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Status over everything! Despite hard times Nigerian banks splurge on private jets

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Status over everything! Despite hard times Nigerian banks splurge on private jets

Status over everything! Despite hard times Nigerian banks splurge on private jets
August 12
15:49 2019
  • Its a bonfire of the vanities in the nation’s banking halls

Wealth has never been a sufficient source of honor in itself. It must be advertised, and the normal medium is obtrusively expensive goods, like a private jet.
As an end, the acquisition of a private by an individual may be deemed extreme, ignoble too perhaps if acquired by a bank. The latter is expected, among other things, to be frugal and inclined to deploy its enormous financial resources as a means of enabling it to do some good in today’s bleak and impoverished world.

A private jet, however, constitutes a severe strain on a company’s resources; aviation specialists demonstrate that owning an aircraft outright is relatively expensive. For example, companies such as Air Partner, the world’s largest aircraft chartering firm, point out that business jets can be chartered for about £2,100 per hour. And it says they are always available and there are no on-going costs.

By contrast, it estimates that the true hourly cost of owning an aircraft with a purchase price of just £7m stands at about £7,700 per hour. That assumes an annual usage of 200 hours and takes into account the cost of capital, annual depreciation, annual fixed costs, and hourly variable costs such as fuel, landing fees, crew salaries and handling fees.

The mean average wealth for a jet owner is $1.5 billion and almost 20 percent of private aviation users work in finance and banking, worldover.

Trust the Nigerian banker never to be left out; aircraft usage by a local bank Chief Executive Officers (CEOs) may be less – as the aircrafts are often left idling in the hanger – thus increasing the hourly cost and making its acquisition extravagant and reckless.

Keeping a private jet on standby is undoubtedly a costly enterprise that even the mega banks are wary of undertaking, globally but Nigerian banks are unperturbed by the steep cost of such indulgences.

According to new research, the cost of owning and maintaining a private jet is so great that the estimated mean average wealth of its prospectiv e owner is calculated at around $1.5 billion. Much less than that and the numbers simply don’t stack up.

For example, a long-range Falcon 2000DX is estimated to cost around $40 million, and that’s only the upfront purchase price. This has led to the rise of alternative models such as a membership program, fractional ownership or buying by the hour.

But these cost-saving measures do not appeal to Nigerian banks splurging on the steel vessels that their CEOs might deploy them as taxis to and fro official and mostly unofficial engagements.

As private jet acquisition becomes more trendy and attains a frenzy among the country’s top banks, pundits counsel that bank CEOs and their boardroom associates should consult their rational faculties more often in the discharge of their duties.

The question on everyone’s lips is: “Why even purchase a private jet? Could first class commercial travel not offer all the comfort needed, at a fraction of the cost?”

Of course, bank apologists would cite deletion of waiting time, and the facility for the CEOs to drive right up to the tarmac and fly at short notice; they would also allege that private jet travel is safer in terms of operation and maintenance of the aircraft.

But such excuses fly in the face of reason in a country like Nigeria where struggling banks splurge on private jets as a means of ennobling their CEOs and announcing their entrance into the pantheon of the country’s filthy rich.

At a time when bankers in the United States of America are facing tougher rules on transparency, bonuses and the use of corporate jets among others, in response to the global financial credit crunch, chief executives of Nigerian banks appear to have intensified their contest for status with their current private jet acquisition spree.

This, no doubt, conflicts with the hitherto conservative nature of the banking profession and bankers’ fabled capacity to spend in line with necessity.

The private jet is ultimately a status conferer to the Nigerian bank CEO; and neither he nor his bank gives a hoot if it hurts the bank, shareholders and mostly impoverished clientele in the long run

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