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Business Jets Are Not Dirty Words

It’s not a subject for embarrassment- explains Jack Olcott - by avoiding questions on the use of business jets for the transport of company personnel- you’ll miss the chance to demonstrate a focus on efficient use of both personnel and time.

His initial reaction was enthusiastically positive. “What a great idea-” responded the Board Member of a public company that uses Business Aviation. “Directors should know more about corporate aircraft - I would be pleased to offer you my comments for the new Boardroom section in World Aircraft Sales Magazine.” We agreed to get back in touch within a few days.

At the appointed time- however- he answered my call saying- “I have some bad news. Our corporate attorney strictly prohibits me from speaking about our use of the company aircraft.” Interview over - score another point for the advocates of hiding Business Aviation under a basket.

If the auto executives appearing before the U.S House of Representative in the midst of the 2008 economic crisis had simply addressed the question of why they traveled on company aircraft to the U.S Capitol rather than avoiding the issue altogether when confronted by reporters- Business Aviation might have been better understood. Instead- one got the impression that “business jets” are dirty words.

One can argue that it was inappropriate to take the company aircraft to Washington- DC- where the airlines provide ample service- but there is no excuse for simply stonewalling reporters’ questions- especially when at least one auto executive was using the company aircraft to make several stops on the day of the hearings.

Ducking questions about utilizing business jets for the transport of company personnel is missing the opportunity to show that management is insightful and focused on the efficient use of personnel and time.

No company should be embarrassed by providing transportation that enables employees to avoid hours waiting for connecting flights or driving long distances between cities with limited airline connections- when a company-owned or chartered aircraft can fly directly to the desired location.

Corporations generally recognized by the business media as returning high dividends and capital gains to stockholders are users of Business Aviation. Consider the following surveys of S&P 500 corporations for CY 2009:

• Among Fortune Magazine’s “50 World’s Most Admired Companies-” 95 percent were users of Business Aviation.
• Among The CRO’s “100 Best Corporate Citizen-” 90 percent were users of Business Aviation.
• Among Fortune’s “100 Best Places to Work-” 86 percent were users of Business Aviation.
• Among Business Week/Interbrand’s 2008 “100 Best Brands-” 98 percent were users of Business Aviation. • Among Business Week’s “25 Best Customer Service Companies-” 90 percent were users of Business Aviation.

These data are significant since- as a group- only about two-thirds of S&P 500 companies own business jets. It should be noted- however- that the list shown above also includes companies that charter business aircraft.

Acceptance by the business media is nice- but what do individuals who evaluate the investment potential of companies think about Business Aviation?

Consider the opinion of Paul Johnson- a seasoned financial analyst with 30 years of experience in the trade and a sharp eye for emerging public and private companies. Nicusa Capital Partners- where Paul is the firm’s Principle- is a fundamentalsdriven- value-oriented investment fund focused primarily on opportunities in the USA.

When asked for his impression of Business Aviation- Paul remarked that he likes companies where management is actively engaged and focused on the best allocation of resources. “In my opinion-” he said- “time is a company’s most valuable resource. Once gone- it can never be replaced. So it is essential that managers allocate time efficiently.

“The airline industry has reached its nadir-” he added. “Airline management focuses on yield management- and schedules are concentrated around the 35-or-so hubs that handle the vast majority of enplanements. As a result- Business Aviation is a necessity for many companies. When effectively managed- Business Aviation offers users an opportunity to expand their market reach and customer base.

“Treating a business aircraft as a perk is unacceptable-” Johnson continued. “Promoting Business Aviation as a luxury and status symbol is misguided and misleading. It’s a tool for efficient allocation of personnel and time. We want to see a process in place for deciding when a company or chartered aircraft will be used and who will have access to that form of transportation. Management must be held accountable for its allocation decisions- including how the company uses Business Aviation.

“Think about it-” he concluded- “truly the only thing that differentiates companies is how they allocate time and talent.”

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