound.

[Gene5184]

"But of course you HYPOCRITICAL republiCONS couldn't ever be accused of highly-partisan "showmanship" ............"

Who cares what party or where the showmanship comes from. Things are much more serious than that. We need to pull together and make smart decisions if we want to pass prosperity onto all our children.

[jbar116]

In this free economy those companies are supposed to be free to do business as they see fit but that doesn't include taking billions of dollars from the taxpayer and then flying home in a private jet. I think the average person believes that big corporations are all crooks but they only have to answer to the guy who owns their stock and the rest of us be dammed so if the guy who owns their stock (in some cases now the US GOV./TAXPAYER) is ok with them flying around in jets and further bankrupting their companies then so be it after all they are taking the loss. However, I for one feel that any corporation that takes tax dollars should eliminate all perks for employees making six figures or more since these are luxuries and not necessary to the survival of the company. Any corporation that is not showing a profit should not pay more than base salary; after all would you reward a child for bad school grades?

[whitemale08]

Goldman Sucks and JP Morgan are lobbying Obama as we speak to 'waiver' executive pay caps.

Bloomberg story:

http://bloomberg.com/apps/news?pid=20601087&sid=aVrYgD5NiwuM&refer=home

So Goldman Sucks and JP Morgan not only want you, the taxpayer, to bailout their trillions in worthless derivatives and credit-default swaps but also pay their executives handsomely for the 'priviledge'.

How does it feel America to be SHAFTED royally by Goldman Sucks and JP Morgan?

[egresor]

dont feel very nice to me!

since when did big business care about people.
profits profits profits

even if they aren't real
:(
:(