NetJets CEO Says Wealth-Gap Critics Overlook Jobs CreatedNoah Buhayar
Jordan Hansell, who heads the luxury-aviation unit at Warren Buffett’s Berkshire Hathaway Inc., said people who point to private air travel as an example of widening inequality miss that his business creates well-paying jobs.
“We provide a product to people who can afford it and that, frankly, injects money into the system,” Hansell, the chief executive officer of NetJets, said yesterday in an interview in New York. “To the extent that we vilify people in this industry for some reason, it has to be from a position that people haven’t thought very deeply.”
NetJets employs more than 6,000 people, including pilots, mechanics and flight attendants. Hansell said that the company’s average U.S. salary is $1,000 higher than it is in Silicon Valley, the California region known for technology companies like Apple Inc. and Google Inc.
NetJets, which is celebrating its 50th anniversary today, pioneered fractional ownership for private jets. Its clients include corporate executives and wealthy individuals who pay for a stake in an airplane in exchange for flight hours.
Complaints about inequality have grown along with the disparity between the rich and everyone else in the U.S. In 2011, protesters filled squares from New York to Seattle to criticize the government for propping up financial firms three years earlier while individuals struggled with unemployment, depressed wages, foreclosures and reduced retirement savings.
Top executives at Citigroup Inc. and BlackRock Inc. said that year that they understood the protesters’ position. Buffett, the world’s third-richest person, has also said he’s concerned about inequality in the U.S.
More recently, research by economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics has fueled the debate. They found that the chasm between the wealthiest 1 percent and remaining 99 percent is the widest since the 1920s.
Personal use of private jets by executives has been making a comeback after some corporations took the perk away five years ago following the financial crisis. The outrage peaked when auto chiefs including Rick Wagoner, then at General Motors, flew on company jets to plead with Congress for bailout money.
“I know the people who work for me when they hear what I’ll call rhetoric, it really makes them angry,” Hansell said. “They say, ‘You’re messing with my livelihood.’ And I understand where they’re coming from.”
The NetJets service allows executives to travel on short notice, save time and enjoy a higher degree of luxury and privacy than passengers on commercial airlines. The company doesn’t publish its rates, which can be based on variables like the type of aircraft.
Hansell’s business isn’t immune from the tug-of-war over pay. A group of unionized NetJets employees demonstrated at Berkshire’s annual meeting in Omaha, Nebraska, this month to protest cutbacks at the company.
Hansell, 43, took over at NetJets in 2011 after predecessor David Sokol resigned from Berkshire. Buffett, 83, has credited both managers with helping the company rebound through cost and debt reductions after it racked up losses under former CEO Richard Santulli.
“They’ve cut and cut and cut,” said John Malmborg, president of the NetJets Association of Shared Aircraft Pilots. “There was very much a need for the cutting some time back when we were losing lots of money every day. But things are coming back.”
Hansell said negotiations with the labor groups were still in the early stages and that he didn’t have a timetable for reaching agreements.
“We’ll move as expeditiously as the unions are willing to move, provided we can get to a deal that allows us to be competitive and sustainable,” he said. “We don’t have any desire on our side to extend it. If we could be done tomorrow with a deal that made sense, we’d do it.”