In Aviation, a Little Bad PR Goes a Long Way

By Robert Mark on December 2nd, 2008

I can only wonder what truly dumb move will be next from the folks running Fordsome of the U.S. auto makers now that both Ford and GM have decided to work together for the first time. No, I’m not talking about building an F-150 Tahoe-like vehicle, GMwhich, come to think of it, might not be such a bad idea.

Nope. In a storm of brilliant corporate strategy, the two former auto giants today – almost simultaneously – coordinated the shutdowns of their two flight departments, flight operations that had been in business providing transportation solutions to auto executives and customers for decades.

It would be easy to file last week’s appearance by the CEOs of Ford, Chrysler and GM before Congress, hat-in-hand after a quick trip from the airport where they’d been deposited aboard a company-owned airplane as simply bad PR. As much as I don’t like to defend these bozos, they were only doing what they’d always done, use the corporate airplane to save time and money on necessary transportation.

But as any good public relations practitioner will tell you, perception IS reality. And the arrival aboard corporate airplanes to ask for cash to fund more bad strategies looked like, well, just another bad strategy.

The three former Big Three automaker CEOs were in town to plead for a taxpayer bailout lest the automakers dry up and blow away. No mention, of course, that the reason the auto folks were even in Washington was because of hundreds, if not thousands, of dumb decisions over the past few decades, the chief one being that they all seem to be superb at building automobiles that no one wants.

As I have pointed the finger at the airline’s when they’ve made dumb decisions that affect the lives of thousands of employees, customers and shareholders, so too will I point to Ford’s Alan Mulally and GM’s Rick Wagoner as responsible for chopping up two flight departments departments that had absolutely nothing to do with the current state of the mess the auto makers find themselves.

If these two men had any guts, or the courage of their convictions, they’d have looked the panel right in the eye and said, “Yes ladies and gentlemen, we arrived aboard our corporate aircraft. We use them because we’ve learned these airplanes are smart business tools. And we’re going to keep using them as much as we can to help us reach all the places we need to in the next year so we can fix the problems we’ve all created for our customers, employees and shareholders.”

But no, they took the easy way out, pointing the finger at the closest target, in this case their airplanes and the employees that worked hard to accomplish whatever tough mission the CEOs or other senior managers dropped in front of them. Business aviation has always tried to hide their use of these machines from stockholders, fearing some might walk away with the wrong impression. A focus on education of stockholders, rather than avoidance would have gone a long way to avoid these department closings.

Don’t be surprised if other companies begin thinking reactionary like Ford and GM. We’ve all encouraged this smoke and mirrors show to some degree. Will aviation department managers learn from this little piece of board room-induced hysteria? My guess is no. We in this industry tend to want to remain in the shadows and I think this Ford-GM turncoat routine shows us that’s a train to ruin.

Pretty soon too, watch for other employees and shareholders to suffer when some of the former auto giants fail because my bet is that Congress will give them little or no cash, even though Mulally has now vowed to work for just a buck a year – down from his regular $22 million – until the problems are solved. How about all the other auto executives doing more than forgoing their bonuses as a show of solidarity to rebuild this busted industry.

I’d better quit while I’m ahead though, because before I know it I’m going to forget I’m talking about the auto industry CEOs here and not those of some of the airlines like United, that suffer from the same management vacuum as Ford, GM and Chrysler.

Well, at least the airlines didn’t ask for a bailout like the auto industry – or at least not lately.

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11 Responses to “In Aviation, a Little Bad PR Goes a Long Way”

  1. Paul Says:

    I feel awful for those pilots, mechanics and other employees affected by this seemingly hasty and short sighted decision.

  2. Jason Says:

    Ford Motor Co., Detroit’s says it’s OK for now. Although it is seeking up to $9 billion in bridge financing, but says it hopes to complete turnaround without accessing the loan should Congress agree to make the funds available. But it wants the ability to access up to $9 billion in government credit. They also said that if GM fails it could take the entire domestic auto industry down with it.

    So FORD needs GM?

    http://nomedals.blogspot.com

  3. JetAviator7 Says:

    Being from Michigan and knowing some of these pilots I could not agree more. You might take a quick look at my blog regarding this issue, I guess I wasn’t quite so kind as you.

