Thursday, October 15, 2009

Business Aviation Trade Groups: Remaking the Case Despite the Detroit 3

The case had firmly been made for business aviation as a viable, defensible alternative to commercial air service until the recession hit last year -- right about the same time three invincibly tone-deaf CEOs from Detroit auto companies swanned into Washington on their heavy-metal private jets to demand taxpayer bailouts.

Lots of factors combined to put the kabosh on years of robust growth in the business-aviation market. The collapsing economy was the main one.

But there was another, lesser factor. The business-aviation industry evidently still does not -- or will not -- recognize how much public-perception damage was done, at precisely the worst possible time, by the haughty decisions of those three Detroit worthies to use their private jets to get from Detroit to Washington to testify before Congress and ask for taxpayer relief.

Currently, there are signs that the important U.S. business aviation industry is picking up a little bit. As reported here yesterday, business-aircraft activity rose in October for the first time in a year, mainly because of an increased use of turbo-prop planes. Business jets, and especially the heavy-metal beauties like those favored by our Detroit dandies, continued to languish.

I have frequently made the case, here and elsewhere, for the judicious use of business aircraft. Smart corporations know that a well-thought-out corporate flight department, with a mix of planes suitable for various purposes, makes clear bottom-line sense. Most business-aircraft use involves sending teams of managers or technicians somewhere on a tight schedule, often to a location with poor commercial air service.

Getting them in and out efficiently is not a matter of luxury. It is a matter of business efficiency.

Commercial airlines have been slashing capacity (there are 21 percent fewer seats in the U.S. airline market than there were in October 2000, says OAG) and yanking service from small and mid-sized airports. More often, getting there by commercial air requires multiple time-wasting stops -- if you can get there at all by air.

Talk to industry experts, as I often do, and you will hear a general consensus that well over 80 percent of business-aircraft use was clearly justified as a productivity tool.

On the other hand, a small percentage was not. Richard Santulli, the founder of and until recently the CEO of the fractional share business-jet leader NetJets, told me, for example, that the heaviest use of NetJets' top-shelf Gulfstream G5 fleet occurred on the New York/Teterboro-Washington D.C. route. Given copious options for the commercial air shuttles and Amtrak on that short route, that was obviously not a sensible way to use a big corporate jet.

The business-aviation trade groups nevertheless lost control of a message they had been very successful in establishing till the Detroit trio swanned into Washington last year.

If the had simply conceded that flying a G5 from, say, Detroit to Washington is an asinine way to use corporate jets, they could have regained the high ground to argue that in most cases, corporate aviation does make economic sense.

Instead, they blamed the messenger, as if the widespread public revulsion against obvious misuses of corporate jets that followed the Detroit scandal was something cooked up by the media.

And they still at it, as witnessed by the tendentious lede paragraph in a joint announcement released today by the General Aviation Manufacturers Association and the National Business Aviation Association, which contains an otherwise useful argument on behalf of corporate aviation.

To wit:

"Washington, DC, October 15, 2009 – The General Aviation Manufacturers Association (GAMA) and the National Business Aviation Association (NBAA) today published a new survey showing conclusively that some of the recent portrayals of business aviation are inconsistent with the true nature of the industry.

The survey, conducted for GAMA and NBAA by Harris Interactive, depicts an industry in which the typical company is a small or mid-sized business flying a single aircraft that is used by a broad mix of employees to make business trips utilizing community airports, often with little or no airline service.

"These findings stand in stark contrast to recent mischaracterizations of business aviation operators,” said GAMA President and CEO Pete Bunce.

The findings are interesting, and reiterate the case that had ALREADY been made when the boys from Detroit made their ill-conceived flights from Detroit to Washington on their luxury private jets last year.

Those dumb moves were not "mischaracterizations" by the media. The characterizations were accurate. Rather than fingering those three Detroit CEOS for their poor judgment, the industry went into a defensive crouch and pretended that the media was picking on business aviation in general -- and, of course, some elements in the media then did just that.

The smart move by the business-aviation industry would have been to point out that the self-entitled Detroit Three should have used common sense and flown commercially, and then move on after noting (correctly) that frivolous use of corporate jets is relatively uncommon.

As I said, the case for judicious use of business aviation had already been made when Manny, Moe and Jack from Detroit decided to fly the industry into a brick wall.

Making the sensible case again, the GAMA CEO Pete Bruce said this in yesterday's announcement: "The reality is, companies of all sizes rely on many different types of aircraft to be more competitive, productive, efficient and successful.”

NBAA President and CEO Ed Bolen added: "Although the manufacture and use of business aircraft contributes significantly to the national economy, the industry is often not well understood. This important study will help people see the real face of business aviation and underscore its importance to citizens, companies and communities across the U.S."

The survey, based on actual interviews conducted with pilots and passengers involved in business aircraft flights, finds:

--Small companies operate the majority of business aircraft. Most companies (59%) operating business aircraft have fewer than 500 employees, and seven in ten have less than 1,000 employees.

--Companies using business aviation typically operate only a single aircraft. The majority (75%) of companies operate only one turbine-powered aircraft.

--Managers and other mid-level employees are the typical passengers on business aircraft. Only 22% of passengers on business aircraft are top management (i.e., a company’s Chairman, Board Member, CEO or CFO); the majority are other managers (50%) and or technical, sales or service staff (20%).

--Employees use their time onboard company aircraft more effectively and productively than when they are on airline flights. Some passengers even estimate that they are more productive on the company aircraft than they are in the office because of fewer distractions.

--A large majority of flights (80%) are made into secondary airports or airports with infrequent or no scheduled airline service.

The survey was conducted online and by mail within the United States by Harris Interactive on behalf of GAMA and NBAA between June 1-October 6, 2009 among 350 pilots, flight department mangers, and directors of aviation of business aircraft, as well as 289 passengers of business aircraft.

Here is a link to the Harris Interactive survey. It's worth reading.



sawdustjunkie said...

It was not 3 people who flew private jets to Washington to beg for the bailout - it was 4. Let us not forget the Ron Gettlefinger, the head of the UAW also flew the UAW jet to Washington.

Jeff said...

Joe's position is very well stated. I particularly like the comment, "But there was another, lesser factor. The business-aviation industry evidently still does not -- or will not -- recognize how much public-perception damage was done..." This cannot be emphasized enough. Some in the industry have stated that this will turn around as it has in the past. My contention is that, "with how much damage?"
In my opinion, businesses are not being properly prompted by the aviation function leadership. These leaders tend to have a philosophy of being only responders to request and not initiators. They also have been people who avoid the main steam of the enterprise they serve.
Now BizAv wonders why it is misunderstood! We must be proactive. Aviators need to engage the business people they fly. The aviation function needs to think like the rest of the company - it is no longer "so different". Aviators at the company help produce revenue. Now we need to record, track and report how we do so provide value.
Jeff Reich, CAM

See also said...

Sawdustjunkie: I did not know that. The Three Stooges from now on become the Four Stooges! Thanks for pointing it out.