By on January 17, 2009

Back when the CEOs of Chrysler, Ford and GM were “caught” flying corporate jets into Washington to beg for bailout billions, we cautioned our readers that the media scrum had made a great landing at the wrong airport. Yes, these execs were frittering away millions of dollars on their jet fleets. Yes, their Gulfstream travel violated their companies’ supposedly proletarian appeal; Henry Ford’s model T and all that. But blaming jet travel for the CEO’s woes was like blaming Harrison Ford’s limo for the travesty that was the fourth Indiana Jones movie. So yes, but no. Anyway, The Detroit News reports (of course) that Sunflower State senators have lifted the corporate jet ban from the non-automotive recipients of Congress’ recently-refilled, near-as-dammit trillion dollar trough. “Kansas is a center of aircraft manufacturing, and Kansas lawmakers complained that the provision could reduce aircraft orders and cost jobs. This week, House Financial Services Committee Chairman Barney Frank, D-Mass., author of the bill, lifted the jet ban. Could the DetN resist placing another mountainous chip upon the shoulder of their hometown heroes? Are you kidding? “So remember, folks: According to Congress, it’s only a waste of taxpayer money if auto execs are the ones flying private.”

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29 Comments on “Bailout Watch 348: Jet-Gate Becomes Jet Hate...”


  • avatar
    Qwerty

    I think you mean the fourth Indiana Jones film instead of the third.

  • avatar
    Austin Greene

    I actually liked both the third and fourth Indy movies.

  • avatar
    red stick

    What qwerty said. Either there’s a problem with Last Crusade that we all missed, or, like many moviegoers, RF has consigned Temple of Doom to the ashheap of moviedom.

  • avatar
    63CorvairSpyder

    Whenever Barney Frank is involved with something you know somebody is getting screwed in the……

  • avatar

    Fourth. I meant Fourth. What was it called again? Last Crusade for the Crystal Kingdom of the Doomed Temple of the Lost Skull?

  • avatar
    mcs

    They’re going to keep removing loan requirements until there’s nothing. It will turn into a no strings attached subsidy.

    GM: UAW pay cuts not needed

  • avatar
    ca36gtp

    My god, I’m really starting to think this is the biggest joke of a Congress in history.

  • avatar
    tced2

    When you get the government and our representatives like Barney Frank involved in business practices – like whether you should use business jets or not – you get nonsense. Barney Frank wouldn’t know a good business practice from a drain pipe. Congress can’t even run its restaurants properly let alone the rest of the country.
    These decisions are being made by the very people who have no idea what they are doing. Or maybe they do know what they are doing and it will enrich / empower them.
    If I don’t like the Barney Frank Corporation, which other corporation can I take my business to?

  • avatar
    ruckover

    Wow, this is all Barney Frank’s fault?

  • avatar
    63CorvairSpyder

    Wasn’t it during the Clinton administration that it was revealed that many congressmen never balanced their checkbooks and were regularly overdrawing?……If they overdrew it was simply covered by the house bank.

    Similar to the banks, financials and automakers being bailed out today. Just the numbers are bigger.

    BTW, how come Circuit City is not getting a “bailout”(loan/gift) from Uncle Sugar?

  • avatar
    Robert Schwartz

    “Wow, this is all Barney Frank’s fault?”

    Him and his 534 co-conspirators.

  • avatar
    tced2

    Barney Frank is cited as the author of the bill. He’s chairman of the committee working the bill. That puts him quite a bit in charge.
    The point is if I don’t like GM business practices, I can send my business somewhere else (Ford, Audi, Honda, etc). When it’s the US government, where else can I take my business?

  • avatar
    fredtal

    Houston airports are reporting a very busy day of private jets on their way to Washington DC to party with the new President.

  • avatar

    Wow, a private jet and a Lexus LS. Someone call Mulally, that’s a package deal with his name on it!

  • avatar
    golf4me

    Whwn you have execs making 20m per year waiting around in airports for 2-3 hrs for a 3 hr flight, it makes no sense. That’s why corporate jets are used. Over the course of a year, when you add it all up, the cost of a jet vs. first class commercial is really not as bad as everyone thinks. When the jets are used for personal trips on the company dime is what should be “banned”. Don’t you love the new Peoples Republic of United States? Get used to it. It’s a slippery slope.

  • avatar
    mcs

    @golf4me :
    Whwn you have execs making 20m per year waiting around in airports for 2-3 hrs for a 3 hr flight, it makes no sense.

    That’s not how it works. When you are in that kind of position, you’re not working on a decision making assembly line on an hourly basis. You have employees performing the day to day tasks. At that level you make the big decisions. If their schedule is so bad that they can’t handle an hour at the airport, they have organization issues. In other cases, teleconferencing is even faster than private jet travel.

