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Sequestration- Governance and Corporate Jets

Sequestration was yet another sign that dysfunction and a lack of insightful governance prevail in our nation’s capitol. In the midst of such an atmosphere of uncertainty- the value of Business Aviation rings true- observes Jack Olcott.

AvBuyer   |   1st April 2013
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Sequestration was yet another sign that dysfunction and a lack of insightful governance prevail in our nation’s capitol. In the midst of such an atmosphere of uncertainty- the value of Business Aviation rings true- observes Jack Olcott.

President Obama’s favorite whipping boy is the ‘corporate jet’. He uses that term whenever he reflects on income unbalance or the need to revise our nation’s tax code. For example- often he alludes to the advantage that private owners of business aircraft have because they can fully depreciate such capital equipment in five years as opposed to seven years for aircraft owned by Airlines- charter companies or other providers of air transportation for hire.

Advocates of Business Aviation are incensed- and rightly so. When examining means for reducing our nation’s Gross National Debt of over $15-000-000-000-000- even the most objective observers see more significant measures to consider. If depreciation were extended to seven years for all owners of business aircraft- the additional tax revenue ranges from about $300 million annually to considerably less than that figure.

To put in perspective the relationship between our Gross National Debt and changing depreciation schedules for business aircraft- the time required to wipe out the nation’s debt at $300 million per year is more than 50-000 years. Senate Minority Leader Mitch McConnell observed that if enacted- “[Lengthening the depreciation schedule] would take 10 years to raise enough money to replace one week’s worth of the sequester.”

Clearly the federal government would like another $300 million annually to spend somewhere- but hitting on Business Aviation is very counterproductive. Business aircraft are tools that enable companies to generate more revenues and employ more workers- thereby contributing to the federal treasury.

Furthermore- casting doubt on depreciation schedules has a negative effect on business investment- and bashing Business Aviation may cause some companies—about 20 percent of those surveyed—to hesitate investing in the advantages of this form of transportation.

HYPOCRISY
“Do as I say- not as I do-” is a common refrain in Washington. The federal government- regardless of which party occupies the White House- is an extensive user of Business Aviation. The President travels in Air Force One- with a second Boeing 747 at the ready should it be required. Several Cabinet Members are mandated by law to use government aircraft rather than the scheduled Airlines- and leaders of Congress have access to transportation in public-use (i.e.- government-owned) aircraft.

More to the point- traveling on the government’s “corporate jets” is most appropriate for our nation’s leaders. President Obama needs the efficiency and security of a traveling Oval Office that is provided by Air Force One. Maintaining the efficiency and security of our nation’s leaders is essential- just as it is vital that the leaders of private industry use their travel time efficiently- without compromising personal or industrial security. The demonstrated value of Business Aviation clearly is the best argument against negative rhetoric.

Users of Business Aviation know the significant value of their company aircraft- thus they seem not to be dissuaded by the attempts of the Obama Administration to vilify “corporate jets” in its campaign to cast our nation’s economic challenges as a clash between classes. Class warfare may be the stuff of politics- but it is poor leadership.

SEQUESTRATION— LATIN FOR POOR GOVERNANCE?
Sequestration was included in the Budget Control Act of 2011 as a means of forcing legislators to address the nation’s growing debt. Its intended purpose was to be so draconian that the Congress and the Administration would compromise on a reasonable approach. In other words- legislators intentionally placed themselves in a box that they felt left no option other than to act- which they have failed to do in the nearly 20 months since President Obama signed the bill into law on August 2- 2011.

In the absence of responsible governance by all our elected officials- we entered into a period of automatic budget cuts on March 1- 2013. The immediate question for readers of World Aircraft Sales Magazine is ‘What effect will such abdication of responsibility have on Business Aviation?’

It may be too early to tell- since we can hope that Congress and the Administration will arrive at a reasonable compromise before automatic budget cuts do too much damage to the nation’s economy. But we can rest assured that the flexibility of Business Aviation will enable operators to adapt to changing conditions- such as cutbacks in FAA services.

Hours of operation at many of the control towers used by business aircraft may be curtailed- as will be the availability of custom services at airports used primarily for non-Airline activities. Processing of new applications for design changes to aircraft and letters of authorization for operational procedures could be slowed significantly. But safety will not be compromised.

Good governance by crews and managers- where the focus is accepting the responsibility of providing safe and efficient service in the pursuit of economic growth- is the essence of Business Aviation.

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