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Do Corporate Jets actually put Money into the Local Economy?

Corporate jets became a popular symbol of wasteful spending after the Big Three automobile executives flew in to visit Capitol Hill seeking federal government bailout cash late last year.
So intense was the outrage that the auto leaders responded by driving from Detroit for a return trip to Washington, D.C.
Toronto-based Nortel Networks Corp. was one of many businesses that grounded its corporate jet, citing financial woes, not long after.
The message was loud and clear: Corporate jet travel was suddenly so uncool.
Industry experts are now trying to repair that image by stressing the economic benefits of corporate jet use to companies and communities alike.
Two trade organizations have started a campaign to underscore the financial damage that would occur if those aircraft are grounded. Everything from generating less money through jet fuel taxes to jobs at airports and in surrounding communities is at stake, supporters say.
Locally, the main suburban facilities for business aviation – Chicago Executive Airport, Waukegan Regional Airport and DuPage Airport in West Chicago – have a vested interest in the effort.
“I guess we were the target of the day,” said Dennis Rouleau, manager of Chicago Executive Airport in Wheeling. “But when you think about it, we need business aviation.”
However, critics such as Sarah Anderson, a fellow at the Institute for Policy Studies, a liberal think tank in Washington, D.C., said nothing has changed. Excessive pollution and unnecessary rewards for executives are some of the complaints in a 2008 report she co-authored called “High Flyers: How Private Jet Travel is Straining the System, Warming the Planet and Costing You Money.”
“It’s become a symbol of extreme excess,” Anderson said.
Trying to blunt the critics in the recently launched “No Plane No Gain” campaign, the National Business Aviation Association and General Aviation Manufacturers Association stress the benefits of private planes.
The initiative includes positive business aviation messages on a Facebook page and YouTube videos. They also have developed a television and print advertising campaign to boost the industry’s image.
An image boost is critical, local business aviation airport officials say, because of what’s at stake.
Waukegan Regional Airport Manager Jim Stanczak said about 270 jobs at his facility are at risk if the number of business flights continues to slide.
Stanczak said business travel is not tracked separately, but falling jet fuel sales are a strong indicator. At Waukegan Regional, sales declined from about $4.5 million in 2007 to $4 million in 2008, with 2009 purchases so far down roughly 24 percent from last year.
Jet fuel sales have been falling at DuPage Airport and Chicago Executive as well, records show.
But officials insist more than suburban airport jobs are in play. Hotels, restaurants and rental-car agencies are among the businesses with financial links to those airports.
Also, Rouleau said, airports such as Chicago Executive can be a draw when a business decides where to locate. As an example, the airport’s convenience for a nearby company allows it to fly parts to out-of-state manufacturing clients when emergencies arise, he said.
In the most recent report from 2006, DuPage Airport was responsible for $375 million in annual economic activity in the county, said Executive Director David Bird. That amount will slip if corporate flights dwindle, he warned.
“The majority of the impact was being driven by the growth in the corporate aviation component of our business,” Bird said. “So I think it’s safe to assume that the significant reduction in fuel sales we’ve experienced has eroded the economic impact of the airport on the surrounding communities.”
Chicago Executive Airport pumps nearly $331 million into the Northwest suburbs, according to the most recent report issued in 2007.
Studies for the DuPage and Chicago Executive airports used similar criteria in measuring effects on the local economy, such as annual purchases of goods and services associated with aviation and visitor spending.
The Institute for Policy Studies’ Anderson said she doesn’t doubt the economic benefits to suburban airports catering to business aviation, but jobs and spending can be created in different ways.
She also cites in her report the Department of Homeland Security’s concerns about possibly lax security controls for private planes flying into smaller airports.
“In this case,” she said, “you have to weigh the (financial) benefits against what the costs are.”
And, Paul Hodgson, senior research associate at The Corporate Library, said public records filed with the U.S. Security Exchange Commission show frivolous corporate jet use occurs. The Maine-based organization provides independent corporate governance research and analysis for clients.
Hodgson questions companies that view personal use of corporate aircraft by executives as a business expense because it’s required for security reasons. In a 2007 report, he listed 12 chief executive officers who led the way in personal use of corporate jets, with the one-year cost ranging from $540,000 to $1 million.
Waukegan Regional’s Stanczak said it’s easy, but unfair, to criticize private planes as being excessive or wasteful.
“Most corporations are very cautious in the utilization of their aircraft,” he said. “They don’t just go flying them to fly them.”
Ed Bolen, president and chief executive officer of the National Business Aviation Association, said the image of a top executive gallivanting on corporate jets is a common stereotype.
“A CEO is on an airplane on 15 – one-five – percent of its missions,” Bolen said.
Roughly 85 percent of private airplane travel for business is by small and mid-size companies, he said. Companies that own planes use them only when they make financial sense, he said.
Airport officials insist a private plane is cost-effective for employees who need to hit two or three cities within a few hundred miles of each other to strike deals in a day.
“You could have a very, very talented sales guy,” Rouleau said. “And if that sales guy can only make one sales call a day, and with a business jet he can make three sales calls a day, you just improved the productivity and you’ve helped out the whole company and the country.”
Critics who say companies can save money by always flying commercial and get the same job done are missing the point, he said. There are times when employees need to discuss sensitive information or go over last-minute sales strategy for a multimillion-dollar deal – tasks that require a private plane, he said.
And, someone can be well on their way to a destination to close a time-sensitive deal from Chicago Executive in the hour-plus typically required just to park and reach a gate at O’Hare International Airport.
Despite the advantages, Bolen said, some companies are still scaling back.
“That does not help American competitiveness,” he said. “It does not help job growth.”
Private jets’ economic impact
Business flights make up much of the activity at Chicago Executive Airport in Wheeling. Here are local businesses with revenue generated over one year from Signature Flight Support clients and operations, which provide fueling, hangar and office rentals, maintenance and other business aviation services.
745 – The number of hotel reservations booked by Signature Flight clients
$83,880 in revenue for Hilton Northbrook, Wingate Inn and other nearby hotels from Signature Flight clients
3,385 car rentals from Signature Flight clients
$580,446 in revenue for on-site Hertz Rent-a-Car at Atlantic Aviation
1,388 taxi cab rides originating from Chicago Executive
$48,544 in revenue for 303 Taxi cab service originating from Chicago Executive
$17,796 spent in Wheeling-area restaurants for Signature Flight-related business meetings [Source: Chicago Executive Airport, 2007 report]
Article by: Bob Susnjara – Daily Herald

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