KPCC's business analyst Mark Lacter talks about a way to avoid the hassles of LAX; he also talks about how the top end of the housing market is doing.
Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, I see you’ve discovered a way to avoid the hassles of LAX when traveling back east…
Mark Lacter: That’s right Steve, but it’s going to cost you. Most of us have never flown out of Van Nuys Airport and most of us have never flown into Teterboro Airport in New Jersey. But there's a certain class of flier (the ones that can afford a corporate jet) that know all about this run from Van Nuys to Teterboro, including quite a few local CEOs. Call this is the alternate universe to LAX - no lines to get through security, no changing planes in Dallas, all you have to do is fasten your seat belt and you're off. The Wall Street Journal has a nifty database of FAA flight records for private jets, and as you might imagine, there's a lot of activity out of Van Nuys, which is the nation's busiest general aviation airport.
Julian: How many are we talking about here?
Lacter: More than a thousand each year just to Teterboro, which is especially popular among celebrities and corporate types because it's a small facility and it's also very close to midtown Manhattan. I pulled up five pages from the database that list corporations and airplane leasing firms that have filed flight plans for this one route. The second-largest number of flights - almost 200 - came from Paramount Pictures. Also high up on the list is Perini Corporation, the engineering and construction company that's run by Ron Tutor. There's a company called Red White & Blue Pictures, which is owned by Peter Morton, founder of the Hard Rock Café, and IAC Interactive, that's the online retail conglomerate being controlled by Barry Diller.
Julian: Is this travel business or pleasure or a combination?
Lacter: Well, the Wall Street Journal reviewed the FAA flight records of corporate jets and found that 30 percent of more of the trips were to resort destinations (in some cases where CEOs just happened to have vacation homes). And you can see this in our Van Nuys example, where there are hundreds of flights to places like Aspen, Colorado, or Hawaii. For the executives who run publicly held companies - and whose pay raises have been many times higher than their workers - the excess has become more a matter of course than necessity. We've seen several shareholder activist groups beating the drums on this corporate jet activity, but if shareholders don’t out up a fuss (and generally they’re not) there’s not much that could be done.
Julian: Speaking of wealth, the top end of the housing market doesn’t seem to be suffering...
Lacter: That’s right - Coldwell Banker surveyed 2,300 markets to compare list prices for a typical 4-bedroom, 2-bath house, and they found that Newport Beach was tops, at $2.5 million. Last year, the average price was $1.8 million; in 2009 it was $1.3 million. Now, I'm not sure that the value of a Newport Beach home has actually doubled in just two years, but whatever the number happens to be, it's obviously very high.
Julian: Quite a difference from places like the Inland Empire…
Lacter: Yeah, you can find plenty of homes selling there for less than $150,000. Here’s that massive gulf between the very richest residents and everyone else - lots more money has been coming into the state over the past two decades, but much of it is going to the wealthiest one percent of California taxpayers.
Julian: But Mark, this is the American way! Anyone can become super-wealthy, or well-off.
Lacter: And in theory, that's certainly true. But this is not a well-balanced economy Steve - too many people stuck in low-income service jobs that don't usually lead to anything better because there isn't anything better. Matter of fact, the sale of the Aaron Spelling estate in Holmby Hills is a perfect illustration of what's going on: You have a very wealthy buyer (she's a 22-year-old British heiress) paying $85 million, according to news reports, and most likely there will be lots and lots of people getting paid modest wages to maintain the place - a sort of modern-day "Upstairs Downstairs." This is how California works these days. Not great.
Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.