Business Jet Travel: A Line in the Sand

By Robert Mark on January 30th, 2009

Remember the old days, back when people had little respect for business airplanes simply because they knew next to nothing about them? Those were the good old days until the guys from the motor companies jumped on their airplanes in Detroit to head for Washington to beg for cash. That was a PR blunder for sure.

In case you missed the whole debacle, here are a few mile markers for a quick review. Thanks to my pals at Business Jet Traveler magazine who allowed me to inject my two cents into the whole conversation. And another round of thanks to Bill Hemmer at Fox News who gave me some time – albeit a bit tongue in cheek – to debate the very idea of owning a business airplane.Fox TV My stance essentially said companies that use business airplanes as legitimate tools of the trade have been hiding those machines in the weeds so long they’ve become their own worst enemies.

While the auto industry execs trip may have evolved into a colossal PR blunder, not to mention great fodder for some of the TV networks, using those business airplanes for the trip to Washington that day was not a bad business move. Mr. Mulally, Nardelli and Wagoner used their airplanes for precisely the purpose they purchased them in the first place, swift efficient transportation for people being paid enough money to warrant the expense.

This past few weeks has seen even more logs on the fire with the feeding frenzy surrounding the CitiGroup delivery of a Dassault Falcon 7X or Starbuck’s delivery of their Gulfstream 550 as the company cuts their workforce. As I said to Bill Hemmer during our interview … if the media was hounding the execs from Detroit about what kind of computers they used or how much they cost, those execs would have told them to take a long walk off a short plank. So where are the corporate communications people? Why aren’t they out there telling the story in an attempt to balance off the negative publicity?

Because President Obama entering the discussion as he tries to crack down on the idiots in the finance industry who have given themselves huge bonuses even as they accepted TARP funds has driven the airplane users even further underground just as they need to be climbing closer to the light of day. Surely if the bankers used TARP money to buy their airplanes, people should be upset. But we don’t know that happened. It just looks like it could have.

“We have seen the enemy and it is us,” Pogo  

Those trips to DC for the motor executives and other aircraft purchases now look like a walk in the park unfortunately, because as I write this, people in almost every industry have not simply panicked … they’ve begun to stampede. People are running around acting as if the end of life as we know it is here, a sort of 21st Century equivalent of jumping out of windows the way they did in 1929 and for exactly the same reason. People seem to think that losing money in the stock market means life as we know it IS over.

Me, I’m embarrassed at the lack of fight I’ve seen in business aviation operators. Just when we need people to pull together, people are jumping ship, selling airplanes and canceling orders, all out of fear of what might be. Thousands seem to be waiting for NBAA to fight this battle for them on the Hill while they hide their airplanes away in the hangar.

It’s simply not going to happen folks. If we stand by and allow Congress to dictate business terms that remove a valuable business tool from our arsenal, we deserve what happens next. More airplanes will fall idle and more orders will be canceled out of some unnamed fear. What if business becomes worse? some wonder, or what if more media jump on the CitiGroup and Starbucks of the world and ask why we own these darned flying machines?

This is it folks. No one else is going to do it for us.

As much as I love the guys at NBAA, they don’t have the lobbying power to fix this one alone. Ed Bolen said Wednesday, ” While NBAA’s work to advocate for the industry will continue, your direct involvement in our efforts is as critical as ever. Your voice is needed to remind policymakers in Washington that business aviation generates jobs, economic activity and local investment in every state and congressional district in the country. We need policymakers to advance proposals that allow companies in business aviation to survive and keep people working.” Ed is being nice. I don’t need to be.

If we all stand by cowering as if we’ve done something wrong by owning and using a business airplane, we’ll create precisely the kind of chaos we’re all hoping to avoid. We’ll look as if all the things being said in the media, like that insane New York Post article on Monday are true.

They’re not … are they?

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12 Responses to “Business Jet Travel: A Line in the Sand”

  1. Oussama Says:

    Good Day

    A very good article, I agree that in the atmosphere of a crumbling financial market, people has forgotten that business aviation is a market segment and only measure the economies of business trave in terms of airline ticket versus biz jet trip cost and not in the savings accrued by the fact that the people carried cost their companies an arm and a leg and that saving their time is a far greater saving.
    There is a vocal minority of arm chair economists and would be regulators who are driving the debate over the web and social networks intimidating those who do not agree with them.

    Regards

  2. Michael Wardlow Says:

    Do you think it’s possible that Citi’s silence re: the jet was confessory? I mean, boy did they ever dump that thing fast!

