On September 11, 2001 a customer of mine was flown into one of the World Trade Center twin towers. His name was David Angell and he was the co-creator of the TV show “Frasier.” Just a week earlier he, his partner, lawyer and I discussed the purchase of a fractional aircraft share, but David though it was too expensive for his mission.
Regarding recent Wall Street Journal criticism of Jeff Immelt’s corporate aircraft use there is one thing it and Immelt’s critics are missing: Immelt, his flight department leader, and his staff are smart people. And, there were some good reasons why they did what they did; as in, the mission was very important, it had to remain low-key and – what a concept – we must take into account that airplanes DO break on occasion. Africa, broken jet, and high-profile CEO is not necessarily a good scenario.
To the average person corporate aircraft are expensive ‘luxuries.’ To the Chairman of the Board (COB) with a high-profile CEO (Bezos, Dimon, Tillerson, Cuban, Musk, Gates, Cook, etc.) it is an absolute REQUIREMENT for a lot of different reasons to include security, privacy, and efficiency – for both business and leisure travel. If I’m the COB, I really don’t want my CEO sitting in seat 27E next to Sally and her screaming toddler, getting patted down by the TSA in Atlanta or heading to the bar in Chicago when his or her flight got delayed by 3 hours. Heaven help those who have to clear the invasive customs process in Riyadh.
GE is a $130 BILLION revenue company. The ~$50 or $60M it spent annually on its jet fleet equals .0004% of revenues and .001% of net profit, or, in layman’s terms, IT’s A DROP IN THE BUCKET. Even if it was double that cost, it’s still a drop in the bucket.
GE’s woes today have nothing to do with its corporate jet fleet. They are a result of changing economic times, Dodd-Frank regulations and the need to become more of a manufacturing company and less of a capital financier. Was Immelt the right CEO for the times? That is not for me to say. Was he right to use GE’s fleet of jets? ABSOLUTELY!
The critics of business aviation really don’t get the fact that revenue generation is much more important than cost containment. No company ever cost contained its way to growth and no company ever cost contained its way to industry dominance. A CEO or business executive who is on the road, with his aircraft, generating growth is much more effective to stock price than the one sitting in his office looking at the continual cost of pencils.
To the critics of business jets as unnecessary luxuries perhaps this will change your perspective. A $50M business jet, from the time it is built until the time it is scrapped, will probably generate 20X or more of its cost in economic activity. That fact reflects well on growing economies.
It’s truly a shame GE is closing its flight department. With the company on its butt, I can’t think of a better time to put the jets to use.
Source: Craig Picken via LinkedIn