Times have never been better in business aviation - by pretty much every measure. Even its scariest challenges remain at bay. Although a final accounting on 2007 remained a couple of week out from this writing- the handwriting was already on the wall expecting new business jet deliveries to top 1-000 units when the General Aviation Manufacturers Association reported its third-quarter numbers showing 759 jets ...
Can A Year Get Much Better?
The answer depends on the aspect of 2007 at hand...
Times have never been better in business aviation - by pretty much every measure. Even its scariest challenges remain at bay. Although a final accounting on 2007 remained a couple of week out from this writing- the handwriting was already on the wall expecting new business jet deliveries to top 1-000 units when the General Aviation Manufacturers Association reported its third-quarter numbers showing 759 jets delivered – plus another 293 propjets.
By the forecasts from a diverse range of sources- today’s record backlogs should translate into another record this year- with the consensus pointing toward about 1-300 deliveries – up 30 percent a year after growth topped 20 percent.
Still- on the sales side of the business aviation industry- times have been so good that veteran observers quietly question whether the above-par growth can possibly continue. And these quiet rumblings began months ago – before the apparent snowball impact of a U.S. mortgage-loan crisis helped spur some of the biggest drops in new-home sales in decades and large write-offs by large finance companies holding billions in sub-prime mortgages.
They began as crude-oil prices started upward until nearly doubling in under a year and $100-per-barrell crude-oil prices sent another psychic shock wave through markets and minds. The recent New Year messages from too many economic analyses worry that a recession looms in the coming year giving odds of about 50 percent.
Yet alone- there should be little surprise in the prospect of a plateau in new aircraft sales or even a small decline from recent record numbers. The most-recent industry forecasts by all the major players predict an upcoming plateau- then a small decline followed by a resumption of sales growth.
In total- though- the business jet industry will- by Honeywell’s forecast- ship about 14-000 jets during the 10 years ending at the close of 2017. By old-math standards- that’s an average approaching 1-400 per year. Indeed- 2007 brought some great times- some sales records and added years to planemakers’ backlogs- optimistic long-term forecasts for sales plus some subtle hints of unforeseen turns-for-the-worse. And that’s merely on the new aircraft sales side of last year. World Aircraft Sales Magazine takes a closer look at the pre-owned aircraft sales trends for 2007 in JETNET/AvData Stat Analysis on p140 of this issue.
The year 2007 also saw many other notable events of high profile and equal importance in terms of community health and continued development. We’ll look at some of the highs and lows of 2007 and try to make a little sense of what is past and what is to come.
FAA Reauthorization and more…
As of this writing- Congress was not close to resolving the dual- related issues of reauthorizing the FAA and its future programs and deciding how to fund those authorizations. The bucks go on but no one is happy about how. Anyone to ever experience frustration enough to proclaim- “It’d take an Act of Congress” tend that frustration might- for the moment- consider the benefits of that idea.
Had the Air Transport Association- the Federal Aviation Administration- the Transportation Department and the White House got their way- business aviation would- right now- be trying to resolve how to absorb a significant increase in the cost of flying – from the smallest business owner-flown piston right up to the flight departments and boardrooms of the largest operators of the largest business jets. Since it does “take an Act of Congress” and this Congress convened under a different majority- the airlines and their supporting agents of change found a skeptical audience a year ago. It was last February that Marion Blakey- then FAA administrator- went to Capitol Hill to introduce the Bush Administration’s plan for shifting about $1.8 billion off the backs of the admittedly beleaguered airline industry and onto the backs of general aviation – with business-turbine operators targeted the heaviest to pick up the weight relieved off the airline passengers who pay the bulk of the fees generated for FAA operations- including the Airport and Airways Trust Fund.
The first and immediate problem the White House-endorsed plan encountered turned out to be its revenue shortfall compared to today’s system of excise taxes on aviation fuel- airline-passenger tickets and freight weighbills. The impact of- on one hand- crying “crisis” for funding an overhaul of the Air Traffic System and- on the other- proposing a plan that raised $600 million less than before- came mostly in the form of lost credibility and set the stage for skeptical examination of every other argument mounted by the Air Transport Association- its member carriers- FAA- DoT and the White House.
