All Aboard the Corporate Jet

The corporate jet: decadent anachronism or efficiency tool? The number of U.S. companies operating aircraft is rising, and data suggests corporate-jet use helps, rather than hinders, the bottom line.

Corporate-owned plane use has risen 21 percent in the past five years. according to Aviation Data Service Inc., based in Wichita. As of mid-October 1998, deliveries of new planes climbed 24 percent over the previous year.

Companies say they see a tangible return for the lofty costs of managing a fleet. James B. Flaws CFO of Corning, Inc., in Corning N.Y., says that in 1998, using corporate aircraft saved his company about $3 million, the spread between company aircraft costs and using commercial airlines. He also points to the thousands of hours of employee time saved. Company planes are especially efficient when traveling to more-remote locations, he says.

Flaws adds that in the past eight years, Corning's use of company aircraft has doubled. Several years ago, most passengers on Corning planes were upper management, but Flaws says there has been a shift. The majority of growth has been in use by technical and engineering employees, he explains.

Indeed, a Louis Harris & Associates Inc. study reports that of the employees flying on corporate aircraft, only 14 percent come from top management. Middle managers and professional staff fill most of the seats.

The time savings are considerable, as veterans of commercial-airline business travel can easily imagine. Not only do employees avoid delays, layovers, and baggage claims, they are also more likely to conduct company business on private planes that are equipped with computer ports, telephones. and private compartments.

Data from the National Business Aviation Association (NBAA) not a disinterested party. linking plane ownership to the bottom line are sketchy or dated. A 1993 "Business Aviation Performance Study," conducted by Arthur Andersen LLP, reported that public companies that purchased aircraft between 1986 and 1990 had 7 percent more cumulative sales growth in the following years than companies that did not buy aircraft. Approximately two--thirds Fortune 500 companies operate their own aircraft, according to the NBAA.

COPYRIGHT 1999 CFO Publishing Corp.
COPYRIGHT 2000 Gale Group