Taxpayers Are the Wind Beneath CEOs' Wings

June 24, 2008 — -- Attention corporate CEOs: As you hop on your private jet for vacation at the Vineyard, Napa Valley or even more exotic locales, have pity on the poor sops still waiting in airport security lines clutching their economy tickets. They helped pay for your trip.

At least, that's according to a controversial new report by two think tanks, which argue U.S. taxpayers and commercial airline customers subsidize the cost of private air travel.

For starters, the groups say, private jets pay less in air traffic control costs. A corporate-owned jet flying from New York to Miami would pay $236 in air traffic fees, while a commercial jet flying roughly the same trip would be charged $2,015, according to the Institute for Policy Studies and Essential Action, the groups who authored the report.

The groups are pushing for private plane owners to pay more, and commercial travelers to pay less.

Some private aviation boosters think otherwise.

"The air traffic system is here for the airlines," Phil Boyer, president of the Aircraft Owners and Pilots Association, told ABC News. What's more, he said, corporations bring economic benefits when they fly their planes around the country.

"You're dealing with Fortune 500 companies who are using these planes in many instances to visit facilities, set up new facilities," Boyer said. He singled out Wal-Mart as a company with over 40 planes as a company which use their private planes "to be a leader in their class."

The report also takes issue with a generous corporate tax break for buying new jets which it says costs taxpayers handsomely, according to the report, "High Flyers." Thanks to a provision in a post-9/11 law that has been extended to cover every year since, corporate jet owners can deduct a big chunk of the value of their new plane the first year they own it, the report notes.

AOPA's Boyer agreed the tax break existed, but covered other purchases, too.

"If I'm a printing plant in a local community, I can get accelerated depreciation" when buying a new printing press, Boyer said. "The key thing is, this is for business."

The report notes that corporate jets are often used for personal reasons by top executives, who are granted private use of the plane as a perk of their status. As one example, IBM CEO Sam Palmisano used his company's jets for over $400,000 worth of personal travel in 2007, according to a Wall Street Journal article cited in the report.

Airports who handle corporate aircraft and other private aviation get billions in public subsidies, according to the report. Between 2002 and 2007, the report said, federal government gave $2.2 billion in taxpayer dollars to small airports, including one in California's Napa Valley, another in Aspen, Colo., and one on the popular vacation spot of Martha's Vineyard.

Boyer did not dispute the figures, and added that in fact the total amount of public money going to the airports is higher.

"States and local communities also contribute" funding, he said. The federal grants are "a government match to local and state money." But it's necessary, he said, because big airlines have concentrated most of their flights on just 30 airports around the country, leaving many areas underserved.

Of the report, Boyer said that commercial airlines make some of the same points, especially recently, as Congress is entertaining a new bill that could change how the Federal Aviation Administration gets funded.

Critics of the report dismissed it as "a rehash of the big airlines' discredited attacks," in the words of a press release from the Alliance for Aviation Across America, a coalition business group. They noted that commercial airlines make some of the same points, especially recently, as Congress is entertaining a new bill that could change how the Federal Aviation Administration gets funded.

"Each time this bill comes up. . . the airlines say, 'another chance for a big tax break'," Boyer observed.