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The General Business Aviation Crisis

My last article centered on the negative media surrounding our industry and the tepid and muted response our industry provided. As I pointed out- we have reached a crossroads in the global crisis and general aviation is facing a long journey to rebuilding the public’s perception of our existence.

AvBuyer   |   1st November 2009
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General Business Aviation Crisis:
...Without a Government Bailout- we survived...

My last article centered on the negative media surrounding our industry and the tepid and muted response our industry provided. As I pointed out- we have reached a crossroads in the global crisis and general aviation is facing a long journey to rebuilding the public’s perception of our existence.

Both the general economy and the general business aviation sector have emerged from the depths of despair and we have begun to envision a sense of normalcy in our market. While it may be too soon to call an end to the aircraft recession- we cannot wait to repair our image to the public.

No sooner had the ink dried on my last article- than it became international news that Avjet had provided crucial assistance and transportation aboard one of our Boeing Business Jets to Ex-President Bill Clinton on his historic mission to North Korea to win the release of two US reporters being held captive. Here was the big break general aviation had been waiting for to show the public how misguided Congress’ attempts to paint a negative picture of our industry really were.

You can imagine my surprise and that of the rest of our industry when I glanced at the Wall Street Journal that same week to learn Congress- which lambasted corporate chieftain’s for their use of expensive corporate jetcraft- was placing an order for $550 million in new VIP aircraft.

Even more astounding was the claim that the Pentagon only asked for three new corporate jets- but Congress - always the purveyors of efficient use of our money - in its infinite wisdom- decided that three aircraft weren’t enough for the Pentagon. They needed five more additional aircraft. My first thoughts were that Nancy Pelosi must have written this bill.

As you will recall when she became House Speaker she determined that the Learjet at her disposal wasn’t big enough for her and three assistants. She needed a Boeing 757. Apparently Airbus didn’t have an A380 on hand at the time so the 757- which in commercial configuration can seat 280 passengers would have to suffice.

Talk about a PR nightmare. What were they thinking? At a time when unemployment is close to topping 10% with nearly 15 million people out of work- real estate still plunging and a still shaky banking system- Congress decided that their current fleet of Gulfstreams and Boeings isn’t new enough. I think this might be taking the “cash for clunkers” concept a bit too far- don’t you? When was the last time you can recall one government agency telling another government agency- “…you are overspending.” This was exactly the Pentagon’s response a day later after learning their request had been more than doubled.

The public condemnation to this news story once again drove home the point that the general public still perceives corporate jets as perks for the “fat cats”. However- as noted in my last article- public perception has markedly shifted against our federal government and even our president in the government’s ability to save any and every industry.

Just look at the economic score card at present: Unemployment continues to go up- the deficit has tripled in only nine short months- the value of the dollar has plunged and is being challenged as the standard world currency- and lastly the industries which President Obama and his Congress targeted as too important to fail and in need of government intervention (read your hard earned money) are in fact in failing even with our tax dollars thrown down the drain.

General Motors and Chrysler are in no better shape than before the bailout- some would argue in worse shape and banks in the US are failing at the fastest rate since the crisis occurred.

Why is this exactly relevant to our industry? As noted in the last article I believe that in these times of crisis we have to appeal to issues that directly impact the average person’s life which we failed to do the first time around.

This issue is namely tax dollars. It’s no secret that taxes are going up and the current administration is trying to figure out how to raise money for the industries it has bailed out which include banks- real estate- insurance- and of course the auto industry.

California recently raised taxes by nearly $13 billion as other states are doing the same. Our government wants to tax everything from simple financial transactions- to your health insurance policy- to the can of soda you drink. All under the disguise it will fix all our nation’s problems.

Well it hasn’t fixed anything. Proponents late last year of asking for government to bail out our industry need only look at the current state of GM and Chrysler. A quick glance at just how effectively your tax dollars are being spent can be seen in Chrysler’s September sales number (down 45%) and GM’s (down 42%) relative to Ford’s (down only 5%). Ford was in the same perilous state last fall but refused to accept government bailout money. Chrysler is effectively dead at this juncture- and GM isn’t far behind. Ford on the other hand is headed back to profitability as early as Q1 of next year.

Perhaps you think that the auto industry isn’t a good comparison to general business aviation? How about the commercial airlines? After 9/11 our Government approved and funneled billions of dollars of low cost loans with backing by full faith and credit of our government to save the airlines. Now- nearly a decade later half those airlines aren’t even in business anymore and bankruptcy is now a standard operating procedure for commercial airlines.

Our industry has undergone huge structural adjustments which have not come without much pain and heartache. This story needs to reach the public. A recent Wall Street Journal article highlights just how dramatic these adjustments have been on our industry in places like Wichita- Kansas- the self proclaimed “Air Capital of the World” where manufacturers such as Cessna- Bombardier and Hawker Beechcraft have laid off nearly 13-000 people in a town of only 300-000.

This past spring Lincoln- Nebraska-based Duncan Aviation one of the bell weathers of general business aviation for over 53 years- had to lay off employees for the first time in its history. Our industry went through a depression-like period as bad as any of the rest as aircraft flooded the market- entire flight departments were closed down and eliminated- and thousands lost their livelihoods.

Recent sings show that our industry has stabilized and in some areas is showing positive prospects for a recovery. Whether it be next month- next quarter- or next year our industry will not only survive and adjust for whatever business conditions prevail in the future- but thrive in these conditions.

More importantly- we did it on our own without the general public’s tax dollars. I can envision full page adds in major news periodicals showing our hard working men and women of general aviation with their sleeves rolled up- putting a public face on our people proclaiming that we weathered the storm and we did it on our own without spending your money. Maybe we can modify the “No Plane No Gain” slogan to something more along the lines of “We have survived and we did it without your tax dollars.”

Andrew Bradley is senior vice president- Global Sales & Acquisitions at Avjet Corporation- an international provider of aircraft charter and management solutions. The company is headquartered in Burbank- California- and maintains a global presence in Washington D.C.- Seoul- Dubai- Abu Dhabi- Moscow and other locations around the globe. To learn more about the company-
visit www.avjet.com

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