Anyone paying more than a passing attention to recent times might find themselves mightily impressed by the performance of the community of companies that manufacture business-turbine aircraft. At a time when so many important indicators hint at economic weakness and tough times for many businesses- planemakers supplying business jets and propjets find themselves in a situation one might call countercyclical. ...
Ten Questions For Pete Bunce:
Reflections on an Industry’s Boom Times.
Anyone paying more than a passing attention to recent times might find themselves mightily impressed by the performance of the community of companies that manufacture business-turbine aircraft. At a time when so many important indicators hint at economic weakness and tough times for many businesses- planemakers supplying business jets and propjets find themselves in a situation one might call countercyclical. New-product development continues unabated- backlogs bulge- new orders carry delivery promises many years into the future – in some cases- five and even six.
Conversely airlines- the industry arguably most responsible for converting their highest-dollar clients into business aviation customers- face some of their toughest times in decades. Caught in the lurch of spiraling fuel prices- a fragile hub-and-spoke system and aging fleets- the nation’s legacy carriers act as if they’re unaware that this migration to private aircraft from common carrier stems at least in part from their own treatment of their most-lucrative customers – the business-class- first-class and walk-up- full-fare-paying passengers.
Rising fares- new surcharges- lost bags- flight delays and outright cancellations mixed with declining service mount up in the minds- emotions and bottom lines of people dependent on on-time performance.
According to a recently published report- upward of 41 million people decided against taking the airlines last year- opting either for an alternative form of transport or eschewing travel altogether. And many of them are the people who’ve opted to stop betting the most per mile on a bad-odds bet that they- and their trappings- will arrive as promised when promised – and get them to the next stop with similar reliability- and then back again.
Such a shift showed up in the ranks of piston-airplane buyers earlier in this decade- helping propel the sales of new Cirrus- Columbia- Cessna and Beech models – models whose buyers often fed the step-up market by snagging the next rung on the aviation ladder- and- sometimes- the next- until they- too- were turbine operators.
The piston market appears the only level of general aviation currently suffering under the uncertainties of the economy. Indeed- the boom in turbine aircraft won’t continue at this level forever – at least- according to a number of forecasts.
The good news is that those forecasts anticipate that when the boom cycle flattens the decline will be no worse than the old record levels of a few years ago. But aside from maintaining a vibrant market- challenges still loom in the short term.
The continuing political and legislative battle for a full renewal of FAA’s spending authority and revenue stream remains in question. Recently- we’ve heard new propaganda from the opponents of the system favored by virtually every concerned corner but two. In fact- convincing Congress to shift $1.8 billion in tax burden seems to be the airline industry’s only strategy for dealing with its own all-too-visible problems.
Additionally- there are issues regarding modernization of the nation’s air-traffic control system- of the hardware underpinnings- of ADS-B- NextGen- and the fractured state of the human controllers charged with making the best of a flawed system.
Does any of this sound encouraging? Well- take heart. Encouraging news remains plentiful- and attitudes strong for prevailing on these issues and- in turn- in keeping business and general aviation free of the stifling nature of flying found almost everywhere else outside North America. You only have to put ten questions to Pete Bunce for reinforcement.
Bunce- comfortably ensconced in his role as president of the General Aviation Manufacturers Association- has become as familiar a face at major aviation events as any of his predecessors – people such as Ed Stimpson- former ambassador to ICAO- and Ed Bolen- now head of NBAA. Unlike some of Washington’s other industry-specific lobbyists- however- many of the times you spot Bunce at events like Sun ‘n Fun or AirVenture in Oshkosh- he’s wandering the exhibits and displays scoping out new aviation gear as one of the nation’s active general aviation pilots.
“Out here among the rest of the pilots is a great place to feel the energy and enthusiasm in general aviation-” he commented during a brief encounter at Sun ‘n Fun. By his tone and body language- Bunce’s enthusiasm for aviation comes through as something far more than merely a job-required persona. Since then- Bunce agreed to spend some time with us addressing the market- the state of manufacturing- the political stalemate in Capitol Hill - and- of course the overall state of general aviation.
WAS: Just a couple of weeks back- the Senate shelved efforts to even vote on the revised FAA reauthorization – even after negotiators resolved the issue of the $25 IFR filing fee originally insisted on by Sens. Jay Rockefeller (D-W.Va.) and Trent Lott (R-Miss.- Ret.). With summer recess looming and the national-election campaigns in full swing- is this the likely end of hope for a permanent resolution in this Congress?
Bunce: The legislative clock is certainly ticking- but there's still time to pass an FAA reauthorization bill if Senate leadership can come to an agreement over the non-aviation issues in the bill that prevented it from passing.
I hope that there will be a renewed effort to do that before the August recess. The bill itself is bi-partisan and I am confident that the House and Senate can work out any differences in conference in order to get a bill to the President this year.
