Google Founders' Jet Fleet Loses a Pentagon Fuel Perk | Hacker News Reader

Google Founders' Jet Fleet Loses a Pentagon Fuel Perk

online.wsj.com

92 pointsanigbrowl62 comments

Did I understand this correctly: the DoD subsidized several million dollars of military jet fuel, to a shell company owned by Page and Schmidt, under a NASA research contract, which they used mostly for business and vacation travel?

(Seriously, did I read the story accurately -- it's confusing).

edit: I found the documents of the NASA contract:

http://www.nasa.gov/centers/ames/business/foia/H211_LLC.html

Apparently these were disclosed by a FOIA filed by the New York Times:

http://bits.blogs.nytimes.com/2008/10/23/a-new-fighter-jet-f...

Also, I got the impression that the Googlers are allowed to fly their jets out of Moffett while other billionaires aren't allowed to at any cost.

It sounded like the fuel was not subsidized by the DoD but that H211 was avoiding some consumer/commercial cost that the government is not subject to.

lol Are you a lawyer?

Are you an ad man?

Looks like H211 pays NASA over $113K/month to rent the hangars.

> Did I understand this correctly

No. According to the article the DoD charged google what it cost them, so it was null to them. There might be some savings of local tax, but google is supposed to pay that separately (don't know if they did).

This is mostly a non-story.

That's not quite what the article says:

>The agency says it recently charged H211 on a cost-plus basis, and before that charged a standard budgetary price that was infrequently reset but over time reflected the government's costs.

So at least for some time the government was charging a standard accounting price that wasn't updated with rising fuel costs. This won't necessarily compensate over time. If you're smart when the government is below market you buy and when above do what they're doing now:

>Since the fuel cutoff, the Google executives' planes have been coping by flying back to Moffett with extra fuel purchased elsewhere, Mr. Ambrose said.

The reference to cost-plus does seem to imply they fixed this hole at some point.

It's a subsidy because they're selling at below market rates (see the chart). Exxon doesn't sell "at cost".

It's unclear what the costs in the article describe, but the price difference (>$1/gallon) is much greater than the tax rate (21.9 c/gallon) [1].

The article also says DoD fuel isn't allowed to be sold for non-government flights, regardless of costs.

[1] https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_State...

Don't let the sugar-coating fool you: the Google guys got a sweet deal from NASA, all in the guise of "research". The stats from the article prove it: of their massive fleet of aircraft, only 1 was used for any 'research', and that too sparingly. No other private individual is allowed to use Moffett Field, regardless of how much they're willing to pay.

It's a shame, really, that the Google founders feel the need to misuse the system like this. "Don't be evil", my ass.

Google flew 155 missions for NASA. There are definitely serious questions to be asked here, but it's not as if Google wasn't contributing something.

Out of 710. And I'd bet money that of the 155 at least a few (or more likely, most) were also Google flights that did some minor data collection while off to where ever Googlers go. Has there ever been a case of corruption/fraud where the perpetrators weren't contributing something positive? If it smells rotten...

Did you read the article? It was an Alpha jet (https://en.wikipedia.org/wiki/Dassault/Dornier_Alpha_Jet) that was used for NASA flights, not a Gulfstream or a 767. It's basically a fighter jet, it wouldn't be used for Googlers going wherever they're going. Most likely that jet was bought specifically for NASA missions to maintain their agreement.

Sure, it couldn't be that any of the Googlers liked flying a high performance jet for thrills, could it?

Oh, sure, I don't doubt there were a few joyrides that may or may not be counted among the science flights but it's a far cry from, say, a Gulfstream doing a wind-speed measurement at 20000 ft. on the way between SF and NY, and calling it a meteorological experiment.

No, Google flew 155 missions that were claimed to be for NASA. The Alphajet is a German military trainer from the early 1970s, not a research aircraft. I would like to see some documentation from NASA about what these "missions" accomplished. NASA is always whining about budgets, but on the surface, it looks like they were just shilling for Google. Next thing we'll see is Larry Ellison getting research money for flying his MIG jets...

This is in the NASA contract under "Purpose":

"The Alpha Jet aircraft owned and operated by Partner offers unique capabilities due to its performance and altitude range, coupled with the proficiency of the pilots in high-performance and formation flying. The combination of aircraft and pilot capabilities allows ARC to design unique sampling profiles to study the Earth's atmosphere from the surface up to 51,000 ft in very tightly defined columns. This sort of profiling is valuable for comparison with satellite observations and for exploring small-scale phenomena at various altitudes."

http://www.nasa.gov/centers/ames/pdf/675605main_SAA2-402663....

