[corp-focus] High Flyers and Soaring Inequalit

[robert weissman]

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High Flyers and Soaring Inequality
By Robert Weissman
June 24, 2008

Private and corporate jet sales are taking off, reflecting an increase 
in the extreme concentration of wealth in the United States and around 
the world.

Worldwide sales of private jets have more than doubled since 2003, to 
$19.4 billion in 2007. The number of jets sold increased 28 percent 
between 2006 and 2007 alone, and sales are up sharply in the first 
quarter of 2008. Corporate jet ownership has increased by about 70 
percent since the early 1990s. Demand for private jets is so high that a 
used jet bought in 2006 can now be sold at a handsome profit.

But where luxury items like a fancy bottle of wine or a Picasso painting 
are simply a private extravagance, private jet use imposes real costs on 
everyone who isn't a high flyer -- and on the planet. The costs are 
documented in "High Flyers: How Private Jet Travel is Straining the 
System, Warming the Planet and Costing You Money," a new report issued 
today by the Institute of Policy Studies and Essential Action (an 
organization I direct). (See: <http://www.ips-dc.org/reports/#461>)

Soaring private jet use reflects and is emblematic of skyrocketing 
wealth inequality, in the United States and globally. Private jet sales 
grew in parallel with commercial air travel until 1997. Then as wealth 
inequality began to ascend to stratospheric levels, so did private jet use.

The rise of a global billionaire class has globalized the private jet 
market. The main manufacturers report that half or more of sales are 
coming from outside of North America.

Private and corporate jets give the super-rich not just ease and 
comfort, convenience and luxury -- including an escape from the bothers 
of security lines and flight delays -- but a way to distinguish 
themselves from everyone else. Private jet marketing explicitly 
emphasizes the elite status and conspicuousness of this consumption.

And, because the ultra-rich are always eager to distinguish themselves 
from the very rich, private jets are becoming more luxurious and 
expensive. Boeing's largest business jet costs $67 million. Other 
companies sell airplanes that are nearly as costly: Airbus's priciest 
plane goes for $55 million, while Gulfstream Aerospace's G550 sells for 
$46 million. A relative handful of the high flyers set aside Learjets 
and the like as child toys, and insist on owning their own personal 
jumbo jet -- Boeing 757s and the like.

Fueling the take-off in jet use is not just concentrating wealth, but 
numerous subsidies. Amazingly, U.S. taxpayers subsidize private jet use 
and ownership. Corporate CEOs flying on jets for vacation on personal 
use pay personal income tax based on the value of the gifted flight -- 
but the value is calculated based on much lower commercial airfares. 
Most startlingly, the 2008 Economic Stimulus Act enables private jet 
buyers to take a "bonus depreciation" -- allowing them to take larger 
tax deductions in the first year after purchase than they otherwise would.

Private jet use is subsidized as well by commercial air traffic. 
According to the Federal Aviation Administration, general aviation -- 
the segment of the industry that includes corporate jets, charters, air 
taxis, and recreational pilots -- uses 16 percent of the FAA's services, 
but pays just 3 percent of the cost. Very substantial amounts of federal 
funds spent on airport improvement between 2005 and 2007 -- $2.2 billion 
of $7 billion total -- went to small airports that primarily serve 
private jets. These are places like California’s Napa Valley Airport.

Private jet use is further subsidized through corporate profligacy, at 
the expense of workers, consumers and shareholders. Personal use of the 
company jet is the most common perk for CEOs of large U.S. companies. 
The Corporate Library has found that more than half of 215 companies 
surveyed allowed or required -- yes, required; it's supposedly a 
security precaution -- executives to use company aircraft on personal 
trips, with a median annual cost of $182,929.56.

Perhaps the worst element of private jet use is the environmental 
damage. Burning airplane fuel spews huge amounts of carbon into the 
atmosphere, making air travel a significant contributor to global 
warming. Private jet travel is far less efficient than commercial air 
flights, because so few people are transported on each private jet flight.

Four passengers flying in a private Cessna Citation X from Los Angeles 
to New York, for example, would each be responsible for more than five 
times as much CO2 emitted by a commercial air passenger making the same 
trip.

And that's a very generous calculation, given estimates that 40 percent 
of private jet flights are empty -- as pilots return home rather than 
sit idle waiting for a return trip.

At least some in the industry aren't very sensitive to these 
considerations. Robert Baugniet, senior manager of corporate 
communications for Gulfstream Aerospace told my colleague Jennifer 
Wedekind that concerns about the private jet contribution to global 
warming "fallacious."

"So if you go in a bus and pump out a whole bunch of CO2 into the 
environment, but because you've got 40 passengers on board it's OK?" he 
queries. (Answer: Not OK, but a whole lot better.) In the aggregate, 
says Baugniet, air travel is a relatively small contributor to global 
warming, and private jet travel is a small part of that. So, what's the 
big deal?

To the extent that private jets are symbols of an economic system gone 
awry, remedying the problem will require big picture policy changes -- 
steep wealth and income taxes and other measures to redress inequality, 
and comprehensive policies to address global warming.

But soaring private jet use also demands its own response. Tax breaks 
for buying and flying private jets should be ended. Private jets should 
pay, at least, their fair share of FAA costs. And a hefty luxury tax 
should be imposed on private jet sales and flying.

We shouldn't be supporting the High Flyers in their luxury indulgence. 
If such heavy-polluting opulence is to be permitted at all, the 
super-rich should pay a stiff price for the privilege.


Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor, <http://www.multinationalmonitor.org> and director of Essential 
Action <http://www.essentialaction.org>.

(c) Robert Weissman

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