by Jon Spencer and Paul Bertorelli
General aviation and business, business and general aviation. It ought to be a marriage made in heaven, the notion of using a light aircraft in place of the airlines or a car for business trips. But no, the suits in the corner office roll over in apoplexy at the mere mention of using a Bonanza for a sales call or a morning meeting.
The usual response to an employee query about using a personal airplane for company business is often not just no, but hell, no. Several readers told us that when they approached their companies about using GA for travel, they were told that doing so would be cause for termination on the spot, no questions asked.
How did it get this way? The big business view of light aircraft is negative bordering on the hostile, but is it really deserved? Are little airplanes so fraught with risk that death and dismemberment while on the job are likely? Or have the lawyers merely taken over? (The short answer to both questions is no.)
We recently queried the Aviation Consumer readership and that of our sister publication, AVweb, about official corporate policies governing use of light aircraft for business travel. Two overriding findings became immediately obvious: more companies than we realized do allow business use of private aircraft but the numbers appear to be declining as smaller businesses are bought out or consolidated.
Owners who work for companies that prohibit personal use of aircraft are often anxious-make that desperate-for the magic words that will convince the company to relent. Sadly, we havent discovered what they are but the phrase excess liability insurance may at least open the door to further discussion.
How Bad Is It?
Not as bad as we thought, actually. And there are some bright spots out there among large companies with progressive managers who arent frightened of their own shadows with regard to liability risk. The corporate ban on general aviation aircraft use is far from universal and some companies are surprisingly sensible and thoughtful about approving use of general aviation for travel.
The most notable exceptions to the flat-out-no policy are among companies owned by pilots-no surprise there-government agencies and a smattering of larger companies with management not averse to risk.
Putting some numbers on the survey, we sorted 102 responses into a yes pile and a no pile and a its-not that-simple pile. The score: 41 owners said their companies permit business use of personal aircraft, 44 prohibit it and 17 fall into a gray area best described as don’t ask/don’t tell. (More on that later.)
Unfortunately, the trends are not encouraging, however. Many of the owners who contacted us told us their companies used to allow business use of personal aircraft but don’t now, for various reasons. Corporate buy-outs often spell doom for pilots working for small companies and using their airplanes for regional business travel. The 9/11 terror attacks also seem to have served as a wake-up call for some companies, causing them to recoil from any and all liability exposure, no matter how slight.
Until recently, we were allowed to fly our own aircraft on business and we were reimbursed for it at a car-mileage rate up to a limit of the cost of an equivalent discount airline ticket. All was good, wrote reader JU. Then, in 2001, management got paranoid and the following policy revision occurred: The use of privately-owned, leased, rented or borrowed aircraft by an employee for official travel is prohibited. And speaking of paranoia, most of the readers who replied to our survey requested anonymity, so were honoring this request by publishing few names.
I have been flying for nearly 17 years and have owned a Beech Debonair for 15 of those years, reports Mark Foster. During the time I have owned this Deb, I have worked for four different companies, including my own company for whom I now work. Each of the first three companies-where I was working for the man so to speak-started out either explicitly allowing me to fly or at least looking the other way when I turned in my expense reports. By the time I was about ready to move on, I was told that I could not fly for company business, sort of a not only no, but hell no.
One of those companies, and the most vehement about saying that I could not fly for company business, made airplane components and systems.
The reason given for prohibiting business travel by personally owned aircraft is universally, tediously and predictably the same: liability. My boss directed me in no uncertain terms not to use my aircraft on business trips of any nature, wrote reader JB. He was concerned with liability issues, even though I had a big liability policy and could have got the company named as an additional insured.His stated concern: What if you crash into a school bus full of kids.
From this letter and others like it, we concluded that many businesses view the risk of flying light aircraft as a flat, featureless tableau of uniform disaster, with no opportunity to reduce risk by adding a second engine, adhering to strict weather limits or undergoing rigorous and regular training.
