DesertJets From United States of America, joined Feb 2000, 7716 posts, RR: 17 Reply 3, posted (9 months 2 weeks 6 days 20 hours ago) and read 7563 times:
Really what an awful fluff piece -- doesn't really do anything to argue that the current tax incentives/break for private jets are valuable or not.
For one I don't know what type of tax breaks private jet owners/companies get. But if they are such an invaluable business tool why would they need to be subsidized like that? Now I don't doubt the value of general aviation and its economic impact either. Nor do I like how private jets get used in political theater (remember all the hoopla the CEO's of the Big 3 got for flying in their corporate aircraft to testify before Congress before the auto industry bailout a few years ago).
Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
dfambro From United States of America, joined Nov 2009, 292 posts, RR: 0 Reply 4, posted (9 months 2 weeks 6 days 20 hours ago) and read 7529 times:
Quoting BMI727 (Reply 1): People don't understand that corporate jets are not toys. These are real business tools just as much as a laptop or a conference room.
Sure, but it's very easy to overstate that. Reading the Buffet and Winfrey bits shows that what we all know - that having a jet at your beck and call is really cool - is a significant part of the equation. I love how Buffet named a jet "The Indefensible".
One of the business functions of the jet that's seldom mentioned? Executive retention. Once you've got access to it (and at-cost usage hours for personal use as part of your compensation) it's hard to give it up.
BMI727 From United States of America, joined Feb 2009, 15058 posts, RR: 26 Reply 6, posted (9 months 2 weeks 6 days 20 hours ago) and read 7400 times:
Quoting dfambro (Reply 4): Sure, but it's very easy to overstate that. Reading the Buffet and Winfrey bits shows that what we all know - that having a jet at your beck and call is really cool - is a significant part of the equation. I love how Buffet named a jet "The Indefensible".
It really isn't though. Calling it a "business jet" is not a euphemism. I read the story of one guy who was a successful general contractor who did a lot of work for the government. He bought himself a Citation that he used to fly to job sites. Another guy owns a Caterpillar dealership with his family and commonly uses his plane to take customers to the factory.
Quoting dfambro (Reply 4): One of the business functions of the jet that's seldom mentioned? Executive retention.
Well, yeah. I still curious as to why spending money to try and retain employees is somehow taboo or viewed as an illegitimate use of resources. Apparently offering incentives to people below the executive level is good, but doing the same for top executives is bad?
Quoting Mir (Reply 5): I'm not up on the specifics, but they do get some breaks on depreciation at least.
Probably not any more than on any other asset.
Why do Aerospace Engineering students have to turn things in on time?
dfambro From United States of America, joined Nov 2009, 292 posts, RR: 0 Reply 8, posted (9 months 2 weeks 6 days 20 hours ago) and read 7346 times:
Quoting BMI727 (Reply 6): Calling it a "business jet" is not a euphemism. I read the story of one guy who was a successful general contractor who did a lot of work for the government. He bought himself a Citation that he used to fly to job sites.
For some businesses I'm sure the cost-benefit equation works out nicely. For others, well...
Quoting BMI727 (Reply 6): I still curious as to why spending money to try and retain employees is somehow taboo or viewed as an illegitimate use of resources. Apparently offering incentives to people below the executive level is good, but doing the same for top executives is bad?
I'm with you on this one and had no intention of implying otherwise.
g500 From United States of America, joined Oct 2011, 833 posts, RR: 0 Reply 11, posted (9 months 2 weeks 6 days 19 hours ago) and read 7097 times:
Every now and then a CEO uses the company's jet for personal reasons and the whole "private jets are personal toys" argument flares up again... A fortune 100 corporation's CEO used his company's G-V for a family vacation to New Zealand, and a local newspaper found out about it, they put it on the front page of the newspaper.
