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A DEFENSE OF BUSINESS AVIATION ARTICLE - THE RIPPLE EFFECT

People who spend their time observing the economy often note the so-called ‘ripple effect’ of one industry or another: Manufacturer A buys materials from Vendor B- Vendor C and Vendor D; the prices paid to Manufacturer A for its products ripples through those vendors- who in turn buy materials from still other companies to put into their products that go into the item made by Manufacturer A. Along the way- wages and salaries get paid ...

Dave Higdon   |   1st May 2009
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THE RIPPLE EFFECT:
BizAv powers its own vibrant economy

People who spend their time observing the economy often note the so-called ‘ripple effect’ of one industry or another: Manufacturer A buys materials from Vendor B- Vendor C and Vendor D; the prices paid to Manufacturer A for its products ripples through those vendors- who in turn buy materials from still other companies to put into their products that go into the item made by Manufacturer A.

Along the way- wages and salaries get paid to vendors’ people- as well as to their suppliers- who- in turn- spend those bucks in the local community – supporting restaurants- dry cleaners and gas stations- clothing stores- service centers- and much more.

The success of Manufacturer A sends some of its revenues into the community as well- through its own employees’ wages and salaries. So a purchaser of Manufacturer A’s product directly supports that company and its staff and- as some of that purchaser’s money ripples through the chain- employees of each vendor- plus those local restaurants- dry cleaners- gas stations and local community.

And all this wealth circulates independently of the use that purchaser gets out of the product from Manufacturer A; that use may- in turn- further add to the economic engine and spur further wealth creation and its own ripple effect.

It should be clear to see the symmetry and synergies of this cycle all within the cycle of a single purchase of a business aircraft.

The money caravan of a single Caravan
In late March- a business airplane was delivered to its customer- one of many in fact. But this single airplane illustrates the impact of business aviation- and of the aviation business itself.

This story started many months ago: A small Wichita-based business called CommTech Communications decided to upgrade its business transportation system with a new Cessna Caravan. A manufacturer of specialty computer products- the company’s president Arthur Alvis employed business aviation to regularly transport teams of engineers to remote sites.

The technology company wanted an aircraft suitable for the lift requirements- as well as one capable of accommodating in-flight work meetings among those engineers and allowing them to work on their computers while staying linked to the company’s offices on the ground. The expanded demands and use profile envisioned by CommTech exceeded the capabilities of the company’s first business aircraft- one used effectively for more than eight years: a Cessna 182 Turbo Skylane RG.

That expanded mission meant finding an aircraft suitable for the mission- capable of being equipped to accommodate the engineers’ needs in-flight- with flexibility to serve as a freight hauler for any hardware needed on a work trip. Additionally- the aircraft needed to fit financially and it would help if the aircraft continued to offer the simplicity and economics of a single-engine aircraft.

“We did a thorough and exhaustive comparison of the various aircraft we thought might meet our needs-” Alvis explained- “and the Caravan with the Oasis interior was the clear- hands-down winner.”

Of course- people in aviation know the single-engine Caravan propjet to be a workhorse- sturdy- reliable- easy to fly- and cost effective thanks to the reliability of its single Pratt & Whitney Canada PT6A turboprop engine and simple fixed landing-gear system.

The choice was set. A production position for CommTech went into the 2008 Caravan production line at Wichita Mid-Continent Airport. That order set in motion its own ripple - a ripple that had only a short distance to travel before it washed across other local companies.

An Oasis in the Prairie
CommTech’s choice impacted not just Cessna- the avionics and engine makers- but also two other distinctive Wichita-based companies- assuring that the Caravan purchase would benefit the local economy long before it helped generate ripple-effect expenditures at the remote locations it would visit.

The order for Cessna in turn produced an order with Yingling Aviation- directly west of Cessna’s factory across Runway 1R/19L at ICT. As the exclusive marketing agent for the Oasis executive interior in the Caravan- Yingling provided a staff member dedicated to working with customers- Cessna and the interior-components maker to specify the interior configuration- finish and furnishings.

That step rippled through another Wichita-based company- one that worked with Yingling- Cessna and others to create a new level of interior options for a Caravan program that had- after 20 years- slowed somewhat.

The company - an interior design and production specialist - established itself in Wichita by taking on a project far larger than refitting a simple propjet single. But the experience of that first project and subsequent contracts to work its magic- helped propel to a decade of success what was once a four-man team of engineers from another Wichita company who started with nothing more than a contract.

And the Ripples Continue…
Millennium Concepts started in February 1999 with four Bombardier Learjet expatriates who shared backgrounds in interior design and aircraft engineering. The launch contract for the company landed in May 1999- when Ozark Aircraft Systems of Bentonville- Arkansas- tapped Millennium to provide portions of the engineering and certification for a Boeing 737-700 conversion to a VIP aircraft for Orbit Aviation.

An office- a contract- energy and creativity helped propel Millennium Concepts to ever more-ambitious projects.

Those projects continued a ripple started by the Ozark contract as Millennium expanded- built and certified its own burn-test facility- enlarged its physical facilities and added staff. By the time January 2003 rolled around- Millennium Concepts had firmly established its credential in aviation interior design and engineering- as well as component manufacturing.

In January 2003- Millennium and Yingling- began work on an entirely new interior package for Cessna’s workhorse Caravan. Millennium brought to bear all its disciplines- design- engineering- certification and manufacturing to create and certificate an innovative interior solution for the Caravan that gives owners more options in the finish of their airplanes.

The ripple continues…

Circling back to Yingling
Millennium holds the approvals- STCs- TCs- TSOs; Millennium completes the design sought by the buyer- makes the components- and Yingling’s staff executes the installation in a bare airplane.

Between the two partners in this enterprise- dozens of employees gain weeks of work to make- install and deliver the finished Oasis Caravan per the customer’s specifications.

