Two private jet trade groups are accusing the cable network of misrepresenting Clay Lacy and the importance of business aviation
A letter issued yesterday by the top executives of the National Business Aviation Association and National Air Transport Association said CNBC coverage of the CARES Act distorted the impact of Covid-19 on business aviation.
A post on NBAA’s website was titled, “CNBC Distorts Pandemic’s Impact on Business Aviation, Specifically Charter Company Clay Lacy.”
An article on May 14th after the Treasury Department published the first batch of aviation-related CARES Act recipients highlighted donations by the aviation company’s founder Clay Lacy to Republican causes.
It reported, “Lacy gave $2,700 to the Trump campaign in 2016 — the maximum for an individual to give to the campaign — and he gave $47,000 to the Republican National Committee after Trump became the nominee.”
It’s not clear what, if any, ownership stake the founder still has in the company. An Aviation International News article from 2013 indicated current CEO Brian Kirkdoffer had bought a controlling interest in the private jet charter, management, and maintenance provider.
Letter to CNBC
The letter was directed to CNBC. It was signed by Ed Bolen for NBAA and NATA’s Tim Obitts. It read in part, “Your recent story mischaracterized business aviation, including its misrepresentation of a charter company, and the impact of the COVID-19 crisis on many companies like it. We respectfully request the opportunity to set the record straight.”
It continued, “First, your description of charter businesses failed to note that most of them are small, employing a couple dozen people. Customers rely on charter aircraft to boost employee efficiency, productivity and scheduling flexibility. But, with travel at a standstill for many companies, charter flights have fallen to a trickle. Air-taxi providers therefore requested aid for the same reason countless other small businesses did: to keep employees on the job.”
The CNBC article quote from the Clay Lacy website described clientele as “business and world leaders, Fortune 500 companies, government agencies, professional athletes, sports franchises, celebrities and dignitaries.”
However, in the next paragraph, the reporter, Robert Frank, who authored the book Richistan, went on to write, “Private jet companies lobbied Congress and the White House to be included in the billions of dollars that went to the commercial airlines and aviation companies, arguing that they support more than 1 million jobs and offer a lifeline to smaller communities without a major airport.”
The letter from the trade group CEOs, said the “family-owned business is a cornerstone of the local community. In addition to the specialized workers who manage, maintain and fly the company’s charter aircraft, this business provides jobs for over 500 line workers, technicians, customer-service representatives, facility managers and other professionals, in the local area and beyond.”
It went on to state, “Clay Lacy Aviation – and the community-based companies like it, spread across all 50 states – are a critical part of business aviation, which supports more than one million jobs and $247 billion in economic activity. As our country grapples with the COVID-19 crisis, charter airplanes are flying medicines, specimens and testing supplies, medical personnel and patients in need of specialized care (including patients with compromised immune systems), repatriation flights, and other critical missions.”
The trade group bosses concluded, “The failure of any of these businesses will deal a serious blow to the ability of American companies and communities to connect with one another, to foster business success and to provide critically needed transport in times of crisis. Your readers and viewers deserve serious, informed coverage of the importance of these companies, and their employees, families and communities.”
Tuvoli, an industry payment system for operators and brokers, notes, over 70% of Part 135 private jet operators in the U.S. have fleets of five jets or less.
At the time of the CNBC article Clay Lacy was the largest recipient of support with $28 million. However, in an update last weekend, the Treasury Department said Directional Aviation’s OneSky Flight, which includes Flexjet, Sentient Jet, and Flexjet, had received $84 million.
Flexjet swipes NetJets over CARES Act
Its principal Kenn Ricci also took issue with some media coverage around the list. He told Private Jet Card Comparisons during an exclusive interview, “This is not about propping up a service for the wealthy, as some have inaccurately portrayed it. It’s about preserving the jobs of thousands and ensuring that an industry that touches Americans across all income levels and geographies continues to thrive in a post-pandemic world,” he said.lso took issue with media coverage.”
He said the company is using funds to support the expansion of its ferry program for pilots. The extra staging points will cut the time it takes for pilots to commute to the positioning flights. He said some monies might also be earmarked for aircraft orders, supporting jobs at OEMs.
Recipients are required to maintain payroll levels for at least eight quarters, Ricci said, adding, “Even though it’s called payroll support, that’s not really what it is. You can’t lower your payroll…You can’t cut jobs, but you can use it for other activities. We are going to use this to improve safety and sustainability,”
Ricci then went on to seemingly swipe the industry’s largest player, NetJets, which has publicly said it hadn’t applied for support.
“We are disappointed that some of our largest peers who would have qualified for PSP funding did not apply. They, too, could have had more capital to support employees, suppliers, vendors, and more importantly, our industry’s growth,” Ricci said.
He continued, “No matter how much capital you have, you would be remiss if you didn’t take an opportunity to inject more capital into the opportunities available in our industry. We think failure to obtain funds under the PSP is an opportunity missed for them to do their part to position the industry for a better, stronger post-Covid-19 future.”
NetJets calls CARES Act list “eye-opening”
NetJets declined to respond to Ricci’s comments which were reiterated in a press release. However, yesterday it seemingly punched back in an email to customers announcing it was eliminating minimum flight time charged on certain aircraft types.
In the message, NetJets’ president Patrick Gallagher wrote, “We have observed others in our industry badly bruised by the pandemic as the recipients of CARES Act monies have become public. The names on the list and amounts received have been eye-opening.”
He continued, “It reminds us just how fortunate we are at NetJets, and it has affirmed that our disciplined approach to growth over the years was the right decision. NetJets was well-positioned going into this crisis, and the critical steps we have taken make us stronger for the future.”
In the CNBC article, the Treasury Department said, “The standard for determining air carrier eligibility was set by Congress on a bipartisan basis and each applicant’s eligibility is verified by the Department of Transportation before any funds are disbursed…Political affiliation has absolutely no bearing on the Payroll Support Program, including applicant eligibility, the amount of assistance provided, or use of funds.”
However, the updated list included at least three companies that have been in the news recently for the wrong reasons.
Kobe Bryant’s Helicopter Provider, Illegal Charters, and Chapter 11
JSX, which operates scheduled flights in the Western U.S. from private terminals, is related to JetSuite. The latter ceased operations and filed bankruptcy.
The Part 135 charter operator furloughed nearly all of its 100 employees. Members of its SuiteKey jet card program had unused flight credits of $50 million at the time of the bankruptcy. JSX received $8.9 million.
Additionally, a charter operator, Jem Air Holdings, that a month earlier had been accused by the Federal Aviation Administration of running illegal charters with a recommended $220,000 fine, received $150,000
However, the most high profile company to receive government funding was Island Express Helicopters. It received $603,000. In January, it was operating the charter flight that crashed killing NBA legend Kobe Bryant and all aboard.
The reporter of the CNBC article, Robert Frank, is perhaps best known in the private jet industry for his coverage of the troubles at JetSmarter before the company was sold to Vista Global Holdings last year. VCH later merged it with XOJET, creating a new brand, XO, combining jet cards, shared flights, and on-demand charter options.