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Could Auto Bailout Bill Hurt Aviation?
December 11, 2008 5:49 PM
ABC News' Lisa Stark Reports: Even as Congress struggles to agree on a bailout bill to try to save jobs in the automobile industry, another industry is warning the proposals, as written, could hurt their industry.
Supporters of business aviation have written to lawmakers opposing the legislation because it may include a provision that discourages, if not forbids, auto executives from using private planes for business.
The CEOs of General Motors, Chrysler and Ford created a firestorm of anger and controversy when they each flew private company jets to Washington D.C. to plead for a taxpayer bailout. They got the message. For their second trip to Capitol Hill, each drove the 500 miles from Detroit.
The bailout legislation would limit or even forbid car companies from owning or leasing private aircraft.
That doesn't fly with the business aviation community.
"This provision sets a damaging precedent," said James Coyne, President of the National Air Transportation Association, in a letter to lawmakers. Coyne pointed out that thousands of small businesses provide charter and private aircraft.
"Using legislation intended to save jobs in one sector of the economy to impact jobs negatively in another, equally important sector, is unconscionable," he added.
The National Business Aviation Association has also weighed in. In a letter to House Speaker Nancy Pelosi, president and CEO Ed Bolen said the bill "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."
Despite this opposition, lawmakers may be hard pressed to back down, with the image of those auto company corporate jets still fresh in their minds.
December 11, 2008 | Permalink | User Comments (19)
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Have these people NO SHAME?
They oppose a rescue bill for the U.S. auto industry WHY? Because it conflicts with their weasely self-interest!
Here is an idea, how about a law to make the "business aviation community" pay their actual share of the cost of U.S. airport, air traffic control and the value of the airspace they occupy.
The truth is that a business jet costs the system just as much as a commercial plane holding 150 passengers!
Make business jets pay.
Posted by: John | Dec 11, 2008 6:22:46 PM
Why does ABC call this an "automobile industry" rescue, bailout or loan? This is a UAW rescue, bailout or loan. Nissan, Toyota, Honda, Mercedes and BMW all operate non-union plants in the USA and none of those companies nor the governors of the states they are located in are asking for taxpayer money. In fact, Volkswagen just announced a $1,000,000,000.00 investment in a new plant in TN. Hyundai is building a plant in AL. GM is prospering in countries outside the USA. Ford just built a start of the art plant in Brazil.
Posted by: bob | Dec 11, 2008 6:32:31 PM
Bob,
You and your kind stripped America of its industry and shipped it to China.
Do us a favor and go back to school where you can study how terrible things were before the unions brought about the end of child labor, and replaced the norm of 7 days a week labor with the 40 hour work-week.
Oh, by the way, Ford, GM and Chrysler have higher per unit costs only because of the large number of retirees, which is to say because they were so successful for so long!
The "transplant" companies you cite don't simply because they have only been in the U.S. for only a few years. (They don't have any health insurance responsbilities in Japan because in Japan, health insurance is a government responsibility.)
Of course, in Republican world, retired workers should live without pensions and without health insurance. They are an amoral bunch.
Posted by: John | Dec 11, 2008 6:56:15 PM
Business aviation does pay its share in the air traffic control system and airport fees. This is a common misnomer that is claimed by the airline industry. Taxes on fuels and airport ramp space and landing fees are applied to all aircraft. It is the airport that will waive fees for aircraft under a gross weight, usually aircraft less than 6000 maximum takeoff weight for smaller airports. As far as paying for the airspace? The taxpayer pays for the airspace unless you go to Europe. Europe will charge the individual aircraft for time on the airway. So the airlines can stop whining about the fees, we business aircraft pay our fair share just like the waning airlines. There is just a lot of jealousy because business aviation has taken all the first class passengers. If the airlines would have treated them right all along, you would still have them on you planes. We treat them right and they know it.
Posted by: Rick | Dec 11, 2008 6:59:06 PM
The tax on fuel and airport ramp don't begin to cover the cost of business jets. A business jet requires just as much of the air traffic control system as a giant Boing 777. It occupies just as much the traffic capacity of our expensive to build and operate airports as a 777.
But the fuel consumed by the business jet, and therefore the taxes they pay are 0.1% that of the 777.
The taxpayer does indeed pay for the airspace. In the case of the business jet, this very expensive benefit is bestowed on one or two people too "important" to fly commercial.
In the case of the 777, the benefit is bestowed on 283 members of the public.
Make business jets pay!
Posted by: John | Dec 11, 2008 7:12:20 PM
I would assume John, that you take the bus to work or do you drive your own car? My clients take their own plane because they can afford it. Do you take the bus to work or can you afford a car?
Posted by: Rick | Dec 11, 2008 7:27:52 PM
John? I sense that you are a little jealous of a business aircraft. Oh by the way, if the business jet uses 0.1% of the fuel that a Boeing 777 uses, it sounds like the airlines are using way too much fuel. Based on that comparison, everyone should use a business jet and we would use less fuel.