But most of the time, private jets are used for company's business and they are a great tool. A corporate jet enables a company to do a lot more in less time. Efficiency greatly increases
Private jets also enable a company's CEO to show the world his company is financially healthy
dfambro From United States of America, joined Nov 2009, 292 posts, RR: 0 Reply 12, posted (9 months 2 weeks 6 days 19 hours ago) and read 7007 times:
Quoting g500 (Reply 11): Every now and then a CEO uses the company's jet for personal reasons
As I mentioned above, personal use of the corporate jets can and is used as a perk, and is included as part of executive compensation. I am very familiar with one specific case - a private REIT that for top execs had personal time in the contract, and for other employees they bonused out jet time for top performance. At-cost usage was reported to the IRS as part of compensation, so the REIT also gave a tax gross-up payment to make the jet use "free". Granted, I don't know how widespread that is, but within that REIT it was viewed as a huge incentive.
macpat From United States of America, joined Feb 2013, 2 posts, RR: 0 Reply 15, posted (9 months 2 weeks 6 days 12 hours ago) and read 6285 times:
The ongoing discussion about "Corporate Jets" borders on the silly. As best I can tell the cliche' about corporate jets began, or at least accelerated, in 2008 when the financial crisis was cratering everything and the auto execs flew to DC on their jets to testify in front of Congress regarding their bailouts or whatever. Of course, Barack Obama picked up that sledge hammer during the campaign and after. I don't need to reprise all that.
Here is the thing that I have never seen mentioned. From my background which I will not detail here but it has almost nothing to do with aviation, and nothing to do with being a top executive, I can tell you this. Companies don't fly their executives around just to waste money. Sure, it's a bit of a perk, in some ways. But consider this: A company has only one Chief Executive, and only one of several other executives be they Chief Operating Officer, Treasurer, whatever. Companies pay these people lots of money, as well they should.
So, do you want your one and only CEO fooling around with scheduled airlines to go here or there that his job entails? In some cases no scheduled airline service? Of course not. Same thing for other core executives. You want to leverage their time. I know this to be true.
That, and only that is the fundamental reason for corporate aviation and it's good enough for me.
Is it a perk to be an executive and fly on those planes? Of course it is. But the company gets back the use of their one and only CEO or other executive's time. That's all it is for the most part.
Yakking about corporate aircraft is just populist envy mongering as far as I'm concerned.
macsog6 From Singapore, joined Jan 2010, 497 posts, RR: 0 Reply 17, posted (9 months 2 weeks 6 days 11 hours ago) and read 6051 times:
Quoting macpat (Reply 15): Yakking about corporate aircraft is just populist envy mongering as far as I'm concerned.
macpat, I concur with you completely. Also seldom mentioned is that other people than the CEO often use corporate aircraft - and yes, not all of them are jets. I suspect the KIng Air is probably the most common but I've not looked it up.
At most of the companies I worked for, when the plane was going from, say, Dallas to New York, the corporate travel department ensured the aircraft was full of people who needed to go to New York, thus avoiding having to buy a ticket for them out of the company's profits.
Yes, I am certain that there are CEO's who have to have the plane totally to themselves, but there are many who want to ensure the plane is full with legit business travelers when they take off.
Sixty Plus Years of Flying! "I fly because it releases my mind from the tyranny of petty things." - Saint Ex
BMI727 From United States of America, joined Feb 2009, 15058 posts, RR: 26 Reply 18, posted (9 months 2 weeks 6 days 10 hours ago) and read 6002 times:
Quoting macsog6 (Reply 17): Also seldom mentioned is that other people than the CEO often use corporate aircraft - and yes, not all of them are jets. I suspect the KIng Air is probably the most common but I've not looked it up.
You have hit on two misconceptions about corporate aircraft. First, it is more than just the CEO. Other managers, sales reps, etc. also sometimes fly privately. And then there are the various energy companies and others that shuttle many employees around on private aircraft, sometimes essentially operating an in house airline.
The second is that there are small and midsize businessmen who will fly their Cirrus or Piper for business trips. Still better than driving and on short trips there's less advantage to using a jet instead.
Why do Aerospace Engineering students have to turn things in on time?
Pyrex From Portugal, joined Aug 2005, 3626 posts, RR: 28 Reply 19, posted (9 months 2 weeks 6 days 10 hours ago) and read 5950 times:
Quoting Mir (Reply 5): I'm not up on the specifics, but they do get some breaks on depreciation at least.
For the umpteenth time, depreciation is not a tax break. The fact is that a buyer of an asset should be allowed to expense it immediately, since the seller of the asset is taxed immediately, but it is not. If IBM buys a new G650, Gulfstream gets taxed immediately on the profit, for the full amount, while IBM can only expense it over 10 years (or whatever the depreciation schedule of a business jet is), so IBM is in essence lending the government money for free for 10 years. The same can be said of any depreciable asset.
