"Scorn" Against Big Three Automakers Hasn't Spread To Wall
Associated Press has "revealed" a dirty little secret about
corporate America. Despite a massive outcry from lawmakers on
Capitol Hill, several large businesses are still using business
jets for corporate travel... even though it's increasingly
considered improper to do so.
In an "AP Impact" article/commentary that ran this weekend,
Stevenson Jacobs notes a number of Wall Street companies which are
beneficiaries of the US government's massive $700 billion Troubled
Assets Relief Program (TARP) bailout scheme have scaled back their
corporate aircraft fleets somewhat, but most are still flying those
planes when they need to.
For example, when a number of executives need fast
transportation to their destination... and they don't wish to lose
valuable work time traversing the miasma of commercial
As ANN reported, CEOs of General Motors, Ford
and Chrysler made a PR blunder last month when they each flew to
Washington, to beg for government bailout money, onboard their
companies' business aircraft. "Couldn't you all have downgraded to
first class or jet-pooled, or something, to get here?" New York
Congresman Gary Ackerman asked rhetorically.
And rhetoric is the operative word here... since most corporate
execs use business jets for the same reasons such high-profile
lawmakers as House Speaker Nancy Pelosi (D-CA) use them: it makes
more sense for those people to efficiently use their time in the
air -- meeting with staffers, for example, rather than wasting two
hours reading SkyMall -- and often, they need to arrive at their
destination sooner, and more securely, than a commercial
airline can muster.
Given their precarious financial positions, those Big Three CEOs
felt it wasn't advantageous to point those facts out. In the end,
each kowtowed to Congress...
announcing they would slash their corporate jet
fleets. Each CEO then wasted two days driving
from Detroit to DC for a second round of hearings earlier this
While he does make note of the time savings corporate aviation
provides, Stevenson also notes "Wall Street's reliance of the
rarified mode of travel has largely escaped the scorn poured on the
Big Three automakers."
That doesn't mean the industry hasn't felt the sting, however,
as several distressed companies have taken heed of the antipathy
against corporate aviation.
Insurance giant AIG maintains one of the largest corporate
aviation fleets around, but it sold two of its jets earlier this
year to raise badly-needed cash. Since the automaker fracas, AIG
has sold or cancelled outright other orders for new jets.
"Our aircraft are being used very sparingly right now," AIG
spokesman Nicholas J. Ashooh told the AP. "I'm not saying there's
no use, but there's very minimal use."
Beleaguered investment firm Citigroup -- which is among five
financial companies that have received a combined $120 billion in
TARP funds -- has also scaled back operations for its Citiflight
aviation wing. Company spokeswoman Shannon Bell said just a
"limited number of executives" are allowed to utilize Citi's fleet
of four jets and a helicopter. "Executives are encouraged to fly
commercial whenever possible to reduce expenses," she added.
Though most declined to offer specifics, there's evidence other
companies like Wells Fargo, Bank of America and Morgan Stanley have
also trimmed back their use of business jets. Stevenson correctly
notes "many US companies are giving up the perk," and adds the
market for used private aircraft had increased 52 percent as of
Patrick McGurn, special counsel at investment advisory firm
RiskMetrics, says the outcry comes from the perception among
lawmakers and the general public that corporate jets are
flashy, opulent toys, that executives use not for business... but
to jet off to faraway tropical destinations, TARP monies burning
holes in their pockets.
"The personal use of these planes is virtually indefensible at
this point," McGurn said. "Once you're on the federal dole, the
pressure is going to become immense on these firms to cut these
Gulfstream communications director Robert Baugniet begged to
differ. "What people don't understand is that business jets are
mobile offices," said Baugniet. "If time has any value to you, then
you'll understand why people use business jets."