The Gulfstream flights to Tahiti are less credible.

http://geo.arc.nasa.gov/ajax/ajax_index.html

I can't think of a bigger perk than having a "private" airport that close to Google HQ

The fuel discount, while sweet, is probably an extra

That was one of the cool things about working on campus at Cranfield CIT - having an airfield attached and a lot of cool aviation tech on site - they used to have a tsr2 in one of the hangers!!

Some of the engineers had air band radios to listen into the tower traffic and if any thing interesting was coming in some of us went out to have a look.

I saw a spitfire (MKIX) refueled from about 50 yards away when they where showing it off to a potential buyer.

My best memory was walking between buildings one foggy day carrying backup tapes when a mosquito came out of the mist at 100 ft and made low pass over our office.

I think the fuel thing is just an inconsequential side-effect of having their aircraft based at Moffett. It's not like there is a commercial vendor selling fuel at Moffett, so of course they bought it from the only place available on the airport. And apparently that's subsidized government fuel or not taxed in the same way. What else were they supposed to do if the aircraft are based there?

I don't see how that's a big deal. It seems like it's just a matter of course. The bigger question is why they're basing the entirety of their fleet at Moffett when only one aircraft is involved in research.

As for the folks with their eyebrows raised over the "shell company" that owns the aircraft, this is a very common practice in the aviation business. Nothing out of the ordinary or shady at all.

when did convenience become an excuse for ignoring contract terms? They broke the terms of their contract, that were clearly spelled out, so they should face the consequences.

I'm not saying you should always follow the terms of contracts, there are plenty of business reasons to ignore a contract, you just have to do so with the knowledge of the potential consequences.

There are so many weird things about this article. Here is another one:

"I don't see how in the hell anybody can buy it that cheap," said Fred Fitts, president of the Corporate Aircraft Association, a nonprofit that negotiates discounted jet-fuel prices for 1,600 corporate flight departments at airports around the U.S.

What the heck is a nonprofit doing negotiating jet-fuel prices for corporations? I can't think of any reason although my knowledge of tax loopholes is admittedly small..

I'm sure they're an industry association, not a 501(c)(3) charity. There are plenty of groups like that (dairy board, etc.) -- you don't get to write off donations to them, but they're not supposed to generate income, either.

Being a non-profit sets an expectation of the actions the organization will take.

Also remember that until recently, Visa and Mastercard were also non-profit entities.

> Also remember that until recently, Visa and Mastercard were also non-profit entities.

[citation needed]

>"Prior to its initial public offering, MasterCard Worldwide was a cooperative owned by the 25,000+ financial institutions that issue its branded cards."

>"Prior to October 3, 2007, Visa comprised four non-stock, separately incorporated companies that employed 6000 people worldwide: Visa International Service Association (Visa), the worldwide parent entity, Visa U.S.A. Inc., Visa Canada Association, and Visa Europe Ltd"

From their respective Wikipedia company pages.

How does that have anything to do with being non-profit?

MasterCard Worldwide was a non-profit cooperative until 2006.

For some reason I'd thought that for-profit cooperatives existed. Thanks!

They do.A lot of coops are for-profit.

E.g. it is common for cooperative store-chains to pay out dividends from profits to all members proportional to the amount of money you spend with them.

Neither of those citations actually say anything about profit one way or the other. They certainly don't appear to have ever had 501c status.

Brush up on your tax loopholes! Did you know even the NFL (US National Football League) is technically a non-profit (501c6)?

Like Ikea, the world's biggest "nonprofit"

http://en.wikipedia.org/wiki/Stichting_Ingka_Foundation

Probably a 501(c)(6), it's for business organizations like the Chamber of Commerce or the NFL. It's not really a loophole, it's exactly what the designation was created for.

Step 1. Become billionaires by organizing the world's information.

Step 2. Spend hundreds of millions on a fleet of jets and helicopters.

Step 3. Conspire in the backrooms of government offices to save money on gas.

The final stroke of their master plan has finally been revealed!