Next to go down in flames: recurring claims that business aviation contributed to the record-high airline delays of two straight years. The User Fee supporters sought to harness a high level of passenger dissatisfaction in support of their cause by portraying those pesky business jets and their rich operators as cause for flight delays. When congressional watch-dog organizations- controllers and the FAA’s own data roundly refuted the contention- many of those passengers didn’t know they’d been told lies; and many seemed not to care. It was the airline with which they had a complaint- so it was about the airlines that they complained. Congress- on the other hand- seemed to notice big time- with some lawmakers going so far as to complain about being told lies.
The House of Representatives crafted a bill that leaves in place the current fund-raising system but increases excise taxes to cover the cost of the so-called Next Generation Air Traffic System. It passed with widespread support and a great deal of bipartisan backing.
The one place the User Fee argument got some small-but-significant traction came in a Senate subcommittee on aviation. In that panel- the chairman and ranking member – West Virginia Democrat Jay Rockefeller and Mississippi Republican Trent Lott – dug in their heels for a $25-per-flight fee for IFR services- in addition to higher fuel taxes. Rockefeller and Lott tried- as had others- to split general aviation by noting that the majority of piston operators would never pay the fee. The amendment adding the fee to S.B. 1300- the Senate’s version of FAA reauthorization- passed 12-11- with Lott and Rockefeller in the majority.
But then Lott (who received an award from the Aircraft Owners and Pilots Association for his support of general aviation) resigned effective the end of the year. Replacing Lott on the panel is Sen. Kay Bailey Hutchinson of Texas. While the Senate legislation has not been revisited- it’s known that Hutchinson was not a supporter of the $25 IFR fee – she was among those 11 subcommittee votes opposing the fee.
While Hutchinson- the new Ranking Member of the subcommittee- remains resistant to the fee- which way the committee may go next depends on the leanings of a new Republican member. So while hope remains for the House bill- the FAA remains in a state of funding and program limbo. Three times Congress has passed stop-gap legislation that keeps FAA funding at last year’s levels but leaves the agency limited in its ability to advance programs such as NextGen.
A huge amount of credit for getting across general aviation’s position goes to (in alphabetical order) AOPA and its president- Phil Boyer; to the Experimental Aircraft Association and its president- Tom Poberezny; to the General Aviation Manufacturers Association and president Pete Bunce; the National Air Transportation Association- and its president Jim Coyne; and to the National Business Aviation Association and its president and CEO- Ed Bolen. Such a coalition among general aviation’s diverse constituencies is rare but not unique – and always effective.
The FAA Reauthorization/FAA Funding debate had a few surprise players- though- and none less than the new-in-2007 Alliance for Aviation Across America. The Alliance consists of thousands of individuals in and out of aviation- of municipal governments and businesses dependent on general aviation for air access to the world-at-large.
If we get the right Act of Congress- 2007’s top business aviation story could also top the list for 2008. We’ll let you know this time next year.
Out With the Old Boss…
The end of Marion Blakey’s term as FAA Administrator came on September 13th- five years after 2002 when she stepped into the job after serving on the National Transportation Safety Board.
As she cleaned out her desk at 800 Independence Avenue- she began to concede that airline schedules “aren’t comporting with reality-” when speaking with National Public Radio during a last-day-on-the-job interview. Previously- in a speech to the Washington Aero Club- she warned the airlines that if they didn’t begin to bring schedules in line with runway capacities at the worst airports- the government would. She also re-asserted that the airline passengers pay “more than their fair share” and the system for funding the FAA needed a dedicated funding stream to invest in NexGen and a way to “shift those costs more equitably.” And then she was gone for a new job heading the Aerospace Industries Association where her new message seemed less supportive of the User Fees that underpinned her past espousing for a “dedicated funding stream.” Interesting how perspective can change things.
While industry leaders all had different forms of praise for Blakey’s efforts as FAA Administrator- a subterranean grapevine breathed a sigh of relief- hoping that a new Administrator might seem to serve more as a consensus builder and less an outlet for the commercial airline industry. Those same voices also hope for a change in executive staffing away from the appearance of a near-total dependence on airline or Airline Association people in making appointments.
