Barron's Al Root's article titled "Corporate-Jet Ownership Flies Mostly Under Shareholders' Radar" addressed an issue which I am sure festers on the peripheral of many shareholders' attention: The ownership and operation of corporate aircraft by company executives. In the article, Root calls to account D.E. Shaw's letter to Emerson Electric which chastises Emerson's use of a fleet of eight jets and the management of the fleet through their in-house aviation department. Shaw's letter states that "operating a fleet of eight private jets isn't efficient or optimal." However, industry-renowned aircraft broker Steve Varsano brought up a notable point when he discussed the same issue, believing that corporate executives could fly commercial airlines, but their use of company-owned aircraft allows them greater flexibility in scheduling appointments and arriving to those appointments better rested and prepared.
In his article, Root continued by writing that company-owned aircraft are symbols of excess and are consciously hidden from display on annual reports. Could this be true? Possibly, but can we also consider the possibility that the structure of annual reports are not tailored to address aircraft ownership and use? I would argue that the display of aircraft use by the lay shareholder may encourage the negative view of aircraft use by executives with Root's viewpoint as a perfect example of it.
To conclude the critique, I do not outright condemn Shaw's concerns, nor their sending of their letter to Emerson's board of directors, but on the highest level of corporate America, we have to take in to account the needs of the company and their desire to provide ample conditions for their executives by their use of private aircraft as tools for continued growth and success.
My original critique can be found here: asterion-aerospace-defense.com/l/a-critique-on-roots-article-on-corporate-jet-ownership/