WAS: Even more recently we’ve seen renewed efforts by the Air Transport Association and its members to pin on general aviation the burden of airline delays. Yet equally recent studies and reports again refute that contention. GAMA- NBAA- AOPA- EAA and NATA all have excelled at inspiring action from their constituents – the choir clearly knows the right song.
But is our community doing enough in the way of outreach to correct the record in the minds of people outside the church of general aviation? Should- or can the GA community do more to enlighten those outside of our community?
Bunce: The airline’s hub and spoke system leads to congestion and delays- not general aviation. People get that - I don't think the average American blames airline delays on general aviation- I think they blame it on the airline's over-scheduling- which they should. When you're stuck on the tarmac at JFK and you look out the window- you will see other commercial airplanes- not general aviation.
Consequently- I think the best thing we can do is present the facts to the media and to Congress. With that said- however- I do believe that we in general aviation can do a better job in telling the story of the economic benefits of GA- particularly to the communities that surround our general aviation airports. Access to airports and airspace is our life-blood and making our communities and neighbors aware of the commerce our GA airports generate is extremely important.
WAS: Beyond working on general support- should that message also inform that same audience of the extensive public good that comes from general aviation – public good not supported by the common-carrier community?
Bunce: It should. First and foremost- general aviation provides air service to many communities the airlines do not. In other communities- GA supplements limited airline service- particularly when passenger volume is low.
General aviation also strongly supports many charitable air transportation organizations such as Mercy Medical Airlift- Angel Flight- Corporate Angel Network and Veterans Airlift Command- to name just a few. Each of these tremendous organizations provide free flights to hospitals and specialty medical centers for tens of thousands of Americans every year- including recently returned Iraq and Afghanistan war veterans. It is hard to overstate the importance of these networks and the contribution they make to the health of those in need.
WAS: Turning to the FAA’s management and philosophy in recent years- more and more agency insiders tell a tale of an agency pursuing a hidden agenda- an agenda that tarnishes the labor relations and performance of ATC- engages in slow-motion progress toward improving conditions to help on-time performance – with- in the end- the goal of making the agency so impotent that privatizing ATC looks like a better solution.
The administration’s near-perfect record of drawing in airline-industry executives for high-level agency positions helps reinforce that perception.
Acting Administrator Bobby Sturgell’s credentials aside- from the perspective of those who work closely with the agency- does it seem at times that the tilt toward the commercial community to fill executive slots warrants more balance with talent from the general aviation ranks?
Bunce: What I believe is important is that there are aviators and aviation industry professionals in key leadership positions within the FAA and Department of Transportation. Whether those aviators and professionals are from the airlines- cargo- the military- business- or personal piston operations- their roots are generally from GA and therefore they have an understanding of that significant portion of the industry.
There have been some fantastic servants with deep general aviation roots in the agency over the past several decades going as far back as 1981 when then GAMA chairman Lynn Helms of Piper led the agency as Administrator. Another good friend of GA is Steve Brown- who headed the air traffic organization after having worked for AOPA. GAMA’s former President and CEO Ed Stimpson also went to work for the FAA as ambassador to ICAO after retiring in the 1990s.
I think it is fair to say that the FAA continues to reach out to industry to get the necessary expertise it needs to address modernization and how the agency works - be it from the airline side or from general aviation. As an aviation industry- we continue to encourage the FAA to bring in expertise from the aviation community both directly and by working with industry representatives.
WAS: Turning more toward the industrial side of general aviation- it has long been considered a truism that there is no market more international than aviation – but with the U.S. providing the overwhelming majority of the market and the lift- thanks to the superior quality of American design and workmanship.
But these days we’re seeing more and more of American industrial capability outsourced to foreign plants with some North American companies turning more toward the assemble-and-integrate process.
Is a decline in American aviation production capability an inevitability in order to meet the conditions of international buyers?
Bunce: Aviation- by its very nature- is an international industry and this very much includes general aviation. GAMA has member companies from across the globe that are integral parts of this dynamic industry. Many are global competitors and many others supply to multiple airframe and engine manufacturers.
Competition drives innovation and necessitates manufacturing and performance efficiencies that make all of our companies better. With the fantastic quality and capabilities of the products that our members are producing- I think it would be hard to characterize any segment of aviation manufacturing as being in decline.
WAS: Somehow- the general aviation community managed to progress through another year without suffering under additional security mandates – yet we periodically hear how the Department of Homeland Security and Transportation Security Administration continue to look for ways to “improve” security at airports dominated by private aircraft users.
What do you expect to see in the next 12 months coming from the TSA – and is more really needed?
Bunce: There is certainly more attention now being paid to general aviation from the Department of Homeland Security than we have seen over the past year. We have gotten to the point where the initial post-9/11 security protocols have been put into place and DHS/TSA and other agencies are able to take a more pragmatic and strategic view of transportation security based on risk analysis of our industry.
