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AN INTERVIEW WITH JIM COYNE- NATA

To borrow a phrase from a famous fiction writer- these are the times that challenge an association’s soul. And in no segment of business aviation are the challenges of the times felt more than at companies represented by the National Air Transportation Association.

FBO consolidation; security issues; charter-operator challenges; FAA finances; customer retention; operational safety; business development. All these issues and more fall under the wing of NATA and its staff- headed by Washington veteran Jim Coyne.

NATA essentially represents the nation’s aviation service providers – principally fixed-base operators- charter providers- flight training organizations- maintenance providers and airline service companies – with its eye on three distinct missions:

NATA aims to be the leading national trade association representing the business interests of aviation service companies on legislative and regulatory matters at the federal level.

• The association provides education- services and benefits to members that contribute to their long-term economic success.

• NATA strives to ensure the wellbeing and continuity of the association.

These missions are direct descendants from the origins of NATA as the National Aviation Training Association. In some ways- today’s challenges to general aviation are reminiscent of the days leading up to the founding of NATA.

NATA was founded in 1940 in response to U.S. Army plans to take control of the highly successful Civilian Pilot Training Corps and to ground civilian aviation for the duration of the anticipated war that was already raging in Europe and Asia. After World War II ended- NATA morphed its mission and its name – not once but twice – eventually becoming the organization we know today.

Jim Coyne has served as NATA’s president for nearly 12 years. A former CEO of a family chemical business as well as a former Congressman from Pennsylvania- Coyne’s Washington experience includes a stint in which he served as a special assistant to President Ronald W. Reagan before returning to the private sector in 1985 as an association executive.

In April 1994 the board of NATA tapped Coyne to become president of the association- counting on his knowledge of business- politics- regulatory affairs and general aviation built up over his decade-plus experiences as an active pilot.

Coyne continues to fly- actively using his aircraft as an asset for NATA in the travels required of an association executive responsible for representing a community of aviation business as widespread and diverse as NATA’s membership.

Mr. Coyne kindly agreed to spend some time answering some topical questions for the readers of World Aircraft Sales Magazine.

WAS: For a benchmark on the industry you represent- please compare for us the relative health and stability of NATA’s membership now with the days prior to the attacks of September 11- 2001.

Coyne: It’s a little hard to generalize across the board- but I’d have to say the GA services are doing as well as they have in a long time. Most of our members- aside from the flight schools- would say that the last year was a continuation of the steady improvement that’s run over the past 12 or 13 years. In aviation training- a lot of fight schools are struggling because of the restrictions on foreign student travel. The FBOs have attracted a lot of new business- a lot of new capital- and that’s a good thing. And there’s a general belief that GA is safer and more secure than before 9/11. Charter providers- as a group- are also doing very well. For our airline service companies- having your main customers go bankrupt hasn’t been the best for them – but they’ve been continuing to grow as the majority of them have figured out how to cope with the bankruptcy risk. I’m pretty bullish- frankly- on our industry. But as you know- there are clouds on the horizon.

WAS: If you had to pick one area of NATA’s membership as the one facing the greatest challenges today- which segment would that be- and why?

Coyne: The flight-training segment has been struggling and continues to do so. Flight training is dramatically lower than it was prior to 9/11. Before that- 90 percent of all the flight training in the world was done here – flight training was an American industry. Prior to 9/11- you couldn’t find a flight school anywhere in the world with more than 12 or 15 flight training aircraft. Thanks to our short-sighted government- we’re seeing market share go overseas. It’s one of the most stupid things I’ve ever seen. If you were concerned about another terrorist crashing an airliner- wouldn’t it be easier to have 90 percent of all the students in the world here- where you could watch them easily? We’ve created rules that are intended for no other purpose than political eyewash. I’m continuing to meet with the people at TSA and- believe it or not- they know what I say is true. But Congress enacted a lot of very reactive legislation in the aftermath of 9/11 and is slow to correct its mistakes. It’s going to take a long time to recover that business.

WAS: Does the recurrence of the perennial debate on User Fees seem like the same old familiar saw of years past – or is the argument and the resulting potential different than it’s been before?

Coyne: From a Congressional point of view- this is very much the same debate as in the past. I’m hopeful we can again defeat it- as we have in the past. Although the argument is really not that different- however- there are differences that make it more serious. The airlines- for all intent and purposes- are united this time. The user fee concept proposed last time was a lot harder on the point-to-point airlines- fracturing the airline’s political support for user fees. The second difference is the deficit is seen as more of a problem. Before- there wasn’t any real sense of the Administration’s argument that this is a way to reduce the deficit. And we didn’t have as many games going on regarding the deficit’s severity. The reality is that the user fee solution- regardless of what that will be- will not affect the deficit.

WAS: Some observers of the aviation industry see some method in the White House’s budget priorities – a method by which the Administration tries to starve programs it doesn’t support to the point that failure is all but assured – with the result being an easier path to eliminating the targeted program all together. Does the cut to FAA programs in the FY 2007 budget proposal seem like a way to assure budget shortages so user-fee supporters can point to the failures of excise taxes as an argument for the fees they support?

