NetJets CEO Abruptly Resigns

ATN_Pilot said:
Maybe someone can explain to me why a NJ pilot should get paid the same or similar for a flight that brings in $30k in revenue compared to a Delta pilot who for a flight of similar stage length brings in double that revenue? I just don't get the argument that this comparison is reasonable, and I definitely don't think the NMB will give it the time of day.
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I agree with lots of things you say on this board, and you seem quite intelligent. However this is the most ridiculous post I have ever seen...
 
Inverted said:
I agree with lots of things you say on this board, and you seem quite intelligent. However this is the most ridiculous post I have ever seen...
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I'd love for you to explain why. And not in an emotional way, but in a way that you'd explain it to a member of the National Mediation Board, who is responsible for deciding whether your demands are reasonable or not. Because they're the only ones who matter, and based on my experience with them, I don't think they're going to buy any arguments I've seen to date.
 
ATN_Pilot said:
I'd love for you to explain why. And not in an emotional way, but in a way that you'd explain it to a member of the National Mediation Board, who is responsible for deciding whether your demands are reasonable or not. Because they're the only ones who matter, and based on my experience with them, I don't think they're going to buy any arguments I've seen to date.
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Well, they aren't comparable business models first of all. The simple reason that people who pick companies like NetJets over flying in the back of a Sardine can, lends it self to different compensation packages. NetJets appeals to the top 1%, which airline does that? While Delta isn't the lowest price carrier, they compete in a market which vast competition. NetJets as a fractional hasn't had a legitimate competitor in its space since Citation Shares. The amount of work involved, and flying while on rotation are higher than any other private jet operator, and I have no problem making a statement like that. We have positioned ourselves as a company that has separated its self from other private jet operators by providing a unique product and experience. That statement usually gets a lot of pushback but it is 100% true. Sure the bottom feeder the charter company will get a client from point A to point B just like a NetJets crew, but there are tons of behind the scenes people that are planning the monumental undertaking of having 700 aircraft and 2600 pilots available to the thousands of owners and clients at a couple hours notice. The scope of this operation warrants special consideration. Why would a company that is poised and positioned to serve the highest of the rich and famous not be expected to pay its employees a respectable salary?

NetJets is an owner based business model. How many people get piled in the back has ZERO to do with the revenue the company generates. This a polar opposite to the airline industry, which is exactly why NetJets, and other 135/91 operators should not be compared to the airline industry.
 
ATN_Pilot said:
You have a misunderstanding of how 121 pilot compensation is argued. Net worth of the individuals in the back is meaningless. All that matters is the revenue that the airline is generating from them (and the profitability of the carrier to a certain extent). And 210 people paying an average of $250 per ticket is a lot more revenue than one rich guy paying for the same flight on NJ, no matter how many billions the rich guy may be worth.
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I know you're not one to be bothered with other people's opinion, so I won't even go there. I'll just go straight to your argument, though I'm sure you'll be along shortly to show me why I'm completely wrong. Using the best numbers I could find and/or make up:

767:
Crew costs: CA 255/hr + FO 160/hr + 5 FAs at $50/hr = $665/hr
Fuel: 12,000 lbs/hr @ $2.8/gal = $5000
Extra costs (maintenance, parts, administrative, taxes, fees, hotels, crew soft time, etc) = I dunno, let's say $2500/hr.
Revenue: 210 passengers at $700 per seat for an 8 hour flight = about $18,500/hr
That would come to about $10,400 in profit per hour.

Gulfstream G450:
Crew costs: CA $255/hr + Fo $160/hr + 1 FA at $50/hr = $465/hr
Fuel: 2700 lb/hr @ $5.5/gal = $2200/hr
Extra costs: $1500/hr
Using this info about the Marquis Jet Card, they can charge at least $17,000 per flight hour, or $12,800/hr profit.
Using these numbers for full ownership: $22m for a half share for the 5 year contract period ($11,000/hr), plus the occupied hourly fee ($1950/hr) plus the monthly management fee ($1800/hr), that's $10,600/hr profit.

