The Wall Street Journal, in a bit of investigative reporting, found that the CEOs of companies that have received federal bailout funds are still having fun using their firms’ private jets. Or, in some cases, these executives make the case that it is better to use the jets than fly commercial.
The situation is not as bad as the paper makes it out to be.
CEOs have to pay taxes on their personal use of planes and they have to pay their companies for the cost of operating the aircraft. In either case, it is not has if flying to a vacation home is free. Why shouldn’t a person who has spent 30 years working his way up the ladder not get a few choice benefits?
Business use of small jets is often much more efficient than flying commercial. Getting from a factory in Akron to a distribution center in Boise can take a whole day, if not longer, on commercial flights. A CEO making $7 million a year is earnings almost $30,000 a day. And, he may have other senior executives with him. Is it worth it to have a management team that costs a company and its shareholders $100,000 sitting in a remote airport waiting for the next commuter plane?
Executive use of company jets is a red herring. Jets save time. That has been the case for the 30 plus years since Gulfstream and other private aircraft firms started marketing small, fast planes. CEOs know that the public and shareholders are watching, which means that are likely to be judicious in putting together their plans before they step aboard that G-IV. (BAC)(MS)(C)(PNC)(MI)(RF)
Douglas A. McIntyre
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