In the wake of the public relations fiasco brought to us by the automakers and the delayed reaction of the industry to defend business jets, it now seems that those taking delivery of new business jets will have to mount public relations campaigns of their own to justify them not only to shareholders but to those paying close attention.
That assumption comes after Starbucks announced it was closing hundreds of stores, laying off thousands and weighing how much it could contribute to its 401(k) at the same time it took delivery of a $45 million Gulfstream 550. The irony was not lost on the Seattle Times, which covered the home-grown company with a blaring headline and used FlightAware.com to find that the jet’s first two weeks on the job was spent in Hawaii.
The hapless spokesperson forced to defend the jet, ordered three years ago, told the paper that cancelation was deemed too expensive. She also noted that personal use must be reimbursed by the company and was ready with the figure that, in 2007, Chair Howard Schultz reimbursed the company $400,919 for personal use of the company’s Bombardier and Gulstream V, the later of which, at seven year old, is for sale. Even so, that figure really served to mark the gap between executive pay and line personnel at a time when executive compensation is also under criticism.
It would have been better to have ready figures available on how much the business jet contributes to the bottom line in productivity alone. If it can make the business case for an executive jet to its board, it should be able to do so to reporters. Time saved from using commercial airlines, for example would resonate with most people even if they are jealous. Unless of course, such research would reveal that this is, indeed, a perk that doesn’t pay for itself. Even so, it certainly gives both corporate bean counters and something to do as they contemplate the Starbucks coverage and the delivery of their own business jets. Certainly, reporters are taking the time to do the math.
The last study done on the subject was in 2001 and is readily available on the National Business Aircraft Association’s web site. Indeed the organization released compelling fact sheets on how business jets impact the bottom line in December. Related Story
The Times acknowledged the NBAA argument about increased productivity but relied on Jet Perspectives Consultant Bob Zuskin to provide balance to the story. It was he who set the price of Starbucks aircraft at $45 million when the company refused to divulge the cost. He also said cancellations would have cost not only the payments already made on the aircraft but about a $5 million penalty, adding the GV being sold has lost value, down from $45 million to between $32 and $34 million.
“Zuskin argues corporate jets are extensions of executive offices, ‘so leadership can be in back of the airplane productively working as opposed to sitting in row 23F,’" said the Times.
This is an evergreen story – one that arises every so often – and perhaps it is even a no-win situation no matter what the industry does, but I doubt it. Even so the productivity argument rings hollow at times like these and it certainly wouldn’t hurt for the industry to update its material and for companies to be prepared to defend the use of business jets with numbers not arguments.