““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Editor's Desk: Coping with the Iceland Volcano
Nobody knows for sure what Iceland's temperamental Eyjafjallajökull volcano will do next. But the lack of a coordinated response to the ash cloud by air traffic control officials-and the ensuing lengthy shutdowns of air travel across Europe this spring-clearly needs to be remedied. The question is how?
One way to mitigate the volcano's economic impact could involve permitting more flexibility in the routing of business aircraft during airspace closures. In practical terms, airliners are nearly as inflexible as rail cars. Business jets, on the other hand, go wherever they are permitted. Allowing private aircraft to operate at the periphery of the ash cloud, right to the edge of established no-fly zones, would go a long way toward alleviating travel chaos for those with access to this option.
Given the uncertainty wrought by Iceland's volcano, corporations, governments and high-net-worth individuals ought to be taking a hard look at their strategies for traveling within Europe-or anywhere, for that matter-when preternatural events close vast swaths of airspace.
One option that might seem counterintuitive to well-heeled business travelers would involve booking charter flights on piston-powered airplanes. These propeller-driven aircraft generally have been allowed to operate to more European airports than jets during airspace closures. A puddle jumper might not get you home, but it could deliver you far enough away to catch a business jet or airline flight out of Europe.
Airlines, meanwhile, have strongly criticized European officials for failing to develop clearer procedures and identify the exact boundaries of the ash cloud, thereby permitting more flights.
"This problem is not going away anytime soon," said Giovanni Bisignani, the director general of the International Air Transportation Association, an airline industry trade group. "We are still basically relying on one-dimensional information to make decisions on a four-dimensional problem. The result is the unnecessary closure of airspace. Safety is always our number-one priority, but we must make decisions based on facts, not on uncorroborated theoretical models."
Some question whether flying at the edges of the ash cloud will indeed damage turbine engines. Understandably, engine manufacturers have taken a cautious approach, warning that you could void your warranty if you inadvertently fly into the cloud.
Ingestion of volcanic ash can cause jet engines to flame out from a lack of oxygen, and it can damage turbine blades and other internal engine components. The ash might also abrade an airplane's windshield, making it difficult or even impossible for the pilots to see outside. The Iceland volcano's particles, mostly glass, also pose a problem when they land on aircraft parked outside.
Still, nobody knows for sure how exposure to the ash cloud will affect turbine engines in the long run. Now, one engine maker aims to find out.
Engineers at Honeywell's engine division are examining a pair of turboprop powerplants that were removed from a Dornier Do-228 operated by the UK's National Environment Research Council on flights into the heart of the ash cloud. The Dornier flew an amazing 10 hours in the center of the ash cloud and 22 hours in the outer zone.
The engineers last month ran the engines in a test cell to evaluate their performance. Next they plan to take them apart and perform borescope inspections to examine internal parts.
"We're going to try to understand what flying in volcanic ash means operationally," said Ron Rich, Honeywell's vice president of propulsion systems. "We want to help operators understand the effects of flying in this environment and give guidance on what the operational rules ought to be."
The examination and teardown process should take about a month. My guess is that the inspections will uncover significant internal engine damage. But armed with this knowledge and data from other test flights, engineers should have a better understanding of the extent of damage caused by flying in and near the ash cloud. Only then can air traffic officials adjust their strategy for dealing with future eruptions.