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Corporate jets arn't the an economic downfall
August 11, 2011
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  • August 5, 2011

    By Ed Loughrey


    Phew! Aren’t you glad that we now have a debt bill passed on time and we don’t have to go through that mess for at least six months? Let’s all let out a collective sigh.

    But during the talks, the item that stuck in my mind was the fact that business jet owners were the culprits and as soon as we could stop them from getting tax incentives, all of our problems were over. But what was it really all about? What is a business jet and how did it get mixed up in the fray? After the 9/11 tragedy, there was an economic downturn in the private business jet industry and it was beginning to make its way back up when they were encouraged to increase their production. Just a few months after lawmakers scolded auto executives for flying to Washington in private jets, Congress approved a tax break in the stimulus package to help businesses buy their own planes.

    The main talking point was the fact that plane owners will be able to accelerate depreciation of this asset over a shorter life span than before. For example five years instead of seven years which results in lower taxes in the earlier years. The total amount of depreciation taken over this span will still equate to the same regardless which method is used.

    Depreciation is considered an ordinary and necessary business expense and is allowed to all types of business enterprises.

    Accelerated depreciation is not just for plane owners, it is for all businesses whether it is a local mom and pop activity or a large corporation.

    In defense of the private jet business, there are over 5,000 airports in the country with only 500 ports available for scheduled passenger service. If anyone has ever flown for business, you know what a hassle this could be to get in and out of the latter ports and try to maintain a business schedule. Standing in lines, security problems, lack of privacy, not being able to schedule a plane when needed, being at the mercy of many unforeseen delays and problems drives the case for plane ownership. Having the use of the company plane with the ability for the CEO to travel at his own schedule is more conducive for effective business. The modern jets are equipped with all of the latest technology so the executive is able to carry on business as he would back on the ground office. If need be, he is able to rest and arrive at his destination fully ready to conduct a proper meeting or conference. The state of the art jets are so well equipped with all of the amenities of larger planes including a galley and still have the ability to carry up to 20 passengers. They have the capacity to fly to many overseas ports of call with out stopping.

    One of the ironic parts of this argument is the fact all of Congress use the air when they are in their own campaign mode and traveling around to meet with their constituency. In many cases, their organization either owns its own plane or enters into a rental agreement with some of the leasing companies.

    Not with standing that this segment of the airline business exceeds over $20 Billion in annual sales and employs thousands, it should not be considered as a frivolous or less important segment of our economy.

    Observation: The real reason you can’t take it with you is that it goes before you do.

    Edward J. Loughrey, CFE, EA, LPA can be reached at or 705 -7258.

    Date: 2011-08-05