UK: CORPORATE JETS GROUNDED. - Are company aircraft too much of a luxury for UK business?

Last Updated: 31 Aug 2010

Are company aircraft too much of a luxury for UK business?

In the United States, the company jet sits comfortably alongside the modern art collection and other status symbols. In Britain, such displays of corporate wealth tend to be frowned upon. Maybe the excesses of Robert Maxwell have left shareholders fearful that ostentation is closely related to financial irresponsibility. But is this a reasonable attitude?

Since Granada's takeover of Forte the question of whether corporate aviation is an operational necessity or an unpardonable misuse of shareholders' funds has once more taken to the air. During his bid earlier in the year Granada's chairman, Gerry Robinson, promised to get rid of the Forte jet if the bid succeeded. However, to the evident irritation of some shareholders, he has kept it on, since it is apparently useful for keeping in touch with outposts of the Exclusive and Meridien hotel chains.

But Robinson is one of The Few. Britain's population of executive aircraft, always small, may even be shrinking. British Petroleum used to keep a company jet until four years ago, but no longer. Glaxo had four planes, but three were sold when Sir Richard Sykes became chairman in 1993. Press officer Corinne Gordon plays down the importance of the surviving aircraft: 'It was used between our main base in North Carolina and Britain, but now there are scheduled flights so it is used primarily within the US.'

Unlike BP, Shell International still has a corporate jet available to its VIPs, although chairman Chris Fey tends to favour commercial airlines.

According to press officer Fran Morrison, 'He uses the jet only if taking a large delegation on tour'. A high proportion of the company jets which fly from British airfields belong to US based multinationals with widely dispersed operations across Europe and the Middle East, groups like Rank Xerox and Electronic Data Systems.

If British businessmen seldom get airborne in their own company planes, the reasons are not far to seek. A middle-sized jet like the Hunter will have a price tag of some $10-13 million, rising to around $35 million for a state-of-the-art Gulfstream V, with $1,500 per hour running costs on top of that. Not surprisingly, sales are slow. Although Mike Brown, sales manager of Raytheon, the biggest manufacturer of business aircraft, claims that the market has started 'to move nicely again', international sales amounted to only 70 jets last year - and none of them went to British companies. At Air Hanson, according to sales manager James Godfray, 'We typically sell maybe two or three turboprops and one or two medium jets a year'.

But if aircraft sales are depressed, it's equally true that the charter market is growing. 'It's increasing all the time,' reports Godfray. This is the solution now adopted by BP which, aside from scheduled services, charters an aeroplane when needed. 'In the oil industry we do need to get to some far-flung places, like the Sahara or parts of the former Soviet Union,' spokesman David Nicholson points out.

In the end, whether a company chooses to own an aircraft, or to lease one (as Zeneca does in the US), or to charter - or go without - should depend on the use that's going to made of the facility. In the US, distances between centres make private aviation an obvious choice, especially if the aircraft is available for urgent journeys, whether by the board or not. (Zeneca's US plane 'could be used because we have to get an engineer to a plant in times of pressing need,' says spokesman Steve Brown.) Perhaps one day corporate flying will become a barometer of economic buoyancy across Europe too.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

When spying on your staff backfires

As Barclays' recently-scrapped tracking software shows, snooping on your colleagues is never a good idea....

A CEO’s guide to smart decision-making

You spend enough time doing it, but have you ever thought about how you do...

What Tinder can teach you about recruitment

How to make sure top talent swipes right on your business.

An Orwellian nightmare for mice: Pest control in the digital age

Case study: Rentokil’s smart mouse traps use real-time surveillance, transforming the company’s service offer.

Public failure can be the best thing that happens to you

But too often businesses stigmatise it.

Andrew Strauss: Leadership lessons from an international cricket captain

"It's more important to make the decision right than make the right decision."