|Wall Street Journal|
WSJ runs NBAA letter about sensationalist industry coverage
Jun 24, 2009
A Letter from NBAA's Ed Bolen published in the June 24 edition of The Wall Street Journal responds to the newspaper's recent account of business aviation, which missed key facts about the mode of transportation and overlooked its benefits.
The Wall Street Journal
Letter To The Editor
June 24, 2009
This article greatly mischaracterizes business aviation and does a disservice to tens of thousands of American companies of all sizes that rely on business aircraft to succeed, especially in these tough economic times.
You barely acknowledge that, although a company's nonbusiness use of its aircraft is but a tiny portion of the missions a typical plane flies, there are good reasons that allowances are made for it. It minimizes employee time away from the office, and company officials can stay in touch with the office while in flight. Many businesses also mandate that some employees travel aboard company airplanes out of safety and security concerns. At public companies like those featured in your story, allowances for nonbusiness use of company aircraft are made with an eye toward what is best for the company, and in total compliance with tax law and Securities and Exchange Commission rules.
President and CEO
National Business Aviation Association
Letter as originally submitted:
The Wall Street Journal
Letters to the Editor
June 18, 2009
To the Editors:
Your June 19 article about companies' non-business use of their airplanes utterly mischaracterized business aviation and did a disservice to tens of thousands of American companies of all sizes that rely on business aircraft to succeed, especially in these tough economic times.
For starters, the story barely acknowledged the fact that although a company's non-business use of its aircraft is but a tiny portion of the missions a typical plane flies, there are good reasons allowances are made for it.
The aircraft minimize employees' time away from the office, and company officials can stay in touch with the central office while in flight.
Many businesses also mandate that some employees travel aboard company airplanes out of safety and security concerns. At public companies like those featured in your story, allowances for non-business use of company aircraft are made by with an eye toward what is best for the company, and in total compliance with tax law and SEC rules.
Equally disappointing, in focusing on only one type of aircraft use, your article failed to acknowledge that for thousands of companies, utilization of an airplane is the most effective, efficient and prudent way to do business. When time is critical, when multiple locations need to be reached in a single day, when proprietary information must be discussed, or when business must be done in areas with little or no airline service - a company's airplane provides the transportation solution that allows a business to remain nimble and competitive.
The bottom line is that business aviation is and will remain an invaluable tool for companies all across the U.S., especially in this challenging economic climate. It's unfortunate that this reality was overlooked in your story.
President and CEO
National Business Aviation Association
In response to the following article:
The Wall Street Journal
JUNE 19, 2009
CEOs of Bailed-Out Banks Flew to Resorts on Firms' Jets
By JESSE DRUCKER and MARK MAREMONT
Some executives at banks propped up by government aid have retained a coveted perk: personal use of the company jet.
Flight records show numerous occasions when banks receiving federal money have flown their planes to destinations near resorts or executives' vacation homes, including spots in Europe, Mexico, the Caribbean, south Florida and Aspen, Colo. In some cases, it's clear that bank executives were traveling for personal reasons; for other flights, many of which were over weekends or holidays, the passengers and purpose couldn't be established.
Regions Financial jet N605RF landed at the Prestwick, Scotland, airport on Nov. 12, 2008.
Regions Financial Corp. of Birmingham, Ala., received $3.5 billion from the Treasury Department's Troubled Asset Relief Program, or TARP, on Nov. 14. Twelve days later, the day before Thanksgiving, two Regions jets left Birmingham within minutes of each other, bound for a small airport in West Virginia.
The destination: the historic Greenbrier resort, where the bank's chief executive, C. Dowd Ritter, and family members spent four nights over the holiday, according to a person familiar with his accommodations.
The round-trip flights cost Regions roughly $17,700, according to a calculation by Conklin & de Decker Aviation Information, a consulting firm. A Regions spokesman declined to comment on the trip or the cost estimate but said all travel on company jets "either for personal or business was within our policy."
The Wall Street Journal identified 14 federally aided banks that register planes under their own names. It reviewed Federal Aviation Administration flight records for these planes from October, when the bank aid program began, through mid-March, the latest information the Journal was able to examine.
