FLYING/MAY 2002

On the morning of September 11, 2001, Warren Buffett, chairman of Berkshire Hathaway, was watching television in his home in Omaha, Nebraska, as he got ready to host his last annual Charity Classic golf and tennis tournament. In the meantime, elsewhere in Omaha, Al Ueltschi, president of Flight-Safety International, one of Berkshire’s two flight service subsidiaries, was getting ready to golf in the Classic. He, too, was watching TV, having turned it on in his hotel room to check the weather, and was pleased to see that it was going to be a nice sunny day.


At the same time, almost all the way across the country, in Kentucky, Rich Santulli, CEO of Executive Jet Aviation, the other airplane-related subsidiary, was attending a horse sale.

But Santulli, with his airplane grounded, drove home to New York that day without any new horses for his stables, and the Charity Classic was cancelled. Like all of us, Buffett, Ueltschi and Santulli were stunned and horrified when they heard about the jet airliners crashing into the World Trade Center, the Pentagon and a field in Pennsylvania.
In the wake of these disasters, their peers at airline, airplane manufacturing and other flight service companies began scrambling for ways to increase the safety and security of their operations. And yet, despite the fact that these three men were responsible for two very important airplane-related organizations, they made almost no changes in their companies’ operations. And the reason they did so little was that, even before the terrorist attacks, they and their companies were already extremely safety and security oriented. Although Buffett himself is famous for his insistence on maintaining a “margin of safety,” both in his investments and in his method of travel, he made no changes in his regular routine. He knew he didn’t have to. Just as he had since Berkshire bought Executive Jet in 1998, Buffett flies in an EJA NetJet, one of the 300 airplanes in Santulli’s fleet. Prior to purchasing the company, Buffett had maintained his own corporate airplane, nicknamed “The Indefensible,” because he had for so many years argued against the use of corporate aircraft. But as soon as he learned of NetJets timeshare program, he recognized that sharing the costs of an airplane, rather than bearing the entire cost alone, was a much better use of Berkshire’s corporate assets.


And in being part of the NetJets owner family, Buffett is in excellent company. Among those who own shares of NetJets airplanes are not only many other corporate executives but also such well-known individuals as Tiger Woods, Pete Sampras and Arnold Schwarzenegger. Moreover, NetJets offers its owners a wide range of benefits that commercial airlines cannot. NetJets owners can fly with complete privacy at almost a moment’s notice,
directly to 3,000 general aviation locations rather than the 400 large and crowded airports used by the airlines. And the NetJets fleet is under the guidance of a command center that
resembles NASA’s mission control, staffed by 250 flight department personnel 24 hours a day, seven days a week, 365 days a year.

Most important, though, is the company’s safety record. When asked if he considers his fleet to be the world’s safest airline, Santulli says, “We operate to that standard. Anything less than the world’s safest is unacceptable.”

Although Executive Jet has always operated that way, Santulli says that his company has instituted some changes in the wake of September 11th. “Our pilots display photo IDs and
check each passenger’s photo IDs now,” he says. “Also, no one flies unless they are on the passenger manifest, and we secure our airplanes at night. We’ve also increased our security department,” he notes, “and have added an international security team based in Columbus to review every flight and to alert our owners to high-risk routes and destinations. Our greatest concern is always the safety of our owners, their passengers and our crew.” In fact, NetJets has never had a single fatality and has maintained that record—both before and after September 11th—by following strict safety and security procedures on all of its 150,000 annual flights to 142 different countries. One of those safety procedures is to always use brand-new, state-of-the-art airplanes and avionics.

This means, of course, that NetJets is constantly updating its fleet, taking delivery of 70 new airplanes and hiring 600 more pilots this year. In addition, how and where those airplanes fly also provides safety and security for NetJets clients. NetJets owners also enjoy a greater level of security because, unlike corporate jets that bear their company logos, NetJets airplanes have no identifying tail logo, which means that no one can tell simply by looking at the airplane who may be on it. (Only the registration of N###QS indicates that it’s a NetJet; QS represents Quality Service.)

