BUSINESS AVIATION REVIEW 2002

Dave Higdon | 1st January 2003

Dave Higdon

Dave Higdon writes about aviation from his base in Wichita Kansas. During three decades in...
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Logic defying convention attendances mask an undercurrent of an industry struggle and uncertainty in 2002.

When you live with a front-row seat on the business aviation community- when you fly for your work and work to fly- a certain sensitivity develops regarding the world outside the office window. In this town (Wichita)- the self-described Air Capital of the World- the view varied greatly throughout 2002 – some of it good- some of it bad- some of it hard to believe.

Lest my point be misconstrued- let me drive it home right now: 2002 goes down as a year gratefully gone and not likely lamented by many in our community.

You may not see it from the cockpit seat or the aft cabin- but the past two years brought plenty of pain and struggle to the companies that support business aviation- in large part due to declines among the mainstream customers that form the customer base for the aviation firms.

On the up side- attendance at the various trade gatherings generally defied both expectation and conventional logic. Near-record crowds came out in 2002 to support their segments at pretty much every event on the calendar. This observation applies to the convention of the Helicopter Association International that opened 2002’s events calendar in Orlando- as well as to the gathering of the whole community for the National Business Aviation Association convention that closed the season – again- in Orlando.

Nevertheless- an undercurrent of uncertainty and concern ran deep behind the scenes of these and other events- again products of the uncertainties of the sagging stock market- rising unemployment- swelling inventories and declining sales. Those emotions permeated companies as diverse as business aviation itself- from the engine and airframe makers to the suppliers of avionics- hardware- and support systems.

Some of that uncertainty originated from the creation of a new agency within the Department of Transportation- the Transportation Security Administration. Between the TSA- Secret Service- FBI and National Security Administration- pressure to curtail private aircraft operations and restrict vast segments of airspace came hard and heavy – sometimes heavy handed and illogically.

The immature perception that private planes posed a risk comparable to a jumbo jet spurred these pressures to regulate and restrict which- in turn- gave considerable pause to many potential buyers of business aircraft. 'Why-' many wondered- 'invest in a time-saving machine if we’ll be unable to enjoy its advantages.'

Fortunately- a changing of the guard at the TSA helped mollify those concerns in many quarters of the buying public- but those who decided to move ahead proved too few to offset the impact on sales of a stagnating economy and an arguably incorrect perception that the United States wallows in a recession.

So an aircraft sales slump reached into virtually every corner of business aviation- touching literally every business from the sellers of top-end new hardware to the resellers of top-condition used aircraft for sale. Layoffs- furloughs- entire line stoppages resulted.

And that’s where the view here in The Air Capital may come closest to representative of an entire industry. More than 5-000 local aircraft workers moved out of aviation and into some other form of work – if- indeed- they’ve found work at all.

Bombardier suspended production of the entire Learjet line- while proceeding with development of its new aircraft. Nearly 1-500 workers are out of work from this one company- about 930 permanently laid off- another 500 on furlough until Montreal decides to resume Learjet production.

By comparison- Raytheon Aircraft has shed about 2-200 in the past 12 months- and in early December announced plans to move an annual two-week shutdown to January – from its traditional spot in July.

Cessna- the longest to hold out against pressure to cut production and jobs- cut 800 positions last fall- half through voluntary departures- half involuntarily. Then- three weeks ahead of Christmas Eve- word came out of Cessna that another 1-500 workers are headed for the street in the early months of this year. Cessna had previously acknowledged that 500 were due to go in the early months of 2003- making the 1-000 increase somewhat more startling.

Next we come to Boeing Wichita- maker of the entire Boeing Business Jet fuselage. Kansas’ largest private employer saw its roles drop about 5-000 workers in the past 18 months- the bulk of them due to the worst slump in the airline business seen in decades.

Yet- though Wichita caught more flack from the damaged aviation economy than many other corners- it was by no means alone – nor was new-airplane work the only segment struggling. Savannah- Oklahoma City- Vero Beech- Montreal- Downsview – almost anywhere you looked- business aviation companies struggled- even if they didn’t suffer outright.