    For all your misplaced dudgeon, I don’t see anything here, nor have I seen anything else justifying the use by these taxpayer-dependent businesses of public funds to purchase luxury jets.

    Would you agree that ‘Welfare Queens’ should not pull up to the welfare office in grand Cadillac cars? I don’t see much difference between that kind of behavior and the approach taken by Citi and the auto execs. It’s bad PR, but also just bad.

    I concur that under ordinary circumstances, it’s nobody’s business but the shareholders what kind of conveyance these guys take. But these are not ordinary circumstances, and when our employees are taking a pay cut to keep our small business afloat, I don’t think it behooves me to show up to work in brand new Ferragamos. Nor do I think it is sensible business practice for public dependents to zip around in gold-plated flying Cadillacs in the midst of a mess they created all by themselves.

  3. Bill Says:

    From the exec’s behavior, it doesn’t seem as though they are as convinced about the validity of the business tool aspect as you are.

  4. Wes Leighton Says:

    Doesn’t anybody else feel screwed as a taxpayer? From 2004 to 2008, Wall Street bonuses were over $120 billion based on fictitious profits and failed economic theory.

    First, the car guys need better PR people. One of GM spokesman is a former FAA spokesman, Greg Martin. That would explain why the facts are obfuscated by denial. Old habits are hard to break.

    Second, Citi needs another jet like I do. They have two Bombardier Global Express and two Falcon 900EX. Not to mention a Sikorsky S-76 helicopter. How is a Falcon 7X going to help their new business plan?

    These wizards of Wall Street are so out of touch they don’t get it. How else could a John Thain spend more on an office renovation than new hire RJ pilot make in a career!?

  5. Vince Easler Says:

    I find it extremely hypocritical for our government elected officials to scream about businesses using corporate airplanes as those same officials use taxpayer funded corporate airplanes for there own travel needs. The airplanes at Andrews AFB, just outside of Washington DC, fly more than any other aircraft in the world!!! They are flying around the same bloated big mouthed hypocrit bastards who are so quick to criticise the corporate exectutives.

    The real answers are to be found when true captitalism is allowed to operate… not socialism or nationalism as we are seeing now!!! And if need be, bankruptcy and the courts to settle the financial quandry and how the spoils of corporate failures will be divided. The real answer to this is a trip through bankruptcy court and an acceptance that some businesses or companies (no matter how big) do need to close thier doors and fail. Only then will the winners and losers be determined and the debris of over inflated payrolls and over inflated salaries and yes a few flight departments be fixxed. Risks and opportunities can evolve if we have the courage to face the future!!! More tax payer bailouts and governement involvement is the problem not the solution!!!

  6. Paul Says:

    I couldn’t agree with the previous comment by Vince more. Wasn’t it Pelosi herself who requested a bigger jet when first appointed as Speaker of the House? I think the hypocrisy and corruption in government has never been more apparent than in the last few weeks.

    I understand that the fallout from a big domestic car manufacturer would be devastating to our economy (short term), but I think a more terrifying future lies in nationalization (long term).

    What’s next on the “bailout” radar screen? Airlines? Oil Companies? When do we finally say, enough is enough ?

  7. Robert Mark Says:

    Bill’s comment here is extremely disturbing because I think he has hit the nail on the head.

    No one let’s a valuable business asset fly out the door, unless of course, it was never really that valuable in the first place.

  8. daveg Says:

    I think the almost visceral angry response from the general public has quite a bit to do with the state of the airline industry that they have to use. I know quite a few people, myself included, that will not fly these days for anything short of dire need. People being treated like cattle might just be a little irritated with those that they percieve as being treated like royalty.

    Perhaps corporate flight departments (or whoever it is that does procurement) could buy airplanes that look more like the tools they are, rather the plush luxuries. What’s the average interior finish cost for a Citation X or a Gulfstream V relative to the cost of the airplane? I’m guessing that it is relatively high. All that teak can’t be cheap, right?

  9. Scott Sorel Says:

    Unfortunately, if companies are going to be given handouts, the one giving the money has the right to tell those companies how they are going to operate. It goes against free market capitalism in the highest way but it is fact. Companies have aircraft because of their value in time saving travel. Government can not see the value because they do not know how to run a business. Government loans and funding restructurings are one thing, goverment handouts are another and should not happen. Companies that are successful today need to stand up and do what is right for their future, whether it be buy more aircraft or park them. Free market should decide- not Senators and Representatives.