Read this very carefully, I shall write this only once!
jbcarioca From Brazil, joined Jan 2013, 8 posts, RR: 0 Reply 21, posted (9 months 2 weeks 5 days 23 hours ago) and read 4277 times:
As a former owner and operator of a number of corporate aircraft I am often torn in my views. While operating a charter service in the Los Angeles area the majority of business was to places like Las Vegas, Salt Lake City (winter only), Vail etc. There was business charter too but most ostensible business was conveniently co-located with the clients personal interests. My own use was not materially different, but I did make all my business trips with these aircraft.
As for MACRS the depreciation benefit is front-ended enough that first year cost is usually negative, but one needs income to shelter. I know enough accounting to debate the merits of expensing all capital goods vs depreciating over the expected life of the asset, but taht seems a discussion out of place for this forum.
I though Warren Buffet was right when he called it The Indefensible, less so when he changed it to The Indispensable.
Frankly we all know toys are big business. From yachts to aircraft to super cars toys sell, just as jewelry and trophy houses. That is the way the world works. IMHO, giving fewer subsidies to such toys are unlikely to damage sales too much, but will severely change timing of sales.
Personally I see no reason whatsoever to provide tax advantages for such sales. Allowing accelerated depreciation is itself pretty silly for equipment taht does not rapidly depreciate, unless there is a clear benefit. Of course there is; the donations and perks granted by the owners of such equipment.
rampart From United States of America, joined Aug 2005, 3015 posts, RR: 7 Reply 22, posted (9 months 2 weeks 5 days 23 hours ago) and read 4276 times:
Quoting g500 (Thread starter):
"The private jet industry employs 1.2 million people and creates biliions in tax revenue"..
I wonder if Mr. Obama knows that? he likes bashing the private jet indutry
This is an interesting discussion, yet the OP immediately goes into a political opinion, which taints it from the onset. How does one suggest deletion of an thread-starting original post -- directing to Non-Av -- while keeping the thread open?
Like most (all?) of you, I'm not a corporate finance attorney. I certainly support the need for general aviation, at all levels. I do wonder what tax loopholes exist associated with the purchase and operation of business jets, loopholes I wouldn't have owning, say, a car for my business? Or are they the same, just a different order of magnitude? Or is it that I won't be able to finance it with a Cayman Islands bank account?
DashTrash From United States of America, joined Aug 2006, 1367 posts, RR: 2 Reply 23, posted (9 months 2 weeks 5 days 23 hours ago) and read 4093 times:
Quoting readytotaxi (Reply 2):
On a serious note my neighbour is a Stew for a private jet company and there is no downturn in her work load last year or this, she is very busy.
I apparently absorbed that downturn for her, along with a few hundred other pilots. NJA still has 495 on the street. Flex was offering voluntary separations recently, FLOPS still has guys furloughed, CS is pretty much shutting down and Avantair is barely hobbling along.
Quoting jbcarioca (Reply 21): Personally I see no reason whatsoever to provide tax advantages for such sales.
I do. There are thousands of us that depend on these damn things for our livelihood. We usually make good money doing so and although I can't back this statement up, I bet we pay more in taxes than any advantages the buyers have.
Also, accelerated depreciation is not a tax break, as has been stated before.
mastermis From Cayman Islands, joined Apr 2008, 134 posts, RR: 0 Reply 24, posted (9 months 2 weeks 5 days 23 hours ago) and read 3872 times:
Business tool huh?
"The biggest event for private jet travel is the Super Bowl; this year, over six hundred private aircraft flew into New Orleans Lakefront Airport for Super Bowl XLVII (typical weekend traffic at the airport is just 125 landings). Other top events include the Masters Golf Tournament and Art Basel Miami Beach."
