I suppose with a starting price tag for a private jet at $10 million and another $500,000 needed for annual fuel and upkeep, the term “fat cat” naturally comes to mind to describe the corporate jet set.
So just call me a fat cat from now on because I’ve been a passenger on two private jets. Thing is I don’t remember eating filet mignon and swilling champagne by the bucket on board or lighting a cigar with a $100 bill upon arrival.
No, what I remember most was the sheer convenience of the trips. From parking my car for free right in front of a small airport (by O’Hare standards), not having to take my shoes off going through security since there really wasn’t any, and handing my bag to the pilot no less.
I also remember the employees of the companies who accompanied us on our trips. Sure, maybe sales and marketing managers made more than an ink-stained scribe, but we were along for the same ride.
I do not remember meeting the “owner” of either jet. These were both successful family businesses so maybe some lucky siblings got to ride more than anyone else. But both companies had been in business a very long time – one for almost a century – and had made a deliberate decision that such a seeming extravagance was, in fact, a cost-effective way of running the show.
I may be considered biased now that I’m in the aviation industry, but I don’t think I ever considered my transportation on those two days to be symbols of greed and playthings of the rich and powerful.
So I was surprised to read about how President Obama talked about me last month. During a press conference, he singled out the corporate jet industry as unfair benefactors of tax loopholes seemingly born on the backs of widows and orphans. Actually, he did more than single out the industry; he jabbed it in the ribs six times from the podium.
At issue wasn’t the elimination of a tax break for corporate jet ownership. Rather, the president wants to increase the length of time companies can take to depreciate these assets from the current five years to seven years. That two-year difference doesn’t sound like a deal breaker to me. But I’ve read enough about the issue to know that it could affect the “when” and the “how much.” I’ll leave that up to accountants who understand this issue better than I.
However, Obama framed the idea in terms of deficit reduction. And I don’t need an accountant to tell me that this gambit is only worth about $3 billion over a decade – chump change in the context of a deficit projected to top $7 trillion in that time.
We think fixating on the deficit is a natural in these trying times. Fights over debt ceilings this summer led to the two-week closure of FAA.
But a far more urgent problem is creating jobs. Shortly after Obama’s press conference, the aviation industry naturally came out with figures to bolster the argument to keep the depreciation limits untouched. The General Aviation Manufacturers Association, for example, reminds us that the aviation industry employs 1.3 million workers and contributes $150 billion to the national economy.
This is not to say the industry isn’t hurting like everyone else. Although these numbers included more than corporate aircraft, GAMA says U.S. jet manufacturers shipped 1,334 units last year – down from 3,079 in 2008.
It pays to take a closer look at what this downturn in sales has done to people in Wichita, KS, home to two brand-name planes. Employment at Hawker Beechcraft , for example, went from 9,000 in 2008 to 6,000 in 2010. Meanwhile, Cessna cut its workforce in half to about 8,000 in that same time.
In other words, 11,000 more working-class people once worked at just two companies building aircraft a little more than two years ago. I don’t think a tax incentive is alchemy. After all, people and companies buy jets when they need new planes and feel good about the economy – and manufacturers will hire workers when people and companies buy jets and feel good about the economy. But right now, there’s so much hesitancy to make any purchasing plans, we don’t need to change a depreciation schedule that would add to this indecision.