Travel$ense User's Guide (PDF, 139 MB) - NBAA

TRAVEL$ENSEthe same way that a building is insured against physical damage. 2 The loss to acorporation that can occur as a result of the death of a key man is wellrecognized, and the purchase of life insurance to compensate for that loss isclearly a purpose within the reasonable needs of a business. Such an opinionwas stated in the Emeloid case. 3 That opinion stated, “The business that insuresits buildings and machinery and automobiles from every possible hazard canhardly be expected to exercise less care in protecting itself against the loss oftwo of its most vital assets, managerial skill and experience.”163The importance of human capital in productivity and growth began to berecognized in the economic analyses of the 1950s and 1960s. It was then thatquantitative estimates began to reveal the contribution of human capital toincreases in the U.S. Gross National Product. This recognition of human capitalgenerally is attributed to the increased spending on education in the public andprivate sectors. An extensive study indicates that the total value of humancapital in the United States is almost equal to the total value of physical capital. 4The economic analyses concerning human resources to date have beenprimarily empirical estimates of the value of human capital on amacroeconomics basis. For example, the methods used to estimate the value oftime in the empirical studies relating to airline regulation tend to equate thevalue of time for the average airline traveler to approximations of their averageincome levels as measured by their wages and salaries.The Department of Justice Brief in the TWA-Ozark Acquisition Case clearlyrecognized that the value each traveler places on an hour of time is not known,but found that, based on empirical studies, a magnitude of the value of time forthe average passenger could be made. 5It should be noted that these empirical estimates comprise a wide range ofpassengers who value their time differently, from time-insensitive pleasuretravelers who place little value on their time to highly time-sensitive businesstravelers who place substantial value on their time.In addition, these studies consider average values of passenger time based onrelationships to hourly rates of income, determined from annual salaries orwages. 6From a business standpoint, the salaries and wages that are paid to businesstravelers form only a portion of the total cost of employees. Total cost would2 Freeman, R.B., Investment in Human Capital and Knowledge, Capital for Productivity and Jobs, PrenticeHall, Inc. 1977, p. lOl.3 The Emoloid Co., Inc. v. Commissioner, 189 F. (2d) 230, CA-3, 1951.4 Freeman, R.B., Investment in Human Capital and Knowledge, Capital for Productivity and Jobs, PrenticeHall, Inc. 1977, p. 101.5 Department of Justice, Post-Hearing Brief, TWA-Ozark Acquisition Case, DOT Docket 43837, p. 15.6 Testimony of Gloria J. Hurdle, Economic Witness for the Department of Justice, TWA-Ozark AcquisitionCase Before the Department of Transportation, Docket 43837, pp. 13-15.Copyright © 1999, National Business Aviation Association, Inc.