Tom Haines

Business aircraft as scapegoats

December 10, 2008 by Thomas B. Haines, Editor in Chief

Let’s forgo the debate about what a bad PR move it was for the top executives of the Big Three automakers to each fly a business jet to Washington to plead for money from Congress. And for Ford and GM then to immediately cave in to the resulting media storm and vow to sell their business airplanes and close their flight departments. Chrysler charters business airplanes.

The latest–and most disturbing–news is that the government’s proposal for boot-strapping the manufacturers out of their financial quagmire requires them to sell their airplanes and to not use general aviation aircraft in conducting their business.

Even near bankruptcy, these are still three of the largest companies in the world–with plants, vendors, and customers all over the globe. They have every need for business airplanes. And while charter may be a solution for some situations, for regular users, it doesn’t take long to justify ownership.

Let’s remember that business aviation isn’t just about moving executives around. Business airplanes fly every day with critical replacement parts that keep assembly lines from shutting down. We have personal experience that Ford uses its airplanes that way. Companies move engineers and software specialists to factories to solve critical problems that might otherwise put thousands out of work. Business aviation allows teams of employees to efficiently work while en route to a convenient general aviation airport.

And speaking of efficiency, there are definite advantages to being able to access some 5,000 airports around the country versus only the 500 or so with airline service and only about 70 with frequent airline service–an ever dwindling number as airlines cut service to smaller airports in attempt to improve their own bottom lines. Nearly 100 cities have lost airline service in the last year alone.

Study after study shows that companies that own business aircraft handily outperform competitors in the same field that don’t use business airplanes. Wal-Mart, the largest retailer in the country and a model of efficient operations, has nearly 4,000 stories and more than 1.3 million employees. How can it manage such far flung operations from Bentonville, Arkansas? By the use of 20 some business jets. Founder Sam Walton was a pilot. The company hired its first corporate pilot in 1969 and has never looked back. As with most companies, Wal-Mart uses its airplanes to efficiently move employees of all levels, not just executives. By one count, 86 percent of the people aboard business airplanes are not at the executive level.

What the American taxpayers want is an efficient use of their tax dollars. What the government is doing with its prohibition on the use of business aviation is hamstringing the auto manufacturers from using a tool that may be valuable in some situations. No one is suggesting that general aviation is the right tool in all cases. Companies operating business aircraft purchase some $12 billion worth of airline tickets annually. Most of the time companies make wise, prudent choices in the use of business aviation–that trip from Detroit to DC being an exception. Let’s not throw the baby out with the bath water.

Is it just me or are business aircraft just the latest scapegoat for poor business decisions and the desire by some politicians to score some PR points? What do you think?

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40 Responses to “Business aircraft as scapegoats”

  1. Mike Flannelly Says:

    Tom,

    I whole heartily agree. What disturbs me further is the fact that these same “crusaders” of right, just and fair do not seem as intent on fixing the real issues facing not only our industry, but this economy as a whole.

    -Mike

  2. Eli Gershkovitch Says:

    Tom,

    Your points are all valid except you’ve left out one essential fact. GM’s CEO flew to Washington in a $36 Million G-IV. Had he chosen to fly in a King-Air, Avanti or Pilatus, he could have in fact argued that flying was more economical than purchasing a half dozen full fare economy tickets. Instead, GM’s choice of aircraft on this occasion did indeed make Business aircraft the scapegoat, rather than the true culprits, Business executives.

  3. Jake Says:

    I am quite passionate about GA as well, and there are times when flying to a destination makes financial sense in my own life (in a 4 place single, mind you). However, there are some aircraft that are just not ever cost-effective. I marvel at Citation Xs whenever I see them, and yet, there is no justification for that level of fuel burn for an aircraft of that passenger capacity; except for enjoyment, status, or convenience (a few extra knots). While I would love to own one if I could afford it, to do so on the dime of a company that is being forced to lay off countless thousands, and worse yet, is teveling to beg for federal money, is not ok. As the last person pointed out, it was not a Citation X that was used, but I find that aircraft an effective, dramatic example. I would have felt much differently if they had landed in a Cherokee, or even perhaps a King Air. Still, in all honesty, it probably would have made a lot more financial sense to get a few 200$ tickets on jetblue.
    It is one thing when someone chooses to operate luxury business jets due to large personal wealth, and desire for the convenience. But it is quite another to have it paid for by a company (or worse yet, and far too often, by the government)

  4. Jim Says:

    The automakers are in triage mode. Let them/help them figure out how to use charter service or fractionals within the guidelines of the bailout.

