The Economics of Private Jets
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If you missed all the different announcements, I started a new podcast called Extremities about a month ago. It’s all about how and why the world’s most isolated human settlements exist, with the first season being on Pitcairn–the 50 person British territory in the South Pacific.
You can listen to the podcast here: http://ExtremitiesPodcast.com
Fun fact: The Pitcairn Islands are the only reason the sun has not yet set on the British Empire.
Is it on Spotify
I missed all the announcements
It’s not the same here tho https://youtu.be/Yl-x3EZyy6g
Your math doesn’t add up mate
So all those Instagram models on private jets are actually Walmart management… well I’ll be damned.
I worked at a municipal airport and I became good friends with a local car dealership tycoon who had his own private jet he flew himself. Just because I was nice enough to him he literally drove up to me during the middle of my shift while I was removing vines from the fence line. Needless to say within an hour I was in the cockpit of a Cessna Citation Mustang at 10,000 ft.
Moral of the story is… Network, work hard, and SHOW INTEREST!!! If you want to be a Pilot or have a chance to enjoy the elitist comforts of a private jet, be humble, friendly, and aim for your future many of the pilots and patron CEO’s who who fly those jets were eager wannabes when they were younger and they know the driven young bucks of today are tomorrows CEO’s and Entrepreneurs. They want you to be as successful as they are and always remember that.
No, theyre overglorified hookers
Or they went to private jet studio in Moscow
Their double D executive suite.
No lol. They using niggas money because they don’t work for it ?
Hi Wendover!! I want to request a video about how airline alliances work. (Star Alliance, SkyTeam and Oneworld)
Dave Sisson link?
Long Haul recently released an okay video on the subject.
no
YEAH
^
“$5,750 per hour”
*Cries in working class*
@Jimmy Drums money can make you happy if you use it right money cant *buy* happiness but you can be happy
Long live the proletariat! Seize the means of production!
Redistribute the jetskis! Dictatorship of the boat hobbyist!
Can you imagine just paying a LV handbag for every second >.<
@Truth You can buy a jetski
But if you never have the time to use it, or you cant bother because you’re “on call” and have to be ready to go to work any time 24/7, then you’re not happy.
Why take a private jet : Same reason, you would take a cab rather than a bus. (On regular routes).
jane lam all you’re telling me here is that there are too many cars on the road so the buses can’t keep to their schedule. So the answer is to get busses of the streets. Which isn‘t what the Hyperloop does.
@Sebastian Peitsch You are severely mistaken to think that buses keep to their printed schedules, there are traffic jams, terminus/depot breaks, breakdowns etc. Try waiting for over an hour for an empty bus and watching some full to capacity buses drive past you. Not all buses can take you from A to B in one fell swoop and you could find yourself having to take multiple buses to reach one destination, add to that the waiting time required for both the journey out and back. You can save money or time.
김동준 that’s equable the to owning your own jet. Chartering one is like taking a cab.
I only took cabs when I missed the last bus
@Koba in a city, yes. outside of a city? very very rarely
The economics of running a youtube channel like wendover productions. PLEASE!
Ihan Omar should go back to Somalia
Karim Hage thanks man, I found his deviant art page. Really great stuff ?
Yeah, please!!!
Ya great idea
The economics of monetary value
I’m surprised the video did not touch on the value of the work that could be done while flying private. Much easier to write/review reports, prepare presentations and have team meetings while flying private than at airports or on planes with the public listening in. Obviously not easy to calculate but worth a mention all the same.
Turbulence time
@Sauga Verse Private aeroplane doesn’t necessarily mean private jet. Go on Flightradar24 and click on a smaller icon or two and you’ll quickly discover most are flying above 40,000ft.
And free scotch
Sauga Verse that would explain it! Piper does not make a jet. They only make propellor aircraft, most piston powered aircraft have low service ceilings, meaning that they cannot fly above most of the weather.
@Sauga Verse a Cessna turboprop is not a private jet lol
It’s also easy to be cost effective when you have 10 kilos of coke on board.
I always have at least 50 metric tons in case I run out of cash
American Made…
I just spit out my coffee.
@Nikhil Bansal by good job do you mean a good job or ? good job old boy good job??
dannydaw59 they do, when flying international, you must fly to an airport with a customs office. The custom officers then come on the plane and do a thorough check, they do a good job.
Many big corporations have a policy of not allowing multiple upper management people on the same flight, to reduce the hit in case of an accident. A friend in upper management at Snap-On Tools says it’s the policy there. A 1993 corporate jet crash took out the president and upper management of In N Out Burger, and almost sunk the company.
