Thursday, January 29, 2009

The Business Jet Industry: Don't They Get It?

The business jet industry, after several years of great prosperity, is in trouble. But the industry apparently just doesn't comprehend the extent and cause of the public backlash that whipped it, starting when those three Detroit auto executives swanned into Washington in November in their heavy-metal corporate jets to beg for a federal bailout.

Instead, the industry continues to blame the press for its travails.

Business jets definitely have their place as productivity tools, especially in these days when what used to be a one-day business trip is often now at least a two-day trip, thanks to cutbacks in airline capacity and routes. (This is not true on the 90-minute Detroit-Washington route, by the way.)

Anyway, the case for business aviation has been made in the media -- including, incidentally, by me.

But sometimes, as I have said here repeatedly (and with good and sufficient extra irony, considering my experience in the Amazon two years ago), a ride on a business jet is simply not a good idea.

The most recent example of corporate tone-deafness was when Citicorp, with $45 billion in taxpayer bailout money in its well-tailored pockets, tried to plunge ahead on an order to buy a $50 million Falcon corporate jet. Citicorp backed down this week amid a political outcry and a rather sharp nudge from the Obama White House.

I am not in the business of giving advice. But this particular industry does not seem to understand that those Detroit knuckleheads "set corporate aviation back 25 years," as Bill Garvey quoted a flight department executive in Business & Commercial Aviation last week. Bill Garvey, one of the most respected aviation trade journalists, is the editor of Business & Commercial Aviation.

Nor does the industry seem to understand that taxpayer outrage is an entirely appropriate response to a company so indifferent to public perception that it tries to buy a new heavy-metal jet soon after it begged for and got emergency taxpayer bailout money.

It couldn't wait a year?

In a letter to members of the National Business Aviation Association, its president, Ed Bolen, writes:

"As everyone in our industry knows, the business aviation community is facing severe turbulence on several fronts. Our industry is being stereotyped and pilloried by the press, and the people and businesses in general aviation are weathering one of the worst economic storms anyone has ever seen.

"The challenges coming out of Washington appear no less daunting: In the three weeks since the 111th Congress was sworn in, business aviation has repeatedly been in focus for lawmakers. A troubling pattern seems to be emerging in which some policymakers are discouraging and disparaging the use of general aviation for business purposes - a pattern in evidence as recently as this week."

The industry dodged a bullet this month, by the way, when it managed to get removed from the bill authorizing the second phase of the bailout language that would have required any company that receives bailout money to get rid of its corporate jets.

But government is still bearing down on the industry with threats of requiring corporate jets to be subject to stricter passenger security (corporate jet passengers don't go through TSA checkpoints). Also possibly looming are a slew of potential new fees, taxes and other onerous burdens on corporate aviation -- much to the glee of the commercial aviation industry, the arch-enemy of business jets.

The case for business aviation has been made, and made well in recent years. But people have stopped listening, and Congress is hopping mad -- and the industry is blaming the media?

The troubles the industry has are fundamentally economic -- but they're also partly atmospheric. In an era of massive layoffs and home-foreclosures, at a time when people are profoundly worried about the economic future, and cutting back on everything feasible and then some, three auto-company CEOs thought it was a good idea to take three big corporate jets on the 90-minute flight from Detroit to Washington to demand bailouts for their companies.

Naturally, the media made note of it. Labeling that "stereotyping" is quite a bit like the case of the young man who murdered his parents and then threw himself on the mercy of the court because, alas, he was an orphan.


1 comment:

Change Agent said...

According to David Cay Johnston's "Free Lunch", before the Brandon Dunes ultra-luxury golf course opened in 1999, the Coos Bay airport averaged 3 visits by corporate jets per year. By 2006 the visits topped 5000. It's obvious that, though I can't drive my car on personal business and deduct it, according to IRS regs, any corporate executive who wants to touch down for a meeting can do so at a hundred luxury destinations each year. If you can't meet with your customer, vendor, lobbyist in an ordinary conference room, it shouldn't be expensable or deductable. While this will seem sophomoric to many, the practices that have dragged-down the flinty business values that build-up an auto company or a bank aren't served by this sort of thing. Tell Howard Schultz that his customers know where he spent Christmas, and maybe he'll take Starbucks' stock price more seriously than his perks.