Coyne: This is a pretty normal White House strategy – you don’t put into the budget things you know Congress is going to put in- and so force members to make the choices. I see very little appetite in Congress for making the draconian cuts we’ve seen proposed for 2007. The FAA leadership is very loyal to White house priorities. I see another part of it that seems more nefarious to me – there’s evidence that the FAA is intentionally punishing GA because they see us as a hindrance to their user fee plans. And cuts to the important staff support for GA are being made because- they say- there isn’t the money available due to our lack of support for user fees.

WAS: Much has been made of evidence that the FBO industry is well into a period of consolidation that’s shrinking the numbers – while others see the FBO community expanding as growth in general aviation flying and other new opportunities encourage more outside investment. Where do you see the FBO community five and 10 years from now?

Coyne: Even with the consolidations- I think the FBO community will always have a relatively diverse set of business owners. The level of concentration that people talk about today is much- much less than in other industries. The success of an FBO often depends on the managers’ knowledge of the local market and their strengths. I don’t think there will ever be a successful concentration down to just a handful- like a Hertz or Avis. You look at the success of the Showalters and others- because they are deeply entrenched in their local airports and the pilot community. I can point you to a lot of different parts of the country where there’s a chain FBO and an independent coexisting. I don’t think the independent is unduly threatened and we’re always going to have a strong component of independent FBOs. We’ve probably had $4-5 billion in new investment in FBO facilities since 9/11: Westchester- Teterboro - each FBO operator has invested millions. Multiply that by three or four thousand airports- and there’s a lot of investment going into the FBO business. Numerically- size of community will be close to the same – consolidation will be offset by new independents- supported by expanded utilization.

WAS: Is the NATA membership getting the hired help it needs to run the FBOs- maintain the aircraft- fly the charters – or does the community face a looming labor crisis with shortages of qualified people hampering the companies’ ability to function?

Coyne: Certainly on the maintenance side. I think we have a looming- or in some cases- present crisis – there’s just no doubt about it. On the senior management side- too. In response- NATA’s board authorized us to create a management-training track for future senior FBO managers. There’s a very good stable of qualified flight instructors – so I’m not too worried about that right now. In terms of pilots- there’s a risk we’ll create more stupid immigration laws that will make it harder for people to come in to fly and learn to fly.

WAS: The contentious issue of the Washington Capital Air Defense Identification Zone (ADIZ) seems more entrenched than ever in the minds of security officials – yet only now- after nearly four years- are hard-and-fast facts of its impact coming to light and only now are aviation community participants getting the ear of the officials responsible for its existence. When all’s finally said- does NATA expect any meaningful modification of the ADIZ- its structure- operational rules and management?

Coyne: There is movement and some reason for optimism there- driven by Congressional frustration with the TSA and political pressure from the aviation community. There’s got to be some modifications. But I am cautiously optimistic that the ADIZ debate will continue and we’ll get a chance to act on some of what we said in testimony and privately to TSA and others. Local television news is of a mind that the ADIZ is not practical- good for Washington- the economy – and not effective. What the ADIZ does is create a hassle for pilots – particularly for pilots based here. And it’s a big enough hassle that a lot of those pilots will stop flying or move their airplanes away – and the businesses that supported them will whither away. Not only is it a hassle- it’s a hassle that is not a deterrent to even the most ‘light-hearted’ terrorist. I think we’ll wind up with some modifications that will increase access from its current level.

WAS: Elsewhere in the post-9-11 world- NATA’s had a hand in shaping the response to other security concerns of federal officials- among them the 12-5 rule. Can the aviation community start to feel comfortable that today’s restrictions are as far as the government will – or can – realistically go in its efforts to regulate security for general aviation?

Coyne: We have had continuing discussions with Skip Hawley at TSA about improving procedures for presidential TFRs so that 12-5 approved operators can also gain greater access to them- and to DCA and national security special events- like the Super Bowl- Olympics or political conventions. The general feeling is that we’re moving in that direction.

WAS: In the near past- you’ve personally flown a 90-series King Air and a Baron 55 for your personal and business needs. How much are you getting to use your aircraft these days and do they remain the essential asset they once were?

Coyne: Oh- they are more essential than they ever were. There are times when I’ll come back from a day of flying and someone on staff will comment- 'Jim you just couldn’t have done that without the airplane.' Because of where I travel- usually second or third tier cities- the easiest way to turn a day into two days is to cut off my transportation and put me on the airlines. The hardest part is no longer being able to keep my airplane at DCA – and being able to walk outside my home and NOT see a GA airplane overhead. I’m flying more than I ever have and enjoying it as much as I ever have. I’ve probably visited more FBOs than anyone else in America- and I get to meet the people who arguably are the backbone of aviation- the people who work at these FBOs and support aviation in the U.S.

WAS: Thanks for your time- Mr. Coyne.

Jim Coyne and the rest of his staff can be contacted through NATA offices at 4226 King St.- Alexandria- VA 22302; Tel: +1 703-845-9000; Toll Free: 800-808-6282; Website: www.nata.aero


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