@Bill A “In before” (as in “I was here/I thought this would happen before this happened if it does happen” usually but that doesn’t make sense here because it’s in the past, maybe before we find out that it happened)
Isn’t that really unlikely?
There is a company near me called united engines, about 10 yrs ago all day the execs were on their bombardier global 7500, and on takeoff they hit some pelicans and killed the execs and president,
@Ryan Remmers So you think those separate flights all land at the same time and companies that can afford multiple planes would baulk at the price of more than one vehicle?
@Ryan Remmers most automotive accidents are much more common but typically survivable, aviation accidents are the opposite. In a typical travel itinerary, there is also much more time spent in the air and a relatively short road trip at the destination so the exposure is different. Risk management considers probably and consequence together.
Sam Walton preferred smaller propeller planes so he could fly low, examine traffic, and figure out where to buy land for the next Walmart.
Nathan Banks too bad none of his children took after his caring personality towards their customers and employees.
Plus when he visited towns where one of his stores was being built, he’d fly over head to see how construction was going. Then land, and he’d visit said site, and shoot the breeze with us workers.
Great comment!
Makes cents to me.
These people got more ? money than cents to being with anyways ?
Imagine spending all that money to just go to Walmart! Jeez.
@THE NEON TETRA PRO GAMER more dough than my mom’s fat load
Yeah, but you own that Walmart so totally worth it to roll in the dough
rekt
@SFAAPK7 ñïggä why it’s just a word it’s stupid that only one race can say the word while the rest can’t either ban all bad words or let everyone use them
@SFAAPK7 That is racist. Words are just words.
Walmart doesn’t just fly one exec. More likely a team of 5 gets on board. That makes those trips super competitive vs flying commercial business class.
When my father was svp of tech for Walmart he often flew out to places with a small group. So you’d be correct
AKA public transport reinvented.
@Aiden Henrie It might not be particularly friendly to the environment, but at that point, it definitely makes sense for the company. They probably don’t even care about that part, and it hardly factors into whether or not it “makes sense”.
When looking at the carbon footprint of the jets, it still doesn’t make sense to fly them even with 5 on board.
I think you may have done the economic evaluation backwards. From the perspective of a company, the company would evaluate whether or not it’s worth it to fly a jet by looking at how much net value an individual adds to the company. That would be the gross value added LESS the person’s salary/benefits/etc. Your analysis only makes sense for an individual with a salary paying their own way without a company paying for them.
@HasseBrasse Never thought of that until now, thanks for pointing that out. I’ll now consider that in my valuations 🙂
Barney Garcia Also, the jet itself generates value. Being able to fly potential clients to you for meetings makes them much more likely to buy whatever you are selling.
Your model is closer to reality but the question is how do you compute for “the net value an individual adds to the company”? The value of a company is in itself speculative in nature. Remember, valuation is more of an art than science. Especially if the company is private, there’s no market cap to rely on. The salary model eliminates the speculative aspect of valuation because it’s an actual cost, thus, imo it’s superior for documentary purposes. Companies would also prefer the salary model because its cost-to-cost, without speculative valuation w/c makes decision making more objective.
GDP If he had earned the company $50.000 hour it would be worth it.
No Wendovers system makes sense. If you work out that in 3 hours someone earns 15,000 dollars. A private jet says let’s saves 3 hours but costs 20,000 dollars. So technically it is not worth it.
So basically they save time by spending money
And we watch this video cuz we don’t value our time
Lol true
I used to work at a small airport where we had Golf Stream jets and other high end private jets stationed. The people that owned them wouldn’t always use them or exclusively use them. When they knew they weren’t going to need the jet they would allow the jets to be “chartered” where other rich people that needed a high end jet could use it and it’s crew for a premium cost. Small airports are often closer to their final destination and offer a much quicker commute. Also small airports know the occupants and security can be easily expedited saving the patrons literally hours of time compared to a commercial 1st class plane ticket. Depending on the person, their skills or value to the business flying them, these few hours could save the business millions of dollars.
Often it wasn’t just CEOs or top business persons flying on these jets but engineers, or key personal that absolutely needed to be moved to another site in the quickest possible manner.
Think about it, you own a major business and you have multiple sites across the world. you have a major issue in 1 site and your top engineer is located halfway across the world. Every minute that the major issue persists it costs your company 10s of thousands of dollars, maybe even a major impact to the environment as well. So you call your pilot and tell him you need the jet ready ASAP and you send your engineer to the local small airport. 30 minutes later the jet and engineer / support personal are on their way to fix the problem.