"Even so, the contract between H211 and the Pentagon stated that the fuel was supposed to be used only "for performance of a U.S. government contract, charter or other approved use," and said violations could trigger civil or criminal penalties. There is no indication of any such investigation."

Kick-back for Google granting NSA quick and easy access to their servers? A little too tin foil hat for my tastes, but it wouldn't surprise me.

The dollar amount saved on fuel costs would be under $2 million. Their 2012 cash reserves were just shy of $4.8 billion. You're barking up entirely the wrong tree.

I don't quite get your point here. They have so much money they wouldn't care about a bit more?

My experience with wealthy people/companies is exactly the opposite, they didn't get there by leaving a "measly" $2 million on the table.

You should try meeting these particular people sometime, before making mean-spirited assumptions about them?

Ah, the character witness.

How is suggesting wealthy people would care about $2 million "mean-spirited"?

I didn't say all wealthy people would also put ethical considerations aside for $2 million. I certainly hope not.

The OP was suggesting this was a bribe or 'kick-back'. The scales for which are entirely ridiculous. Of course Google cares about money, but to suggest that they would make sweeping changes to their infrastructure and privacy policy for something on this small a scale is nothing short of hilarious.

Well, you can feed a lot of people and give work to a lot of other people with "under $2million."

I think that is what we are complaining about.

The real perk is having _access_ to something that's not on the market for any price - the privilege of a convenient government airfield. Even more exclusive than a regular private jet.

Did you accidentally add a decimal point, or do you ha D different figures? I thought reserves were closer to 50 billion.

It's not a little "tin foil hat", it's full-blown "the government bombed the twin towers" level of raving-mad consipracy-theorist nutjobbery.

The idea that any government organisation would have the competence to pull this off should be a stark sign that they didn't.

It's getting tiresome that nearly every single post on HN features at least one comment accusing the NSA of being implicated in the subject of the story.

And this isn't a radical apologia. I'm deeply concerned about the NSA, GCHQ, data interception and the fact that judicial processes are being sidestepped. However, I can't help but feel that jumping at every shadow mires this discussion in so much hysteria that it's going to result in people tuning out, and the real issue being buried under reams of facile argument about whether or not the NSA has backdoored the friggin' RNG on Intel CPUs!

NASA, not NSA.

I'm astonished at that graph. Jet fuel is more expensive than normal petrol ("gas") right?

So, if it's $5 a gallon in the US for Jet Fuel, in the UK for petrol you'd pay roughly £6.10 for a gallon of normal car fuel[1] which is like $9.60 .

Seriously? it's cheaper to fuel a private jet in the US than a car in the UK?

[1] estimated from http://www.petrolprices.com/search.html?search=London%2C+Mid... based on the cheapest price in London. Prices quoted are for 1 Litre.

This might interest you: http://www.bloomberg.com/visual-data/gas-prices/20133

The cost of UK fuel is mostly tax. Jet fuel is tax-free by international treaty, I believe (treaty of Rome?)

Yep. The US (and California especially, because of their unique blend) actually pays a little more for the fuel itself than UK consumers. It's only a few cents a gallon, but it reflects our higher transportation costs (it has to be shipped further from the refinery to the local gas station). The major difference is in the taxes.

I know - I didn't see the difference so clearly before.

Wow, really? "no, you shouldn't drive your car everywhere, bad citizen. hey, you with the private jet - have a tax break!" -- sounds unpopular / depressingly likely.

Jet fuel is definitely not tax free.

Ah, you're right; misreading of http://ec.europa.eu/taxation_customs/taxation/excise_duties/... - it's only tax-free within the EU.

Your numbers are a little off as Imperial (UK) Gallons are 20% bigger than US ones although it doesn't massively detract from your main point.

> The Pentagon probably didn't lose much, if any, money on the fuel sales. The agency says it recently charged H211 on a cost-plus basis, and before that charged a standard budgetary price that was infrequently reset but over time reflected the government's costs.

Oh, ok.

Yeah this is totally a words game. So if I bought an ounce of gold for $600 ten years ago and sold it today for $600, yes technically, I didn't lose any money, even though gold is worth a lot more than that now. I wasted potential money which is pretty much as good as losing money.

What a rookie mistake. They really should've not encrypted that cross-datacenter traffic.

I suggest we start a donation fund so we can all chip in to help out Larry & Sergey with their fuel expenses.

> 767

It's good to be a billionaire.

don't be evil

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