NBAA Convention News

Good times are back, but trouble lurks

 - November 13, 2006, 5:42 AM

More than five years after the 9/11 attacks, not only has the worldwide aerospace industry rebounded, in many cases it has soared far beyond pre-2001 levels, according to the latest industry figures. But like jealous siblings, not everyone is completely happy that the balance of prosperity across the segments within aerospace is skewed in the favor of business aviation.

Statistics compiled by the Aerospace Industries Association (AIA) show that the battering the aerospace industry sustained after the terror attacks has given way to a strong rebound in the years since then, and especially for the business aviation sector. Bizjet deliveries are up nearly 30 percent this year, according to the General Aviation Manufacturers Association (GAMA).

But just as impressive has been the turnaround in the airline sector. Airliner sales plummeted after 9/11, falling to a low of just 174 in 2002. They started trending upward in 2003 and again in 2004, and then skyrocketed last year to a remarkable 1,004 orders placed. Now, with fuel prices easing and passenger traffic approaching historic levels, analysts are predicting a strong swing toward the positive for the world’s airlines.

AIA president and CEO John Douglass said the turnaround has implications that extend beyond pure economics. “The airline industry’s recovery is a reflection of the strong will of the American people, who refused to let terrorists prevail,” he said. “As we healed as a nation, we decided that returning to normal activities like traveling was a way to show the terrorists they would not change our way of life.”

While there certainly is a grain of truth to that sentiment, the current boom in the business jet market can be attributed in part to a desire by some to avoid the airlines at all costs. Convenience is a factor driving those with the means toward private jet travel, but concerns over security rank high on the list as well.

In the first half of this year, shipments of general aviation airplanes totaled 1,843, a 19.1-percent increase over the same period last year, with industry billings rising 34.9 percent to $8.8 billion. “These are the highest recorded billings for the first half of a year in general aviation’s history,” said Pete Bunce, GAMA’s president and CEO. “With our manufacturers’ current backlog, we are confident that this trend will continue throughout the remainder of 2006.”

The same trend that is causing business aviation to siphon off some airline passengers is now leading to feelings of enmity from airline camps, some warn. Jack Pelton, chairman, president and CEO of Cessna and GAMA’s chairman, said recently that even though the airlines are experiencing a recovery, they are attempting to push an additional $2 billion to $3 billion of costs onto general aviation. “As delays at hub airports increase and the airlines continue to shrink their route systems, Americans will continue to rely more heavily on general aviation,” Pelton said. “Now more than ever, the airlines are viewing GA as a threat and we believe this is one of the very reasons for their push toward imposing user fees.”