    AOPA could aid the inclusion of such a clause in the bailout by producing a map showing auto plants, engineering rewources, and tier one/two suppliers and their proximity to smaller GA airports.

    Otherwise, I think AOPA should stay clear of *direct* support of these particular flight departments. Any attempt to justify the use of corporate AC for these guys is going to look bad in the mainstream media.

  5. kelly grant Says:

    From what I’ve seen, Allen Mulally turned the Ford ship around months before this crisis made it to Washington. He & his staff were everywhere: dealerships, Wall Street, assembly line floors, auto shows…. everwhere… traveling by corporate plane.

    It will be months before the public recognizes what he did. I wonder how many of the congressmen in that hearing room rode a corporate jet to a fundraiser that week. I know our congressman isn’t bashful about asking for a ride.

  6. Alex Kovnat Says:

    I would like to add the following observation to the above discussion on business aircraft.

    As a member of the general public, I am well aware of the inconvenience we, when we need to be airline passengers, have to go through regarding security. Since nobody wants another September 11 2001 outrage, it is only right that we put up with various security precautions.

    Now what if a major entertainment or sports world celebrity, or a major-caliber corporate VIP, were to travel on the airlines. Can you imagine the security precautions that would be needed to protect their privacy and safety i.e. from obsessed stalkers, autograph-seeking fans, pushy women, punks looking for fights with football stars, etc? Such precautions would only add to the inconvenience the public already has to put up with when flying the airlines.

    So let the sports and entertainment world celebrities and corporate VIP’s have their business aircraft (BTW I’ll scream next time I hear anybody call a Gulfstream a “Lear Jet”).
    Its better for them and better for the public.

  7. John Says:

    These government demands show why we should all be angry at the auto-execs. By begging for government money they have now opened the door to government control. This is what you will get. Idiotic decisions made in the major industries of this country made by camera-hungry politicians. These politicians do not have advanced degrees or lifetime experience in the industrial or business world. More likely they were drama majors.

    Thanks big three. For this reason and no other I hope the big three execs get the boot. They asked for government control. Most likely they will now get it.

  8. Daniel Clapp Says:

    Doesn’t the Air Force maintain a fleet of VIP haulers up to and including Air Force One?

  9. Bruce Ziegler Says:

    At the hourly salary of these executives (open for greater debate), I would rather have them travel in the most time effective manner and in a way they can continue to conduct business while enroute. Same reasons I justify my lowly Skyhawk. It is another business tool that increases productivity.

  10. Bill Bedell Says:

    Jake’s last paragraph, “It is one thing when someone chooses to operate luxury business jets due to large personal wealth, and desire for the convenience. But it is quite another to have it paid for by a company (or worse yet, and far too often, by the government),” hits the nail on the head.

    Less than 2 years ago Speaker Pelosi demanded a B757 jet because the G-III provided to her at tax payer expense did not have the range to take her home to San Francisco non-stop every time. Our government has been operating in the red for much longer that GM, Ford, or Chrysler. Our constitution states that our government is supposed to “provide for a common defense.” Politicians have seen to it that our tax dollars are subverted by taking, fuel, aircraft, and personnel out of the military role to be wasted on those who write the very laws making airline travel so miserable.

    GM, Ford and Chrysler are profitable overseas where they have no CAFE standards, California emmission standards, paid benefits to homosexual partners, or union strong-arm tactics. General Aviation is being slugged in the face by the same politicians supporting LASP, EPA, Secret Service, and CBP infringing on our constitutional liberties and driving even more Americans towards bankruptcy.

