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Private jets represent an inconceivable level
If the average American were to spend their
entire year’s salary to charter a Gulfstream
G550 from New York, they would just barely
make it to Utah, and yet, there’s a class
of people who use these planes to fly not
just from New York to Utah, but rather routes
like New York to Beijing.
There’s a class of people who will spend
tens or hundreds of thousands of dollars on
just one single flight.
Now, there are a few reasons this is strange
beyond just the sheer price of things.
Chartering that Gulfstream from London to
Dubai, for example, you’d end up paying
about $55,000 at rack rate.
Meanwhile, if you were to fly Emirates First
Class, which is just, if not more opulent,
you could fly between the cities twenty times
for the same price.
What’s even stranger about this kind of
expense is that businesses, which are intended
to maximize profits for their shareholders,
are able to justify this enormous expense
So, when is it that paying $8,000 or more
an hour to fly makes money?
There’s a pretty simple way of figuring
Out of the 8,760 hours in a year, the average
CEO works 2,716 of them.
For a CEO that’s paid $1 million a year,
that makes an hour of their time worth $368.
Among America’s largest companies, though,
the average CEO earns $15.6 million.
That makes their hour worth $5,750.
For the most part, though, private jets fly
about the same speed as commercial planes
so when flying a route like London to Dubai,
the time savings come at the airports on each
It comes from being able to arrive, get on
a plane, and fly—rather than having to navigate
one’s way through a busy terminal for a
fixed flight time.
But still, flying private versus commercial
from London to Dubai would save, at most,
about three hours in airport time.
With the cost of $55,000 for the flight, that
would mean the CEO’s time would have to
be worth $18,300 per hour.
That wouldn’t be true until they earned
$50 million a year—a salary earned only
by the upper echelon of CEO’s.
But the truth is that, for the most part,
private jets do not make economic sense when
flying routes with plenty of commercial service
like London to Dubai.
One of the larger corporate jet fleets out
there belongs to Walmart.
Now, this might come as a surprise considering
that this is a company so focused on keeping
You see, Walmart is headquartered in Bentonville,
AR—a relatively small city of 50,000.
Their airport does have a surprising amount
of service for such a small city with flights
all the way to Los Angeles and New York, largely
propped up the company’s traffic, but for
the higher ups, commercial doesn’t cut it.
That’s why the company has a fleet of 20
corporate jets—the largest of any American
These are most frequently flown by the company’s
Regional Vice Presidents who are in charge
of a specific area of the country and will
have to make frequent store visits within
The company apparently has a goal that nobody
spends a night away from Bentonville—they
want as many trips as possible to be day trips.
Now, let’s say that one of these executive
vice presidents needs to take a trip to three
stores—one in Rock Springs, Wyoming; one
in Spokane, Washington; and the last in Great
Getting to Rock Springs requires a seven hour
itinerary through Denver that would get this
executive in at 9:30 pm therefore already
requiring an overnight stop.
Then, the next day, they would do their store
visit in the morning and, as there are only
two flights a day from Rock Springs, they
would have to wait until 4:50 pm to catch
a flight back to Denver then another one to
Spokane, getting in at 8:30 pm local time,
therefore requiring another overnight stop.
The next morning they would do their site
visit, but once again, flight schedules dictate
that the first itinerary to Great Falls would
leave at 5:05 pm through Salt Lake City, getting
in at 10:04 pm local time, thereby requiring
another overnight stop.
Following the next morning’s store visit,
this executive would catch a noon flight to
Denver and, after a three hour layover, another
to finally get into Bentonville at 8pm.
These three store visits would therefore take
up four whole working days, but what if this
executive flew private?
Leaving at 9am, the first flight direct to
Rock Springs would take an hour and 45 minutes
getting in, with the hour’s time change,
at 9:45 am local time.
After a two hour store visit, the plane would
take off again at 11:45 am, flying an hour
and 15 minutes to Spokane, getting in at noon
After another two hour store visit, the plane
would take off at 2 pm for a quick 45 minute
flight to Great Falls, getting in at 3:45
pm local time.
After a final two hours at this store, the
plane would take off its final time at 5:45
pm bound for Bentonville.
2 hours and 15 minutes of flight time later,
it would land at 9 pm local time, exactly
12 hours after leaving.
What was a four day trip on commercial flights
becomes a day trip on private, and that’s
why Walmart decided private jets are worth
it for them.
It’s all about valuing the time of their
employees and they’ve determined that, even
for the relatively low level vice presidents,
their time is valuable enough that it’s
worth flying them private.
For example, one of the aircraft Walmart owns
and operates is the Learjet 45.
It costs the company about $4 per mile to
operate this aircraft including crew, fuel,
insurance, maintenance, and all other variable
Therefore, the 2,900 miles flown on that day-trip
to the north-east would cost them about $11,600.
Saving three days, that places a value of
$3,900 per day which means that, assuming
the executive onboard works every single one
of the 260 workdays per year, they would have
to make almost exactly $1 million per year
for this private jet ride to be worth it to
Walmart—an amount within the realm of possibility
for upper management at such a large company.
Of course, that’s not factoring in the alternative
option’s hotel, food, and airline transport
costs which would likely sum in the thousands
and it’s also assuming there’s just one
If the plane were to be filled to its maximum
capacity of nine, each passenger would only
need to be paid $111,000 per year for the
expense to be worth it to the company which
is less than an average Walmart store manager
Now, there’s one other case where private
jets can make economic sense over flying commercial.
Let’s say Walmart was looking to expand
into the Philippines.
Flying business class, it would cost a minimum
of $5,000 roundtrip per person, require three
stops, and take over 26 hours to get from
Bentonville to Manila.
Flying private, though, a long range jet like
the Bombardier Global 7500 could make it there
non-stop, in just 15 hours, carrying 19 of
the company’s top executives.
Since the company does not own this type of
jet, it would likely charter one at a cost
of about $10,000 an hour, or $150,000 for
While the cost of commercial airfare is less
than this, assuming the CEO, who makes $24
million a year, is onboard, the value of the
eleven hours of his time saved is worth $97,000—clearly
tilting the math in favor of the private jet.
The general phenomenon of globalization has
been great for the private jet market as businesses
need to travel to far off places like this.
Especially as companies outsource manufacturing
and other operations into developing countries,
which don’t necessary have much air service,
many companies have determined that private
jets are the best way to get where they need
But despite this, the private aviation industry
was hit hard but the global financial crisis
and still has not fully recovered.
While part of it was genuine cost cutting,
businesses also wanted to show that they were
doubling down on luxuries by getting rid of
their jets, even if they could make economic
sense in some cases.
It was all about optics and nowadays, these
jets are coming with poorer and poorer optics,
for good reason.
Private jets are truly horrendous for the
If one were to fly that Bombardier Global
7500, the one that could make it from Bentonville
to Manila, with just one passenger onboard,
the jet would make it only to South Dakota
before that passenger’s carbon footprint
exceeded that of the average person in one
Increasingly, these jets are even being used
for purposes that cannot be justified economically.
Since 2013, there has been about a 10% increase
among Fortune 100 executives of using their
company’s corporate jets for personal, leisure
They apparently justify this by saying that,
in case of a work emergency, they might need
to get back to the office quickly and commercial
air travel could hinder that.
Firms that include this as a perk for their
executives, according to one set of research,
under-perform against the market average in
terms of shareholder returns by about 4% each
Of course, the real reason some companies
might have private jets is not because it
makes economic sense, because it quite often
It’s because the people who decide whether
the firm will use these are the very people
that will use them.
In many instances, the explanation is not
economic, it’s societal.
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