“Isn’t the FAA supposed to represent all segments?” one aviation association executive rhetorically asked a journalist at the NBAA Convention in Atlanta- Georgia.
Say Hello To the New Boss?
Private aviation leaders describe their ideal candidate to replace Marion Blakey as many things she was not: a pilot - preferably one with general aviation as a significant part of the log book. Someone with both aviation-business and aviation-government on their resume; and someone with balance in their background – not a totally military- business- commercial nor general aviation centric candidate.
Imagine the surprise of those who didn’t know that many felt such a person actually ran the FAA day-to-day during much of Blakey’s term – her long-time number two- Deputy Administrator Bobby Sturgell. Appointed Acting Administrator upon Blakey’s departure- Sturgell shortly became the short-list favorite- thanks to a resume pretty much like that described above. In the words of one aviation association insider- “He’s got the bases covered – and we know we can work with him because we’ve already worked with him for years.”
Shortly after getting the nod to serve as the Acting Administrator- President Bush nominated him to replace Blakey for the next five years. And that’s where things stand- thanks to several different political issues – some of them even aviation related. As of this writing- he awaits his Senate confirmation hearing. But unless a Senatorial “Hold” comes off his nomination- Sturgell may serve out the rest of the Bush term as the acting boss. In talking to some former acting Administrators- however- the trains should continue to run on time. “At least-” said one- “those trains Congress has authorized and funded – and right now- that description leaves out a lot that he can’t do much about.” Stay tuned…
Arriving 2012: ADS-B
Late last year the FAA released its long-awaited Notice of Proposed Rulemaking- or NPRM- outlining the opening phase of a planned transition to a satellite-based air-traffic-control system for the NextGen system.
To make GPS technology useful for ATC service- the FAA proposed that aircraft using positive-control airspace employ Automatic Dependent Surveillance-Broadcast- or ADS-B. Capable of broadcasting data with a position- altitude- speed and direction of flight- ADS-B would work through that nationwide network of ground stations being established to receive so-called ADS-B Out broadcasts and route the data to radar-like screens used by controllers.
Aircraft with so-called ADS-B In could also receive the same data and display targets on a multifunction display or a traffic-awareness system screen just as ATC sees the data- allowing each aircraft to see and know the position of other ADS-B equipped aircraft.
Earlier in the year- FAA awarded the initial contract to install and operate the ground-station network; because of the complexity of the issues- AOPA sought and won an extension on the comment period into February.
An accelerated installation of ground stations is already underway in the Gulf of Mexico for the benefit of oil-platform support operators- as well as on the East Coast. Still- despite all this activity- many- many questions remain unanswered about how the transition to ADS-B from radar would occur and when- if ever- all aircraft would be required to use ADS-B. The kicker question concerns how ADS-B will actually reduce traffic spacing and- thus- boost traffic capacity.
But despite the understandable- worthwhile skepticism of many- much of the comfort and confidence with ADS-B comes to the party after years of use and testing in two FAA experiments. One was all general aviation oriented- the so-called Capstone Project in Alaska and ended last year; the other was the Ohio River Valley project in which express-package giant UPS deployed ADS-B on its extensive fleet of freighters operating to and from its hub at Louisville (Ky.) International Airport (KSDF). For early adapters- airborne ADS-B transceivers are already available.
Operational Control Oversight
Operational control oversight could start spreading this year- we heard late last year. And the private-owned/privately operated Part 91 business operators are in the expanded area.
Most of the business aviation community watched the FAA’s enforcement and heard of the $10 million fine against TAG Aviation USA citing violations of operational control traced to the company’s ownership by Europe-based TAG Aviation.
TAG and AMI Jet Charter customers now have available a new deal with the new owners of both- Sentient Jet- which was in the midst of closing on the purchase of TAG Aviation USA – with AMI among the assets in the deal.
This year-end news came shortly ahead of word from the FAA that inspectors will be on watch for signs of operational-control issues among Part 91 operators as well. The idea- FAA sources said- is not to launch more enforcement- but to make sure the people using- maintaining and operating the jets in private flight departments know who is responsible for the details of staying legal – and that the operator isn’t flying under Part 91 when they should be operating under a Part 135 certificate.