25 Dufo: This one? It's registered as a Caterpillar jet..
26 STT757: I agree totally, when an industry starts feeding at the trough of public assistance it opens itself up to criticism. Don't like it, stop asking for i
27 26point2: I have worked in biz av my entire career...25+ years. Whenever one of these stories appears it's always the usual misinformed fluff piece dolled up to
28 cmf: Political rhetoric, it may be your motivation. It certainly isn't mine. I want efficiency. As to data to back it up, experience. When you work we lar
29 g500: Business trips, pleasure trips, company's business tool, etc etc etc. everybody is got an opinion and everybody is an expert on private aviation The f
30 njxc500: Do you think there were a few contracts signed at that event? I bet many of those aircraft had potential clients aboard. Do you know what the governm
31 jetblueguy22: I'm not doubting what you are saying, but you also didn't list who owns those jets. I don't doubt some executives are using the jets for personal use
32 Dreadnought: Not surprising from the President Hypocrite. One of the two tax breaks he keeps harping about is one HE put in place as part of his first stimulus bi
33 Quokkas: Agreed, the reporting is very sloppy. They do post a link to NTSB statistics but if you follow it it shows figures for General Aviation, which does n
34 BMI727: That's one of Cat's corporate fleet. The guy in this story just owned a dealer. Corporate America is much too greedy for that. And giving perks to em
35 cmf: In other words, you have no facts, just political conviction. And even then you state they are toys. In direct contrast with your earlier statement.
36 BMI727: What info do you have regarding the proportion of business vs. personal flights? Or that flights to vacation destinations are aircraft being used by
37 canoecarrier: I agree. Most people on this site seem fixated on commercial aviation. Having worked for almost 8 years at a FBO at a relatively large regional airpo
38 FlyPNS1: So, it's the president's job to pick and choose which industries we should encourage? Shouldn't the free market do that instead? And that's fine. But
39 BMI727: ...that's because some states have governors who like being governor, but not enough to go live in the capital.
40 canoecarrier: Do you support employment in rural areas? If I was an executive in a large company like Wal-Mart or even a grocery store like HyVee having the abilit
41 FlyPNS1: I'm neither for nor against it. Let the free market decide if it makes sense to do business in rural areas. Sorry, but it's a pretty weak correlation
42 canoecarrier: The small fleet of government owned turboprop aircraft I worked with didn't always cater to the governor, who did live in the capital city. Even the
43 BMI727: The plane doesn't assemble and maintain itself. And someone has to put gas in it and possibly fly it too. What special treatment exactly do they get?
44 cmf: It was you who stated they are used as business tools and not toys and then went on political motivation when your statement was challenged. Now you
45 BMI727: And you said the same. They are business tools, and even if they aren't, it's none of our business.
46 cmf: No, I said they are used as both, big difference. Sorry that doesn't fit your political conviction. As to the topic, I see no reason why they should
47 sccutler: Perhaps that is because private jets are not treated any differently than any other capital asset. The jet (or turboprop, or helicopter, or tracked e
48 BMI727: And before anyone says "Airlines don't do that" it's necessary to point out that people don't account for their personal vehicles the same way FedEx
49 cmf: They aren't? They don't? How about different maximum? But of course it is class warfare (petty no less) to acknowledge the differences.
50 blueflyer: The accelerated depreciation schedule that the industry is fighting to keep from expiring is intended for business equipment, so "if they aren't" is
51 njxc500: Well then who needs to travel at all, why not just conduct all business through webcams. May sound good on paper but that's not how the real world wo
52 sccutler: By all means, if you cancel accelerated depreciation for business aircraft, do so for every other capital equipment. No difference. Just a tool. Noth
53 cmf: IIRC the requirement is that they are used for business purposes at least 25% to qualify... Who is saying there is no need to travel? But why pay sev
54 sccutler: Absolutely! As CIO of the enterprise, that's a proper management function. You decide. Not the government. Again, management prerogative. The wastefu
55 cmf: Government never tried to make the decision. The wasteful do not fail. It isn't bad enough to create negative returns. It is lost opportunity that do
56 blueflyer: I thought the MACRS' 50% requirement applies. Wow! I don't know where to begin... How do we go from the Superbowl not being necessary to get a good d
57 cmf: Even 50% show it isn't just for business, as was claimed. But I think 50% or 25% depends on who is the owner. It has been a few years since we had th
58 FlyDeltaJets: I say that if corprate jets didn't exist at the level that it currently does there would be a job loss. There would also be a job gain in the airline
59 sccutler: If government treats any category of business asset differently than other business assets. that is certainly a form of "micro-managing." What is the
60 cmf: Your description is so wide it can encompass micro management but it isn't micro management just because you split things in categories. How many tim
61 TheCommodore: Some more pics of private jets This time with much better taste ! http://www.smh.com.au/photogallery/t...0130226-2f3nq.html?selectedImage=0