I fly the airlines a lot. I can see the reasons that business aircraft are flourishing. Late departures, terrible customer service, gate agents who don't care about the customer, dirty airplanes, TSA and time required to be at the airport before departure. Does this kind of remind you of the bus you ride to work? I certainly would not think that you would take your own car to work! Using all that precious roadway and clogging up the parking lots?
Shame shame shame on you if you do. I sense that you are an elitist.
Posted by: Rick | Dec 11, 2008 7:58:11 PM
I drive a car. The comparison you make would make sense only if almost everyone got to work except for a privileged few who drove to work. Such is not the case.
You say that your clients take their own plane because they can afford it. But the question is whether they are paying the cost of their choice.
In fairness, the same rule should apply to auto drivers. They should pay the cost of their mode of transportation.
Of course since about 95% of Americans get to work by car, it seems unlikely that giving the 5% a fairer deal is likely to make much change to the cost of the car driver.
ALL OF THIS IS BESIDES THE POINT HOWEVER. The business jet class are morally nude. As the beneficiaries of a free lunch vis a vi paying their way, they are in no position to be critical of the entirely symbolic (read meaningless) requirement that the "big three" CEOs sell their corporate jets.
This portion of the rescue bill is petty and meaningless, but the selfish interests of the business jet types should have nothing to do with whether the auto industry rescue is good public policy.
Posted by: John | Dec 11, 2008 8:19:12 PM
Rick,
In answer to your last post, my motivation is an intollerance of fools -- by which I mean the idiots who thought the symbolic and meaningless stripping of corporate jets from the CEOs of Ford, Chrysler and GM -- should be the determinative factor in the important decision of whether it is in the public interest to rescue these 3 companies.
Posted by: John | Dec 11, 2008 8:24:32 PM
It should be pointed out the foreign automakers with US plants that are often pointed to as models of how the business should be run also have business aircraft as part of their comprehensive travel program.
Posted by: David C. Miller | Dec 12, 2008 11:13:24 AM
What is so disturbing is for there to be a blanket mindset that corporate aviation does not pay its "fair" share in taxation. In addition to the fuel taxes paid, individual's who ride on the airplane pay income tax, corporations (C & S) pay income tax, etc. all of which go into the general fund that is allocated among all agencies. I can promise John that I pay an inordinate amount of income tax and receive no tangible benefits from the majority of federal agencies that my tax dollars support. I accept that so why is it so difficult for acceptance of the FAA's budget through the general fund? It is interesting that we live in a country whose basic concept is capitalistic; however, there are those who believe that there should be apologies for success. The restriction or elimination of the use of corporate aircraft by the automakers if this legislation is approved is socialism mentality. The economic bailout of the banks did not include this restriction and there are very few banks with multiple locations that do not own corporate aircraft. The CEO's of the big three exercised very poor judgment in using high profile aircraft when they were holding out their hands for government assistance. However the necessity of corporate aircraft for traveling efficiency is an absolute.
Posted by: Bob | Dec 12, 2008 11:42:47 AM
Hey - let's move the "pay for airspace" concept to income taxes. Since big taxpayers take up the same "space" as little taxpayers, lets divide the cost of government equally - each taxpayer assesed the Federal Budget number divided by the population. Any voluteers for "collections"??
Posted by: Glenn | Dec 12, 2008 1:06:35 PM
Let’s make no mistake about this. NAFTA years ago put the American Industries at a disadvantage from the start. This has taken this long to come to fruit. But the piper is being paid for the mistakes of our government so many years ago. Those on the Republican side have had an agenda to bust the union for many years. The bottom line is the UAW has given concessions for many years and has tried to work side by side with the executives of the American Automotive industry. The Republicans want to cut the UAW workers wages by 50%. Does that mean that then, their home mortgages will be cut by 50%? Does that mean that their auto loans, property taxes, credit card, water bill, utility bill and any other bill, most of that is essential to live, will be cut in half? Does that mean that the very congressmen that asked the UAW for concessions are willing to take 50% pay cut? If we are truly talking across the board does that mean that the banking industry that has received billions of taxpayer money will be asked to take 50% pay cut? Let’s truly make this across the board. If 3.5 million people lose their high paying jobs, who will pay the taxes? Congress inadequacy to act on this matter of the automotive industry and put it back into the hands of the president has stunned all 3.5 million of those people who are effected. The president can ride in like a white knight to save the day but 3.5 million people will still not buy a vehicle because they still don’t know their future. The administration has doomed the American Automotive industry from the start of this 3-month trial period. If no one buys cars, the industry does not succeed. Congress needs to go back into legislation and change the very trade agreements that got us to this position. What’s good for the goose, is indeed not good for the gander. We are and have failed our American Industries, from the textile to the electronics to the steel to now the automotive. Does congress truly believe that we can operate this country on minimum wage? We have become socialistic because congress has failed to protect the American Industries. How many major players of jobs and taxes have went bankrupt in the last decade? They are falling like dominos. If we truly continue to run this country into the ground, we can ring the doorbells of our NAFTA partners and say, “Dominos, your pizza is here.”
