So what are the potential ramifications associated with the introduction of a Private Jet tax and will it have any major affect on the market?
In short no. As with all other costs associated with Private Jet charter, operators and brokers alike will factor in these costs whilst trying to absorb as much of the burden themselves to remain competitive. Essentially it will boil down to trimming already slim margins and pushing forward with a “business as usual” approach.
This strategy of ensuring that the wealthy do their fair share does however seem to be a victimisation of the very engine that drives wealth creation in the UK. There can be no doubt that travelling by private jet is a luxury, but let us also not forget that it is an essential tool used to create business opportunities across the globe. Let’s take for example an Oil exploration firm – at the core of this business is geography. This is not a backyard business by any means. As a firm you have to fly to sometimes hard to reach remote destinations in order to assess the viability of oil exploration in a region and subsequently to tie up the deal. This can involve senior members of a team out of the office travelling for, in some cases, days. In this instance the private jet is essential in cutting down this travel time and getting senior fee earners back into the office where they ultimately are at their most productive.
This strategy of ensuring that the wealthy do their fair share does however seem to be a victimisation of the very engine that drives wealth creation in the UK. There can be no doubt that travelling by private jet is a luxury, but let us also not forget that it is an essential tool used to create business opportunities across the globe. Let’s take for example an Oil exploration firm – at the core of this business is geography. This is not a backyard business by any means. As a firm you have to fly to sometimes hard to reach remote destinations in order to assess the viability of oil exploration in a region and subsequently to tie up the deal. This can involve senior members of a team out of the office travelling for, in some cases, days. In this instance the private jet is essential in cutting down this travel time and getting senior fee earners back into the office where they ultimately are at their most productive.
One should at this point remember that a good proportion of tax revenue and, in the case of listed companies, share revenue, is created by those that government seem hell bent on ensuring they “do their bit”. These are the very firms that long term provide value in our pension funds, dividend payments to private investors and bonuses that ultimately get spent in car showrooms, estate agents, clubs, bars, restaurants and shops. This is the only way that the money pumped into the banking sectors filters back through to people on the street. Private jets pay landing, engineering, insurance, catering, pilots and air traffic control fees. Not only does the core business generate income but so too does the business tool.
At Execflyer over the last 3 years, we saw a marked slow down in private jet travel in the corporate sector. Some of this was ultimately cost saving, though for the most part firms wanted to be seen to do the right thing. With the economy showing signs of recovery in some sectors, dealmakers are having to go the extra mile and get in front of clients across widespread geographic locations. Sometimes 3 or 4 cities are vistied in a day. The result of this “jetsetting” ultimately is deal conclusion, revenue and thus security for the hundreds/thoudands that make up the ranks of a particular firm. Then theres the tax revenue…..
To conclude, the “Learjet tax” as it has become affectionately known, will do little to slow down the engine that needs to function in order to restore wealth across the UK. Lets allow these dealmakers within UK plc the tools to get each and every one of us back into a position of strength in this somewhat injured global economy. The wealthy are an essential fuel in this engine and we would all do well to recoginse the long term gain for bar staff, builders and car sales through to lawyers, architects and let us not forget the pilots.
