November 21, 2024
The idea CFOs would keep a lid on travel expenses in a post-pandemic world is being undermined. It’s coming from the corner office, according to a report this morning in The Wall Street Journal.
In a piece titled, “Wall Street’s New Rivalry: Who Can Meet the Most People in Person,” CEOs of JP Morgan Chase, Jaimie Dimon, and Goldman Sachs, David Solomon, are said to be encouraging, and rewarding, employees for traveling, including using private jets.
At JP Morgan, a contest awarded “[S]enior bankers 10 points for proper face time with CEOs outside their offices, seven for attending board meetings in-person, five for visiting CEOs in their offices, three for CFOs and one for other senior executives such as heads of corporate development.”
Dimon, according to article, told managing directors, “If you need to use a plane to go see a client, use it. There are no excuses.”
During the June contest, Dimon himself, apparently helped bankers looking to rack up points. He flew personally to host meetings. Stops included Paris, Rome, and San Francisco. Apparently, he avoided London, deciding against being sidelined by the five-day mandatory quarantine.
The push from the top could mean even more demand for private jets. While June saw the most private jet flights in the U.S. in nearly 15 years, according to Argus, most private aviation providers say that’s without a significant return of business customers.
That’s backed up by a survey of paid subscribers to Private Jet Card Comparisons earlier this month. Nearly two-thirds (64%) of new private jet users since Covid said they are using access only for personal/vacation travel. 52% of pre-Covid private flyers said they use private aviation for a combination of personal/vacation and business travel.
American Airlines Group Inc. CEO Doug Parker has a strong interest in seeing business travelers return. He said the company’s recent $10 billion debt offering was awarded to suitors who came to visit its offices.
“Do you know how many bankers showed up the next week?” the airline’s CFO, Derek Kerr, was reported to have said: “Every other one.”
More CEOs could join Dimon and Solomon in the private jet push. An analysis of S&P 500 companies shows that those using business aviation outperform those that don’t by 70%. A Nexa Advisors study of the Small Cap 600 showed similar results. It also showed private aviation users outperformed non-users in revenue growth by 23%.
Still, the industry will need to cope with the increased demand ongoing. Nearly 20% of respondents to this website’s survey said they had experienced service lapses in the past several months.
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