Monday, December 9, 2019

Carlyle's Rubenstein Learned Delta Can't Offer Free Wi-Fi

TravelPulse reported:

Delta Airlines CEO Ed Bastian told podcast host David Rubenstein that charging for internet access prevents too many people from using it.

“One of the reasons why I say it’s ‘not a good reason’ why we charge for internet’ — you don’t pay for internet practically anywhere else — is that the planes do not have the technical capacity, and capability yet that if we made it free the system would crash,” Bastian said. “So, once it gets above about a 10% take-rate onboard performance starts to erode…if you turned it on free.”
Bastian didn/t mention Carlyle owned ARINC which makes airline communication equipment 

FT reported:

Rubenstein has, he admits, always been a workaholic but he denies that the happiest day of his life was the one he found out he could send emails while airborne.
Carlyle bought ARINC in 2007 and sold it in 2013 to Rockwell Collins for $1.4 billion. Not many people know of David Rubenstein's history with airline WiFi systems. Rubenstein received the Digital Patriot Award from CES on the Hill in April 2012.  He received his award for protection of technology. 

Rubenstein cited Delta Airlines in a Spring 2018 Philanthropy interview:

I was surprised to learn that Delta was broadcasting the interviews on airplanes. Friends would e-mail me, saying they were flying and watching an interview. People around the world watch them because Bloomberg is a global television network. 
Rubenstein returned the favor when he interviewed Delta's CEO in Fall 2019.  Bastain's "if you turned it on for free" comment runs against the decade long tide of airline's charging for anything and everything, known as ancillary revenue.

Face the Nation recently interviewed David Rubenstein on his appreciation for history.   Rubenstein, like Thomas Jefferson, started working as an idealistic youth.  Jefferson crafted the "All men are created equal" Declaration of Independence.  Rubenstein worked in President Carter's White House. 

Both used leverage in innovative ways and ended up obsessed with profits.  Jefferson was the first man to use slaves as collateral for a loan when he had access to riches by simply setting his slaves free, something Jefferson refused to do.  Rubenstein pioneered private equity's connection to the seat of power, Washington, D.C. and helped grow covenant light debt. 

Mr. Rubenstein wants people to study and recall history.  Carlyle's history has a number of dark spots, 26 patient deaths at LifeCare Hospitals post Hurricane Katrina, torture rendition flying by Landmark Aviation, World Bank procurement violations by ARINC and several pay to play (bribery) settlements where Carlyle paid tens of millions but admitted no wrongdoing.

History is written by the winners, like Mr. Rubenstein.  Face the Nation did not interview the Brinton's family, who had their company back-doored by Carlyle's purchasing discounted debt and forcing it into bankruptcy.  John Dickerson did not interview Former Texas Governor Rick Perry who gave Carlyle $35 million for 3,000 new jobs at Vought Aircraft Industries' Dallas operations.  Vought cut 35 jobs during the six year performance period for $1 million per job reduced.  Vought sent Boeing 787 Dreamliner production to South Carolina where they gunked up Dreamliner production.

Character is revealed across a person's interactions with others.  Mr. Rubenstein's philanthropy is admirable but it does not counter the tremendous damage the private equity model has done to industries and workers.  Prioritizing profits over people had Thomas Jefferson use slaves as loan collateral.  Private equity is its modern day expression.