November 20, 2008 How Not to Win Friends for Biz Aviation |
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By Paul Bertorelli
Here's a suggestion that someone at Ford should have made to CEO Alan Mulally before he took his trip to Washington yesterday.
"Gee boss, I've been thinking. It might not be a bad idea, seeing as how we're asking the government for a $25 billion bailout, if we didn't take the corporate jet to Washington, or maybe catch a ride with Rick Wagoner instead."
Of course that didn't happen and all three of Detroit's auto CEOs got roundly roasted in the press for having the tin-eared, clueless temerity to fly their corporate jets to the capitol to ask for government handouts. Business aviation caught some collateral damage and must now attempt to defend the indefensible, which is that corporate airplanes, for all their value as time-leveraging-production-enhancing business tools, are also subject to profound misuse.
And the misuse here has almost entirely to do with appearances. But in a world where taxpayers are being asked to pay for corporate management incompetence, appearances do matter. My guess is that in the rarified world of the high-power CEO where Mulally lives, having the jet on call insulates him from having the slightest inkling of what the outside world thinks of how business aircraft are used.
The standard boilerplate to explain away business aircraft costs is that they leverage the expensive CEO's time to make him more productive and, theoretically, the company more profitable. There's also a security consideration. In the world of aviation, we accept this because it's largely true. Business aircraft usually more than pay for themselves.
Putting a quick pencil to the numbers, Mulally's hourly pay is about $2000—base rate and bonuses, not including stock options. The Wall Street Journal reports a $2 million base salary, plus $4 million in bonuses and another $11 million in stock options. It also said he earned $22 million in 2007. I calculated his hourly based on 60 hours a week which, if I were a Ford stockholder, I'd damn sure expect him to be working. If you use the higher figure, his pay is $7000 an hour. But who's counting?
So in this case, trying to sell the taxpaying public on the aircraft-as-efficient-business-tool actually does the biz aviation industry more damage than it does good. If even I don't buy it, how can we expect the average newspaper reader or television viewer to sign on? In this case, someone at Ford, GM or Chrysler should have picked up on this, if for no other reason than self-survival before an angry Congress. But, of course, the Big 3 really are the gang who couldn't shoot straight. Profound management stupidity got them into the situation of having to ask for a government dole, so it's probably too much to expect them to be sensitive to the sort of PR nightmare a first-year intern at Burson-Marsteller could see coming a mile away.
Just to tie this mess up with a nice red bow, I thought Mulally's response to one question was especially tone deaf. Chrysler's Robert Nardelli at least offered to work for $1 a year while his company tries to right itself. Chrysler is now privately held, so it's anybody's guess if he'll actually do this—but the thought is at least nice. He maybe gets the PR.
When Mulally was asked if he would reduce his pay to a buck, his reply was a classic. "I think I'm OK where I am."
Well, at $6 mill per, I guess so.
Further tarnishing the glitter of legitimate business jets is the notion of excess luxury. You can see the need for phones, faxes and internet access and even a sleeper couch. If the caterers bring cracked lobster, well fine. These are productivity tools, after all. But do they really need the gold-plated fixtures in the lavs and chilled water dispensers? Call this believer in biz aviation a skeptic.
General aviation's headwinds are strong enough without numbskulls like these guys, as one congressman put it, showing up in the soup line dressed in high hats. Next time, Mr. Mulally, how 'bout plane pooling it?
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