We received no reports of any companies actually analyzing the risk, although a few attempt to insure it. When presented with a request to use a private aircraft for business travel, the message from corporate HQ appears to be: pilots of little airplanes are idiots and they crash, therefore, you are an idiot and you will crash. Request denied.
don’t Ask, don’t Tell
This leads to a rejoinder from reader JB: Lesson learned. Do not mention flying in an employment situation. In a nutshell, thats what many readers call the don’t-ask, don’t-tell approach to using a personal airplane for official company business.
Sometimes this is done with a wink and nod from upper management and sometimes its done completely on the sly. If the latter, the best advice seems to be to submit expense reports based on auto mileage and to react with shocked surprise if accounting discovers youve been flying your own airplane and demands an explanation.
Some 17 readers told us they follow the don’t-ask, don’t-tell policy, with varying degrees of success. Some do it with the explicit knowledge of middle managers while others use their airplane for business entirely on the sly. My company has a policy that personal aircraft may not be used on company business without the express permission of the CEO, 100 percent for liability reasons. This means that you can not claim air mileage nor say you flew to get somewhere on your expense voucher, wrote reader AE.
However, the company cannot control what you do on your off days or vacations, so I often go on the weekend and/or take a day off when required. Solo, only. Kind of like going on vacation with your wife and coincidentally ending up where you need to be for business. Some owners are able to use their personal airplanes for business because there’s no express policy against it or, even if there is, a supervisor or division manager is willing to look the other way.
Ive worked for a couple of Fortune 100 companies and both had policies prohibiting using a personal aircraft on company business, writes Tom Ahonen of Minneapolis. When it worked out, I did it anyway and submitted the equivalent number of driving miles on my expense report. My direct boss knew what I was doing and looked the other way, but we certainly did not publicize the practice. Im now in my own consulting business and fly on business to my hearts content, he adds.
Another reader reported this conversation with his boss: Although I don’t want you flying, if you hand in an expense report and claim you drove to Columbus, Ohio, Im not going to go out and check your speedometer to make sure you drove. (Wink, wink.)
Is this sort of thing, well, dishonest? Are you acting irresponsibly if you fly in the face of a strict company prohibition against business use of personal aircraft? In our view, its a sticky ethical issue each owner will have to answer for himself. On the one hand, we think concerns about liability, while legitimate, are overblown. On the other, ignoring a strict, written corporate policy is rarely a good thing. If employees expect companies to play by the rules, they should do the same.
The best advice we can give in this regard is this: if you work at a company where there is no written policy on using a private aircraft for business use, don’t request that the issue be reviewed in your behalf. If you ask for a written policy, the likelihood is high that the result will be an explicit prohibition. As one reader reported, the standing play-dumb approach-its easier to receive forgiveness than permission-works we’ll here. In our view, its neither dishonest nor deceitful to assume that you can unless an explicit policy says you cant.
As for claiming expenses, most readers pursuing the don’t-ask, don’t-tell policy submit expense vouchers based on auto mileage rates, typically 32 to 35 cents per mile. This doesnt quite make you whole on airplane costs, but its close. Allowing for the difference between nautical and statute miles and figuring $90 per hour wet for a high-performance retract, the direct per-mile cost for the airplane is about 50 cents. Another way of skinning this cat is to charge the private aircraft costs at the rate of the cheapest available airline fare. Sometimes this is equitable, sometimes its not. If the trip is between city pairs we’ll served by competitive airline fares, the light aircraft trip could cost $500 but be reimbursed only $200. But if the trip takes you to an outlying burg ill-served by airlines, the fare could be $500 while flying your airplane could be half that cost.
Success Stories
So how do the owners who are allowed to fly for business-and there are quite a few-do it? How does that bit of magic happen? The best way to make it happen appears to be to own your own company and your own airplane and combine the two in any way you wish. Next best is to work for a company with a realistic assessment of the risk of GA travel and an appreciation for its benefits in cost and time savings. (Yes, such companies exist.)