    Regards,

    John
    JetAviator7

  4. Phil Says:

    I would like to add my thoughts to the laid off flight department staff.

    Regards
    Phil

  5. Jeff Hardesty Says:

    Robert. I saw you on FOX news today. I found your counter-point to corporate business travel options refreshing to say the least.
    You mentioned that Public Relations is ‘Perception’, but not necessarily ‘Reality’.

    Let me take it one step further and break it down to a true cost including a ‘Productivity Factor’ which is a leveraged multiple of what a Company expects to get back from an employee.
    Let’s take that same Detroit to Washington trip and compare traditional Airline travel to corporate Jet travel in a Lear 60.

    This is a perception-buster ‘Quantitative’ look via a Jet Charter ROI Simulator comparing 1st class airline travel for the GM CEO making 2.2 million in salary and having to make 1 intermediate stop on an 519 mile airline trip.

    The ‘Straight Travel Cost’… that traditional line item at the bottom of a Jet Charter Trip Proposal is nearly 5 times more in the Lear 60 than with traditional airline travel. And that’s where the conventional na-sayers pitch a fit.
    Because who can justify 5 times more in ‘Price’? Especially in this economy.

    But if you ask the stock holders about that same CEO’s ‘Productivity factor’… a leveraged multiple of what a company expects to get back from an employee, then there is more to the story when seeking a true ROI equation of Time, Flexibility, Productivity and Price = TRUE COST.

    In this travel scenario, the Jet Charter ROI Simulator shows that there is a Time machine Savings with Employee Productivity Value of over $63,000… $63,426 to be exact.

    Because when you recover 9 hours of a CEO’s productivity time… it’s something you can actually ‘put your Finger on’ and ultimately justify it. And that goes for other executives that are high up on the org chart, minimally in the 6-figure salary range.

    And what about the PR move to appease the public outcry by succumbing to a 9-hour hybrid car ride this past Wednesday.

    In this travel scenario, the Jet Charter ROI Simulator shows there is a Time machine Savings with Employee Productivity Value of over $133,000… $133,235 to be exact.

    Because you recover 12 hours of a CEO’s productivity time… and Time truly is Money.

    So, Robert, next time you talk to other CEO’s that are considering doing the ‘politically correct’ thing by jumping out of private jet business travel and jumping into a 4-seat hybrid, advise them to include ‘Quantitative’ values to justify a legitimate business tool.

    Jeff Hardesty
    President
    SellMoreJetCharter.com

  6. BJ Says:

    This is just a stunt to do what is fiscally favorable to the corporations. It is cheaper to use any of the variations on execjet service than to own your own. The time savings would be minimal at best.

  7. Robin Kernagis Says:

    Rob

    I heard you on Fox news today … good for you for setting the record straight … I am a corporate flight attendant (out of work needless to say)… but I have been working the corporate sector since 1994.

    I have worked for companies such as Sony, Paramount, Enron, Compaq Computers, HCCH, KKR, Safeway, Two private individuals etc..and all were used primarily for the purpose of moving their management to meetings saving time.

    Unfortunately the media creates this frenzy of “Companies or individuals out of touch”..

    Now these companies are rushing to close departments and put more people out of work when the truth is to restructure to begin with…I agree with you.

    I believe it will eventually cost the companies more, and what is the difference if they charter or own their own department it still gives that perception of “being out of touch”.. you know as well as us in the industry I highly doubt these companies will send their management by commercial.

    So for someone like me who has extensive experience in my career as well as many others.. I am forced to train for something else, which is unfortunate.. this is what I have known for over 19 yrs and I am good at and really enjoy doing.. I guess I will have to go to Europe I hear its booming over there!!

    Anyhow.. good for you for explaining the reason for these business aircraft.

    Robin Kernagis

  8. Sean Reilly Says:

    Many assumptions have been made in justifying the cost of a CEO’s use of a private business jet. Two include (1) that CEOs use 100% of their time on the jet – or time saved by using the jet – productively (i.e. working) and (2) CEOs use corporate jets ONLY for business purposes. Truth is, neither assumption is accurate. There have been many accounts of CEOs using their wings to fly family around, for vacation travel, to go big game hunting, etc. Remember the big-time controversy surrounding Jack Welch’s personal use of GE’s business jets… after he retired… until his jilted ex-wife blew the whistle? A woman’s scorn… ouch! Numbers justifying corporate jet travel might not add up quite the same way when “abuse” is factored in. Don’t believe there is a line item in the justification formula for this. To say there has been no abuse of corporate jet travel would be hypocrisy.

