The Wall Street Journal is on a campaign against private jets. From a front-page article in today's paper:
A Wall Street Journal review of FAA flight records found that dozens of jets operated by publicly traded corporations made 30% or more of their trips to or from resort destinations, sometimes more than 50%. Often, these were places where their top executives own homes. The review covered nearly every jet flight in the U.S. over the four-year period from 2007 to 2010....The high percentage of trips to vacation destinations in a few cases suggests some companies' jets are frequently used by executives to make personal trips. This has stirred doubts among some experts about whether companies are disclosing to shareholders the full amounts spent on personal-jet travel, widely considered the most expensive executive perk.
The Journal article names five companies with corporate jets that fly frequently to resort destinations — EMC, Leucadia National Corp., Comcast, Nabors Industries, and Jarden. Let's group their shares together into what for argument's sake I'll call the FutureOfCapitalism-Wall Street Journal Corporate Jet So-Called Abuser Index, even though for all the innuendo, there's no evidence whatsoever in the Journal that these companies are abusing their corporate jets or failing to comply with the law, which, absurdly, requires companies to report only the variable costs, not the fixed costs or the cost of a comparable NetJets-type-flight, of private jet use. (The politicians who make the laws like that because it allows them to ride along on the jets while making it look like the benefits they are getting are less than what they actually are.)
So it turns out that over the period the Journal examined, from January 1, 2007 to December 31, 2010, the FutureOfCapitalism-Wall Street Journal Corporate Jet So-Called Abuser Index, which is the combined prices of the five companies adjusted for dividends, declined 2.3%. Pretty damning, huh? Those executives are flying around to ski areas and beaches in their private jets while their shareholders are losing value. Except that during the same period, the S&P 500 Index, adjusted the same way, was down 11.2%. In other words, over a four year period, the companies flying their executives around in private jets to resort destinations outperformed the broader stock market by about 9 percentage points, which is pretty impressive.
All in all, one might make the case that corporate jet travel to resort destinations is actually a sign that would make potential investors want to own a stock, rather than want to avoid owning a stock. It's a sign that a company is doing well enough that it has money left over for jetting even after providing the returns that shareholders demand. It's a kind of cushion — if the company's fortunes start to fade, it can always cut back on the jetting. Or maybe executives who are able to get away to resort destinations and spend time with their families are happier and have a better perspective and are therefore better managers.
The Journal also reports the Obama administration's decision to disclose more data on private aviation on the grounds that "privacy concerns don't outweigh the public's right to know about the use of public airspace." I'm a big fan of disclosure and transparency, but if this is going to be the argument on tail numbers of private jets using "public airspace," how about the license plate numbers and registration information on private cars using public highways, tunnels, and bridges? Is that going to end up in a database on the Wall Street Journal Web site, too? What's next, "dark pool" private airports operated outside FAA control for private jet flyers who don't want their movements publicly disclosed?
Disclosures: I am a happy Leucadia shareholder. A family member of mine has a place in the flight path of the airport on Martha's Vineyard, which is one of the resort destinations that the Journal writes about in the case of Nabors and Comcast. If the SEC or shareholders cracked down on private jet travel to MVY, it would be good for that property's value and for the peace and quiet there on summer Fridays and Sunday nights/Monday mornings. When I fly places, which is not that often these days, it's almost always commercial.