  • avatar
    jmo

    mcs,

    I don’t think you understand how it works. For many of these meetings you need face time. If you’re in NYC meeting with a hedge fund to get a 9 figure loan, if you are meeting with a firm that will need to commit to buying $50million in new tooling to produce the new part, if you need to fly to Asia to meet a potential new investor, these people will want to meet the guy in charge face-to-face, in many cases.

    A phone call, teleconference, or sending some V.P. just isn’t going to work

  • avatar
    dzwax

    jmo:

    I think you don’t get it.

    What sort of success or performance basis is there for giving these guys $20M a year? Because they have been able to jack their salaries during the boom years when money was easy doesn’t mean they are worth what they get.

  • avatar
    mcs

    I don’t think you understand how it works.
    Been there, done that. Flying to NYC for meetings at the Yale Club with investors etc. I understand very well how it works. When I was with a big company, at one point I even had access to a Bell Jet Ranger II just to get me to the plane. Now with smaller companies Amtrack is a luxury. Even with the greater demands in the smaller company, I don’t think I’m any less productive using cheaper transportation methods.

    Yes, the face time is important (including visiting employees), but that’s precisely why you have staff doing the day to day work – so you have time to make trips.

  • avatar
    Landcrusher

    Here is a clue for Congress, and journalists everywhere. A waste of money is when one gets less value in return than what one spends. Methinks that most newspapers are a waste of money. By the same standard, the last few congresses have been right up there with the biggest wastes of all times.
    They both are losing a lot more in cash than they are providing in value. The models for each are pretty darn broken. They should both be careful about throwing stones at bizjets.

  • avatar
    TEW

    Most large corporations have private jets and as a shareholder in some I don’t mind it. I also don’t mind paying the executives of the companies that I own stock in large pay checks because I feel like they are doing a good job. Remember the shareholders can vote the CEO’s out. The problem is that they are begging me to bail them out and that is where I have a problem with the whole jet gate. If I owned GM stock I would be pushing to have Red ink Rick canned but I saw that the company was not worth anything so I did not buy it.

  • avatar
    Stu Sidoti

    I find it at an odd juxtaposition that Congress is nearly demanding that the OEMs shed employees, dishonor their retirement and benefit packages for their retirees and current employees and in general cut heads…yet the Congress happily proclaims the sugar scoop is being used to ‘save jobs’. A whole lot of folks are losing their jobs right now in these massive efforts to…’save jobs’. These job losses would include a massive job losses in Kansas and other aircraft centers of industry as the ripple effect of Jet-Gate continues on…Thanks Brian Ross, you Royal Flaming A-hole for creating a non-story out of normal business practices-the American public bought it hook, line and sinker though huh? Anyone watching the news in Kansas should boycott anything ABC news does because of his sleazy self…and yet he’s their Chief Investigative Reporter. Gee what a surprise from the MSM.

    http://sweetness-light.com/archive/is-brian-ross-a-reliable-reporter

  • avatar
    jmo

    MCS,

    If what you are saying is true than you know how important these perks can be to recruiting qualified talent. You mentioned how much travel your old job required, and in many instances highly qualified people are unwilling to take jobs that require a high degree of travel, because it is so uncomfortable, time consuming and inconvenient.

    You aren’t recruting CEO’s from among the entry level, you’re recruting them from among your most senior people. If you have a very successful VP of sales that is already making $2 million a year and only on the road 1 week a month, you can’t get him to take the CEO job (which has him on the road 3 weeks a month) by paying him $10 million – you need to throw in the plane.

    Many people here would say they would be a CEO for 50% of the salary. But, would they take a job that paid them 100% more than they make now, if it meant heading to the airport Sunday evening and getting home on the red-eye early Friday morning? From my extensive personal experience the answer, in upwards of 80% of the cases, is no. And, if you’re not willing to take the job that pays 100% more, you’ll never be in a postion to take the job that pays 10,000% more.

  • avatar
    TheRealAutoGuy

    It’s a double standard, and I commend the Detroit News for bringing it to our attention.

    Chips on the ol’ shoulder? Ya, but it’s not the Detroit News daring us to knock it off.

  • avatar

    The problem is a combination of media frenzy and CEO stupidity.

    If I’d been one of them – I’d have said…

    LISTEN Up – my TIME IS MONEY.

    I have a jet to take me wherever I need to be in as short amount of time as possible. The longer it takes me to attend my meetings, THE MORE MONEY WE PUT AT RISK. Not to mention my security requirements.

    These dumbass CEOS didn’t put forth an argument like I would have.

    Not to mention the fact that AMERICA’S AUTO COMPANIES ACTUALLY PRODUCE SOMETHING more tangible than wall street which just “moves money around”

    This was all a conservative hit job to break the back of the unions.