Interestingly, the federal government and military may have the most liberal policies allowing use of personal aircraft. Writes Lt. Col. Lindy Kirkland: I am an active duty Marine and I have used a rented airplane and my personal airplane for official travel. The Joint Travel Regulations allow for the use of personal airplanes for official travel and a traveler can get reimbursed up to the cost of a commercial ticket for the same trip.
As noted above, the economics work best on short trips. Onshort trips, writes Col. Kirkland, it works out great and I can often make a meeting and get back home the same day. Using commercial air on the same trip, I might have to get there a day ahead to make the meeting or stay over a night to catch a flight home the next morning. The use of personal aircraft in this instance saves the government a considerable amount of money and increases productivity.
Businesses owned by pilots may have the most enlightened policies with regard to GA travel, since they understand both the risks and benefits and are sensitive to insurance requirements. Robert Johnson, a pilot, is president of a small software company with two pilots who fly for business. The company pays for $1 million of non-owned aircraft insurance to cover us in case of a major problem. Coverage of the aircraft and personal liability of the pilot is the pilots responsibility, he says.
Our policy is that anyone can fly for company business, but they have to have an IFR rating and be covered under the corporate insurance policy. We reimburse the individual the lesser of the plane rental costs (including fuel, tiedown and so on) or the price of a ticket to go to the same destination. We have found that generally flights under about 600 miles are more time-and-cost effective in GA aircraft, especially when on a sales or service trip which requires multiple city stops.
Some small companies have formal policies on aircraft use, some don’t. Im the CEO of a 260-employee, publicly-heldfinancial services company. I am the only licensed pilot in the company. We do not have formal policies concerning the business use of privately-owned aircraft. My board of directors is aware of my use of the airplane for business; one of my directors has flown with me for a business purpose, writes one reader.
I pay the expenses out-of-pocket and file a claim for expense reimbursement from the company. For…evaluating a potential business acquisition/investments, I pay for the expense personally and intend to research whether those expenses are tax-deductible, he adds. Interestingly, this reader also pointed us to a General Services Administration Web site which gives a rate of 95.5 cents per mile for privately owned aircraft, a rate which generously compensates direct and indirect costs. (See www.gsa.gov, search POV rates for privately owned vehicle reimbursement rates.)
Although companies that allow GA use tend to be small-and often high-tech start-ups-not all are. Boeing, for instance, allows business use of GA aircraft, as long as the airplane owner carries at least $1 million in liability coverage and the trip must be approved by a vice-president. Boeing pays 85 cents a mile for GA travel. Another biggie, financial giant UBS, also allows GA travel but requires the pilot to name the company in the insurance policy.
Another aircraft company, Raytheon, also allows use of private aircraft. On the other hand, defense giant Lockheed Martin prohibits business use of privately owned aircraft, as does Northrop Grumman. We know of three avionics manufacturers, Collins, Honeywell and UPSAT, which also prohibit or restrict use of personally owned or GA aircraft for business travel.
Alphabets? No Miracles
Obviously, its in the interest of the entire industry for companies to have more liberal policies with regard to light aircraft use for business travel. But whats the industry doing to help itself? The short answer is: not much.
AOPA is the only organization to have anything in writing available to its members. We talked to Warren Morningstar, AOPAs spokesperson, and he suggested we search the AOPA Website for articles on the subject. We found a couple of articles that addressed the issue of liability directly. One, from the October 1998 issue of Flight Training, suggested exploring a liability waiver and checking with the company insurer to see if any special coverage is available. We thought the articles evaluation of a liability waiver was half-hearted at best: Liability waivers arent rock solid when it comes to preventing litigation, but like chicken soup, they cant hurt.
