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Dear Mr. President: Give Us a Break, Willya?

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I was traveling Tuesday night and missed the President's State of the Union message. But over breakfast Wednesday morning, I caught a CNN summary of it, a snippet of which began, "This time, CEOs won't be able to use taxpayer money to pad their paychecks ... ." As that sentence unfolded, I held my breath: Is he going to take the easy shot at the private jet? Sure enough: "... or buy fancy drapes or disappear on a private jet. Those days are over."

This is the verbal equivalent of kicking a guy when he's down or of running a two-minute drill in football when you already lead by 48 points. Enough already. We get it. If I were given to similarly cheap shots, I might point out that our President is the beneficiary of (if not the largest) the most-expensive-to-operate private jet on the planet. What President Obama is doing, of course, is surfing the wave of populist anger about corporate excess. The bizjet segment is, unfortunately, being dragged along for the ride. Admittedly, it's not like he doesn't have a case here. We now know of at least three fugitive financiers who allegedly bilked investors for billions and who, of course, had private jets or used them. One of them even owns the FBO at my home airport.

Just as an aside, if I were President, I'd haul the head of the Secret Service into my office and tell him to figure out a way fly me in an Air Force 737 for at least domestic travel. And before he even spoke, I'd tell him "we can't do that Mr. President" is not on the table. Call me naive, but the Presidential barge and all that goes with it is less necessary than it is a product of a security bureaucracy that's been given an unlimited budget and unquestioned authority. If scaling back is good for industry, it's good for the chief executive, too, the majesty of the Presidential office notwithstanding.

But I digress. The rising populist view is that business jets are a symbol of excess and, as noted, there have been examples. How should the industry respond? One way not to respond is to react like a stuck pig and scream about how unfair it all is. The industry is, for the time being, holding the short end of the stick and we've got to get over it. As my colleague Mary Grady pointed out, on the anniversary of Darwin's birth, adaptability is the notion of the age.

NBAA's No Plane, No Gain PR campaign is on the right track, but I don't think it's specific enough. The public, stockholders and boards need to be shown real numbers describing the economic advantages of business aircraft. Show me an invoice for airline travel for five people, show me the business aircraft costs, including time savings. But please, don't wear me out with the argument that the CEO is too important and too time pressed to run his shoes through the X-ray scan.

I am absolutely certain that these economic arguments can be made. When we were based in Connecticut, I routinely used our Mooney for multi-stop business trips that wouldn't have been feasible in any other way. There's no question that these same economics still exist and still apply to many companies. But here's the thing: They don't apply to every company all the time. In an age where mass transit is more politically acceptable than private jet travel, the adaptation the industry has to make is toward efficient, justifiable use of these expensive assets. If that means a Net Jet position instead of a full-up flight department, so be it. Remember Darwin.

But, as an industry, I think it's critical to keep our eyes on the hard-headed numbers to show—not just talk about—the bottom-line value of business airplanes. In the opening lines of this blog, I indulged myself the pleasure of pointing to what might be called a Presidential excess. But really, that's just changing the subject away from what matters. It's up to us to make the argument (and the sale) and we won't do that by discrediting either the President or Congress, but by selling the practicalities of business airplanes.

Comments (13)

I totally agree with the point whether you really need a couple of (!) full fledged 747s to fly the President around the US. But to his credit, he has refused to get a new helicopter... I think one of the biggest problems is that a private jet (as the word private suggests) is still considered one of the most prestigeous luxury items, just like a speedboat or other fancy toys. And in the discussion, celebrities with their G Vs are thrown into the same pod as CEOs using jets for serious (and cost effective) business. Maybe the industry could influence public opinion by not putting the marketing focus on fancy leather recliners and interiors or emphasizing the privacy and style (like it's been so far), but by promoting the jets as small airliners that work the system just like any other plane and are really a business tool.

