The Business of Business Jets
The validity of the private aviation industry has been under scrutiny for years. Namely because of the perceived cost of traveling via a private jet versus flying first class on a commercial flight. Many people chalk it up to the traveler wanting to be more comfortable or wishing to maintain their anonymity, which to the outside perspective seems like a waste of money.
While both reasons are true in some cases, and we will get to that, but the biggest reason is that time is money, simply put.
Let’s put this into perspective, shall we?
According to a USAtoday report, the average CEO of an American company makes $13.8 million per fiscal year, which boils down to a whopping $6,634.62 an hour. But that’s just the average, in more extreme examples, CVS CEO Larry Merlo rakes in $13,914 an hour, Starbucks CEO Howard Schultz at $9,323 an hour, and let's not even get started with Amazons Jeff Bezos who in 2017 enjoyed a $107 million per day paycheck.
That’s just to put things into perspective, but let’s dig deeper to why it’s important for shareholders to understand why they should be happy the CEO’s of the companies they invest in are flying private rather than commercially.
Anyone who has flown commercial understands this general rule of thumb, “always give yourself two hours at the airport before departure to go through security and board your plane.”
Hey, I’ve even fallen into the trap before where I hit traffic and arrived half an hour before my departure time. Thankfully, I had an in with the TSA agents who let me walk right through due to my frequent travel, but no one would expect that kind of pass regularly.
If we follow this general rule using the US national average for CEO pay for two-hours of their time, $6,634.62, that’s a $13,269.23 expense to the company just to have their highest-level employee standing in a baggage check line or waiting for the plane to board. That figure doesn’t factor in the time they will spend on the plane, with the public, unable to work, and the time it will take them to settle in once they arrive.
Time is wasted while spending hours boarding commercial flights
A private business jet, or charter, allows the CEO in this example to board on their own time without regard to commercial flight schedules. They can arrive and depart at any of the 5,000+ regional airports or 102 International airports in the country, never mind the world if they are dealing with international business.
This time saved, allows them to travel with ease, comfort, and gives them the ability to conduct business while in the air whether that be a web-hosted meeting, an important phone call to a new investor, or even finalizing a new acquisition.
The point is, with private business flights, traveling doesn’t halt the work being done and CEO’s and other executives can continue to work hard to give you your money's worth even while they are on the road, err...in the air.
It’s not just about the time saved by flying out of a local FBO and avoiding the mass public either. Many companies are meeting at locations that are far from international or major airports and must utilize the convenience of landing at a regional airport.
This effectively can turn a business trip that if traveled through commercial means in air and on the ground would be a three or four-day sprint into a one or two-day affair that gets the executive back home or in the office where they work best and doing what they do best; making you money.
Even for smaller companies this model is important. At VoyagerFBO we own both a Seneca and a Cessna, using both often to meet with clients in person rather than conducting business over the phone. The face-to-face interactions are invaluable to building relationships with FBO’s in our area.
The most recent was an out of state trip that would have taken six hours in driving time over 357 miles and an overnight stay in a hotel before driving home. Rather than take a mini-road trip, we flew the Seneca out of our local FBO and within an hour and half arrived at our destination, held a two hour meeting, and flew home all within the span of an average workday. Not to mention there was a mix-up at the FBO in the morning, and even though we had a late departure we still made it home before I usually leave the office with a scenic detour on the way home just for fun.
There is real validity to the business of private business flights in the time saved traveling, and the value gained in keeping employees working even while they are en-route to their destination.