Farewell to the Corporate Flight Department

As the U.S. economy continues its struggle to recover one of the shoes that is going to be sucked off and lost forever in the quicksand is the corporate flight department as we’ve known it. The actions of three gutless auto company CEOs, in response to a question from a hypocritical member of the U.S. Congress has forever changed the landscape of business aviation. After slinking back to Detroit and closing their own company flight operations they spawned a virus that grew into an epidemic. Each day another company with a private aircraft is trying to run away from it- or hide it – as quickly as possible. Not wanting to be perceived by the share holders as wasteful and extravagant corporations are shuttering their flight departments, some after decades of service. Private aircraft owners, not wanting to be judged by the public as moneyed arrogant twits jetting from one private resort to another while burning up precious fossil fuel, they are selling their airplanes- or parking them until the resale value recovers.

We are witnessing the death of the corporate flight department.

The prototypical company flight operation has an airplane, sometimes several, along with a staff of pilots to fly them, technicians to service them, maybe a flight attendant, and perhaps a scheduler or two. These folks are employees of the company and they work extremely hard to ensure the highest degree of safety and convenience for their passengers. Those passengers are employees too, for by and large these airplanes are not approved for hire by the general public; they fly only for company business. The business rents a hangar or perhaps builds its own at the nearby airport. Some company airplanes never leave U.S. airspace while others fly around the world.

Smart executives know the value of a company plane. They know the efficiencies and of the opportunities gained. The brightest of them aren’t intimidated when the naysayers point and shout at the corporate jet. They know a plane is the best implement in the company tool box.

When the Board of Directors decides to shed the in-house flight department the justifications can be many but more often than not the goal is to change perception. They can say, “We respect our investors and their money- we got rid of the company flight department and now everyone from the CEO on down flies commercially!” Just for good measure they'll add those commercial flights will be made on a discount carrier. The truth is that those executives are unlikely to ever sit in a seat on Southwest Airlines. It is also true there is no longer a company flight department; the hangar is closed and the employees are laid off. But the airplane may or may not go away.

If an aircraft is leased it often can’t be turned in without accepting severe financial penalties. If it’s an owned asset it may be hard to sell, as is in today’s flooded market. And really, all the Board ever wanted to do was to be able to tell the shareholders that the costly and unpopular flight department is gone. Did anyone seriously think the CEO and his mahogany-row associates were going to fly anywhere on those cattle-car airlines? And so the company airplane is turned over to a management company that specializes in operating business jets. The management company employs the pilots and technicians; it keeps the plane in its hangar; it puts in the fuel and vacuums the carpet. Once a month it sends its client a simple bill for services rendered and everyone is happy.

Some companies close their flight department and get rid of the airplane, too. But because the need for executive transport still exists they charter airplanes or become a fractional owner of a shared aircraft. They too can truthfully state that they have no corporate flight department.

To be sure there are advantages to this hands-off approach to corporate flying. It’s much easier to manage (just send in a check when the bill comes); the pilots and flight attendant are merely contract employees (“Can we replace our usual cabin attendant with a better looking one?"); sometimes the company plane earns a little revenue when it’s chartered out. There doesn’t seem to be much of a downside for the corporation, does there? Now which is actually more expensive- the in-house operation or the out-sourced one? It depends....I’m sure the determination varies with the company’s accounting practices. So for these reasons the traditional corporate flight department is now on the endangered species list. The trend will continue until equilibrium is achieved.

Why will some companies keep their own flight departments in spite of this fad to switch? I think because it’s an issue of control, i.e. the “our airplanes, our employees” attitude. Smart executives know too that rarely does anyone care as much about the passengers and airplanes as much as an employee does- it’s hard for a contract employee to sincerely care very much- after all he or she is just a hired hand. Regarding the management company, you are their most important customer until the contract is signed and their attention is directed to the next potential client.

The demise of the corporate flight department is a sad thing but this segment of the aviation industry has fundamentally changed forever, I’m afraid.