Private Aviation Causing Black Eyes
By Sean Ballent
There’s a lot of positive talk these days about private aviation. What is there not to like? Compared to commercial, when you dissect the positives of private aviation it comes at a value. But to every upside comes a downside. And in the souring economy the downside seems to be looming larger then ever.
Private jets are quickly becoming symbols of high-flying excess. Congress in particular is frowning upon companies that ask for taxpayer bailouts while still enjoying the luxuries of their private planes. Last year, Detroit automakers announced they would sell their fleets after the scrutiny of Congressional hearings. Recently Citigroup announced it would refuse the delivery of a $42 million Dassault Falcon 7X jet it had planned to buy (after receiving urging from President Obama).
What does this mean? With the hodge-podge of companies deciding to sell their planes to cut costs and to avoid public relations headaches, the used-jet market is growing at massive rates causing the prices of private jets to drop through the floor, opposite of a year ago.
It’s not necessarily that these companies can’t afford their private jets. The overall operating costs are fairly small. Companies are dumping their jets to save their image. Manufactures are hurting. This month Cessna said it would lay off an additional 2,000 workers and would shrink production in 2009. Manufactures are pointing fingers at Washington, saying that they are disparaging and discouraging the use of general aviation for business purposes. Potential buyers are also drying up due to the difficulty in obtaining credit. Banks just aren’t financing.
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