Turbulent Ride for Private Jets

Posted February 10, 2009 at 6:03pm

Eight big-bank executives will be making their way to Washington today to testify before the House Financial Services Committee. And they won’t be flying into town in private jets.

The corporate honchos are opting for much less glamorous transportation — trains and commercial airplanes.

Corporate jets may seem like a thing of the past, a sign of corporate largess that is unseemly in an economic crisis as companies lay off thousands of workers.

That’s exactly the image of corporate aircraft that the National Business Aviation Association is working hard to disprove.

The trade group, which represents some 8,000 member companies that use general aviation aircraft, has taken its case to Capitol Hill. And it is trying to convince Members that the recent example of chief executive officers of the Big Three automakers flying into Washington this fall on corporate jets before pleading for millions of dollars in loan guarantees is the exception, and not the rule, in business aviation.

Since the flare-up with the automakers and more recent scrutiny over Citigroup’s scheduled purchase — and subsequent cancellation — of a $42 million corporate jet, the NBAA has gone on the offensive.

It’s trying to stop legislation aimed at limiting corporations’ ability to maintain private airplanes, while also pushing for general aviation provisions in the stimulus.

“There has been a concern on our part that legislation related to [the Troubled Assets Relief Program] or statements coming from Capitol Hill or the administration could be misinterpreted, suggesting general aviation airplanes for business purposes are always inappropriate. Clearly it is not,” said the group’s president, Ed Bolen, who has been leading the association’s charge on Capitol Hill.

President of the NBAA since 2004, Bolen has long been an advocate for the aviation industry. Before joining the NBAA, he served as president and CEO of the General Aviation Manufacturers Association.

Bolen and the NBAA have been meeting with members of the House Financial Services Committee and other lawmakers to press the point that business aviation is an important source of jobs. The industry has a large manufacturing base in the U.S. and also helps service the more than 100 small towns and rural areas that have lost scheduled commercial airline service in the past year.

“Our efforts have been to make sure that everyone on Capitol Hill understands the realities of business aviation in the U.S.,” Bolen said.

It’s been an uphill battle.

“There’s no doubt that over the past few months there certainly has been a witch hunt against corporate aviation,” said Bob Zuskin, an aviation consultant at Jet Perspectives, citing the government’s decision to require Ford and General Electric to divest their general aviation fleet.

The bad publicity has dovetailed with a general softening in the used aircraft market, which is trying to absorb an excess number of private planes.

At this time last year there were 1,800 airplanes on the market for sale. Today there are 2,800 airplanes, which has dramatically reduced the resale value for jets, according to Zuskin.

The NBAA itself has also taken a hit, cutting its head count by 10 percent in January.

The NBAA had eight lobby shops on retainer last year, spending $2.5 million on federal lobbying, according to Senate records.

In February, the group added Gottlieb Strategic Consulting to its roster, which already includes Bockorny Group, Capitol Counsel and Mitch Rose Strategic Consulting, among others.

In response to the economic downturn, the trade group has also merged two of its signature events — the association’s annual meeting and convention with its light business airplane conference.

Despite the industry troubles, the NBAA and the General Aviation Manufacturers Association, which only represents private aircraft manufacturers, have had some success on Capitol Hill.

The groups were able to fend off a provision that was originally in the TARP legislation that would have required companies receiving bailout funds to divest their corporate airplanes or jet leases.

GAMA worked alongside the NBAA to get the measure stripped out.

“Some of these provisions that were appearing were coming forward through Financial Services and other parts of Congress that quite frankly, are committees that don’t have a history of dealing with our industry,” said Paul Feldman, vice president of government affairs at GAMA.

The business aviation industry has also teamed with the wider air transport community to promote stimulus projects for airports and air traffic controllers. Additionally, GAMA has been pushing for a provision that is currently in both the House and Senate stimulus bills that would allow companies that purchase capital investments, including private jets, to accelerate their depreciation.

“It gives a boost to sales because somebody in this case purchasing an aircraft would receive accelerated depreciation in that first year,” Feldman said.