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"Justifying private jets for business"



Sunday, February 6, 2005

Justifying private jets for business
Cable News Network (CNN)

 
(CNN) -- Corporate governance regulators say the use of private jets by some
executives is the equivalent of shareholder robbery; others say it is an
essential travel tool.

Stock market legend Warren Buffett knows about the controversy of such
things. One of his few extravagances is a corporate jet -- he once remarked
that he wished to be buried in it. The name of the jet? "The Indefensible."

But Buffett is not the only one in the business world what was once the
indefensible. Hundreds of Fortune 500 companies now own their own plane,
with top executives arguing that it is a vital tool, saving time and
boosting productivity.

"Private jets have this appearance of being affluent and full of fat cats
and celebrities," David Savile, CEO of charter company Air Partners, told
CNN.

"Our experience is actually the opposite. They are practical business tools
and are used by lots of people."

Some of the bigger private jets now in operation even have boardrooms where
meetings can be conducted in-flight.

"If you term the business jet as a mobile office...you do not need to loose
any productivity time by flying from A to B," says Martin Moore, of European
Business Aviation News magazine.

In the U.S they are used in regions where commercial services have been
eliminated. Business jets have access to nearly 5,300 airports, compared
with 558 for commercial airlines, according to the U.S. National Business
Aviation Association.

Global multinationals are also using them more extensively. U.S. Steel uses
a jet to shuttle executives to its European operations in Serbia and
Slovakia.

"With the scrutiny of traveling through the airlines right now, where a
business man might take seven days to hit seven cities, with access to a
private aircraft he can hit seven cities in two days," says Gary Anzalone of
Aero Toy, a private jet sales firm.

The development of new lightweight jets is also making this type of travel
more affordable.

"Eclipse, a U.S. company, has come out with the (smaller) Eclipse 500. There
are huge orders booked for these aircraft and they think they are going to
be the next big thing," says Kate Sarsfield from Flight International
magazine.

But with a pricetag ranging from around $1 million for a light jet to more
than $50 million for a larger business jet, the cost cannot always be
justified.

One option is fractional ownership where a buyer invests in a proportion of
a plane and pays for a share of its maintenance and management.

"It is an expensive proposition -- no question about it, but there are
rewards in terms of control of one's time," says Bill Boyster, CEO of
fractional ownership firm Netjets.

"Who you travel with and when you travel (is important). The privacy and
security in which you travel does make (business jets) a reasonable value
equation."

The latest innovation is the Jet Card. where you can buy blocks of hours on
business jets -- say 100 hours or 25 hours for a fixed price. There are also
cheaper options including the transatlantic business shuttle.

"When Concorde went out of service the business aircraft operators and the
airlines thought: we will find a market niche here and we are going to
exploit it," says Sarsfield.

"Lufthansa was one of the first airlines to come up with the business
shuttle idea, so they linked up with a company in Switzerland called Private
Air -- they are proving a huge success."

Attached Photo:

Is the business jet a valuable corporate aid or an indefensible luxury?

story.gulfstreamg200afp.jpg


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