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TEN QUESTIONS FOR PAULA DERKS

Avionics industry prepares to meet the future From one perspective- the general aviation business seems to be in a ‘shrinkage cycle’- with deliveries down for the first time in a half decade and other important indicators also in decline. Flight hours- fuel sales- resale of aircraft – all seem in decline. From another view- however- this bag of lemons offers an opportunity for the savvy to make lemonade.

With sales of pre-owned aircraft dropping- some operators seem interested in making the best of what they’ve got – particularly those who weren’t selling out of panic or fear- but to either move up- or to better match their lift with their needs.

Potentially even more influential is the impact of NextGen- the inbound re-invention of the nation’s Air Traffic Control system- and the equipment demands that underpin the planned new ATC system – ADS-B.

Further - just as we’ve faced for the past few years- the aviation community sees efforts in Congress to finally pass reauthorization for the Federal Aviation Administration- an agency stuck for three years with operating under one “continuing resolution” after another. Under the leadership of long-time president Paula Derks- the Aircraft Electronics Association (AEA) engages on several fronts to help its members provide the best- most-knowledgeable work and products possible and to serve customers with the solutions they want and need in today’s environment and that of the near-future.

Operating from its new headquarters adjacent to the airport in Lee’s Summit- Missouri- the AEA serves its membership by tracking issues- assisting with training and providing a unified voice for the technicians- shops and producer businesses engaged in making- installing- and servicing the electronic systems that give private aircraft much of their utility.

Similar to other trade associations- AEA also engages the federal government on behalf of its membership- providing lawmakers and regulators with accurate information about AEA’s constituency- providing its members with up-to-date insights into government activity and serving as a focal point for responding to legal and regulatory proposals that might impact the membership.

When we caught up with Paula Derks she and her staff were preparing for the AEA’s important annual meeting and trade show March 31 through April 4 at the Gaylord Texan Resort & Convention Center outside Dallas. Interestingly- many issues of discussion at last year’s AEA convention remain open topics going into this year’s 52nd convention: FAA reauthorization; the user fee debate- re-run; NextGen and ADS-B implementation.

Yet one new item tangentially related to the avionics shops carries some concern: the Large Aircraft Security Program (LASP) proposal from the Transportation Security Administration. And then there are those so-called evergreen issues that never really end for small businesses like many of the shops AEA represents: how best to survive in a tough climate- how to win new customers and keep old ones- and how to stay abreast of a constantly evolving field.

With new products seeming to emerge monthly- the evolution of last year’s new stuff and the increasingly integrated nature of new and updated cockpits- no avionics tech or shop owner can ever afford to slack off or rest on old knowledge. So with this as background- World Aircraft Sales Magazine arranged to put ten new questions to Paula Derks as president of AEA

WAS: It’s been a year since we last visited - and in the interim AEA moved into new digs. In the spirit of doing a little catch-up work- how and why did it come to pass that AEA took on building the new headquarters- and building adjacent to an airport- no less?

Derks: Simply put- we were outgrowing our old space in a big way! Fortunately- the association has been growing at a healthy pace the last several years and our 3-000-squarefoot building could not handle that growth.

The AEA board of directors authorized me to begin looking for new space in the fall of 2007. I knew I wanted our new headquarters office to be located near a general aviation airport- so I was lucky to find a new office park in a suburb of Kansas City- Mo.- called Lee’s Summit- adjacent to the Lee’s Summit Municipal Airport.

We purchased an unfinished 12-000 square foot building and hired an architectural firm to design the inside of the space exactly to our needs and requirements. We were able to quickly sell our old headquarters offices and we moved into our new facilities in June of 2008. Today- we boast a state-of-the-art training center- an executive board room- a fully-outfitted publishing department- catering facilities- and a suite of offices with room to expand.

The city has welcomed us with open arms and the airport authority has been wonderful. We’ve had several members use the airport and in the seven months since we cut the ribbon to open our new offices and training center- we have welcomed more than 200 members to the international headquarters.

Our staff has grown to 10 persons and in addition to our new offices in Lee’s Summit- we opened a satellite office in Cologne- Germany- to serve our European members and be located near the offices of the European Aviation Safety Agency.

WAS: Even though it’s been a year since we last formally spoke- looking at the agenda for general aviation this year it seems too little has changed. What is AEA’s view of the FAA reauthorization Congress is already considering?

Derks: It’s discouraging to see the new administration following the same financing path for the air transportation system as the previous Bush administration. Congress has again and again rejected previous attempts to fund the system through a user fee scheme sure to damage an already-fragile general aviation industry. Now is not the time to entertain this method of funding when our present system – through excise taxes – works brilliantly.

The AEA supports House Transportation and Infrastructure Committee Chairman James Oberstar’s current House bill- H.R. 915- which supports the current system of aviation excise taxes to fund the aviation transportation system.

We also are disappointed with the administration’s implication that a business aircraft is a perk and not a vital business tool. No one is questioning the government’s (such as the President- Vice President- Secretary of State- and every Cabinet Secretary) use of government-owned business aircraft for their business efficiencies. Why- if a private aircraft is a valuable tool for government officials- can it not also be a valuable tool for private commerce?

