It sounds like the people at Gulfstream are in for a better 2010 than they had in 2009. Jay Johnson the CEO and chairman of General Dynamics which is the parent company of Gulfstream stated, “We’re seeing a gradual improvement in the business jet market.” This was stated during the company’s second-quarter financial conference held yesterday. Johnson went on to state, “Gulfstream flying activity is up and we’re seeing a 16-percent increase in aircraft service sales…The industry has turned the corner.”
Gulfstream often seen as the leader in the business aviation space and one of the stronger markets in the industry is a good indicator of where the business of jet aviation is headed. Most of the numbers for Gulfstream are up in most of its orders in all categories. It was stated that Johnson expects sales to rise by “low to mid single digits” this year, with “steady growth” in revenues next year as G250 and G650 deliveries start in the second half.
Gulfstream numbers are not reflective on the entire industry but it is good to hear that corporate jets and jet aviation is beginning to “turn the corner”. We at Corporate Jet Insider believe it to be about time.
Many people ask what the options are to more traditional travel of commercial airlines. We know that on a commercial airline flight there are different classes of travel, be it coach, or business class or first class, but what are the options if you want to fly via a private jet? There are 4 options outside of commercial air travel that should be discussed. The options are listed as:
Each of these four types of corporate travel come with their own unique opportunities but none of them can be argued as the best option than outright ownership. I listed private ownership as the top spot here because that is what makes most sense if your travel extends beyond those of normal passengers in the business sector. I like the chart and discussion that was put together in the Wheels Up article written by Jeremy R.C. Cox. This is a great analysis of four types of of corporate travel listed above. He has listed out the annual costs associated with each option by using a Cessna Citation X and the Pilatus PC12. The Cessna Citation X is becoming one of my favorites in that category and it was interesting to note his analysis using that model.
The conclusions drawn by Cox in the article state:
“The Magic Formula: After analyzing the numbers listed above, you will see that there is a magic formula that comes in-to-play when you are deciding whether you should rent, or lease, or own. In this case we learn that you will have the lowest operating cost, per flight-hour ‘overall’, if you own your aircraft when your annual utilization is above 240 hours of flight-time.”
Having this type of analysis is crucial to the process of determining your own type of corporate or personal private jet usage. The analysis includes other costs that are not necessarily included in this formula such as your region, the type of travel you are doing and the Direct Operating Costs (DOC). This can be discussed at the time you decide on your own corporate jet purchase.
I was reading an article sent by a friend that indicates that studies have shown that corporate jet use is up and the month of June showed the increase as well. That means more and more companies are using their corporate jets for more travel and I am sure that personal use is up as companies and their executives use the aircraft for personal use associated with vacations. This increased use of the aircraft also means a possibility that you will have a higher maintenance budget. If you have budgeted for an amount certain for 2010, and that amount increases at all that may mean that your business aircraft or private personal jet may now be up for an inspection and those costs will be added to the yearly maintenance budget.
If your usage of your corporate jet increases over the year and it changes either your maintenance schedule or inspection, this can have a large effect on the annual budget you have for the use of that aircraft. You need to stay on top of that usage and the budget associated with the use so that it will not change your bottom line at the end of your fiscal year. Keep someone on top of the business use and the personal use and keep up to date with the maintenance of your aircraft. With the use of corporate jets increasing for both the business use and personal use it may be marking another indicator that the slide is over in this industry. It is good to hear that corporate jets may be on the rise.
There is always a number of people buzzing in the technology community when Apple comes out with a new product or there is a new press conference about its latest news. The Apple community is very loyal and they have a very sought after following in the mobile market. I am an Apple user in their laptops and computers, but I have not yet adopted the iPhone. It has to do with the service I use, but I still look forward to seeing what is the latest in the world of Apple. On Friday, Steve Jobs the leader of Apple held a press conference on the latest iPhone4 and I was one of the ones that paid attention to what was being said. The conference ended and they opened it up for questions and right out of the box, the first question asked Jobs how he was feeling and about his health. He responded by saying he felt better last week while he was on vacation in Hawaii and not working. This made me think about the way he travels.
Steve Jobs has been known for his salary of $1 per year, but he also has a number of things that are required under his compensation agreement. Part of that is his corporate travel. Steve Jobs chooses to travel on a corporate jet owned by the Apple company and I assume his latest trip to Hawaii was no different. What business jet does Steve Jobs use? He travels around in a well publicized Gulfstream V. The Gulfstream which is pictured here is top of its class and a great way for the Apple executive to get around on his many travels.
Jobs no doubt has many reasons to travel on the Gulfstream and security is probably a main component of that idea. With the secrecy of what goes on in Apple and the number of corporations looking to beg, borrow or steal from the innovations and for journalists looking to get the scoop on what is going on at Apple, I can bet that security is a big decision why Gulfstream is sailing through the skies with this top executive. You too can own a Gulfstream V for your corporation.
[Photo via John R. Beckman at Airliners.net]
I have been giving some thought to a few of the posts that talk about security and ease of travel that is brought out by many companies as to why they have decided to purchase a corporate jet or have decided to go with a private aircraft for their executive travel. It has to do with the flexibility issue of travel. I have been sitting in a line at an airport wondering if I had any chance to make my flight due to some mishap or weather problem or perhaps just a broken light that needs replaced in the galley. I also sit and wonder if I will make that connecting flight or if I will be sleeping in my own bed at the end of the day.
