During a visit with the head of the General Aviation Manufacturers Association (GAMA) a year ago- the dominant industry conversation seemed focused on the community’s continued strength in the face of signs of an economic decline.When we last talked with Pete Bunce- president- GAMA- in June 2008- airlines were already feeling the sting of a public starting to hunker down and spend less when a huge spike in crude oil ...
10 Questions For Pete Bunce
From boom times to down times- GA’s OEMs persevere
During a visit with the head of the General Aviation Manufacturers Association (GAMA) a year ago- the dominant industry conversation seemed focused on the community’s continued strength in the face of signs of an economic decline.
When we last talked with Pete Bunce- president- GAMA- in June 2008- airlines were already feeling the sting of a public starting to hunker down and spend less when a huge spike in crude oil prices thwarted business plans and the profits projected. Private aviation also felt the pain of overpriced petroleum- as shown in steep- rapid declines in use as the year wore on. Pre-owned inventory started stacking up in the sale listings- pushing the percentage of aircraft for sale well into the teens – and that- in turn- sent values plummeting- and created an additional drag on market action.
By the end of the third quarter- planemakers and the vendors who supply and support new-aircraft production found their huge backlogs in peril. Order holders started deferring their acceptance dates- or canceling their order outright- putting at risk their deposits and progress payments.
Then- before year’s end- another challenge arose for private aviation that grew out of the image of three long-time corporate aircraft operators sitting at a table during a House of Representatives hearing into the requests for financial help by Detroit’s Big Three automakers. The image of a little-known lawmaker shaming the powerful executives of Chrysler- Ford and General Motors for flying three different large-cabin business jets between the same two airports precipitated a public-relations battle that our community continues to fight today.
Bunce and GAMA have been in the eye of these storms. GAMA members- in the meantime- reacted to the market decline by dramatically reducing production targets or shutting down assembly altogether. Collectively- in the process- the industry shed thousands of workers in painful reductions. Some announced suspension or delay of developmental programs with great potential.
And the worst thing is that there’s no credible way to know for sure that the industry is anywhere near the bottom of this slump – which so far still comes in short of hitting the community as hard as the two years after the terror attacks of September 2001. “Thank goodness-” one Wichita aircraft company executive observed recently- “for small favors. Here’s hoping we recover as quickly – but no one’s holding their breath.”
Adding to the strain on private aviation is the continued slow progress in Congress on a full reauthorization of the Federal Aviation Administration and all the issues attached: The fight over excise taxes versus user fees; the planned shift to ADS-B and GPS to support the Air Traffic Service’s surveillance needs; and the transition to a Next Generation ATC system that fully exploits the promise of these new technologies.
A new administrator to head the FAA has now been confirmed and is on duty. The Transportation Security Administration however- lacks even a nominee for administrator and this bureaucracy remains a troubling factor in general aviation as it continues to rule by directorate while mulling the near-universal rejection of a security proposal for aircraft weighing more than 12-500 pounds published last October. And the general aviation community at-large still faces the problem of a gradual- years-long decline in the pilot population.
It seems that at every turn- forces align to undermine or refute the value- utility and contribution of private aircraft in the hands of individuals and businesses- alike. It’s in this environment that we caught Bunce- to talk about the industry’s resilience- its ambitions- its public image and the future of an industry and a community under siege from several directions.
In recent weeks Bunce has worked closely and visibly with other alphabet organizations to help counter some of the insanity in the political and public challenges- while in his own organization- he’s worked with his members as they seek to find a point of equilibrium from which they can rebuild once the economy starts to recover. To slightly understate things- Bunce is working in a challenging environment.
WAS: In the year since you last talked to us- the industry seems to have rallied around some new threats- while continuing to wrestle against some old challenges. Starting with some of the old- familiar challenges- can you bring us up to date on GAMA’s activities regarding the latest FAA reauthorization proposal and the taxes proposed for GA operations?
Bunce: In February- the House Aviation Subcommittee introduced their version of the FAA reauthorization bill and passed it through the committee on March 5. The Transportation and Infrastructure bill (H.R. 915) was then considered by the full House before the Memorial Day recess and passed.
H.R. 915 is essentially the same bill that passed the House in 2007. Notably- it does not contain a user fee for general aviation. Rather- the committee recommended that the House Ways and Means Committee (which has jurisdiction over aviation taxes) adopt the same increase in the jet fuel tax that passed the House in 2007. We are pleased that the Ways and Means Committee did not change the funding agreement that Congress reached on fuel taxes last year. H.R. 915 does include provisions on repair stations which would undermine a safety agreement between the U.S. and the European Union.
