February 18, 2009
The Foolish War on Corporate AircraftBy Jeff Eriksen
If President Obama and Congress are serious about stimulating the economy, they might better consider why businesses use private aircraft before they vilify such expenditures.
For the aspiring entrepreneur, private aircraft are not luxuries that are to be indulged upon once success has been achieved, but rather necessary tools to support the drive toward success itself. No plane is cheap. However, what many businesses, a majority of Congress, and perhaps most Americans fail to grasp is the true cost of business travel by any other means.
A Hypothetical Example
I live in beautiful Bellingham, WA, a bastion of activist liberalism on par with Berkeley, CA and Boulder, CO. We're "home to the longest-running weekly peace vigil in the nation." Bellingham is sandwiched between four oil refineries and blessed with some of the highest prices at the gas pump in the state. 142 miles as the plane flies to the southwest is Hoquiam, WA, new home of one of the nation's largest bio-diesel production facilities and former home of a vibrant timber industry prior to the Spotted Owl's placement on the list of endangered species in 1990.
Let's say Big Biodiesel has a problem that requires six hours of onsite consulting from one senior and two junior process engineers. They call around and find two relatively local companies that can do the job.
The closer company, Company A, based in Seattle, is just two hours and nine minutes away according to Mapquest. Company A pays its senior engineer $50 per hour, while its junior engineers each earn $25. Added to the $100 per hour in gross wages is $50 per hour in benefits. Yet the $150 per hour that Company A is paying to employ those three is not what they are worth. They need to be producing more than $150 per hour to justify the existence of their jobs. They have to produce enough to pay utilities, salaries of the support staff, taxes, office leases, and a host of other things even before they produce a dollar of profit for the company. A low estimate of their hourly value for this experiment would be four times the total of their hourly wages, which comes to $600 per hour. The nearly four and a half hours packed into a Toyota Prius driving from Seattle to Hoquiam and back, plus the six hours on site requires that they charge Big Biodiesel more than $6870, thanks to the overtime. Not included in this calculation are expense-account items, time lost to bathroom stops on the road, etc.
Company B's headquarters are in Bellingham, three hours, forty-one minutes from Hoquiam by car, but less than ten minutes from the local airport. They have a small, but capable turboprop aircraft that costs them less than $400 per hour to operate. FltPlan.com lists the flight as lasting 49 minutes (due to a 13 knot headwind). If we add 10 minutes for travel to the airport on either side of the trip, and 10 minutes for the plane to taxi, we have two hours and eight minutes of commuting for our three engineers. If we round the aircraft usage up to one hour either direction, the plane costs $800 that day. That's about $789.87 more than the cost of gas for the Prius according to AAA and the EPA for Company A's commute.
How can Company B justify such a thing?
Company B pays their employees the same as Company A. Therefore they need to bill Big Biodiesel the same $600 per hour, plus an extra $800 for this particular day because of the plane, and $350 for its pilot. The 2.1-hour commute by air and car costs $2350. The onsite costs are $3600. If we add the commute expense, plus the onsite, plus a tenth of an hour overtime ($90), Big-BioDiesel gets billed $6040, saving $830, a savings of more than ten percent.
Company B is providing gainful employment to not three, but four people in this scenario. However, it's the tool that the fourth uses that maximizes the other three's productivity. This isn't "New Math" either. It's the plane that provides the magic that allows them to do more, with more, for less.
Company B is much more likely to get the job, and their employees will be home by dinner, ready to be productive tomorrow morning.
That's real stimulus. Better business. Better quality of life. And for more people.
Not everyone can own and operate a Gulfstream G550. Yet a Cessna 172 can also be an effective tool for business. The smallest corporation doesn't need the same equipment as the largest one. More businesses should use the tool of private aviation to reach their goals, and they should do this even in the face of the present political pressure.
Our President and many in Congress seem hell-bent on destroying something that provides hundreds of thousands of well paying jobs, many of which are held by union members. Aviation is at the leading edge of technological achievement. It is a complex symbiosis of science and service and it is a meritocracy that rewards hard work. I know all of this from personal experience.
I went from putting gas in planes and emptying their lavatories, to piloting a corporate jet and teaching others to fly. That transition took just a few short years. I love what I do and I'm proud that I do it. I'm grateful for a job that provides for my growing family. Those who disparage the means for that provision place thousands of Americans in economic harm's way.
An updraft lifts all planes as a rising tide does boats. Improving corporate travel should not mean the pursuit of its lowest common denominator.
Jeff Eriksen is a corporate pilot, flight instructor, and aircraft mechanic living in Bellingham, WA. He welcomes your comments at email@example.com.