Nov. 21, 2008 -- General Motors said today that it is putting two of its five corporate jets out of service because the planes are not being used enough. The top three executives at GM, however, will continue to use the private luxurious jets for all of their business and personal travel, despite a flurry of criticism over the perk following an ABC News report this week.
An ABC News investigation revealed that the top three automakers have together spent several hundred million dollars to buy, maintain, and operate a fleet of top-of-the-line private jets for their top executives.
GM leased a fleet of seven planes at the beginning of this year, according to a company spokesperson. Two of the planes were dropped from the fleet in September and two more will be dropped by the end of the year.
"We're cutting back very drastically on all travel," said Tom Wilkinson, a spokesperson for GM. Wilkinson said the downsizing is "strictly in response to the planes not being used" and not a reaction to the harsh treatment CEO Rick Wagoner and others received from Congress this week after it was learned that the CEOs of all three big automakers flew to Washington on private planes to plead for public funding to bailout their ailing companies.
Indeed, despite the downsizing, Wagoner and the two other top executives at GM will still fly private for all business and personal travel, a board stipulation according to Wilkinson, for security reasons. The executives are required to reimburse the company for personal travel on the jets.
Ford was unavailable for comment on whether or not the company plans to re-evaluate its use of corporate jets.
A Chrysler spokesperson was unaware of any plans to change the company's policy on using corporate jets, which it leases through an outside firm. "We have a strict travel policy that determines the use of leased corporate aircraft and at this moment that policy hasn't changed," said Chrysler spokesperson Ed Garsten.
It's Up to the Board of Directors
But some experts say it is time for the boards of these struggling companies to readdress their outdated policies from more profitable eras.
"It's sometimes true for security reasons that CEOs will need to fly in corporate jets, but I've never bought the argument much," said Tom Donaldson, professor of business ethics at the Wharton School of Business at the University of Pennsylvania.
"One thing's for sure, the board of directors has the power and the board of directors can make it okay for them to fly commercial if that's what they want," said Donaldson.
Indeed the GM spokesperson said the company will continue to monitor its travel costs and policies very closely.