Who Am I?

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A nobody; a nitwit; a pilot; a motorcyclist; a raconteur; a lover...of life - who loves to laugh, who tries to not take myself (or anything) too seriously...just a normal guy who knows his place in the universe by being in touch with my spiritual side. What more is there?

01 February 2009

In Defense of the Business Jet

Much hoopla was recently made about the troubled Citibank’s intended purchase of a “$50 million” business jet. The outcry was incredible, as if Citi was going to take $50 million in cash from the TARP money and plunk it down on the Gulfstream salesman’s desk, "Here ya go!"

Are we really that stupid? Don’t we realize that Citi was going to finance the jet? And that financing would probably be with a term of 20 or 30 years?

Suddenly, business jets have become the focus of our national anger…flagrant wastes of money! The perception is that these are nothing more than ostentatious “luxury jets,” something more fitting for a rock star than a corporate executive. So far, nobody is stepping up in defense of the corporate jet as a business tool. Pity, that.

My Boss is on the Board of Directors of a certain company which is inconveniently based in a tiny town in eastern Alabama. Every month, he has to attend a four-hour board meeting. Bad news: Interstate highways do not go there; it’s all back roads. Scenic, but slow. From our company headquarters, mapquest.com tells us that driving will consume a few minutes shy of three hours of his time. One-way. In perfect conditions. Six hours total of (unproductive) driving and four hours of meeting: Ten hours expended - one whole day gone.

But the Boss owns a helicopter, and I fly him to the meeting, which starts at one o’clock. We leave right from his office at noon. It takes us just under an hour to get there. I land in a soccer field right behind the building in which the meeting is held. We’re home before six.

The advantage of using the helicopter is that the Boss can work in the office all morning, and he can get back at a reasonable time as opposed to late in the evening. Instead of a grueling three-hour drive on Alabama back roads, it’s an easy flight each way.

This is just one example of how the Boss uses the helicopter. There are others. Having a “corporate aircraft" increases his productivity immensely. He loves it. To him it is well worth the cost.

Having said that, we did not buy the biggest, fastest, most capable, most expensive helicopter available. We selected our ship carefully from the used-aircraft market, and we bought it at a good, fair price. He paid cash. We’ve taken some grief from others. They ask, ”Why didn’t you guys go with a new Bell 407??” Well, for one thing, the Bell 407 is not that much faster than our 206. The 407 has a slightly bigger cabin, but conversely a slightly smaller cockpit, which is where the Boss always rides. Too, the purchase price of a 407 is roughly four times (or more!) what we paid for ours, and is much more expensive to operate. It is sexier, yes. But “sexy” doesn’t figure in on the bottom line. The 206 suits us just fine.

Larger corporations have obviously larger travel needs. One of my non-aviator friends joked, “Did Citibank *have* to buy a $50 million jet? Wouldn’t a *two* million dollar jet have been good enough?” Well, maybe…maybe not. Two-million dollar jets typically cannot carry very much of a load, nor can they go very far without refueling. If a corporation needed to take a bunch of people from one coast to the other…or from the U.S. to Europe, then a $2 million jet would not suffice. There are other considerations too.

But I cannot speak for Citibank. Their transportation needs and wants are between them and their Board of Directors, not us. We shouldn’t even be involved in it.

As I’ve written, we are also “in the market” for an airplane to augment the helicopter. Right now the Boss is balancing his own needs and wants, trying to select the plane that best suits our “mission profile.” The problem is we really don’t have one, just as we had no clearly defined mission profile for the helicopter. The Boss just knew he could use it, and use it he does! It makes good, defensible business sense.

The plane we buy will likely not be a $50 million jet, because we have no need for such an aircraft. However it will probably have two engines, and those engines will probably be turbine (i.e. a turboprop, where jet engines drive propellers instead of using their thrust to propel the plane).

Perhaps if all corporations used as much intelligence and discretion in selecting the proper aircraft for their needs as my Boss, they wouldn’t find themselves having to justify their use to the American public. And too, it wouldn’t hurt for one of those highly-paid CEO’s to come out and say, ”Hey look, these jets are important TOOLS that help us be more efficient in the conduct our nationwide and global business.”

2 comments:

Jack said...

Bob:

I'm also a businessman, and fully understand the justification of the corporate jet. My wife, a fairly low-level executive for a major company, has flown on their jet many times because it's extremely useful to work while traveling, which you cannot do while flying commercial -- too many prying eyes and ears.

On the other hand, there's this concept called "the appearance of impropriety". And this is where Citibank is having problems. It's a PR problem, not a business problem. The same thing befell the CEOs of the Big-Three auto companies.

There is a way to manage the PR. However, neither Citibank nor the Big Three Chiefs took that route. This points to a certain amount of both hubris and arrogance, and is also a good indicator or why their companies are loosing so much of our money!

Bob said...

Before Citibank became a partner with the U.S. government, the kind of jet that have -- or whether or not they have one -- had no significance. That's all changed now. You want Uncle Sam's help, you get him looking over your shoulder.