WAS: Has any of the FAA’s action on ADS-B and NextGen encouraged you that we’re moving in the correct direction and with enough speed?

Derks: The AEA is sitting on a NextGen implementation working group. We are seeing progress – although measured- which is not necessarily wrong. AEA strongly supports the need to adopt ADS-B technology. However- we have commented to the FAA that we don’t believe they have fully developed the true cost of equipage and the timetable of which to equip general aviation aircraft to meet the deadlines.

WAS: What progress has AEA seen on the Part 145 rewrite that was pending when we talked last?

Derks: I would like to report that a lot of progress has been made since we talked last year- but to date- there have not been any developments in the rewrite of Part 145. That’s disappointing. We are hearing rumblings that the new re-write may be out in the next few weeks- so we shall see.

WAS: Turning to some issues not on the agenda when we talked last year- what is AEA’s response to the LASP proposal the TSA published last fall?

Derks: Someone please explain to us what hazard they are concerned with? These are private aircraft with known passengers – prohibiting aircraft owners from carrying shampoo- golf clubs and ski poles- and their own company’s equipment- shows how completely unknowledgeable the TSA is about the use of general aviation aircraft.

The fact that a record number of comments (more than 4-000) were received from industry in response to TSA’s NPRM speaks volumes of the validity of the proposed rule. We can only hope TSA will review each and every comment and seriously re-assess their proposal.

WAS: Here’s another issue we didn’t have to deal with 12 months ago: the state of the economy. How has the combination of a recession and paralyzed credit markets impacted AEA’s membership?

Derks: How quickly things change. There is certainly an economic impact on AEA’s membership as there is in all pockets of the international aviation community. We recently surveyed a general representation of our repair station members to ask about how their businesses are fairing in this struggling market. Their answers—no matter what the size or location of their facility—were nearly identical.

Their customers seem to be holding off on purchases until the third or fourth quarter of the year- taking a “wait-and-see” attitude. For those customers who are making purchases- it is strictly retrofitting existing airplanes- instead of purchasing new. They are putting their money in the cabin instead of the cockpit right now with high speed data and cabin management systems. As one member put it- “If you can’t get your BlackBerry to work in the air- you just aren’t living.”

Many members also are reporting to us that they are putting a freeze on hiring right now- but trying to hold on to the valuable avionics technicians they currently employ because when times get good- they want to make sure they have them under roof.

WAS: Is AEA planning or already offering any specific help to ensure members can weather the economic storm?

Derks: Regardless of good or bad economic times- the AEA prides itself on continually offering benefits and services to enhance our members’ businesses. Besides technical training opportunities- we offer a plethora of business management topics to help our members keep their shop doors open.

We offer membership payment plans to help our members keep their dues current; in fact- we are having a record year so far in 2009 for new members joining. I think it is a sign of the times when a company joins a trade association to help weather an economic storm.

WAS: We know from first-hand conversations that sales of new and pre-owned aircraft across the spectrum have slowed to a near standstill. Has this helped shops land new business supporting owners who’ve decided to keep and upgrade their existing aircraft rather than upgrading to a different plane?

Derks: Most definitely. As industry reports show- the sales of both new and used aircraft are off. Consumers are deciding to keep what they have and are turning to our members— the repair stations—and upgrading their worn-out cockpits with glass and their cabins with high-speed data systems. iPod docking stations seem to be a big seller right now- too. Avionics is where it’s at right now.

WAS: From the vibrations traveling along the grapevine- it sounds as if the avionics providers are continuing to develop and pursue new products. Since the AEA convention has long served as the premier venue for unveiling such advances- can you give us some insights into how the 52nd AEA convention is shaping up?

Derks: We were pleasantly surprised at how well it is coming together. Honestly- I didn’t know what to expect because of how bad the economy has become in the last three months alone. But our advance registrations were slightly ahead of last year- and our exhibit hall was just shy of being sold out [as of this interview].

We actually had a waiting list of manufacturers who wanted to introduce new avionics products! We had to cut it off at 30 new products because we simply ran out of time on the program to get them all introduced. It is amazing that we were expecting a great show amidst all this negative economic news.

WAS: In visiting AEA’s website recently we noticed that the Association put its Technical Training Exams on-line to help shops qualify for the Avionics Training Excellence Award. How can a customer learn whether a shop or technician has qualified for the award- and why should customers care?

Derks: Displaying the AEA’s Avionics Training Excellence Award (ATE) plaques- banners and posters on the walls or in the hangar of an avionics shop- shows its customers that each and every technician in that shop has received some form of technical training approved by the AEA in the last 12 months.

That means those technicians are well versed on the installation- integration and troubleshooting of the newest avionics technologies.

Our awards program is relatively new- less than 10 years old. But- we are working to promote it not only to our members- but to pilots as well to let them know to look for that ATE symbol in the shops they do business with. In turn- that not only saves the customers’ money because they are working with skilled technicians- but helps promote safety and a continually-trained technicians.

More information from www.aea.net


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