Disclosure of the flights comes at a time when the Obama administration is setting limits on how banks that receive federal money may compensate their executives. Aid recipients' use of corporate jets, even for business, has been a sensitive matter since last fall, when a flap arose after auto executives flew to Washington on company jets to plead for a public bailout. In January, President Barack Obama berated a major aid recipient, Citigroup Inc., for planning to add to its fleet of jets.
Citigroup canceled the order.
Banks aren't unique either in owning corporate jets or in sometimes letting top executives use them for personal travel. Many big companies do so, saying this helps executives use their time more efficiently and is more secure. Some companies even require certain executives to use company planes for all travel. At Regions Financial, a proxy statement says the CEO should always use bank-owned or other noncommercial aircraft, unless flying commercial is more efficient and "does not involve unreasonable personal risks."
For banks receiving federal money, the cost of personal use of planes is small relative to the aid packages, some in the billions or even tens of billions of dollars. Nonetheless, some banks have curbed or eliminated personal use of company planes in recent months, citing federal aid or the economic downturn.
At Citigroup, two days after the bank canceled the jet order Mr. Obama criticized, former Chief Executive Sanford Weill boarded a Citigroup-owned plane for a flight to a small airport at Saranac Lake in New York state's woodsy Adirondack region. Flight records show it was the seventh trip a Citigroup plane had made to Saranac Lake, near where Mr. Weill has a vacation home, since the bank first received federal aid last fall.
The flight returned to its point of origin, in Westchester County north of New York City, on Sunday, Feb. 1. That same day, Mr. Weill announced he was waiving his contractual right to use Citigroup aircraft. His spokesman said Mr. Weill "cares deeply about the future of Citi and recognizes the extraordinary commitment by the American taxpayer." The statement came on the same day that a much longer Weill flight on a Citigroup jet -- taking family members to the Mexican resort town of San Jose del Cabo in Baja California over New Year's -- was disclosed in the New York Post.
The Presidential Suite at The Greenbrier That plane, a Bombardier Global Express, sat on the ground at Cabo for eight days, FAA records obtained by the Journal show. The cost to Citigroup of the round-trip flight was about $33,500, according to Conklin & de Decker, a consulting firm based in Orleans, Mass., that was asked to make an estimate.
A spokesman for Citigroup said personal use of company planes is limited to certain executives, who are encouraged to fly commercial when possible.
Under Internal Revenue Service rules, executives who receive free personal travel on company jets owe tax on "imputed income." The IRS dictates a per-mile valuation method, which would have resulted in about $3,300 of taxable imputed income for Mr. Weill for each person on the Cabo round trip. A charter flight would have cost about $90,000, Conklin & de Decker says.
One of the largest recipients of government money is Bank of America Corp., which got $15 billion in October and $30 billion more in January in connection with its acquisition of Merrill Lynch & Co. In between the injections, a Bank of America Gulfstream V flew from Bank of America headquarters in Charlotte, N.C., to Aspen, Colo., on the Saturday before Thanksgiving and to the Savannah/Hilton Head International Airport in mid-December.
The latter flight was one of a number to Savannah/Hilton Head in the second half of 2008. Bank of America CEO Kenneth Lewis has part ownership in a home on Spring Island, S.C., near Hilton Head.
Just after Christmas, as the bank's controversial deal to buy Merrill was about to close, a Bank of America Dassault Falcon 2000 jet flew to a small airport near Greensboro, Ga., FAA records show. Mr. Lewis spent the following three days at a nearby Ritz Carlton resort, the Reynolds Plantation. A different Bank of America Falcon 2000 traveled back to the bank's headquarters city from Greensboro on Dec. 30. Flying time each way was about 38 minutes, versus about four hours it would take to drive.
A Bank of America spokesman declined to comment on specific trips but said, "We are implementing a new policy in 2009, under which personal use of aircraft will not be permitted."
Morgan Stanley received $10 billion in October from TARP, a government program to encourage lending amid the credit crisis by infusing banks with cash in return for preferred shares. In subsequent months, Morgan Stanley jets traveled twice to Wilmington, N.C., where property records show Chief Executive John Mack owns several beachfront properties. A Morgan Stanley Gulfstream V that went to Wilmington over the Thanksgiving break later flew to Paris and London over the Christmas holiday.