  11. Jerry Preussner Says:

    Tom,

    I would like to see the lawmakers in Washington stop accepting rides on corporate aircraft if it such a waste of money. Whatever a persons feelings about the bailout, does anyone with even the slightest hint of business sense think that it is a good idea for the some of the captains of US industry to stand around in an airport terminal waiting to get on an airplane. I would have liked to hear the comments from the media if the CEO of GM was a no show at the congessional hearing because his flight got cancelled. Let’s put it another way. It was disclosed through the media that the CEO of Ford makes 24 million a year. That equates to $11,538.46 per hour. Yeah, as a stockholder in Ford, I want to know that he’s standing around in an airport terminal trying to run the company from his Blackberry.

    Whatever your feelings are about the choice of airplane that the big automakers use, they are not going to fly around in a Bonanza. Sorry guys! (And yes, I think the Bonanza is a very nice airplane, so don’t even go there). These companies own this type of equiptment based on the mission requirements of the company, which is global travel. So why would they charter a King Air, when they have a perfectly good airplane and crew ready to go on moments notice? Also, given the scope of the meeting, it would also be fair to say that there was also more than one guy riding in the back of those G’s.

    The big three have lots of problems for sure, but I don’t think its the flight department budget that got them there.

  12. Roland Desjardins Says:

    Everyone addressing this issue make very fine points, but I thing that what dismays me is the inability of those corporate giants, in the face of such self-rightous indignation, are unable to provide even one point of justification, pointed out in this blog, for the use of corporate aircraft. Security and on-time arrival are two very strong points that could have very easily (without malevolance) been provided to temper such attacks on corporate aircraft use. NBAA and AOPA need to start providing corporate America with better PR assistance to counter these unwarranted attacks, if we are ever to gain respect from the general public.

  13. neal mcconochie Says:

    In the condition of change, or chaos my come opportunity. Yes they may close there aviation department but they may not stop flying in “Business” aircraft. If I was Netjet or a charter service, I would be knocking on their door inquiring if they would want to outsource there continuing needs for timely aviation service. This may be a better way to manage their aviation.

    all the best neal mcconochie Indy

  14. garnett haubelt Says:

    Mr Haines,

    As a former Naval Aviator, Business Owner, GA owner of over 26 yrs and a CFIIAM, I am tuned into the functionability of GA A/C in the business world. I believe you missed the point, though, in your article about the BIG THREE and their fleet. Going to Congress in a G-5 for a handout because you have missmanaged your company furthers that incomptentcy. Conversely, Congress should not mandate shutting down/getting rid of all of the fleet, just those large expensive long haulers which the CEO’s could use scheduled airlines for said business meetings. Hussling expidators around the company to keep it working doesn’t require G-5, 4 etc. Let the BIG THREE get lean an mean by reducing their gass guzzlers and re-aligning the work & file labor cost …… then give them a LOAN with collateral.

    Respectfully

    garnett w. haubelt
    AOPA 00670999

  15. Stuart Smith Says:

    I believe there will be a shareholder and taxpayer revolt against private jet travel. The reporting and accounting for the true costs of such travel are murky, at best. At my last company, more than half of our private trips were less than 400 miles, carried two or fewer passengers, and both departed and arrived at major airports with non stop commercial service available. There is no amount of “convenience” that can justify the additional cost. Companies such as Wal Mart, with thousands of locations in remote locations have a well run and well thought out corporate flight departments. Flying 3 CEO’s from Detroit to Washington DC on 3 seperate jets is a symptom, not a problem.

  16. Steve T. Thibodaux Says:

    What often gets overlooked in the discussion of business aircraft use by corporate executives is the fact that the cabin of a business aircraft is an extension of the corporate boardroom. When sensitive discussions are taking place behind the closed doors of a boardroom or office the same discussions can be held in the secure environment of a corporate aircraft while en route. This is not the case when traveling in the cabin of an airline, nor in the terminal building awaiting a flight.

    Eavesdropping on conversation involving strategic or tactical business plans, expansion of a business in the form of mergers or buy-outs can affect the price paid when involving a publicly held company. Industrial espionage sounds melodramatic, but it is real. Getting the jump on competition has real value.

    If a business suffers because of lost executive productivity so too will the employees. Most will not realize this. It is a hidden cost. Even executives have to be productive.The price of the aircraft can be easily seen. The cost to the company by not having that aircraft is not as apparent.