The most important element of NetJets safety and security measures, however, is its pilots. All NetJets pilots are seasoned professionals with a minimum of 2,500 flying hours and
an average of over 8,000 hours. Many, in fact, are retired senior airline pilots. FAA regulations mandate that airline pilots retire at the age of 60, but if they still have a desire, they can
continue flying as long as they can pass the medical and flight skills tests. And, of course, the company has always conducted extensive background checks and screening prior to hiring new pilots, both before and since September 11th. If NetJets pilots are the most important part of the company’s safety and security measures, the most important characteristic of those pilots is their training. In this regard, in fact, the company is in many respects more demanding than the FAA.

For example, the FAA permits commercial pilots to train and fly in multiple aircraft types. But, like most general aviation pilots, NetJets pilots train in only one type and style of aircraft. The fleet’s cockpits all have the same configurations and the same avionics. For example, pilots flying Collins-equipped cockpits never fly Honeywell-equipped cockpits, even if they are the same manufacturer and style of airplane. This adds to the margin of safety because, having trained on only one kind of airplane, in an emergency NetJets pilots are less likely to look at the wrong instrument or reach for the wrong control or switch. NetJets is more demanding than the FAA in other ways as well.

The company’s 2,000 pilots receive 22 days of training every year, which includes two complete simulator courses and a company annual review. Also, while the federal agency requires all first officers to go through flight training and evaluation only once a year, NetJets requires its first officers to do so twice. NetJets captains go through training and evaluation twice a year. In fact, not only does NetJets use flight simulators exclusively, it uses the flight simulators of Berkshire’s other flightrelated subsidiary—the New York City-based lightSafety International. FSI was founded by Al Ueltschi, Pan Am’s first corporate pilot and personal pilot to the airline’s founder and president, Juan Trippe, in 1951. Ueltschi borrowed $15,000 to start the company and worked at it part time until, in 1968, FlightSafety went public and Ueltschi finally resigned his position at Pan Am. Nearly 30 years later, in 1996, he sold the company to Berkshire Hathaway for $1.5 billion.

Like Executive Jet, FlightSafety has always emphasized safety and security in its operations. They share the same motto: “the best safety device in any airplane is a well trained pilot.” However, unlike Santulli, Ueltschi says that his company hasn’t had to make any changes at all in response to the terrorist attacks. For example, Ueltschi says, “Our pilot screening is the same as it was before Sept 11th. We contract with airline and corporate flight departments to train their pilots. No individual would show up unannounced for training in a Boeing 767 unless he had an ATP rating and was paid for and sent by an airline or company.”

But screening pilots is only one of the many measures Ueltschi’s company takes to ensure the highest possible level of safety and security for both the pilots and for the passengers they transport. One of the most important of those measures is in the quality of the flight simulators FSI uses—FAA approved Level D simulators, which provide pilots with state-of-the-art visual, tactile and auditory experiences that are virtually the same as actual flight. The company even manufactures its own simulators and outfits them with actual pilot seats, cockpits and avionics purchased from the airplane manufacturers.

Moreover, the simulators are programmed to enable pilots to experience 200 errors and malfunctions, as well as an unlimited number of combinations, during simulated flight. Ground-based training is so completely safe and thorough that, as a result, once pilots have learned to fly the simulator, they can fly the airplane. Simulator training is so advanced that a pilot rated, for example, to fly a Cessna CitationJet can learn to fly and get a Boeing 737 type rating without actually flying the airplane. Simultaneous training, by which pilots can learn from the simulator mistakes of others, and video and audio recordings of training sessions, which can be reviewed and evaluated, also enhance FSI’s training program. For all these reasons, FlightSafety has been chosen to train all of NetJets’ pilots, plus 65,000 other pilots
worldwide, and the pilots of 35 of the world’s heads of state, including the President of the United States.

There is no question that the events of September 11th have changed every one of us. We’ve all become more concerned about safety and security—at sea, on the ground, and especially in the air. At such a time it’s heartening to see that there are people and organizations—like Executive Jet and Flight-Safety—whose first priority has always been the safety and security of those whose lives they are responsible for. And it’s wise, too, to make sure that, like Warren Buffett, we all have a “margin of safety.”


Robert P. Miles is a professional speaker, freelance journalist and the author of The Warren Buffett CEO: Secrets From the Berkshire Hathaway Managers and 101 Reasons to Own the World’s Greatest Investment: Warren Buffett’s Berkshire Hathaway, both published by John Wiley and Sons.He is a long-term shareholder of Berkshire and can be reached by

e-mail or write to 4532 W. Kennedy Blvd. #225, Tampa, FL 33609-2042

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