Uncustomary Customs Proposal
A proposal to change procedures for clearing into the United States left a lot to be desired for every segment of private aviation- business and personal- according to all the alphabet groups representing the community. Greatly increased information requirements- and a mandate that all pre-clearance information be filed electronically via the Internet attracted the most negative response.
The unreliability of available Internet access at foreign departure points stood out as one problem; the nearly tripled amount of information about each person on board struck many as excessive too- particularly for U.S. nationals holding valid U.S. Passports.
With an extended comment period graciously granted- pilots got additional time to voice their views into the New Year. No one expects either quick or satisfactory resolution of this issue- even with an entire year ahead.
Business on the Fly
Time for another New Year Cliché: ‘The only constant is change’. Nowhere is this old line more applicable than the aviation business. 2007 brought some interesting changes in the business landscape and other machinations worthy of a dynamic year.
Take a look Out with the old- in with the old!
Two of business aviation’s most historic names came together under a common banner back in March 2007- when the old Raytheon Aircraft Co. passed to new owners and became the sum of two old- historical aviation monikers: in alphabetical order- Beechcraft and Hawker.
For a company founded in 1932 like the old Beechcraft- celebrating a 75th year of existence took on something of the feeling of a Renaissance after more than a quarter century of ownership by the defense-industry giant Raytheon Corp. The venerable Hawker line- as well- received its due – assured by the new name for these old corporately held hangar-mates: Hawker Beechcraft.
Led by Canada’s Onyx- the same investment group that purchased the Boeing Wichita operation a couple of years earlier- the new owners signaled their faith in the company’s fundamentals by keeping on the senior management- including Jim Schuster- the last president Raytheon brought to spark some added profitability and salability to the old Raytheon Aircraft Co.
With a modernization of the piston lines largely accomplished and significant improvements to the King Air line- the new company has the low end of business aviation well covered. And with the company’s expanding Hawker line (with the 750 and 900 upcoming)- the Hawker 1000 finally delivering and the Premier I a solid performer- Hawker Beechcraft looks as competitive as it has in years.
And with the hint of more new modern through-and-through products- this new name with a long heritage could finally be on its way to being known more for the innovation of new products replacing the models known as much for their longevity as their competitiveness.
Eclipse works to get its legs
So far the VLJ revolution is a little short of blotting out the sun as some shrill alarmists have worried. But we did get an Eclipse or two out the door as Eclipse Aviation began to deliver its class-catalyst Eclipse 500- even as a change in avionics suppliers set back putting the diminutive twin jet out in numbers forecast by the company.
By the end of 2007- Eclipse claimed 104 deliveries in a year – the fastest- the company cheered- that any jet maker has ever achieved deliveries of 100 new jets of a new type.
Also- as the clock ran out on 2007- Eclipse finally received FAA approval for its new Avio NG integrated digital panel for the 500. The 105th Eclipse was on the line and the first to receive the certificated Avio NG system; Eclipse 500s previously delivered with the old Avidyne-based panel will receive a free upgrade from the factory.
Cessna: At 80 Thinking As Young As Ever
Cessna made its own contribution to the early history of the VLJ by beginning deliveries of its new Citation Mustang – a plane that’s won raves from every pilot from whom we’ve heard. And Cessna continues to work toward development of its new Large Cabin Concept Jet.
Cessna- seldom stationary in any way- made two moves in 2007 that garnered attention across the business aviation spectrum – even though the root news was well outside the corporate-flying field.
Late in the year- Cessna submitted the winning bid for bankrupt Columbia Aircraft of Bend- Oregon- in the process gaining two new aircraft models that fill upper-end vacancies in its piston-product line as well as access to composite manufacturing technologies and aircraft assembly practices that should be useful in developing the Next Generation Piston line first shown at Oshkosh in 2006. Unlike the NGP concept – a high-wing concept – the Columbia 350 and Columbia 400 are low-wing designs- the first low-wing piston singles ever to wear the Cessna badge.