  17. Colin K. Says:

    There are plenty of direct flights from DTW to DCA, so the only thing the company jets saved these guys was a little time standing in line and taking off their shoes. An hour, maybe?

    RE: Jerry, as a shareholder I’d be a lot more worried about my company’s CEO not having the foresight to realize that taking the company luxury jet to Washington to plead for taxpayer dollars might not be such a good idea. If he’s that dense on that issue I wonder what else he’s got his head up his tailpipe on. No wonder these companies are going bust.

  18. Mike H. Says:

    Tom,

    It is certainly not just you. How insulting it is to be lectured to by the very people largely responsible for the economic mess this country is currently facing, namely the pinheads in Washington. To be more precise, Congress, who I might add, once again, parade their ignorance and disconnect to everyday “normal” life in America. Let’s not also forget to point out that many of these so called “representatives of the people” are more often than not flat out hypocrites who fly on taxpayer funded private aircraft courtesy of the 89th Airlift Squadron out of Andrews AFB, thank you very much Nancy Pelosi. What is going on in Washington right now, not just with GA, should have everyone scared as hell!

    Mike H.

  19. Bruce B. Says:

    As i under stand the situation, and as reported by AIN, the auto makers may not own or control the aircraft. Charter operations appear not to be prohibited.

  20. Steve Fritz Says:

    The use of corporate jets is a business efficiency issue. The CEOs of the auto manufacturers should have been able to produce a detailed analysis that shows the cost effectiveness of business jet travel and a corporate flight department because they should have done this for their shareholders, not the politicians. If they can’t or won’t share this analysis, they deserve to be pilloried.

    That said, there was no way they could have responded to the question poised, since it was not done to elicit information but to demagogue the issue. Answering the question in real time would just have played into the demagoguery. The time to provide the answer was the next trip, when instead of driving two days to get to Washington (and two days home) they would have flown, proudly noted the fact and pointed out that they saved $X for the company by doing so and that was they way they would husband taxpayer funds if they received them.

    Anyone want to bet that the CEOs who drove to Washington drove home vs. taking the jet? No one was going to ask them if they drove home.

  21. Dave Purscell Says:

    Tough call. Their insurance companies would CERTAINLY not have allowed the top execs from the big three to travel together in a single GA aircraft…or on the same airline for that matter. The value of there time means that driving there would waste untold amounts of money just to placate a few Washington ID-10-Ts. Unless there is a lot of shuttle service between those two markets, airline doesn’t make sense. GA was and is frankly the best alternative.

    That said, GM’s choice in aircraft was audacious to say the least. But he is in good company. Obama spent $500,000 just to customize his chartered jet for the two month long campaign season. It looks like flying around in a gas guzzling (900 gallons/hr) completely customized airliner might just help you achieve your goal.

    By comparison, McCain spent less then $25,000…including the ferry flight. Look where that got him. :)

  22. Jay Says:

    While I’m sure that there is diversity, perversity, gross waste and corruption at the big 3, they made it even more obvious that they are slow, inefficient and clueless when Nasty Pelosie called them down for flying large company aircraft to Washington. All 3 missed a perfect opportunity to remind the entire world of her demand to have a personal Boeing 757 to fly her at taxpayer expense because she feels that a lowly Gulfstream IV is beneath her aristocratic, feminist dignity. There are some very harsh realities about to set in and those who have lived luxuriously at the expense of others are not going to be able to hide behind their political correctness any longer when it happens. Hungry and bankrupt Americans can regain realistic thought processes at amazing speeds.

  23. Jim Says:

    Where was AOPA in the discussion? Somehow I get the feeling that Phil would have had a response that was insightful and well reasoned, if not well received. Maybe it’s forthcoming?

  24. A. eugene Seasly Says:

    Mr. Haines,

    It’s highly probable the three CEO’s of GM, Ford and Chrysler had other
    business to attend to, enroute or return, concerning their travels to
    Congress this past week. For The Speaker of the House to chastise them
    publicly displays her constant ignorance.

