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Is business aviation stuck in the economic doldrums?

by Allen Howell 1. October 2010 15:14
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Over the last year, I have frequently been asked how it is going in our business. To be honest, it has been a rough ride for most of us in aviation.  These sincere questions that I get about our business and the industry we work in come from vendors, customers, friends and family.

My answer is usually something like “it feels like treading water with concrete filled boots …. but we are still above water.” Most of our peers in business aviation and many in other industries say the same things. Never have we worked so hard just to stay even or dig out of the hole.  

Two years into the toughest economic conditions I have seen in business aviation, the media reports that we are no longer in a recession.  That may be true, but progress seems to be measured in inches rather than in nautical miles.

Flight activity reports from Avinode and industry trade associations are optimistic, showing slight increases. Fortunately, businesses and individuals have not stopped flying in business and private aircraft; so, our part of the world seems to be picking up nicely in the third quarter of this year.

But when I speak with friends who are out there selling new aircraft, peers in the charter and aircraft management business, and vendors who supply our industry with fuel, aircraft, parts and support services I get different feelings about recovery. While we may be seeing an uptick in charter, ask the aircraft manufacturers in Wichita if the recession is over.  If not for government related aviation spending and international demand for new aircraft, the aircraft manufacturers would be hurting even worse than they are.

It seems that not too many businesses are buying new aircraft in the US, and the reversal of this trend could be years in the making. There is a huge inventory of used aircraft right now and the prices are lower than at any other time in the last 30 years, at least in relation to the price of new aircraft. Manufacturers are discounting new aircraft off of list price, something that was practically unheard of in this industry even as recently as three years ago.

So what is the solution, short of accepting that we will just be here in the trenches for the next few years and will have to slug our way out of the aviation recession?

I don’t know the answer, but the question is certainly worth considering by those of us who don’t want to accept that the current situation is what must be.

It seems that in the history of the United States, game changing innovation has spurred major growth. The railroads connected the country, opening up new markets.  Mass production and the automobile opened and connected the country even further, creating millions of good jobs.  And in the last few decades, technology innovation created a whole new economy.

The barrier to growth in business and private air travel seems to be price. To surmount that barrier, either more people need to attain the financial ability to take advantage of private aviation or the price has to come down. Either solution works just as well for growth in business aviation..

We can’t do much to affect the affluence of the overall population; but, we can innovatively lower the price of private aircraft travel to bring in a bigger audience.  Three decades ago, Southwest did this in the airline industry and changed the demographics of airline travelers. I don’t know that private aviation can do exactly what what Southwest did; however,  there must be a combination of solutions that, in aggregate, will change the pricing of business aviation to bring in a larger customer base. 

One thing I feel certain of is that the growth and restart of this economy, in general, and of the business aviation economy, in particular, will not come from any government program.

So, let’s not wait on the politicians for the answer. Let’s create our own recovery!

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