Another article mentioned adding the company as a named insured on your policy and exploring a corporate non-owned policy. Morningstar also raised the usual argument that business flying is safer than pleasure flying and suggested we talk to AOPAs insurance division, which writes coverage up to $5 million for combined single limit. We did that and we’ll report on insurance options in the second part of this article next month.
National Business Aviation Associations Cassandra Bosco told us the organization had nothing formal to offer owners on using their own airplanes but were using the General Aviation Manufacturers Associations Employee Business Flying Kit, which GAMA says is totally out of date.
To its credit, GAMA showed the most interest in this difficult dilemma faced by many aircraft owners. Shelly Simi, GAMAs vice-president of communications, clearly grasps the question and reported that her organization had recently begun researching the topic in the hopes of providing some new solutions for aircraft owners. We got a chance to look at a draft of the new brochure.
Its clearly addressed to employers who are either reluctant to allow use of private aircraft or havent thought about it at all. In keeping with GAMAs purpose to promote general aviation, the brochure has one of the best discussions of the advantages of business flying, including time-savings and cost-savings, weve seen.
GAMA advises employers to contact their insurance agents to explore corporate non-owned liability but this isn’t a major part of the brochure. We think this brochure, when its final version is published, could be an excellent starting point for a discussion with an employer, although youd still need to do your homework on insurance.
Manufacturers? Clueless
What we found most surprising in our research is how unaware the manufacturers seem to be of this issue. For the most part, their attitude seems to be we sell to rich people, and rich people don’t have those problems. Surprisingly, those we contacted claimed to have never heard the notion of companies prohibiting use of private aircraft for corporate travel. In short, it isn’t a problem that is visible to them and so they see no reason to address it.
Kate Andrews of Cirrus Designs admitted that they hadnt heard the question before, but she cheerfully pointed out that if safety is an employers concern, they always have the parachute, referring to the Cirrus CAPS ballistic parachute system. After further reflection, Cirrus believes it hasnt lost a sale based on aircraft-use policy and thus don’t see any reason to address the issue.
Mooneys Larry Hunter joined the other manufacturers in saying they hadnt heard the question of corporate prohibition before, a response that, frankly, stuns us. Hunter noted that most of Mooneys customers are either independently wealthy, work for themselves or are entrepreneurs who own their own companies and therefore make the aircraft-use policy themselves.
Cessnas PR person seemed quite puzzled by the notion that we were asking about corporate-use policies. Lancair didnt return our query. To be fair, were not sure what the manufacturers could or should be expected to do about the corporate liability issue. On the other hand, we thought they would at least be aware of it as something many of their customers-not just buyers of new airplanes-see as a major barrier to getting full use out of their aircraft.
Conclusion
If there’s any gold-plated advice we can offer in convincing a company to allow business use of an aircraft, its this: start your own company. For owners who work for companies that flat-out reject the idea that light aircraft can be cost-effective business tools, this article may serve as talking point to reverse the decision or at least modify it. We applaud GAMAs efforts to produce business-friendly data that makes a compelling argument in favor of light aircraft travel. Similarly, AOPAs insurance arm has what may be solutions for some owners.
For companies with a fence-sitter policy-that is, theyre lukewarm negative but sound faintly receptive-we think a combination of approaches will work. First, a written policy with clear limitations on use designed to allay unreasonable fears about liability. (See the sidebar and the Aviation Consumer Web site (www.aviationconsumer.com) for more details.
Second, insurance. Many companies may not accept being named as an insured on a $1 million combined single limit policy-smooth-but may agree to allow business flying under the protection of a $2 or $3 million smooth policy. Although not cheap, these policies can be found with a determined search. Before ruling them out as too expensive, we recommend having an independent agent shop the market or check with AOPAs insurance provider.
Also With This Article
Click here to view “We Make the Rules … and We Don’t.”
Click here to view “4D Aircraft Use Policy.”
Click here to view “What You Can Do.”
-Jon Spencer is a regular contributor to Aviation Consumer. He owns a Cessna Cardinal and is based in Massachusetts.
