Tuesday, August 23, 2011
The Value Of Corporate Time
It has to do with misinformation, not politics
First, the huge majority of business airplanes aren’t jets, and most of the folks who fly in them aren’t rich. I’ve been fortunate to fly on corporate turboprops and business jets perhaps two dozen times over the last 40 years, and not one of those trips has been for fun. Every trip has been to transport company personnel to or from business appointments at trade shows or conventions on the opposite side of the country or overseas, and the airplanes just happened to have an extra seat for me.
Those companies that do operate turbine equipment must perform careful analysis to justify the expense, and even then, passengers are more often midlevel management than high-priced CEOs.
Just as with boats and company limousines, there are unquestionably some abuses of jets, but the vast majority of operations are simply too expensive not to be legitimate.
Putting aside for the moment the fact that such uninformed stereotyping on the part of government officials is unbelievably hypocritical, it seemed logical to analyze exactly what it costs to transport the CEO of a major company.
Take, for instance, Alan Mulally of Ford Motor Company who drew a salary of $21.7 million in 2008. Compensation for the other two auto executives at the hearings above was estimated in the same general range.
Mulally doesn’t punch a clock, but if he works 60 hours a week, 50 weeks a year, not unreasonable for an executive at that level, his direct hourly pay comes out to $7,000.
That means if a comparably compensated executive who’s determined to “save money” by flying airlines arrives at the airport the required two hours before flight time, travels for three hours on the airline, then spends another 1.5 hours disembarking, retrieving luggage and getting out of the airport, his company will have spent a total of probably at least seven hours’ compensation, worth about $49,000. Make that a total cost of $98,000 for a round-trip.
Oh yes, the first-class airline fare will add $1,128 to the price. Figure a nice round $100,000 total cost for Mulally to fly round-trip to Washington by airline.
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