Posted by: Lonny | Dec 12, 2008 1:54:50 PM
Here there are, as always, several point of views and sometimes different approaches to the same problem.
I will start by saying that the CEO's of the Big Three made a big blunder by flying their Large Jets almost by themselves to DC. If they had been smart, they would have shared a ride together, and brought a number of their associates and counselors (few empty seats), and thus truly show efficient Corporate Aviation can be. They would have been even smarter to share a ride in a mid-size jet like a Hawker or Lear Jet instead of flying alone in a Gulfstream.
Having said that, it is incredibly short sighted for politicians to demand that the car automakers disband their flight departments, for in that one swift move they caused the unemployment of dozens while curtailing the ability to use corporate aviation as an efficient tool of American Industry. Most corporate aircraft carry 4-5 passengers aboard (in a typical 8 seater), and allow companies to fly to over 5300 airports around the country, many with NO airline service at all. The critics fail to see the efficiency of corporate aviation, or the way it allows small businesses conduct their business more efficiently, perhaps because of lack of knowledge or prejudice on the matter.
At the same time, even the unknowledgeable critics forget that corporate aviation is not just the large Gulfstreams, but rather hundreds of other medium and small corporate aircraft and helicopters, and these small to medium size aircraft provide many LIFE SAVING services, such as Air Ambulance, Helicopter Evacuation, Aerial Organ Team Transplant Transport, etc, etc, etc. You just can't do those mission via the airlines! I am sure that those calling for the banning of corporate planes from the sky have never been injured in a highway accident, or have never been the recipient (or known someone who was) of an Organ Donation/Transplant, otherwise they would not have made such short-sighted and seemingly uneducated comments. But I wholehartedly agree that flying one person in a Gulfstream was a terrible idea, especially if that person was looking for Billions from the Taxpayers! Maybe instead of firing their flight departments, the Big Three should have fired their handlers and PR advisors?
I don't personally want to see any corporation fail, whether one of the Big Three or a small business, but I am not convinced a bailout of 14 to 35 Billion Dollars will truly save the Detroit auto industry. And I think that attacking aviation, especially corporate and business aviation, a segment that provides thousands of jobs and export Billions of Dollars overseas, is certainly not a well thought out thing to do.
Posted by: Harold | Dec 12, 2008 3:32:28 PM
While I thank President Bush for
keeping us safe since 9/11 someone
should remind him(The Supreme Court)
about the "separation of powers"
among the three branches of government!
The U.S. Senate has voted against the
Detroit Automakers Bailout!
He has No Constitutional Right to
circumvent Congress and give the
Automakers the money anyway!
More than 60 percent of the American
People oppose this bailout!
Back off Mr President!
Posted by: reaganfan | Dec 12, 2008 5:54:48 PM
The Illinois governor is in deep poo-poo while the political radar acted like nothing happened. Too close for comfort for Obamotis? What's going on with this blog? Avoiding the hottest topic for the past 3 days. Smart move, ABC!
Posted by: Jen | Dec 13, 2008 12:15:34 AM
Rick,
So you are advocating flying business jets to avoid TSA and the protection of U.S. citizens? I see.
Pay your fair share you thieves!
What's the accident rate of business jets vs. commercial?
Posted by: Common Sense | Dec 13, 2008 10:14:15 AM
I have to agree that punishing the car makers or anyone else on private air travel makes for good press, but in reality is stupid! I mean you can't legislate good sense. Laws are there for people to protect people who will abide them and generally, people do abide by them; however many an idiot has died while obeying a law.
The problem is not private air travel or even the ownership of a private plane. The problem is not even specifically that they flew them to the meeting in the first place. No, no, no the problem is they don’t have enough good sense to realize that an airplane like many other things in business can be used as a tool, a time saver, and many other things, but if it doesn't make good economic sense or fit in your budget then you don't do it!
I mean all the other small business people who own aircraft realize when you don't have the money or it doesn't fit in the budget you don’t fly your plane. I mean to spend $30,000 for convenience when some inconvenience for $300 makes a lot more sense and fits the budget that's what you do! Is it really too much to ask people to make a budget and be a good manager of the shareholders investments? If it is then like the "bailout" this will be good intentions legislated that can or will likely cause more harm and be harder to undo than a simply saying get it together or we will get someone who can!
Just please don't make that next person someone from the government!
Posted by: Will | Dec 13, 2008 10:35:13 PM
These southern auto manufactures do not employ millions of people and I wouldn't purchase a car with a foreign label where do they get the parts that make these cars, the glass, the tires, the metal, the engine, the lights the wiring. I know how cheap these cars are made. you say non union all they get is $3.00an hour less. which would you prefer a depression because if the 3 big ones go under that's what will happen bail out now or spend it for unemployment compensation for these millions of people/t all comes out of the same hand wake up, where is your brains
Posted by: Rose Szymanski | Dec 14, 2008 4:28:23 PM
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