Gulfstream- for example- made some changes and moved some work; New Piper scaled down its production plans; Dassault looked ahead to another flat year. Advanced orders declined- backlogs shrank- deliveries declined.

Used aircraft sellers also took their hits- while many shops found success in refurbishing and upgrading operators’ existing wings. All was not totally bleak though: The best salve for a savage 2002 would come from a sense of recovery from the infection of economic illness.

But to paraphrase one industry executive- the industry hasn’t so much as bottomed out and headed for a rebound as it has plateaued and flattened like so much soft ‘Silly Putty’ – that is- it looks like we’re apt to be down here longer than anticipated.

Happy New Year!

It can’t get much worse than 2002 but expectations of better await the arrival of 2004. Perhaps the best aspects of 2002 came in safety and security – and in knowing the year is officially over- done with- kaput.

For example- the chorus of voices urging a clamp down on business and personal aircraft lost some of their volume when the new head of the Transportation Security Administration- retired Coast Guard Adm. James Loy- embraced a call for a national airport watch program. The Aircraft Owners & Pilots Association created a handbook- training video- posters and other materials- while the TSA funded a national alert phone line: 1-800-GA-SECURE.

Business pilots can obtain the guidelines AOPA published by contacting the association directly www.aopa.org; or through the site of the National Business Aviation Association; www.nbaa.org.

The TSA also brought some sighs of relief to the business aviation community by moving toward security rules for charter operators that seem to recognize that the air-taxi business differs greatly from the commercial carriage of passengers. Another bullet dodged and another issue resolved.

NBAA weighed in with its own new membership committee devoted to security issues and also published a series of documents and reports on best practices for corporate aircraft operators. For those in need- the information is available through the NBAA web site cited above.

The National Air Transportation Association also weighed in- helping influence the direction TSA’s charter rules took- and further enlightening members of Congress and the security administration – as well as keeping the association’s members well informed about the need to stay well informed.

All in all- 2002 brought to an end a great deal of uncertainty and saw a significant reduction in the questions and concerns that marked much of the year.

Unfortunately- a few U.S. airports still remain largely off limits to the type of traffic taken for granted 16 months ago- and the number and type of Temporary Flight Restrictions remain a concern- still. Nevertheless- the Federal Aviation Administration- under the management of new boss Marion Blakey- and with the cooperation of the TSA and other agencies- worked toward resolving the communications gap that made for too much guesswork in the prior months.

Flight Service Station personnel- for example- should soon all have access to graphical depictions of active TFRs. Next up is to make the same information available to pilots for viewing on their computer screens.

Finally- the FAA also resolved the issue of identifying legal pilots by enacting a rule that requires pilots to carry a government-issued photo identification card – and by making the common state drivers license a legal document for that purpose. For pilots in every state but New Jersey- the issue of positive identification should be closed – at least for now.

Short-term programs

No one expects the long-term future of business aviation to be permanently dimmed by the collaborative impact of the dual struggles against economic malaise and radical terrorism. But in the short term- the picture may remain unexpectedly dim. As evidenced by the continued averse reaction of planemakers- the bottom may be here…or only near.

Business aviation forecasts of a few months ago predicted a resumption of growth in the 2004 to 2005 timeframe. But there is tacit acknowledgement that the forecasters based those prognoses on survey responses that expected a business environment that remained flat through the next couple of years.

With signs that advanced sales remain bogged – and even showing signs of further decline – the clearing skies may be a bit later coming than hoped. That said- however- the planemakers and suppliers continue to develop exciting new designs and features that should make resistance to upgrading difficult to sustain.

And the advent of an entirely new realm of light jets in the past year also bodes well for the future. Cessna’s Citation Mustang- for example- and Adam Aircraft’s A700 jet- both won surprisingly strong responses when introduced in September and October respectively.

Despite the setback with the Williams EJ22 engine Eclipse Aviation remains a bright light and the Eclipse 500 a harbinger of even lighter jets in the latter half of the decade.

Sure- 2002 proved hard on our community- but business aviation long ago proved its tenacity. As with past bad times- these current times can’t go on indefinitely. With further distance from the ordeals of the past year and a bit more confidence in the economy- be prepared to clear a path when the rebound eventually begins. Once again- business aviation will show there’s nowhere to go but up.