As the TSA has stated- they are especially interested in cross-border transportation that can involve either persons or goods being brought into the country. We saw the Customs and Border Protection (CBP) Notice of Proposed Rulemaking (NPRM) late last fall- with a final rule currently scheduled to be published later this year. The CBP rule will have an impact on how we do business in general aviation. Similarly- there are domestic security programs under development and testing including the Secure FBO Program which is going through testing at Anchorage- Alaska; and Shannon- Ireland. The program is a public-private partnership that will allow fixed base operators to check passenger and crew identification onboard general aviation aircraft.
WAS: Schools continue to recruit- academic advisors still cite the potential and young adults are still lining up to train for pilot and technician jobs – and yet- we still hear that the numbers won’t support the growth potential forecasters predict- a dilemma with the potential to impact aviation across the spectrum- commercial and private.
Is the country approaching a moment like that of the late 1930s when the Roosevelt Administration helped launch the Civilian Pilot Training Corps to provide a pool of pilots in the event of war? Does the country need an equivalent to the CPTC to assure the economic health of both the aviation community and the nation at large by training pilots and technicians?
Bunce: I do not think that the aviation industry is at the point you describe in your question- but our industry is addressing the need for a highly skilled work force on several levels. Many of our manufacturers and sister GA associations have their own initiatives involving government and academia partnerships to attract students to careers in aviation – whether it is flying- engineering or maintenance.
The U.S. government is also taking notice. One of the best examples of this is the Interagency Aerospace Revitalization Task Force- the result of the work of Congressman Vern Ehlers of Michigan and the Department of Labor. This task force is emphasizing cooperation among government- industry and academia to tackle this issue and has already put forth a blueprint to put strategies into action.
I believe there is also a strong need to reform U.S. immigration laws to allow foreign students that attend our colleges and universities- and who often intern at our aerospace manufacturing companies- to remain in the States for employment after graduation.
WAS: The current state of the economy seems to have most impacted the sale of piston general aviation and light sport aircraft- based on GAMA’s most-recent reports. Conversely- business turbine sales seem unaffected and backlogs continue to grow beyond even the levels of a year ago.
Is the business aviation industry approaching a point of diminishing returns – where new plane orders will slow simply because of lead time?
Bunce: Our industry has experienced an impressive order rate over the past several years to include the first half of 2008- where our members continued to build backlogs as evidenced by the numerous order announcements at EBACE this past May. At the end of last year- our confirmed backlog exceeded $58 billion.
Our members continue to take new orders for delivery several years into the future while they increase production rates to meet customer demand. There is always a delicate balancing act between rapid delivery time and backlog. A healthy backlog provides stability for the supplier base and acts to smooth out the peaks and valleys of economic cycles.
Several of our member companies will also have clean-sheet business aircraft coming on-line in the years ahead to include the Cessna Citation Columbus- Embraer Legacy 450/500- Gulfstream 650- and the Lear 85- while other business jet manufacturers increase their offerings with advanced derivatives of already successful products.
Additionally- single engine very light jets from Cirrus- Diamond- Eclipse and Piper are scheduled to make their production debut at the beginning of the next decade. In the turboprop arena- we see fuel considerations continuing to spur production and innovation of these important business tools.
We know that new aircraft introductions stimulate demand- which- when coupled with strong international orders- should provide for exciting times in our industry going forward.
WAS: While fuel costs have soared- along with other unavoidable items like lubricants- food from the caterers and the costs of credit- is there anything in the economic outlooks that makes GAMA members fearful of something worse?
Bunce: Our industry has been through a number of peaks and valleys before and we have learned to take actions that provide degrees of insulation from cyclic economic cycles- while still allowing for growth and expansion. Aggressive marketing outside of North America is one way to diversify the industry between regions of varying economic growth.
I think our manufacturers are very cognizant of factors that could derail overall growth in our industry and are taking measures to mitigate or prevent those things from having a negative impact. Whether it be researching alternative fuels- providing expertise to spur on NextGen and SESAR- building more fuel efficient aircraft- offering advanced avionics to capitalize immediately upon any and all air traffic modernization efforts across the globe- or growing the skilled workforce- GA manufacturers are devoting tremendous resources to sustain our industry growth over the long haul.
WAS: Summer air-show season is upon us and we know you’ll be among the throngs browsing the aisles of planes and products at EAA’s AirVenture in Oshkosh in late July.
Is there a plane or product that Pilot Pete Bunce will specifically be shopping for this year – and- if so- what does Pilot Bunce need to fill out his flight bag?
Bunce: While I could only wish for the resources to buy a new aircraft annually- or in many cases a classic antique- each time I attend what I consider the greatest aviation event on the planet- I get lots of ideas. This year I'll be spending more time over at EAA's seaplane base. I picked up my seaplane rating last November and that proved to be some of the most fun flying I have ever done.
I am also excited about seeing virtually all our manufacturers at AirVenture- as GAMA staff helps showcase them to government officials. Finally- I will look with great pride as I view the tremendous support GAMA members provide to EAA's Young Eagles program. This should be a great AirVenture and I look forward to seeing you there.
WAS: Thanks- as always- for your time and candor!
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