A spokesman for the bank declined to comment on individual flights but said its policy was to allow Mr. Mack personal use of corporate jets, with the cost "fully disclosed" in annual proxy filings. The value of his personal jet usage last year was $368,675, one filing shows.
Morgan Stanley's most recent proxy filing said that as of March 10, Mr.
Mack began to reimburse the firm for personal use of its aircraft. The price used is the maximum sum the FAA allows plane owners that aren't commercial operators to charge under "time-sharing" arrangements. That price typically is less than it would cost to charter a similar aircraft.
At some banks that received federal aid, executives have been able to use company planes for personal travel. See some examples. Morgan Stanley repaid its federal TARP funds on Wednesday. The Treasury has just issued a final rule saying TARP recipients must implement a policy on so-called luxury expenditures, including aircraft use, and make these policies public within 90 days.
Among aid recipients that have halted executives' personal use of planes is Synovus Financial Corp., a Columbus, Ga., bank that received $968 million in federal funds in December. Its most recent proxy statement said that in light of "current economic conditions," the board's compensation committee in December suspended personal use of aircraft for 2009, though it could approve exceptions.
Marshall & Ilsley Corp., a Milwaukee-based bank that got $1.7 billion in TARP funds in November, ended personal use of its aircraft in February, a spokeswoman said, "in light of receiving capital from the U.S.
Treasury." She said the bank is trying to sell its two planes. Before the ban, the bank's ex-chairman, James Wigdale, used a company plane at least three times in recent months to fly to and from Vero Beach, Fla., the spokeswoman confirmed. He owns a home near Vero Beach.
That Florida city has been a frequent destination for aircraft owned by Pittsburgh-based PNC Financial Services Group Inc. PNC announced on Oct.
24 it would receive $7.7 billion of federal money to help it acquire a troubled Cleveland bank. That evening, FAA flight records show, a PNC jet took off for a weekend trip to Vero Beach. Property records show PNC Chief Executive James Rohr owns a beachfront house about nine miles from the Vero Beach airport.
The day PNC received its federal aid, Dec. 31, the same company plane was parked at Aspen, Colo., where it had traveled from Pittsburgh for a five-day trip over New Year's. PNC planes also flew numerous times to Fort Myers, Fla., near vacation homes owned by other PNC executives.
While declining to comment on specific flights, a spokesman for PNC said its board requires Mr. Rohr and the bank's president to use corporate aircraft for all personal and business travel. Since Jan. 1, senior executives have had to reimburse the bank for personal travel, at the top rate the FAA allows in jet time-sharing deals. Previously, they had to reimburse only after the value of total perquisites, including travel, topped $50,000 in a year.
At Regions Financial in Birmingham, two weeks after the October announcement it would get TARP funds, a company jet took off for a weeklong trip to the U.K., including a three-day stop in Prestwick, Scotland, which is near several famed golf courses. A Regions spokesman declined to discuss the trip but confirmed the Alabama-based bank has no operations in Europe.
At the Greenbrier resort in West Virginia a few weeks later, Regions CEO Mr. Ritter was accompanied by other family members, including son Bill, who is also a Regions executive, according to the person familiar with their stay. They rented the seven-bedroom, $4,515-a-night Presidential Suite. The spokesman for Regions said its executives pay for their own accommodations when traveling for personal reasons.
The Ritter family has reserved the Presidential Suite for this year's Thanksgiving weekend, according to the knowledgeable person.
-Ianthe Jeanne Dugan, Dan Fitzpatrick and Tom McGinty contributed to this article.
No Plane No Gain: Sampling of 2010 Coverage
Since the launch of the No Plane No Gain advocacy campaign, a concerted effort has been made to deliver the message about the importance of business aviation through national and local news outlets. This sampling of national and local television coverage in 2010, highlights the campaign's effectiveness in communicating the industry's importance.
NBAA's Bolen on Fox Business Network
Click here to see Ed Bolen, President and CEO of NBAA, in an interview on Fox Business Network
NBAA's Bolen on DC's Newschannel 8
In an interview with Newschannel 8, Bolen explains that "... business aviation is prudent, cost-effective, and oftentimes, the only way to get where you're going."