Posted by: Christopher Neuhaus | February 26, 2009 4:39 AM    Report this comment

As I said in my writeup in "viewpoints" in BC/A this month, ALL tools used by businesses must withstand the "value for money" sniff test if they are to survive during economically lean times.

This requirements goes doubly for high "absolute dollar" costs such as aircraft and other large capital equipment costs, where the large amount of dollars needed to procure, operate, maintain, and insure them MUST be balanced by economic value to the company, otherwise, it will likely be the target of a "layoff".

-avi

Posted by: Avi Weiss | February 26, 2009 8:05 AM    Report this comment

In a free country, the only people that a CEO should have to convince when deciding on the purchase of a private jet are the owners (shareholders) of the company. If the decision is a good one, the shareholders will benefit. If it is a bad one, the shareholders will lose. Taxpayers (and the President) need not be concerned either way.

The fact that such decisions have now become exercises in influencing public opinion, and rate a mention in the presidential State of the Union address, is scary.

Expect far worse ahead -- the nebulous entity known as "the public" won't be convinced by mere economic arguments.

Posted by: Raman Gupta | February 26, 2009 8:28 AM    Report this comment

When businesses start begging for public money, the taxpaying public becomes the shareholders that have to be convinced. Overcoming the perception of luxury with hard economics may be a tough sell in the short run. I use my plane for business as well, but convenience runs ahead of economic benefit most times.

Posted by: David Montgomery | February 26, 2009 10:08 AM    Report this comment

David:

"When businesses start begging for public money, the taxpaying public becomes the shareholders that have to be convinced".

Absolutely true. Which is why businesses in a free country should never be given public money -- for any reason.

Politicians love handing out taxpayer money. It gives them power because "its public money" (as if people *voluntarily* contributed into some huge kitty) and therefore the "public interest" must be protected. This whole economic crisis and bailout/stimulus is a politician's dream, and will expand government power and control, including in aviation, like nothing Americans have ever seen before.

Posted by: Raman Gupta | February 26, 2009 10:54 AM    Report this comment

Time for high speed rail!

Posted by: Rob Gould | February 26, 2009 10:57 AM    Report this comment

The biggest hypocrite, IMHO, is Nancy Pelosi. As Speaker of the House she is entitled to government (Air Force) transportation between California and D.C. She refused the use of a Gulfstream as it needs to make a fuel stop mid-continent and forced the AF into providing a 737 that can make the trip non-stop because her time is “too valuable” to be spent on the ground refueling. If you watched the President’s address all she needed was a couple of pom-poms to go with her jumping up and down to clap every time the President took a breath.

Posted by: Rich Martindell | February 26, 2009 11:13 AM    Report this comment

Audit: Ky. airport execs racked up lavish expenses By JEFFREY McMURRAY, Associated Press Writer Jeffrey Mcmurray, Associated Press Writer Thu Feb 26, 4:32 am ET

LEXINGTON, Ky. - A small commercial airport in Kentucky - and the taxpayers who support it - picked up top executives' tabs in recent years for Hannah Montana concert tickets, Nintendo Wii video game bundles and even a $4,400 strip club check, according to a state auditor's report. The report released Wednesday outlines indulgences ranging from pricey electronics and exercise equipment to lavish meals and champagne. In three years, officials tallied more than $500,000 in questionable personal expenses. Kentucky Auditor Crit Luallen said the former executive director at Lexington's Blue Grass Airport created a culture of wasteful spending so vast, employees sometimes were paid twice for the same expense and used airport credit cards as if they were personal checkbooks.