    The use of corporate aircraft at this level is the only way to go. I sincerely hope all three of our beloved and proud auto manufacturers make it work.

    Why are people so riddled with envy concerning wages and salaries of all
    auto making people, management and the rank and file?

    Once these icons go, they will never be back.

    I am more mortified with the $700 billion dollar donation to the banks
    and lenders of this country.

    I support all aviation, as displayed by my member number to our
    wonderful organization, AOPA.

    Fraternally,
    A. Seasly
    AOPA member #01081504

  25. David Thomas Says:

    I am an enthusiastic pilot and also a tax payer. In our current critical financial situation it is totally irresponsible for AOPA to defend the big 3 automakers use of GA aircraft while they are begging for financial relief from the rest of us to correct their own bad business judgment. We are all having to make sacrifices and GA has to also. GM does not own jets to ferry parts around. It owns them to make life easier for the top brass and the parts are loaded if no one else needs the hydroplane. If you would act responsibly and advocate sharing the pain you might eventually help the country out of this mess. If you persist in a selfish defense of the GA industry you will drag us all into an even deeper mess. Our flying is an enjoyable but discretionary expense. Lets not fool ourselves that its an indispensible necessity.

  26. Brian Kough Says:

    Here’s an issue that AOPA should be out in front of and make an immediate statement against this political attack. The lack of a public renouncement on this political theater perpetuates the myth of private, GA aircraft use only by the privileged and wealthy. This leads to lack of public support for all of us as in the case for local airports (why should I support a noisy, expensive airport near me), to sensationalization of aircraft incidents/accidents, and lack of understanding of the beneficial aspects of business/GA aircraft in general.
    Obviously there has to be a positive microeconomic case for the use of business aircraft otherwise most businesses wouldn’t be operating them! They are, after all, in business to be profitable. (Although this may be in doubt in the automakers’ case given the enormous government hand-outs that are being discussed – perhaps they are in business to guarantee U.S. jobs, industrial base, etc.)? Despite the “appearance” of fat cats riding around in luxury like Austin Powers, these business assets enhance operations and efficiency. I’m most surprised that some of the AOPA members posting above don’t recognize this. I’m also surprised that the executives when questioned weren’t able to articulate a few of the values that these aircraft bring to their business, e.g.,
    – Efficient use of time for executives/employees (As a stock holder do you really want a CEO or other high paid employee waiting on commercial timetables or standing in a long security line in Chicago behind grandma and mother with stroller holding on to their shoes, belt and unbagging their laptop, liquids, gels, and pastes?!) While this may be very satisfying on a psychological level, it doesn’t make good business sense in many cases. The same goes for puttering around in an electric golf cart to get to congressional hearings.
    – Ability to conduct private business discussions en route.
    – Security for publically recognizable figures.
    Let’s not get into finger pointing comparing business leaders and political leaders and who rates a private flying conveyance. Evaluate the needs on economic grounds and/or security or other logical reasons. If it makes economic sense for a CEO to fly in a GA aircraft for efficiency/effectiveness, then let’s get the word out that that’s the case. In Speaker Pelosi’s case and despite one’s political persuasion, do you really want the third-in-succession political leader exposed to a less than ideal security situation? We need to promote the use of GA aircraft, especially in this rough economic time as so many flying related businesses are falling on hard times. Perhaps a discussion on the category of aircraft is useful; whether a G-V seems ostensible over the top, or whether a B757 is necessary for a single political leader is valid, but we’re doing ourselves a disservice if we get caught up in who deserves an airplane ride without analyzing the business case. In the words of Sgt. Friday, just the facts ma’am, just the facts…

  27. Jim L - Minneapolis, MN Says:

    Why should Congress have been so appauled by the business travels of corporate America when the Big 3 auto execs arrived into town last week? My only complaint is that since the CEO’s from each company was going to be at the same place, on the same day and at the same time, couldn’t arrangements have been made for the Big 3 to ride share and take 1 plane? These guys need to set an example and show they are seriious about changing their ways and it’s not business as ususal anymore.

  28. Chuck VanSloten Says:

    Rules already exist when traveling on the Gov’t dole. They are the Federal Travel Regulations. These allow for travel by GA if advantageous to the Gov’t (or one would assume a Gov’t bankrolled business).