That installation- and the wiring to support the cabin- can take two to three weeks to install at Yingling. Once finished with the installation- Yingling’s staff inspect and acquire the final paperwork approvals- and then test the airplane before delivery to the ultimate customer.

And the customer adds further to the ripple effect merely by taking delivery of the finished airplane - providing an instructor with work providing the transition training for the new Caravan pilot as well as for the Yingling pilot who flies with the customer on the acceptance flight.

Once out in the fleet- that Caravan and its crew continue the ripple effect.

Ever widening ripples…
After delivery- the new airplane begins its real life- transporting the staff- clients and hardware that supports the owner’s business and generating cash flow along the way.

Fuel sales- maintenance- storage- insurance- cleaning and recurrent training are all part of owning and operating an aircraft- for business or personal use.

From initial order to initial operational use- this single Caravan produced work- and spurred cash flow for Cessna- for the engine maker- the avionics and systems suppliers- metal and rubber manufacturers- wiring and insulation makers- paint and acrylic-window producers- hydraulic- wheel- tire and brake makers- a propeller manufacturer and companies that supply the various lighting gear installed – external position and anti-collision lights- cockpit and instrument and cabin illumination systems. And there’s probably more we haven’t listed.

The workers who handled this one project in turn spent their earnings at home and across the nation in a circle that enlarges concentrically with every business aircraft sale- every business aviation hour flown.

This is from only one plane… now picture the ripple effects from thousands!

That single Oasis Caravan delivered to CommTech in late March was the 100th Oasis Caravan delivered in about five years – excellent performance for a niche business.

Destructive Ripples
Unfortunately- things have slowed since that airplane went on order. In the months since the start of the economic recession in Fall 2007- we’ve seen an at-first gradual decline in aircraft sales that since has turned precipitous. By Fall 2008- the writing was on the hangar door; private aviation is well into a long- painful slide.

Before the start of winter 2008-2009- we knew staff reductions were on the way; after the shameful performance of three Detroit Automaker executives- the words “business jet” had taken on a distinctly distasteful tone when uttered outside business aviation.

Continued unwarranted assaults on the wisdom and benefit of business jets morphed into an insidious disdain toward all things related to ‘corporate’ aircraft or ‘business’ flying- regardless of the aircraft type – jet- propjet or piston.

All three types play their own significant roles in the world of business flying and all three have taken huge sales hits. Worse- private flying has taken an operational hit too- with flight hours (aircraft use) down well into double digit percentages these days.

The compounded impact of these interrelated elements generates its own unwelcome ripple effect. Factories producing fewer aircraft need fewer workers; fewer airplanes also mean less of everything up and down the supply chain – and- in most instances- more worker reductions among the vendors.

This negative ripple impacts the engine makers- avionics manufacturers- and all those thousands of others who supply components to aircraft production lines.

The drop in utilization ripples through the aviation economy at all levels too- with less fuel sold- fewer hours billed by maintenance shops- and slowed initial and recurrent training sessions at the professional flight-instruction shops and fewer hours used in expensive simulators.

All these declines translate into fewer dollars rippling from planemakers and vendors and support companies- and reduced ripples in the restaurants- dry cleaners and gas stations that we mentioned at the start of this article. And so the negative ripples continue to spread.

This is where the downward ripple becomes painful for the aviation community as well as the economy overall: If 10-000 lost jobs once supported by business aviation each supported two to three other jobs- the ripple effect expands outward to impact the livelihoods of 20-000 to 30-000 additional people. Those people may not all have lost their jobs- but their jobs have lost support and- very likely- their paycheck values dropped.

If each dollar once earned by each of those separated workers generated another $3- $4 or $5 in spending- the loss of one $35-000 job becomes a community loss of $105-000 to $175-000.

So imagine 10-000 jobs like that – and the further ripple of the spending once supported by the support jobs lost in the domino effect.

The Danger of Unintended Consequences
All in all- decisions like the one made by CommTech Communications may be rarer these days – order deferrals and cancellations underpin huge reductions in production projections – but they still reflect a fundamental truth:

Businesses that operate aircraft for the good of their enterprises do so because that choice improves their competitiveness.

By typically concrete calculation- business aircraft owners and operators know before they buy what benefits to expect from that investment. If business aircraft don’t pay their way- they don’t keep their owners long... yet critics- unfounded and lacking genuine knowledge of business aviation- continue to assail business aircraft use as if it were a betrayal of society.

Making business aircraft use clear an ad hoc bar of social acceptance may give lawmakers and pundits the feeling they’re providing a needed watchdog function- but they need to be shown that setting such a bar in fact helped contribute to a collapse of a powerhouse industry in the American economy!

Business aviation contributes to world commerce and America’s aircraft industry leads the world in innovation and sales. America’s few bright spots in the international trade balance include aviation in all its incarnations.

Undercutting the industrial powerhouse that is America’s aviation industry contributes more than just an unjustified- false image. It costs the nation jobs- dollars and quality of life- and depresses the prices of new and pre-owned aircraft and future sales potential.

Businesses that decide to eschew their aircraft for political or public-appearance purposes serve mainly to handicap their own business prospects.

So the next time you hear someone criticize corporate aircraft- business aviation and the ubiquitous “business jet-” ask them outright:

“How many good jobs do you want to eliminate- and why?”

Remind them that the ripple their beliefs helped start could come back to their own front yard one day. Private aviation- with its tens of thousands of workers and billions in economic impact- may ripple right back to the place they work because private aviation touches almost all of American life and business.

Eventually- of course- the economy will improve- the aviation business will bounce back - business aviation could enjoy the value it deserves again. But this will not happen without an end to the vilification- and the return of smart thinking like that exhibited so long ago by CommTech Communications.


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