DPJ is a wholly owned subsidiary of Delta Air Lines that focuses on private jet travel. Originally founded in 1984, DPJ has grown through acquisitions, including buying Segrave Aviation in 2010. This raised ethical issues around protecting customers that led the DOT to propose new rules for air charter brokers. The rules aim to increase transparency and set standards for brokers to better protect customers and their funds. While the private jet industry can attract unqualified brokers, airlines like Delta that partner with private jet companies have shown they can appropriately address ethical issues through proper management and transparency.

1. Shaikh T. Alamin-Khashoggi
Accounting Principles II
ACC-242-01
Professor Bernard F. Bugg
November 23, 2014

2. Delta Private Jets (DPJ), formerly known as Delta AirElite Business Jets, Inc. (DAEBJ) is
a wholly owned subsidiary of Delta Air Lines (NYSE:DAL) that focuses on private business jet
travel offering the convenience of a charter with the experience of an airline. Originally founded
in 1984, DPJ is a premium and exclusive private jet service with its corporate headquarters
located at the Cincinnati/Northern Kentucky International Airport, 82 Comair Boulevard,
Erlanger, Kentucky 41018 (Delta Private Jets, 2014).
DPJ provides on-demand private and business jet travel services to individuals and
companies in the United States. In a series of restructuring, starting on January 21, 2010, DPJ
acquired the Kinston, North Carolina based Segrave Aviation from Jim Segrave in an all-cash
transaction to double the size of its fleet and improve Web-based bookings (Delta Air Lines,
2010). This transaction required that the corporate office at the Kinston Regional JetPort be
moved to Kentucky in order to consolidate corporate functions. According to David Anderson,
Staff Writer, The Triangle Business Journal of Raleigh, this move affected the 52-person
workforce with possible layoffs, citing information provided by the company to the North
Carolina Department of Commerce (Delta Air Lines, 2010). Thereafter, on September 4, 2010,
DPJ officially changed its name from DAEBJ (BusinessWeek, 2014).
After buying out Comair, DPJs operational success has exhibited modest growth in its
interdependence with its parent company, Delta Air Lines, as well as private jet owners (Delta
Private Jets). Despite all the support available from Delta Air Lines, DPJ is a separate business
unit, which gives it the flexibility to be dynamic. Moreover, it is not subsidized, yet self-
supporting through three programs – Delta Private Jets Card, Charter Choices, and Aircraft
Management – that deliver not only a superior level of personal service and the highest standard
of safety and security, but numerous opportunities to maximize return on the owner investment.

3. According to John Daly, Executive Vice President and Chief Operating Officer, DPJ
manages 48 private jet aircraft and 240 employees in addition to being responsible for DPJs
financial performance that includes an annualized budget exceeding $100m (Daly, no date
given). With the enormous amount of funds budgeted, the potential to generate revenues caused
an ethical issue/concern requiring the proposal of rules to protect customers.
Private pilot James Wynbrandt, who has also written for the New York Times, Forbes and
Barron’s, has noted that “last Fall, the U.S. Department of Transportation (DOT) unveiled
proposed rules for enhancing protection for air charter customers” (Wynbrandt, 2014). Further,
“the proposed rules are a by-product of a nearly decade-long investigation of a pair of high-
profile business jet accidents by the National Transportation Safety Board (NTSB).
The NTSB could not determine exactly what company was operating the chartered aircraft
and recommended that the DOT mandate more transparency in the air charter industry to ensure
consumers can make informed purchasing decisions. Since the proposed rules called for
licensing brokers as “indirect air carriers,” the act of brokering (i.e., arranging for a third party to
conduct a flight), the NTSB found that this ethical concern was at the root of operational-control
issues highlighted in its investigation.
Subsequently thereafter, the Air Charter Association of North America (ACANA), a
brokers’ trade group established to promote best-practice standards in the wake of the
aforementioned accidents, thereby providing input to the DOT during its deliberations on the
Notice of Proposed Rulemaking (NPRM) to encourage strong broker regulations. According to
Wynbrandt, ACANA feels that the proposed rules fall short on three counts, according to
President David McCown, a vice president at mega broker Air Partner in Los Angeles:

4.  The proposals provide for no registry, making it difficult to police brokers
 There are no minimum requirements or standards to become a broker, leaving the ranks
open to unqualified and unscrupulous providers
 The rules offer no protection for funds that on-demand charter customers pay brokers in
advance
These reasons were essentially summed up as: “This business is incredibly sexy, that’s the
reason a lot of people get into it” says Ben Schusterman, founder of El Jet in Los Angeles, a
charter brokerage and ACANA member. “You rarely see people flocking to be dry cleaners.
Something like this is tempting for people who see deep pockets and easy money” (Wynbrandt,
2014).
The United States makes up 49.7% of the world market for private jets; Europe 20.8%;
Asia Pacific 11.8%; Latin and South America 11.6%; and Africa and the Middle East 6.1%.
Besides owners and fractional owners, many of those with deep pockets that provide the easy
money are former commercial airline passengers who used to fly in first-class. This is why many
commercial airlines have partnered with business jet companies and individuals who own private
jets (wherein airlines reach only 550 airports while private jets utilize more than 5,000), in
addition to taking advantage in the loophole where President Obama called for the elimination of
tax breaks for private jet owners who collectively generate in excess of $150B in annual
economic activity while employing 1.2M Americans.
In my personal opinion, airlines like Delta that partner with private jet companies/owners
have shown that they can appropriately address the ethical issue/concern while maximizing on
investments with proper management and transparency to protect its customers. See EXHIBIT A
(Balance Sheet and Income Statement).

5. References
"Company Overview of Delta Private Jets, Inc." Delta Private Jets, Inc.. Bloomberg
Businessweek, 29 Apr. 2014. Web. 15 Nov. 2014.
<investing.businessweek.com/research/stocks/private/snapshot.asp?privcapld=6
452800>.
Daly, John. LinkedIn. LinkedIn, n.d. Web. 18 Nov. 2014. <www.linkedin.com/pub/john-
daly/37/1a/857>.
Delta Air Lines. Delta Air Lines, 21 Jan. 2010. Web. 18 Nov. 2014.
<www.news.delta.com/index.php?s=20295&item=123240>.
"Delta Private Jets." Delta Private Jets. Delta Private Jets, n.d. Web. 16 Nov. 2014.
<http://www.deltaprivatejets.com>.
Wynbrandt, James. "Consumer Protection." Business Jet Traveler. N.p., Feb. 2014. Web. 16
Nov. 2014. <www.bjtonline.com/business-jet-news/consumer-protection>.