  29. Scott Braukhoff Says:

    Meanwhile the Speaker of the House is transported every week back to California on a chartered jet.
    Our legislators had better stop worrying about how to get and keep their jobs and worry about actually doing them.

  30. Jerry Hock Says:

    Tom,

    GA use in business is a good thing. I had a business for 34 years and used my airplane frequently. A lot of my short flights kept me from spending the night away from my family. It was nice to be in my own bed and eat supper ay home with my family. If it was a long flight I would take a commercial flight.
    The more you fly the more efficient you get and that makes the flights safer.
    My theory is have the right aircraft for the mission.
    Go GA!

    Jerry
    AOPA#00791009

  31. David Dixen Says:

    I remember a story told by a freind of mine. Ford had recieved and shipped some bad parts to all Ford production lines. Every line in the US was about to shut down to avoid useing the defective parts. My friend said “. . . we scrambled every plane we had and flew around the United States all night . Ford kept all of it’s production lines running until overnight trucking and rail could replace all the defective parts.”

  32. Stephen Cote Says:

    RE Tom Haines’ comments on biz-av as a scapegoat.
    While I have little sympathy for the “Lords Of Industry” (Captains implies real leadership), I agree with Tom’s analysis. I can be a bit paranoid about aviation; feeling sometimes that it is all to deny a little fish like me a lifelong desire for flight But is this just another attack by the airlines to kill off GA. Leaving them with ALL the marbles and options?
    Personally I feel that if Congress wants to take away those business and private airplanes, THEY should, individually and collectively, NEVER be allowed to use GA again themselves. No cushy trips to junkets, no weekend visits home to consituents, and especially NO air use for election campaigns!!! See what they say then.

  33. Eric Peterson Says:

    It’s easy for us, as pilots, to understand the efficiency and effectiveness of GA. But this goes to prove something that I deal with in conversation every time I speak of flying to a non-pilot. People, no matter who they are, think flying other than the scheduled airlines is a luxury, a frivolous hobby and expenditure.

    When I mention that I’m a pilot (who is not a doctor, or ex-military personnel) they all have similar responses. I usually jump on my AOPA soapbox and explain what GA “really is”: the news helicopter, the emergency medical flight, firefighting, search-n-rescue, the help after disasters, the business being more time efficient, even the average Joe expanding his/her knowledge and skill, etc.

    I usually make my point of efficiency when I ask why this person doesn’t take the bus to work but drives their own car instead… I get the same answers: “It takes more time, they don’t stop where I need them to, it doesn’t run on the schedule I need, I usually don’t save any money!”

    I then explain that for many people, the airlines are the same way… and flying oneself or using business GA is no more “extravagant” than using your car in lieu of the bus. I always get the same answer: “Wow, I didn’t think about that.” My point here is that this whole incident really shows me that GA is completely misunderstood by people from ALL walks of life. So when some reporter who is not educated in GA gets a hold of a story… it’s easy for him/her to pander to an audience with shock and awe.

  34. Aircraft Parts Says:

    I think one of the things that these companies should do is to shave many hours off for the executives travel schedules. Isn’t it that Gary Ackerman asked big three’s executives “Couldn’t you all have downgraded to first class or jet-pooled or something to get here?” when they went to Washington? That could have been hurt.

  35. Ian Says:

    Nice stuff. I tried a car dealer and bought a Electric Golf Cart and I am very satisfied.

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  37. Avionics Says:

    Tom,

    I agree with you that these companies are using only doing this for publicity. I don’t see any other valid reason in using expensive aircrafts.
    But this thing happens also to other big companies not only to those companies you mentioned.

  38. Boeing 737 parts Says:

    I don’t see any return when you use expensive planes for a regular transportation. I would be better to invest the money they used in maintaining these planes for other valid business matters. Its evident that there is a corruption happening.

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  40. Aircraft Test Equipment Says:

    I would say that it is a big mistake for the Big Three automakers to each fly a business jet to Washington just to plead for money from the Congress. It’s not just because there were negative feedbacks from the public but it was their own companies which were classified as repulsive!

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