  • avatar
    CamaroKid

    @golf4me :
    Whwn you have execs making 20m per year waiting around in airports for 2-3 hrs for a 3 hr flight, it makes no sense.

    Flashpoint :
    LISTEN Up – my TIME IS MONEY.

    I kinda get the feeling that none of you have EVER flown first class… You don’t wait 2-3 hours.. you wait 30 minutes TOPS… you are the first on, the first off… They even whisk you through security.

    I’ve been on planes where they hold the plane at the gate so a first class passenger can get right on with ZERO wait time.

    This was, is, and will ALWAYS be a PERK. PERIOD…

    Lets do the business case..
    A private jet will save, if you are very lucky… 30 minutes a flight. If you make 20m a year that means you make about $11,000 an hour (nice work if you can get it BTW) So that 30 minutes of “unproductive” time costs about $6,000. (I am generously rounding up in the favor of the Private jet as I go BTW… it doesn’t matter, the business case isn’t even close)

    Private “Learjet” or a Citation jets charge out at a STARTING price of about $160,000 for 24 hours of air time… (about 6500 per hour) So that 2 hour flight that we are worrying about wasting time on costs $13,000… (again rounding in favor of the private jets)

    So the cost is $13,000 (a hard cost) and we save $6,000 (a soft cost)… The net is $7000… You are going to tell me that you can’t find a first class ticket for any 2 hour flight anywhere in the world that costs anywhere close to that…

    Lets not chuck around business cases and time is money until you’ve actually done the math.

  • avatar
    Landcrusher

    Camaro,

    As a person who has flown first class on many free upgrades, owns a prop plane used for both business and leisure flying, and even flown on a business jet because it happened to be taking some senior executives the same place on the same day as we were going, I can tell you that you are all wrong.

    If I understand you correctly, you are saying the first class is good enough. Well, unless you are going on a really long flight, first class is a perk. Many large corporations pay for almost any employee to get upgraded to business class on overseas trips, but domestic first class is without a doubt a perk. It’s a perk that they have to give though, or many senior people would want to travel less.

    OTOH, a business aircraft is a HUGE timesaver. First, a business flight doesn’t depart on a schedule that suits the airlines, it leaves when it suits the business schedule. That can save you more than a day in many underserved areas. Second, a business jet doesn’t fly to the nearest airport with scheduled service, it flies to the nearest airport to the destination. This can save you hours in ground transport time on top of more than the thirty minutes you claim, but we all know often stretches to hours (Have you ever gone through Dallas or Chicago on a busy day?). Third, the CEO’s rarely fly alone. As soon as you put a few $100 an hour employees on a bizjet, you start saving money against COACH airfare before you even start counting the value of their time.

    So, while your math is just fine, your understanding of the whole picture is simply off. My little prop plane flies at one third the speed of a Boeing or Airbus, but I have to fly well over 4 hours before they can even come close to being within 30 minutes door to door.

    There is a saying about how an airplane takes you from a place you don’t want to be, to another place you don’t want to be – an airport. The only reason the airlines actually work are because most people don’t want to become pilots, businesses don’t want to take the time to understand how to let their employees use light aircraft, and the voting public continues to use their majority to stick it to general aviation because they would rather have cheap airline tickets and don’t care about little planes. In fact, they now have learned to hate them because of attacks by demagogues and folks that really don’t understand the value equation.

    In the end it really doesn’t matter though. Government officials have ZERO business making these choices. They also have ZERO business putting themselves in a position where they need to even be involved (bailouts). Lastly, everytime Congressman go vote fetching by sticking it to the fat cats, they simply end up costing everyone money. It was likely a lot cheaper to give all the CEO’s lots of perks rather than have the end result of the last 30 years of chasing down their “unfair” perks be salaries in the stratosphere.

  • avatar
    essen

    Grandstanding by congress, pure and simple. I guess they didn’t learn their lesson from 1988 when they put a luxury tax on boats and nearly wiped out an industry. They feel such a need to punish the rich, but are so blind to the fact the it is the “little people” who build luxury items who get hurt.

  • avatar
    psarhjinian

    …I can tell you that you are all wrong.

    You’re correct. Absolutely correct.

    I tried to make this point a few days ago—about air travel being an enabler for efficiency, especially for a high-cost employee—and I think people missed the point again. The issue isn’t that highly-paid and ineffective people like the Detroit manufacturer’s executives have private aircraft as a perk, it’s that they’re paid millions, sometimes tens of millions, for being ineffective.

    Don’t cancel the jets, examine whether you’re getting effective work for the money you’re paying your people. If not, you may want to consider putting different people on the jet.

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