Saturday, December 11, 2010

Why some of my friends need a private jet…

To say coal in Indonesia is a booming business is an understatement. Some coal players become rich, some even become extremely rich, while some lucky ones become stinking filthy rich (“SFR”).

The extremely opulent live the life of the riches, with all the toys and privileges including private jets travels. If you’re an SFR, rich beyond belief, why should you and your family travel cramped with us mere mortals, herded thru crowded airports like sheep?

But is that what private jet is all about? A toy and a status symbol for the SFRs? Or even an over indulgence and a waste of money? If that is the case, then do some of my friend actually need a private jet?

Cessna Citation Mustang

Many people don’t realize that money, wealth and all that it bring are just tools. Be it a blackberry, a car or even a private jet, they are just tools, and nothing more. A blackberry is a lifeline for a businessman but an overindulgence for a farmer. A car which certainly is a productivity tool, might be an over-burdening expense for one that can barely afford it and do not use it in a productive manner.

If a private jet is just a tool, then the next logical question is what is it a tool for? What benefits does it bring? Also the all important question, how much does it cost?

To illustrate a productive use of a private jet, let us consider a friend. He owns several coal mines, one in Batulicin, South Kalimantan, another in Samarinda, East Kalimantan and in a process of acquiring some more mines.

Every week he needs to control his mines by having a 3 hours meeting at each site. To do it, his weekly schedule looks something like this,
  • Mondays are for meetings in Jakarta office.
  • He takes first flight to Banjarmasin on Tuesday, have to wake up before 4 in the morning to catch the 6 O’clock flight. Drive for 4 hours to Batulicin site, have his meeting there and drive back all the way back to Banjarmasin where he spend a nite.
  • The next Wednesday, he took a smaller regional flight to Balikpapan, which most of the time are delayed, arrive late in Balikpapan and drive to Samarinda to stay the night.
  • On Thursday he as a site meeting in Samarinda and drive back for 4 hours to Balikpapan to catch the last flight to Jakarta.
  • Every other trip, due to distance and hold ups, he missed the last flight and back extremely tired on Fridays after spending another night in Balikpapan.

He would wrap up the week with Friday meetings and have just two days to recharge (which most often even used for weekend meetings) before repeating it the next week. For someone with a net worth of tens of millions of dollars running a company worth well into the 9 digits, it sure looks like a rat race.

How about the plan for further mine acquisitions? Will it means having to spread too thin? Is it even worth the effort? Is there a better way? Is there a tool to make his life easier, more comfortable, more productive? As it happens, there are!

The same schedule would look very different owning a private jet.

Wake up just before 6 to go to Halim and wheels up soon as he arrives. No traffic, no check ins, no queues. Fly straight to Batulicin and be at site before 9. Have the meetings closed with lunch. Fly a short hop from Batulicin to Samarinda arriving before 2. Have the meetings until dinner then fly home in time for supper.

Three overnights in three different cities, several hours waiting at airports, countless boring and tiring overland drive plus the more often than not delays, all done within a day’s work. With two days to spare per week. Some tool!

How about when having a jet means he can convince a banker to invest in one of his upcoming acquisitions by making a three day trip that is impossible to schedule to a several hours trip in utmost comfort. In such case the profit can cover the cost of the jet as well as its costs for numerous years.

What about costs? Actually, even when you factor in only the tangibles such as airfares, hotels, meals and overland transportation, using private jets is comparable in cost. When you count the intangibles such as comfort, convenience and the time saved, an effective use of a private jet can actually be cheaper, not to mention the prestige and image owning a jet brings.

My friend deals with multiple projects in multiple destinations that require constant control. A simple slip-up on shipment can incur $30K demurrage penalty per day, and missed opportunities can break multi-million dollar deals.

He has the requirement and he can afford it. So, Yes, My friend, you do need a private jet.

What if by owning a jet, other people mistake him for an SFR? Good for him. Perhaps by owning the right tool, he might just become one.

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