So using your argument, regardless of the number or worth of people onboard, NetJet pilots should be paid BETTER than 121 guys because they make more money for the company on an operational hour basis.
 
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I don't really have a dog in this fight and I want you to get the maximum amount of money you're able to negotiate, but your 767 assumptions are kind of "off".

I like your logic, don't get me wrong, but I wouldn't exactly drop that on Buffet's desk and expect him to cut a check unless your comparative numbers are realistic.
 
Inverted said:
Well, they aren't comparable business models first of all. The simple reason that people who pick companies like NetJets over flying in the back of a Sardine can, lends it self to different compensation packages. NetJets appeals to the top 1%, which airline does that? While Delta isn't the lowest price carrier, they compete in a market which vast competition. NetJets as a fractional hasn't had a legitimate competitor in its space since Citation Shares. The amount of work involved, and flying while on rotation are higher than any other private jet operator, and I have no problem making a statement like that. We have positioned ourselves as a company that has separated its self from other private jet operators by providing a unique product and experience. That statement usually gets a lot of pushback but it is 100% true. Sure the bottom feeder the charter company will get a client from point A to point B just like a NetJets crew, but there are tons of behind the scenes people that are planning the monumental undertaking of having 700 aircraft and 2600 pilots available to the thousands of owners and clients at a couple hours notice. The scope of this operation warrants special consideration. Why would a company that is poised and positioned to serve the highest of the rich and famous not be expected to pay its employees a respectable salary?

NetJets is an owner based business model. How many people get piled in the back has ZERO to do with the revenue the company generates. This a polar opposite to the airline industry, which is exactly why NetJets, and other 135/91 operators should not be compared to the airline industry.
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Look, I understand your arguments, and I obviously want labor to get as much as they can while still keeping the company profitable, but the problem is that management and the NMB simply don't see things through the same lens that you do. It was difficult for me to finally grasp this concept when I was dealing with them, but I finally had to do so, because the Board holds all the cards.

The Board wants to be able to draw comparisons to be able to judge the reasonableness of your proposals. So they're going to compare you to other people flying rich people around in the same equipment. You can scream and holler about how this isn't fair, but they don't care. That's what they're going to do. And when they do this, they're going to see that virtually no one flying your equipment is making the kinds of wages and getting the kinds of benefits that I've seen being bandied about on the interwebs.

I hope I'm wrong. But I know I'm not.
 
ATN_Pilot said:
Look, I understand your arguments, and I obviously want labor to get as much as they can while still keeping the company profitable, but the problem is that management and the NMB simply don't see things through the same lens that you do. It was difficult for me to finally grasp this concept when I was dealing with them, but I finally had to do so, because the Board holds all the cards.

The Board wants to be able to draw comparisons to be able to judge the reasonableness of your proposals. So they're going to compare you to other people flying rich people around in the same equipment. You can scream and holler about how this isn't fair, but they don't care. That's what they're going to do. And when they do this, they're going to see that virtually no one flying your equipment is making the kinds of wages and getting the kinds of benefits that I've seen being bandied about on the interwebs.

I hope I'm wrong. But I know I'm not.
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It's really difficult to compare NetJets to anything at the moment. In some ways, they are the only show in town.

There's XOJET, Flight Options/Flexjet, Wheelsup, and Executive Air Share. Those operations put together don't even match the size if Netjets.

Their 10 and 250 campaign might be a bit of a stretch. But I believe that the current wages have them under paid for what they do. I believe that their first year pay should at least match my first year pay. They work a heck of a lot harder than I work.
 
Oh, I think they'll get pay raises. But this 10/250 nonsense is crazy, and the Board is going to string them along for an eternity unless they back down from it. The 100% health insurance premiums is also going to make the Board roll their eyes.
 
ATN_Pilot said:
Oh, I think they'll get pay raises. But this 10/250 nonsense is crazy, and the Board is going to string them along for an eternity unless they back down from it. The 100% health insurance premiums is also going to make the Board roll their eyes.
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It might be a stretch, but my insurance premiums are 100% covered by my company. The caveat is that they don't cover spouse or children by 100% and I would have to pay premiums on them.