Posted by: Rob Gould | February 26, 2009 11:27 AM    Report this comment

I forgot who recently said that the "Wall Street Mentality" has to go. When the huge banks and securities firms were flying high, the shareholders felt that all was well with corporate abuses...not just luxury jets to take the ceos to golf outings, but huge salaries and bonuses. It was even okay for CitiBank to commit to spending 400 million over 20 years to put their name on a silly stadium. As long as they're making money for us, anything goes! Now, I'm in love with aviation, but even I would want to vomit everytime that I read that one of the giant banks would layoff hundreds of its people (so its bottom line would look better to Wall Street) and at the same time new and faster toys were being procured! I remember when companies, such as Chrysler started to operate G 1's, they were set up like mini-airliners for ferrying employees between plants. Things have really changed. When I fly to a vacation place like Bar Harbor, Maine, I have to park my poor single on some out of the way ramp, so as not to get in the way of the scores of jets that have brought their captains of industry to do business (what a laugh)! We must start to hold these people accountable. It is very difficult for small investors to make themselves heard (most shares are held by overpaid fund managers) at shareholder meetings, but now that Uncle Sam is investing our money, we should demand to be protected from this greed and over-indulgence.

Posted by: Steve Tobias | February 26, 2009 1:29 PM    Report this comment

Well my first thought when I saw the subject of the blog was not again. But I think this time you have it pretty close to right Paul. Yes corporate aviation has a place. Just have to have the numbers to prove it. The idea that anything goes as long as the shareholders are OK with it is a dead concept. When shareholders were piling up the big returns they were ignorant to corporate excess. Now that the economy has turned around and shareholders are all losing money, I doubt that if you left it in their hands there would be any corporate jets regardless of whether or not they could be justified financially. If the manufacturers and supporters of these aircraft want to sway public opinion they need to stop with the emphasis on plush leather, amenities, etc. If its a tool that needs to be justified it doesnt need all those perks. I'm sick of reading about how plush the latest Gulfstream (or whatever) is in Flying Mag. I read Craig Fuller's commentary in my latest AOPA mag. His theme was that an attack on one segment of GA is an attack on all of GA. Sorry Mr. Fuller but please dont lump me in with the corporate elitest in their plush jets. I had to build my own airplane to be able to afford it. I dont think I need to be thought of by the general public the same way the 3 auto execs are. Imagine if those three chumps had been smart enough to share a single charter jet on their flight to address Congress we wouldnt be talking about this.

Posted by: Mike Wills | February 26, 2009 2:17 PM    Report this comment

Maybe the Senate should look into video-conferencing!

Posted by: Steve Tobias | February 26, 2009 2:18 PM    Report this comment

Rich Martindell, you might want to double-check your information on Nancy Pelosi's transportation. The reliable Snopes website says Pelosi's choice of aircraft was determined by security requirements (she's 2nd in succession to the US presidency, after Cheney or Biden), imposed by the House Sergeant-at-Arms Bill Livingood, not Pelosi. Those requirements include the ability to fly non-stop from Washington DC to her home district. It says that she takes whatever aircraft the Air Force provides to meet the mission: sometimes a C-20B Gulfstream III, sometimes a "slightly larger" C-37A, and only once through 2008 did she take a C-32 (Boeing 757, not 737 as you wrote).

Note also that Pelosi's district is in California, and the previous Speaker, Dennis Hastert, was from Illinois. It's a longer flight from DC to California than to Illinois, so the range required to make a non-stop flight is longer.

Details, and citations to published sources, at http://www.snopes.com/politics/pelosi/jet.asp .

Posted by: James DeLaHunt | February 27, 2009 12:12 AM    Report this comment

It is all about economics. The use of corporate aircraft follows a general rule: Up to 200 hours, fly commercial; from 200 to 400 hours, look at a fractional share; over 400 hours, look at purchasing. A corporation can depreciate the aircraft (a non-cash expense), write-off operation expenses, sell it for a residual value, etc... Purchasing an aircraft depends upon the mission and cashflow to the company. It can be difficult to justify the purchase of a G550 but there are other aircraft available that can most definitely be used as a tool for corporations in their effort to meet the demands of their clients. No, I'm not an aviation salesman but I have priced aircraft for my company and if the insurance company would allow it, there are nice single-engine turboprops that can economically be used for corporate transportation, especially when their residual value is factored into the equation.

Posted by: Robert Hollman | March 13, 2009 11:27 AM    Report this comment

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