This is a cause of great concern to industry because it will hurt safety cooperation between the FAA and the European Aviation Safety Agency and have a negative impact on U.S. jobs.
The Senate Commerce Committee is working on its FAA reauthorization bill and we were hoping to see a draft introduced by late June. We believe the Senate will likely back a compromise reached last summer that raised the fuel tax- but did not introduce user fees. The Committee has indicated that it wants to write a non-controversial bill that will pass with bi-partisan support.
GAMA feels it is critical that an FAA reauthorization is passed this year- albeit without the repair station provisions- because FAA needs clear direction from Congress on safety and air traffic modernization issues.
WAS: The nation got a new president on January 20th- and with that change many new faces in all the familiar agencies. Among those faces in new roles- Transportation Secretary Ray LaHood was already a familiar face to aviation insiders working Capitol Hill from his time as a member of the House of Representatives. What is GAMA’s view of Secretary LaHood’s plans for DoT and the FAA?
Bunce: I have known Secretary LaHood for ten years and traveled with him several times in my previous life working with the House of Representatives. Secretary LaHood will play a critical leadership role in bringing together the many federal agencies and departments needed to formulate a detailed- executable and fiscally sound plan to modernize our nation’s air transportation system.
On Capitol Hill- he was known for his tremendous effectiveness at building consensus on both sides of the aisle to advance legislation and solve problems. This skill will be invaluable as industry and government join together to tackle the transportation challenges in front of our nation.
However- it is important to remember that aviation will compete with highways and rail for attention on the secretary’s list of priorities- so it is important that the FAA be our vocal advocate with the Department of Transportation. We believe that the new administrator- Randy Babbitt- as a pilot- will be that passionate government official who can get the aviation industry back on a growth track.
WAS: Can you tell us more of GAMA’s take on Randy Babbitt?
Bunce: We are pleased that the president and Secretary LaHood nominated- and the Senate confirmed Randy Babbitt as the new FAA administrator. Randy brings a tremendous background in aviation and the issues that are most pressing for our industry right now.
The FAA needs proper direction and the tools necessary to advance deployment of NextGen. GAMA is confident that Randy- as a pilot- can best leverage government and industry resources- which will help move the program forward so that quantifiable benefits of capacity- efficiency and safety will start to be seen.
WAS: One agency outside DoT seems bent on exerting ever-more control over general aviation- its users- owners and operators: The Transportation Security Administration. We’re familiar with GAMA’s position on the TSA’s proposed Large Aircraft Security Program. Since that proposal received arguably universal rejection- the TSA has moved forward issuing a new security directorate regarding some 330 additional airports where GA and air-carrier operations had coexisted with no security issues- again to pretty much universal opposition from the community.
How is GAMA working with other groups and the TSA to try to bring some sensibility to what many believe are its nonsensical- unjustified actions?
Bunce: The TSA needs to step-back and undertake a comprehensive review of the agency's approach to regulating general aviation. There are a lot of new- uncoordinated efforts underway which is wasting both agency and industry resources. This needs to be addressed going forward with some basic ideas like the pilot becoming the 'secure' link of the general aviation security environment.
Looking at the LASP- the TSA is communicating to the industry that it will re-publish a second NPRM based on the 7-000 comments and follow-on meetings it has held this year. We continue to talk to members of Congress about this important rulemaking.
They are providing direction to the agency to remain engaged with us going forward- to ensure that a practical program is developed that can be implemented. Just last month- however- GAMA was pleased to learn that the Mica-Petri-Ehlers-Graves Amendment to H.R. 2200- the TSA Authorization Act- was passed. The amendment limits the TSA's ability to use security directives to circumvent the normal rulemaking process without consideration of operational impacts or economic burdens.
While the amendment still leaves the TSA plenty of latitude to respond to imminent threats- it brings a common-sense approach to the agency’s use of security directives. We are hopeful that the Senate follows suit with similar legislation.
WAS: The questions regarding implementation of ADS-B and plans for NextGen seem to continue to stack up faster than answers. What- in GAMA’s view- needs to be done to move forward with these programs in a way that provides benefits to GA equitable to the costs of equipping for the new systems?
Bunce: I applaud the direction the FAA has taken on the ADS-B program within the development of NextGen. It is a well thought-out program that addresses requirements- operations- procedures and technology in a very direct way and it is being developed with industry at the table. This is quite different from other programs and we keep telling the FAA that other NextGen programs should be modeled after the work they are doing with ADS-B.