If you attempted to send him through normal commercial airlines it would take him 2 hours minimum to get through security, time waiting for the flight schedule, and the added time of having to travel to and from a hub city airport big enough to have commercial airlines. an incident that could have been fixed in a few hours through private jets now takes over a day to repair. Also your top engineer is stressed out from dealing with all the crap with commercial airlines, bags / tools possibly getting misplaced and he’s not at his prime when arriving to troubleshoot a major issue. Private jets are often comfortable, and somewhat relaxing for this reason. Not only that most of these jets are built to facilitate work that can be done in SITU.
If I was a big business COO, CEO or CFO you better believe I wouldn’t hesitate to own or have charter aircraft on standby at all times.
These jets at first glance appear to “be a major impact on the environment” but I have personally seen a dozen times where these jets have saved the environment from major catastrophic events because they were at the right place at the right time and got the right people on site to fix the problem before it got out of hand.
Super petty reply by me… but it is “Gulf Stream” not golf. ?
A long comment, but accurate.
I was an engineer for one company and a team of would fly to work on a weekly basis.
At the airport, there was no security at all. Getting onto our jet was no different from getting onto a bus, or a taxi.
For the record, if my company needed me to go to a certain place, and it was only me, then I would fly the regular larger commercial jets.
Up next the economics of headquartering your multinational corporation in Bentonville
@Bernard S Chicago and most leftist controlled cities/states have massive taxes and regulations. Moving there would cost billions per year. Plus the culture is different. Walmart doesn’t want that culture and values.
@Christian Monsegue Tyson is located in Springdale. Sorry, it is one of the only thing that makes my town good, so I have a need to say it.
@Saddest Chord Amazon is even worse than Walmart these days.
@ChicagoHOG27 if you want access to a major city then it’s better to just live in a suburb of Chicago, but if you’re more into nature then NW Arkansas would be better.
@Bernard S why would they go to Chicago? if they left Arkansas for a major city it would probably be Dallas where Alice Walton lives. They stay in Arkansas because they pretty much own the state government. In Dallas they would just be one corporation amongst a bunch of other corporate HQs. and that whole Bentonville Fayetteville area has developed into its own small metro area in the last 20 years. Not everything needs to be concentrated into these big cities.
Whenever he said CEO, I imagined Sundar Pichai and Tim Cook
I’ve flow both private business (as a guest) and regular air. Having all those layovers and missed connections sure makes me pine for the private jet again. But the private jet costs 60 million…
A small jet can be an order of magnitude less costly. A Honda HA-420 Hondajet for example costs about $5.3 million and is relatively fuel efficient. An Embraer EMB-500 Phenom 100EV costs about $4.5 million. Many of these small jets also only require a single pilot instead of two on many of the larger jets.
There is a flaw in this analysis. This video attempts to justify the cost of a private jet vs the salary that an executive earns and how many hours is saved vs the hourly cost of the executive. The truth in companies is the value of an executive is how much he can increase the income of the company per hour he works and not what the salary is. An executive is typically worth 10 times or higher than the salary he is paid. This means that saving the executive time with a private jet allows that executive to do other things to greatly increase the income of the company well beyond the cost of the jet or the salary he is paid. The analysis in this video equates the executive’s time value to his salary assumes that the company is only breaking even (the money the company pays the executive = the value of the executive’s time to the company) and this analysis grossly undervalues the contribution of executives.
I actually think it does make some sense to value the executives time by their salary. At least as a rough estimate. While they may make their company much more than their salary is worth it’s probably true that they only make their company slightly more than what another similarly skilled person could make. So rather than lose an amount of money equal to what they make for the company, they would really lose the difference between what this and another person could make plus the salary of that person. In practice, I think this should come to something slightly above the executive’s salary but far below what they make for the company. I realize that it’s not realistic to hire someone hourly who can do the executives job just while they are on the plane, but it might make sense in a very large company to hire another executive.
Another point thats kind of implied here is that working an extra hour doesn’t earn the company an amount proportional to the total the executive makes. Working twice as hard an executive making 10 million for his company might bring in only 11 million in profits, and working half as hard might bring in 9. If this isn’t true then the company could have some serious expanding to do.
(these are just my thoughts im sure there is extensive research out there about how to value an executives time)
Actually, your comments and analysis is dead on accurate.
The value of just having a company employee at a certain location outweighs the cost of getting him/her there.
Keep in mind that some companies could potentially lose money of they don’t send an employee to certain locations where they either have to trouble shoot a problem, or even take over a situation.
When it comes to short hops where the waiting time outweighs flight time, flying turboprop would make much more sense than flying a business jet…
Money isn’t the only consideration. Walking to the corner store makes “more sense” than driving yet most people drive.
Maintence cost would be low. Its for medium range ops.
Except why take a turboprop and be limited to its range and speed when you have a business jet…?