The business aviation industry heaved a sigh of relief last week when the Senate failed to agree on a bailout for the auto industry, which gave business jets such a black eye when auto executives hauled into Washington, hat in hand, in November to ask for $25 billion to help them avoid bankruptcy. Effectively, the Senate failure means that auto bailout will not happen this year, despite threats that at least one – GM – would not survive the year without going bankrupt.
Their failure to defend their use of private jets finally came home to roost with a provision in the auto bailout legislation precluding the ownership or leasing of private aircraft. Related Story Analysis: Missed Opportunity The $15 billion bailout is meant to keep car companies afloat through March, allowing the incoming Obama administration a window of time to craft a longer-term solution.
The National Business Aircraft Association, Aircraft Owners and Pilots Association and National Air Transportation Association launched into efforts to eliminate the language to the bill. NATA indicated that the provision “is also intended to preclude the use of commercial on-demand air carriers as well as participation in fractional ownership programs, according to a letter sent to Senate members by President Jim Coyne, encouraging them to oppose the House-passed HR-7321.
“Approving the legislation with this provision sets a damaging precedent that will detrimentally affect the thousands of small businesses in this country that provide air transportation using general aviation aircraft as well as the small businesses that support these types of operations,” said Coyne in his letter. “Expressly prohibiting all air travel that is not on a scheduled commercial airline is an unreasonable restriction on the auto industry and any other industry with a diverse rural manufacturing and supplier network. Most of the automakers’ facilities are located in rural areas, requiring efficient transportation that the airlines, especially as they cut back on routes, can’t provide. Chartering an aircraft on a government-licensed on-demand air carrier offers corporations unparalleled speed and access at far lower costs than any form of ownership.
“I implore you, as a member of the U.S. Senate, to consider the more than 1.265 million jobs created by the general aviation industry, many of which are supported by these small aviation businesses and play a critical role in our American economy,” Coyne continued. “These jobs are placed at significant risk if the federal government bars corporations from using their services. Using legislation intended to save jobs in one sector of the economy to impact jobs negatively in another, equally important segment, is unconscionable. The aviation businesses represented by NATA will all suffer financially if Congress approves this legislation with its underlying precedent that the use of private aircraft by corporate America is not acceptable. The small aviation businesses that are the backbone of the aviation industry, especially during these difficult economic times, should not suffer from the unintended consequences of this legislation.”
NBAA reacted during House consideration of its legislation when President Ed Bolen sent a letter on December 10 to House Speaker Nancy Pelosi, expressing concern about the draft legislation, saying the legislation “appears to prohibit the use of business aviation in ALL situations, including when it is the sole mode of transportation available to a business, or it is the most prudent and cost-effective solution to a given transportation challenge."
In the two-page letter, Bolen lists the many advantages of aircraft to businesses of all sizes, and notes that 86 percent of passengers aboard business airplanes are not senior officials, but are mostly mid-level workers, such as salespeople, engineers, and other technical specialists. He concludes, "We understand the importance of absolutely providing the American taxpayers with the strongest assurances possible that any federal monies provided to the U.S. auto companies will be utilized to protect jobs and for positive structural reforms to the domestic industry,” he wrote. “However, we again urge you to craft this legislation in a manner which does not inadvertently harm another critical U.S. industry. We want to be careful not to hurt the ability of American companies to do the things that allow them to keep people working and to compete. Business aviation is the most prudent and cost-effective transportation solution in a wide number of situations. While we understand the intent of Congress to address a specific situation dealing with the auto industry, we believe that the broad wording of the provision could be misinterpreted as suggesting that Congress does not recognize the critical importance of this mode of transportation to the success of U.S. businesses facing unprecedented international competition, the economic development of small towns and rural communities, and the jobs of hundreds of thousands of U.S. workers."
The industry was late to react to the automakers’ early November flight to Washington to ask for a bailout. It was not until November 24 that NBAA issued Business Aviation: A Critical Part of Success For Companies Across America, defending the use of business aircraft to reporters. On December 2 it published Why Companies Utilize Business Aviation
One of the top questions asked of the organization was whether corporate aircraft were used to avoid airline hassles. “Companies that have their own airplane often use the airlines,” said NBAA, adding an NBAA survey several years ago revealed that the association’s member companies spend $11 billion annually on travel with the airlines. However, that calculation may have changed given the rising hassle factor of the last two years, which caused travelers to avoid taking 41 million trips at a time when business aviation was growing exponentially. Related Story Business Aviation Gains Air Travelers
While referring reporters to its seven-year old study on the economics of corporate aviation, the organization said, “Companies that have an airplane return more to their shareholders than their competitors without aircraft. Studies show business use of general aviation adds value to a company’s bottom line. Businesspeople can make a trip involving stops at several locations, then return to headquarters the same day, saving time and travel expenses that would be needed to make the same trip over several days via auto, train or airline transport. Business aviation is a productivity tool – when traveling aboard business aircraft, employees can meet, plan and work with each other.”
Corporate shuttles alone tell the story. The advent of the corporate shuttle may have the greatest impact, especially as the powerful economic arguments in their favor - savings of $53 million over a decade’s wroth of commercial transportation vs. costs of $30 million over the same period. Add aircraft management firms offering turnkey operations, and the balance is tilted heavily in favor of a more economic form of business transportation which promises employee productivity gains of nearly $4 million annually. Considering the minimal costs of both acquiring and operating a VLJ, the economics could change even further, especially for smaller companies interested in either a VLJ or a light- or medium-light aircraft. Related Story Special Report: Corporate Shuttles Yield Incredible Savings, Productivity Gains

The industry also cited:
• Competitiveness – business aviation helps companies all across the United States do more in less time, because employees can work collectively en route to a destination and stay in constant contact with the home office for the duration of the mission.
• Efficiency – business airplanes promote efficiency, because they reduce the time needed for employee travel, and allow companies to visit three or four cities in a single day.
• Cost-effectiveness – business aviation often provides the most cost-effective mode of transportation for employees, particularly when companies are trying to move teams of people long distances while keeping hotel and other travel costs down.
• Transportation lifeline – business aviation often serves as a critical transportation lifeline for communities across the country. “With about 100 U.S. cities having lost airline service in the past year, it's easy to understand why so many smaller towns have found business aviation to be a critical lifeline for their economic development. Nobody wants to see a company be forced to move simply because its community has lost its commercial airline service,” the letter states.