However- existing programs such as data communications is still presenting us with more questions than answers- primarily due to the lack of FAA engagement with industry. We have talked to the FAA about the opportunities that the agency has through forums such as RTCA and dedicated rulemaking groups. Based on these conversations- we expect the FAA to take steps later this year to enhance engagement with industry on these important activities.
There are real opportunities for developing tangible benefits from some of these NextGen equipage mandates that are scheduled for the next ten years- but they will only be realized if industry is at the table when the key strategy decisions are made.
WAS: GAMA members have caught the economic flu that’s plaguing the American economy. Can you give us an overview of the industry-wide impact of the collapse in aircraft sales?
Bunce: The most significant and painful impact has been job losses. Every single employee is considered a family member and nothing is more gut-wrenching for our industry leaders than having to announce layoffs.
Our manufacturers are dealing- first and foremost- with the severe negative effects of a worldwide economic downturn- but also with unwarranted criticism focused on the industry. As indicated by the first quarter shipment and billings figures recently released- this has led to order cancellations.
Total shipments were down over 40 percent- but I believe that we are starting to see some positive signs that we may have reached the bottom of the trough. Preliminary indicators are that the used market has reached a plateau and the credit markets may be easing. It is still too early to say definitely that we will not slip any further- but we remain vigilant- responsive and hopeful.
WAS: How can GAMA help its member companies weather the challenges they face during this economic downturn?
Bunce: While our members are willing and ready to take the steps necessary to keep our industry viable and strong- GAMA is working to ensure that we have partners in the new Congress and Administration who consider sound regulations and policies that focus on measures to help manufacturers and others in the aviation industry retain jobs and encourage recovery.
If we work together in this government-industry partnership- we will be well-positioned to ride out this economic storm and emerge healthy with renewed momentum to grow this industry once again. Additionally- every GAMA member company has a representative on our board of directors. Consequently- I am blessed with a large board of very successful decision-makers who continually impress me with their willingness to put competitiveness aside for the good of the entire industry. They are always willing to engage legislators- regulators- policymakers- and the media to advance our global industry.
WAS: What bright spots do you see in where the aircraft manufacturing industry sits at the moment?
Bunce: Our continued investment in research and development of new products and new fuels- along with an expansion of our service facilities bode very well for the future of general aviation. Additionally- our unwavering commitment to NextGen and SESAR in Europe is indicative of our vision for robust growth of air traffic- and increased demand for our products in the years ahead.
Each of the established business jet manufacturers has at least one new model in development. Our engine manufacturers in both the turbine and piston markets are developing powerplants that will burn new fuels with greater efficiency- thereby reducing fuel consumption and greenhouse gas emissions.
With a rash of product launches targeted for entry into service over the next five years- our manufacturers are anticipating- and looking beyond this challenging economic period. We have learned from history that investing in our own future is the best way to build our way out of tough economic times.
WAS: In your view- what would be the best tonic for the general aviation community to help it begin recovering from today’s dire business straits?
Bunce: A turn-around in the worldwide economy would by far be the biggest boon to our industry right now. As you are aware- general aviation manufacturing is one of the few remaining industries contributing positively to the U.S. balance of trade.
In 2008- our manufacturers generated $5.9 billion in new airplane export revenue- which was a nearly 28 percent increase over 2007. These exports accounted for 44 percent of the total value of U.S. manufactured general aviation airplanes in 2008. Getting back to positive sales figures here in the U.S. and around the world will get our companies back on track and our people back to work.
However- I do not want to focus on just one tonic- because we must work together to shape our recovery in this dynamic industry. Each one of us must talk proudly about the economic contribution that the general aviation industry brings to the marketplace- and tax base to every politician- policymaker- and reporter you come into contact with at the local- state and federal level.
Additionally- we must be passionate advocates for our airports- engaging our neighbors about how important our aviation infrastructure is to the vibrant fabric of a community.
WAS: You were missed at the Sun ‘n Fun Fly-In in April and we know how much you enjoy walking these events as just another pilot. With all that seems to be on your plate- are you able to find time to do some of the flying you clearly love – and if so- what’s highest on your list these days?
Bunce: Unquestionably my flying hours have suffered in the last few months with all that is happening in Washington and Europe. However- my wife and I were recently able to recharge our batteries with some backcountry flying in the Idaho mountain wilderness. It doesn’t get much better than that!
For more information about GAMA visit www.gama.aero