    Further… with the economy in shambles and with much-increased scrutiny on CEO compensation packages, how many CEOs will enjoy $22 million salaries in the future? If CEO “hourly wages” decrease, how will the numbers used to justify their corporate jet travel look? May need to run the numbers again here.

    Was the automaker CEO road trip to Washington a PR event? Sure it was. Could they have driven to D.C. or flown commercially (and not necessarily first-class) and just shut up about it? That would have worked just fine for me – and most likely for the tens of thousands of their employees who have lost or will be losing their jobs in the coming months.

    Tough times call for “drastic” measures. Until CEOs have the much-needed answers to very real problems, they should share the pain if you can really call it that. Tough beans.

    Speaking of expensive corporate jet travel… who knows what it costs to fly the President around in Air Force one? Let’s not even go there!

  9. Robert Mark Says:

    Sean:

    I will never sit here and tell you there are not folks out there abusing the business jet idea. Of course there are.

    The IRS has made it tougher to skirt around trying to get the company to fly the family around for free.

    What does make it really tough – even if a CEO or other senior staff are working aboard the flight – is that the chasm between what the boss is paid and what the working people are paid has widened enormously in the past 20 years.

    If we were able to link the work people do aboard an airplane to the jobs they create or the ones lost, most people would have an easier time of it,

    That doesn’t mean they’ll like it, but they might better understand it.

    In tough times they should all share the pain.

    But as I told Fox, no one would ever tell the boss of any company what machinery is justified or not in a business. That’s why you have a board of directors and shareholders.

  10. Robin Kernagis Says:

    Rob

    Again, unless this information is out there the general public assumes that these planes are a free for all .. IRS DOES make it more difficult for these CEO’s and / or Executives to use the plane as their family toy..

    With several companies I was with, I had to keep track of who was on the aircraft and submit to accounting for that very purpose.

    When this same blogger mentioned AirForce One and what the cost could be, well,that was the smartest thing he could say.

    If the tax payers are not happy about paying these bailouts and jumping on the media band wagon to chastise companies who have aviation departments, then maybe they should get a peek at what we as taxpayers are dolling out for Washington to fly around ..like, say.. AirForce One!!!

    Obviously there are quite a few departments in this country that are doing something right, not all of them are jumping to close up..

    Bottom line, these Companies who refuse to sell, sell, sell, know how valuable aircraft are, how much time it saves their executives, promotes productivity, and smart money management

    Best Regards
    Robin

  11. Jreb Says:

    I’m a financial and safety consultant to corporations and people who are contemplating bizjet travel, be it traditional FAR 91, fractional, or charter.

    The bogus, low-brow, phony calculations from the likes of Jeff Hardesty (President
    SellMoreJetCharter.com) always make me laugh. This is yet another reminder that the 135 segment is such a cheesy assortment of oily used-car salesman that nobody can believe anything they say, and for good reason. The 135 outfits are the bottom feeders of the industry, frequently cutting each others throats by pricing their services below the long run average cost, as they seek to eek out some cash flow on the margin. Would you step onto such an aircraft? Not me. Not my clients.

    As for traditional 91 ops, and for fractionals, the bottom line for just about anyone is that they do in fact pay a premium for bizjet use. Duh. The premium is worth is worth it for some, in terms of convenience, comfort, and security. Sure, bizjets also save the passenger travel time, but they’re typically paying a premium nonetheless.

    The traditional FAR 91 operators should stop letting the sleazy 135 used-car types paint the entire industry as a homogeneous service. When these oily charter weasels slink from the shadows with their lies, it makes the entire industry lose credibility in the minds of the general public.

    Bottom line: Bizjet travel is a luxury, we all know that, and pretending it’s anything else makes the industry look like a bunch of liars and retards, which only applies to certain people, eh, Mr. Hardesty?

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