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Business Aviation & The Boardroom - Leadership Required

Let the partisan behavior of U.S. Congress serve as a model of how not to be an effective Board Member- says Jack Olcott. Business Aviation serves company shareholders - don’t be misled by Washington dysfunction.

Jack Olcott   |   1st September 2011
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Jack Olcott Jack Olcott

Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,...
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Leadership Required In The Midst Of Dysfunction
Let the partisan behavior of U.S. Congress serve as a model of how not to be an effective Board Member- says Jack Olcott. Business Aviation serves company shareholders - don’t be misled by Washington dysfunction.

Less than a month ago the world witnessed a major waypoint in American politics as members of a divided Congress hardened their positions regarding the nation’s mounting debt.

Considering the magnitude of the dollars involved—a national IOU approaching the country’s GDP of about $14.7 Trillion—and deficits projected to reach nearly a trillion dollars annually for the next several years- clearly the debate over increasing the debt ceiling required responsible leadership and a rational search for a just solution. Instead the nation saw politics- raw and partisan.

It is said that democracy is not pretty—somewhat like making sausage—but still it’s the best system of governance available to society. Democracy may be better than the alternatives- but the elected leaders who accepted the obligation to serve wisely and justly in Congress hardly covered themselves with glory. Instead- they abused the system- holding the nation hostage to dogmatic and possibly self-serving ideologies.

A secondary- but far from insignificant fallout from the spectacle of partisan politics trumping good governance is the partial shutdown of the Federal Aviation Administration- which went into effect July 23rd and remained unresolved until Congress arranged a quickie move on August 4th to extend its funding until mid-September. For the last three years or so- FAA funding has lurched along with a multitude of short-term extensions.

Negotiations for yet another stop-gap measure bogged to a halt in July ostensibly over the issue of extending less than $30M in subsidies to several sparsely used airports under a program known as Essential Air Service. (It should be noted that the proposed bill-cutting EAS targeted states of prominent Democrats such as Senate Majority Leader Harry Reed- D NV.) Behind the scene- however- the bigger issue revolved around enacting the position of the National Mediation Board that would have made it easier for airline employees to unionize.

Rather than finding an equitable solution- obstinate politicians on both sides of the aisle chose to do nothing- which resulted in the furloughing of about 4-000 FAA employees involved in construction projects already under contract. Additionally about 70-000 non-government contractors were idled until the issue was resolved.

Equally as significant to concepts of good governance- failure to extend FAA funding authorization terminated the agency’s ability to collect taxes on airline tickets and aviation fuel used by non-airline entities at a loss to the government of about $200M per week. The debacle cost the government hundreds of millions of dollars.

I am venting my frustration about the dysfunctional actions of the U.S. Congress to make two points- both appropriate for a publication that is apolitical and focused on communicating best practices in the governance of business aircraft for business transportation.

First- look at the bashing leveled at Business Aviation rather than where it belongs and might be constructive—namely at our nation’s convoluted and seemingly distorted tax code.

In the heated - and at times irrational - rhetoric of the deficit debate- prominent leaders in the Obama Administration chose to point an accusing finger at Business Aviation- citing the ability of companies and individuals using their aircraft as industrial aids (which means that the machines are employed in not-for-hire business transportation) as a prima facie example of why current tax code favors the privileged.

[Note: Companies that own aircraft for commercial purposes- such as charter- must depreciate their equipment over a period that is two years longer than the five year minimum stipulated for industrial aid usage.]

If tax regulations treated all asset classes in similar fashion (which Warren Buffet said makes good sense) and the two-year advantage in depreciation for the owners of IA aircraft were eliminated- the U.S. Government would collect about $3B more in total revenue over the next decade.

With deference to the late Senator Everett Dirksen (R- IL) who was said to have noted “A Billion here- a billion there- and pretty soon you’re talking real money” (but probably never used those exact words)- rationalizing the government’s sources of revenue makes good sense. But really- in the totality of the issues to be resolved in seeking to balance a multi-trillion dollar issue- there are more appropriate topics for salvos from the President’s bully pulpit.

Fortunately- the business community as well as responsible media recognize that business aircraft are business tools. So do Members of the U.S Congress- but some are tempted to play a populous card to capitalize on the public’s misunderstanding about Business Aviation.

As Board Members- you know the wisdom of employing a transportation system that is safe and that efficiently maximizes a company’s most valuable assets—people and time. Business Aviation serves shareholders. Don’t be misled by Washington dysfunction.

Second- let the partisan behavior of the U.S. Congress be a model of how not to be an effective Board Member.

Do you have any questions or opinions on the above topic? Get it answered/published in World Aircraft Sales Magazine. Email feedback to: [email protected]


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