Friday, November 21, 2008

Corporate Jets

Grandstanding on Capitol Hill is national pastime. Surely the auto industry executives appearing, hats in hand, in Washington should know that by now. Instead, they walked into a buzz saw when asked about their transportation mode to the hearing. Now, the use of corporate jets will be inextricably linked in the popular mind with the arrogance--real or not--of the executives.

The economics of using corporate jets makes perfect sense in many cases, depending on the number of people flying, the destination city, its airport conditions, and the specifics of the destination site and the plans for the day. Almost two decades ago, a brokerage firm I worked for used a "plane share" system on a King Air. With six of us flying into Chicago for client calls-- the price for peak hour commercial flights, being able to land downtown versus O'Hare, avoiding rush hour traffic, spending more time with customers--the economics were a no brainer. Surely, a similar case could have been made on the Hill.

Instead, some of the press proxies for the auto executives had the chutzpah to talk about the risk of kidnapping flying from Detroit to Washington! Why not just explain the simple economics of the decision, including non-pecuniary benefits like being able to work full-time on presentations during the flight? End of discussion.

In Washington, DC, as in most places, perception trumps reality. This is a total non-issue in the current systemic crisis, yet it will be used as a defining moment for characterizing the industry. As ridiculous as it sounds, this question should have been anticipated in a well-prepared brief for the executive team.

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