As wolves circle, industry must take action now

 - February 26, 2009, 9:07 AM

The distrust of business aircraft and the people who fly in them didn’t start with
the big three automakers flying on business jets to Washington to plead for a bailout.

Rather, it extends back several decades.

Years ago corporations proudly displayed their name and company logo on business aircraft. Decades worth of Forbes aircraft were emblazoned with the words “capitalist tool.” That changed during the 1960s with an ever-growing distrust of big business.

It has insidiously been gnawing away at the notion “What’s good for General Motors is good for America,” fueled by the isolated but blatant excesses of some corporate leaders. In such a climate it is no wonder that General Motors CEO Rick Wagoner and his peers sat in stone silence as Congressional leaders excoriated them for flying in private jets for a handout.

They lacked the starch of Lee Iacocca, who faced the same dilemma in the early 1980s when he appeared before Congress asking for loan guarantees to bail out Chrysler. Confronted with the same congressional grilling, Iacocca said of the corporate aircraft, “OK, I’ll sell it, but I will be damned if I know how I will run Chrysler’s plants in small towns all over the USA. I guess I will just have to lease it back.”

When the Big Three returned for a piece of the proposed $25 billion bailout, the corporate jets stayed home to be sold off. “We’ve gotten the message,” was the official statement issued to the press by the Big Three. A lot of people in the industry think they, along with bankers and business aviation leadership,  should have been giving the message, not getting it.

“My question is where were the [aviation alphabet] association leaders on the evening news, Meet the Press and the other Sunday shows. Where were the state senators and congressmen from Kansas, Georgia, New Jersey, Delaware and Arkansas?” asked Brian Finnegan, director of professional certification for the PAMA/SAE Institute.

Finnegan, a career maintenance technician and past president of the Professional Aviation Maintenance Association, sees it as shameful that no one stood up in public for business aviation.

“There are legitimate security issues, time-management issues and productivity issues at stake,” he told AIN. “The operating cost of an aircraft is not the purchase price of an aircraft. After the purchase of such an asset the cost becomes quite reasonable, considering all of the above. Thousands of jobs are now being lost throughout our industry and nobody has stood up and taken issue with it. Are we too buttoned- down to permit ourselves to be genuinely mad as hell?”

‘Luxury’ Expenditures

Initially, Congress mandated that no company receiving federal bailout money could own an aircraft. It later reluctantly rescinded that directive. The U.S. Treasury Department unveiled compensation restrictions for executives running companies receiving assistance from the federal government. It called into question “luxury” expenditures, specifically citing business aircraft.

Bank of America announced plans to sell off three of its eight corporate jets and an S-76 helicopter that came with the Merrill Lynch acquisition and had been unsuccessfully on the chopping block for some time.

Citigroup, the recipient of $45 billion from the government, touted its decision to continue with the purchase of a Dassault Falcon 7X ordered three years earlier and on which the company had paid deposit money to Dassault. Twenty-four hours later, pressure from the White House, commonly reported in the media, prompted the company to reverse its decision.

Coffee icon Starbucks also put its month-old Gulfstream G550 up for sale after only 15 landings, and The Carlyle Group, a private-equity group in Washington, D.C., has put its 2004 Gulfstream G450 on the block.

Kathy Tyler, director of sales for ARG/US, said she can sympathize with the pressure the corporations are feeling but she doesn’t understand the knee-jerk reaction of closing flight departments. 

“A decision of such magnitude financially, and such devastating effect on senior management productivity, much less the loss of employment to many good aviation professionals, should have been carefully considered and analyzed,” Tyler said. “A trimming, or adjustment, to the flight operation could perhaps be understood, but not the wholesale obliterations we have witnessed recently. These actions have sent the message to the general public that business aircraft are unnecessary perks. What an incorrect message!” Tyler fears the long-term effect on those corporations that so easily compromise their executives’ effectiveness.

Cessna Aircraft decided to weigh in with an advertising campaign designed to counter business aircraft misinformation. Appearing in The Wall Street Journal and other publications was a full-page ad (page 34) offering a more accurate picture of the value of business aircraft as a resource that makes companies more competitive.

“We think it’s time the other side of the story be told and that support be given to those businesses with the courage to use business aviation not only to help their businesses survive the current financial crisis, but to more quickly forge a path towards an economic upturn,” said Cessna chairman, president and CEO Jack Pelton.

“We’ve all read the articles and seen the pundits portraying business aviation as needless excess, and those that use a business aircraft as being out of touch with the realities of the day, but that notion is wildly out of touch with reality.”

NBAA president and CEO Ed Bolen last month testified before Congressional lawmakers. Asked about the recent drumbeat of negative media coverage of the industry, and an emerging pattern of disparaging the use of general aviation for business purposes and calls for companies to divest of the asset, Bolen commented, “Make no mistake about it: Business aviation is a key ingredient in the nation’s economic activity and well being.” He continued, “In a challenging climate like this, it should be promoted, not disparaged. Instead of telling companies that they can’t use a general aviation aircraft to compete, survive and protect jobs, we should be looking for ways to increase general aviation manufacturing jobs, promote economic growth in communities without airline service and support companies’ efforts to be as productive and efficient as possible.”