Even farther down the product pole- Cessna launched and took nearly 900 orders for a new Light Sport Aircraft dubbed the 162 SkyCatcher. Unveiled in prototype form on the opening day of the EAA AirVenture Oshkosh 2007- the diminutive two-place high-wing is Cessna’s move to provide a two-place solution to its Cessna Pilot Centers and other flight schools- many of which have clamored for a way to lower costs below what’s possible using new-generation 172 Skyhawks.
Interestingly- back in the mid-1990s- when Cessna was planning its return to the piston-single market- the two-place trainer was not on the wish list of larger flight schools; instead- they wanted four-seaters so a second- observing student could ride with a flying student.
Adam: the next VLJ player?
Adam Aircraft changed management in the latter half of 2007 and the focus of the new team is to establish the production process for delivering on the formidable backlog of Adam A500 piston twins and- after winning certification by the end of this year- for the A700 VLJ.
Founder Rick Adam remains chairman and holds several board seats at the company. But that the company remains short of its goal for certifying- making and delivering its innovative composite VLJ is not a surprise. That job now is in the hands of Duncan Koerbel- the new president- and John Wolf- the new chairman and CEO – both executives with excellent production and manufacturing credentials. The focus on the right new people to solve that problem shows a seriousness that should translate into improved production of both of the company’s aircraft.
Success with efficient manufacturing and profitability should help pave the way for a rumored A1000- a new larger composite jet for which new larger curing ovens won’t be needed since the company has already installed them for use on the current product line.
Meanwhile in 2007- the company also flew two conformal prototypes with a third on the way this year. Adam also received Type Inspection Authorization from the FAA- a major accomplishment that allows testing to go toward certification. The company even completed its environmental testing in the cold chamber at Eglin Air Force Base in Florida. A busy year- then- at Adam.
Chartering the Future
Among the customers most anxious to receive some of those new VLJs- DayJet in September flew its first revenue flight of its new on-demand- per-seat air-taxi service using its new Eclipse 500s. Already expanding its reach- DayJet previously won FAA approval for the first all-digital aircraft management and flight-dispatch system. Elsewhere- another contender in the new game of VLJ-based charter flying- Pogo amended its initial public stock offering with more information about its business plan. After winning FAA and DoT approvals by the end of this year- Pogo expects to launch its service in the first quarter of 2009 with its initial pool of Eclipse 500s. That fleet- the company said- will total 25 by the end of that year and grow to as large as 115 by year-end 2011.
It looks like business aviation’s newest niche should within the same timeframe start to show whether it has long-term viability- given that the mere presence of DayJet and some other small new-style charter services are reportedly already driving down prices.
Aerion: Leading in speeding up BizAv
Catch them if you can: In the race to field the world’s first Supersonic Business Jet- Aerion edged it way closer to Mach speed when it began accepting letters of intent – and hefty $250-000 deposits – for its SSBJ. And the Dubai Air Show in November proved a fertile field for Aerion after snagging more than 20 commitments for its eight-to-12-passenger bullet.
The Aerion approach differs from other approaches to solving the sonic boom problem by designing an aircraft capable of Mach 1.6 and making a reduced boom- or flying Mach 0.99 – with no boom – at fuel numbers that are competitive with today’s sub-sonic jets of the same size. With formal program launch expected in the second quarter of next year- first flight in the same period of 2012- and entry into use by the close of 2014- getting supersonic will be the slowest part of the process. But with more than $5 million worth of client confidence in the bank- Aerion has shown progress no other SSBJ program has established.
Now- Aerion needs still to find a production partner- complete the systems design work yet undone- build- test and certificate. The $2.3 billion in expected development costs are expected to be shared by its manufacturing partners.
There’s always more…
As appealing as the idea is for a month-by-month- high-point-by-high-point look back- you would be reading it for weeks – but here are some tops of the icebergs: Further FBO consolidation marked 2007; Synthetic and enhanced vision systems continued to proliferate; Avionics systems evolved to take better advantage of both; WAAS use expanded and the LPV GPS-only approach began to show its promise; Fractional programs grew and their shared-ownership idea expanded; The era of the personal jet edged closer to reality; The world saw the first fly-by-wire business jet in the Falcon 7X… Where does it all end? For last year- right here. But for 2008- well- check with us in early 2009.