I believe Executive Jet Management , a Berkshire company, 100% covers the employees and family.
 
ATN_Pilot said:
You don't have to deal with the NMB. :)
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Nope! I chose to go to a place where I have to negotiate my own and show my displeasure with my feet if I don't like what I see. :) It has its positives and negatives compared to a union shop.

I do find it odd that EJM has 100% insurance coverage and profit sharing while NetJets pilots are being asked to take pay cuts. I do understand that they're do different types of operations with two different types of flying but I believe EJM pilots are payed more also.
 
Derg said:
I don't really have a dog in this fight and I want you to get the maximum amount of money you're able to negotiate, but your 767 assumptions are kind of "off".

I like your logic, don't get me wrong, but I wouldn't exactly drop that on Buffet's desk and expect him to cut a check unless your comparative numbers are realistic.
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I assumed they would be, the last time I touched a 76 was 15 years ago as a passenger sitting in the back. But I'd be happy to tell you where I came up with them.

The crew rates are United's 10 yr CA and 5 yr FO rates, +20% for benefits, taxes, and other such things that the company has to pay for. In reality, the actual number is probably a lot higher (more like 35-40%), but I would argue that it doesn't really matter since I'm using the same number for the corporate guys too.

Fuel burn rates I got from here: http://www.pprune.org/tech-log/422384-fuel-consumption-767-300er.html and here: http://www.airliners.net/aviation-forums/tech_ops/read.main/155509/ Fuel cost/gal is slightly better than what Delta is currently paying in SLC. If you used the actual price, the numbers would be worse.

Extra cost, well, as I said, I pulled that one out of my ass (you can totally say ass here!). But I did the same with the GIV numbers. I expect that netjets doesn't have nearly as high of admin or maintenance costs, but probably much higher hotel costs.

Round trip tickets SLC to CDG are about $1400, or $700 per direction for a roughly 8 hr flight. Some passengers will pay $500, some will pay $5000. I used $700 as an average guesstimate.
 
One of the biggest commodities private jet aviation has is time. My boss calls it his "time machine". I had to go L.A. to Yakima,Wa to meet with some people on the bosses behalf. I met with them for less than an hour. It took me two days of travel on Alaska/Horizon, LAX-SEA-YKM-SEA-LAX. There was only one flight a day between YKM and SEA. If we were to take my boss on that trip we would've been back in SoCal mid afternoon the same day. It would save him over a day of his time compared to an airline schedule. We go direct to small non-towered airports in the middle of no where all the time. Places where if you tried to airline, there would be a 2-3 hour drive on each end. How much is a CEO's time worth? I don't know and I'm not sure what the NMB's position would be, but it is apples to oranges when compared to airline travel. Time is the only way corporate aviation even comes close to making sense. It won't even pencil out other wise. You think Walmart, the cheapest corporation on the planet would have a whole fleet of corp jets if they couldn't put a number on that time saved?
 
I am not saying we need to be paid more than Delta or United, I am not comparing my job to those jobs either. It is a unique job with unique responsibilities, as well the company is positioned in a unique spot as being the top dog in the space. This requires a pay-scale that is commensurate with the quality of service promised to the owner/customer. Again, if NetJets was like the other companies in this space, we wouldn't be having this conversation.
 
I wouldn't turn that down at all haha! Looking at the current pay scale, and how long it has been in place, a 17% raise would only cover inflation at this point.
 
Inverted said:
I am not saying we need to be paid more than Delta or United, I am not comparing my job to those jobs either. It is a unique job with unique responsibilities, as well the company is positioned in a unique spot as being the top dog in the space. This requires a pay-scale that is commensurate with the quality of service promised to the owner/customer. Again, if NetJets was like the other companies in this space, we wouldn't be having this conversation.
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The point I'm trying to get across to you is that the NMB doesn't consider anything to be "unique," and therefore trying to argue for outsized pay based on an argument of uniqueness is a recipe for stalled negotiations that drag out for years on end.
 
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