The stress of travel can take its toll over time and it does take a lot of that — Time. I have no control over the time I leave or the delays that occur and have no flexibility in how I travel. If a company has a private business aircraft that changes drastically. Yes, it still has to deal with weather issues, but ti does not have to deal with weather in other cities that cause delays in the system. It doesn’t fall prey to the problems of schedules and can be ready for travel anywhere in a short period of time. Executives like to have that flexibility and that is not as much of a perk as it is a business necessity in some cases.
The NBAA will be holding its annual convention and meeting in Atlanta, GA on October 19-21, 2010. The Georgia World Congress Center will be host to the vent for exhibitors, speakers and attendees, and there will be a static display of aircraft at the DeKalb Peachtree Airport. This is the 63rd Annual meeting for the conference and they hope to have 25,000 attendees in the business aviation industry attend the event, all looking for the newest and best in the world of business aviation. You can register for the event at the NBAA site. The description is stated:
NBAA2010 is the premier annual meeting place for the business aviation community. This event brings together business leaders, government officials, manufacturers, corporate aviation department personnel and all manner of people involved in nearly all aspects of business aviation.
This event should give us a good look at whether the industry as everyone is stating is making a comeback from an economic downturn. I expect that since we are seeing record numbers at other events for this event to be well attended and many professionals all looking to see the future of the business aviation industry. Let us know if you plan to attend the event and whether you too have the same outlook that 2010 marks the year of the comeback in corporate and business aviation.
When purchasing a corporate jet or company jet it is necessary to determine if you are purchasing the aircraft as a sole owner or if you are intending to be a co-owner of the aircraft. Each has its own set of issues related to the ownership.
A sole owner of a corporate aircraft or business jet means the company or person owns 100 percent of the aircraft and does not share in the ownership. This is by far the best way to own a corporate jet as it affords the owner the great benefits and flexibility. This allows the owner to use the aircraft at any tie and for any reason and it need not be shared with other owners and their needs and uses of the aircraft. This also allows the owner to have full control over the management of the aircraft including maintenance, safety and security and the amenities that the aircraft will have. It has been stated that if you intend to use the aircraft for 250 hours or more of travel it is beneficial for your company to won its own jet. This is merely a guideline of course and not meant to be a rule. Many companies use business jets for less or more.
if you are in a co-ownership situation this means that the owners all own a portion of the aircraft but are still responsible for the costs associated with its use. many companies handle their own costs and use, but it is also a common practice to have a management co0mpany provide all of the needs of the aircraft. If in a co-ownership role, it is not quite as flexible in the travel schedule and the personal use of the aircraft. It is important that this not be confused with joint ownership or partnership roles of ownership. There may be benefits or other business, legal or tax reasons for the different types of ownership and these should be flushed out before making your next purchase.
I have been doing some research on the idea behind CEOs and other executives that are receiving compensation from their companies that includes the use of a private company jet or the corporate jet. There has been a shift in public perceptions of C-level executive compensation since the down turn of the economy. As companies downsize their work force and they tighten their belts, many C-levels employees are scrutinized on their pay and any perks received. Part of the perceived perks in a company is the use of the company or corporate jet.
Many companies state that their C-Level employees’ use of corporate jets are to “ensure security” to “enable privacy” or other reasons stated. This seems to fall on infertile ground as it relates to the debate. Many see corporate jet use as a mere added benefit to the already soaring executive level pay. Reading through a recent article by Alison Grant of The Plain Dealer, she cited a recent study performed by The Corporate Library wherein they identified nearly 400 corporations that listed aircraft expenses. Of the companies that she looked at in the Northeast Ohio area many of them reduced their aircraft or eliminated them completely.
Many companies continue to use corporate jets for their executives and many of them cite the use of the jet as a security precaution. The fact that they are using the personal use of the company aircraft as compensation will continue to come under scrutiny as we wade through these tough economic times. I am curious about how the taxation of personal use is changing and how it is impacting the private use of the corporate jet. More to come as I continue to research this issue.
I have been traveling around Colorado and parts of Wyoming this week, not as a business related trip but because I am taking my family around sightseeing. It hasn’t been in a private aircraft or a business jet but more along the lines of a family minivan. I wouldn’t mind showing the family all of Colorado and Wyoming in a corporate jet so if you want to loan me yours for a the rest of the summer feel free.
I was looking at the airport in and around Vail Colorado and wondered about how they service the world of corporate jets and business jets. I grew up in the mountain town of Vail Colorado in the late 60’s and early 70’s when my father helped work on the Interstate that runs through the Vail valley area. My grandparents actually owned 65 acres in West Vail at that time and I can remember when they sold the property in the early 70’s. I don’t have the heart to tell them now what they particular tract of land sells for in present dollars.
Vail, Colorado, has a great airport at Eagle County Regional Airport (EGE) and it can handle most needs and the folks at Vail Valley Jet Center can help you with travel.
We passed through near Aspen, Colorado and that is the world of the celebrities that visit there and you can see a Hollywood celebrity there almost anytime of the year but mostly while ski season is at its peak. I worked in Aspen during college and I can tell you that it has its share of luxury jets landing at that airport.
I also made our way through Steamboat Springs, Colorado on the return trip and wondered about its airport and how it caters to the world of private and corporate jets. They have Bob Adams Field (KSBS) in Steamboat Springs.
All of these mountain towns have a simple thing in common, they are ski towns. They also have their share of visitors that have their own luxuries like private or corporate jets. They also have airports that can service these types of aircraft and it makes it easy for high dollar clients to vacation there. I love Colorado and their mountain towns. Perhaps you could spend some time there, and if you do take your jet and be in and out easily.