  10. Eric Says:

    Business jets can be highly practical. When you pay an executive millions of dollars to perform a job do you really want him waiting in the Delta crown room or taking a train to DC just because its PC?

    Freakin BARACK OBAMA took AF-1 to a place in VIRGINIA this week. A 747 and all the crew and cost of that for a 30 minute flight. What BS.

    (rant mode over).

  11. Paul Cox Says:

    …swift efficient transportation for people being paid enough money to warrant the expense.

    I think that at least some of the backlash stems from the fact that a lot of us don’t think that ANY business executive really should be paid some of these ridiculous sums of money.

    If they shouldn’t be paid that much, then suddenly the corporate jet doesn’t make that much sense. After all, if the upper management of a company is only worth 200 to 500 grand a year instead of 5 to 10 million, then their TIME isn’t worth what business aviation costs.

    To me, that’s the bigger issue. Corporate aviation, both during the boom years (the past couple of decades) and the current “run for the hills!” panic to sell off jets, is merely the symptom of the problem.

    The real problem is that the vast majority of those folks riding around in those corporate jets on business didn’t deserve their salaries.

    From a CNN report in 2007:

    If you just consider the average compensation (wages plus benefits) of full-time year-round workers in non-managerial jobs – roughly $40,000 – CEO pay is more like 270 times bigger than the average Joe’s. That’s still a far cry from days gone by. In 1989, for instance, U.S. CEOs of large companies earned 71 times more than the average worker, according to the Economic Policy Institute.

    The IPS/UFE report also compared U.S. CEO pay to that of leaders in other fields and other countries. The top 20 CEOs of U.S. companies made an average of $36.4 million in 2006. That’s 204 times that of the 20 highest paid U.S. military generals, and 38 times that of the 20 highest-paid non-profit leaders. They also made three times more than the top 20 CEOs of European companies who had booked higher sales numbers than their U.S. counterparts.

    The pay gap numbers don’t include the value of the many perks CEOs receive, which averaged $438,342, according to the report. Nor do they include the pension benefits CEOs receive.

    The reality, my corporate jet-defending friends, is that you’re both right and wrong.

    You’re right- if someone’s making millions of bucks a year, then their time is valuable enough that corporate aviation makes sense.

    But you’re wrong to assume that all these dudes that some of you have been flying around are worth it. In fact, most of them are NOT worth it.

    As Rob pointed out in response to Bill’s comment… if it were truly a valuable business asset, they wouldn’t be dumping it as quickly as they are.

    In reality, very few of the bigwigs actually deserve the dough they’re making. Microsoft is trucking right along without Bill Gates at the helm. If Jeff Immelt croaks tomorrow, GE is going to keep cranking out light bulbs and microwaves and programming on NBC.

    To me, that’s what’s driving the panic to dump bizjets. Those folks know the reality- there’s actually little to justify their salaries and perks.

    And if their time isn’t actually worth that much, then flying first or business class and working out of the various airport lounges or whatever starts making a LOT more sense.

    They’re dumping the symptoms of the problem (the bizjets) but not actually curing the problem itself- just like they’re not actually dealing with the structures and regulations (or lack thereof) that got the financial world into the mess they’re in.

  12. Tiaun Says:

    I agree that the companies who are accepting handouts should be told how to operate! And as I have mentioned in another column here, Maybe the taxpayers should know how much they spend when Airforce one takes off!..and That is just one A/C in the government, the same individuals who are chastising any operating aviation department.
    However..Enough already!
    Do not make the mistake in assuming all aviation departments operate in an unethical operating standard as GM Citibank etc have shown..
    The companies who are not asking for handouts continue to run their companies efficiently and still manage to keep their aircraft..I am a corporate flight attendant who has personally witnessed companies that will operate in the manner of which the planes are meant for.. Business.. There are Meetings in smaller rural areas of the country which would be time consuming to get into,not all business is done in large metropolitan cities.. so what could be done in a day with a corporate jet could take as many as 3 days to do, fly into a larger airport, car rental, hotel costs, drive to destination, meeting,..that is just getting there.. I have seen papers strewn out over tables getting ready for meetings, execs are unable to do this confidentially in in the presence of first class passengers or a lounge,..only if they are able to get to a lounge due to changing planes in order to get to their final destination..
    Although I am not defending those who have abused the privilege, but am defending those who continue to use the guidelines as a Company Aircraft.
    The misguided information the media is getting to the public is doing more harm for other properly run aviation departments.

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