Private Jet Travel – Black in the Corporate Balance Sheet

September 14th, 2012 by

Companies have many responsibilities. They have to stay competitive within their respective markets, provide steady pay for their employees, create incentive programs to retain hard workers, cover their liabilities, and produce excess revenue. It is a complex balancing act that is constantly scrutinized.

Since the bailouts of 2009, company spending has never before been under such close observation. With news reports vilifying the extravagance of company events, bonuses, and other incentives that dwarf average American expectations, public outrage is inevitable. Public outrage leads to bad publicity, and bad publicity leads to lower profit margins.

As with all corporate spending, private jet charters fell under the public microscope. Inquiries into executive travel via charter flight versus commercial business class began to surface. Viewed by many as an unnecessary luxury, companies had to explain the benefits of spending in private air travel. Speed and convenience – the obvious answers – were not softening critics to the issue.

Of those cited, one of the most important advantages of private flights over commercial travel for businesses became privacy.

Private travelers spend less time passing through security checks and can board their aircraft directly, allowing them to focus more time and energy on work. While in flight, the quieter atmosphere provides an opportunity to conduct business without interruption. The entire equation leads to increased productivity.

Perhaps most importantly, private flyers can reach their destination undetected by the prying eyes of others. News can greatly affect financial markets and the overall value companies hold in those markets. On January 17th, 2011 it was reported that Steve Jobs was going to take a leave of absence due to falling ill. Forbes reported that Apple stock dropped 8-10% in value overnight. Information about company leaders in particular is highly sensitive and can have direct financial consequences.

The privacy offered by chartered aircraft can prevent this type information from reaching the media at inopportune times. A merger or acquisition, for example, should transpire with the utmost confidentiality to prevent changes in the involved companies’ valuations. Many business meetings, events, and incentive programs require such privacy to keep companies stable until news can be disseminated to the public at the appropriate time, through preferred channels.

To help further illustrate the financial importance of business travel, the U.S. Travel Association put together a U.S. Travel Answer Sheet detailing statistics and facts about the impact the travel industry has on the US economy. Highlighted in this answer sheet is a study conducted by Oxford Economics USA, which reported that:

“For every dollar invested in business travel, companies realize $12.50 in incremental revenue and $3.80 in new profits. Curbing business travel can also reduce a company’s profits for years.”(USTravel.org)

According to this study, business travel – private travel being no exception – can lead to greater long-term profits.

Though often under scrutiny, executive travel is an essential aspect of business operations. Private travel in the corporate sector may lead to public inquiry, but companies maintain that its unrivaled privacy and lasting economic boon will always be worth the upfront cost.

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