NATA events anchored Aviation Industry Week

 - April 2, 2007, 10:47 AM

Business flying is definitely up, and so are fuel prices. But, at least so far, aircraft operators aren’t protesting at the pump too bitterly about what they’re paying for jet-A. FBO operators who met in Las Vegas at the end of May for the annual National Air Transportation Association (NATA) convention and Aviation and Services Suppliers Supershow (AS3) may disagree slightly on why they haven’t been assailed with angry resistance, but no one was complaining.

Other hot topics on the agenda during the Las Vegas meeting, held May 18 to 20, included “Washington update–What’s the latest on security and other general aviation issues in the eyes of legislators?” “Are the new Part 145 maintenance rules unfair to FBO repair stations?” “How many FBOs on an airport are too many?” “Are fuel brokers a boon or a bane to FBOs?” and “What does the coming of very light jets (VLJs) mean to the aircraft service industry?”

The overall event itself was a big success, attributed at least in part to the apparent, long-hoped-for economic recovery. In its second year under the auspices of Cygnus Expositions, the format of the show bears some explanation–partly because it’s still evolving and, further, because it is unusual. It starts with the name. Now known as Aviation Industry Week, the overall structure of the show encompasses three separate trade groups’ trade shows held concurrently with two associations’ annual conventions.

Just before last year’s trade show season, Cygnus, a media group, bought the rights to, first, the GSE International Expo trade show (for ground-support equipment) and then the AS3 show from NATA. Until the Cygnus deal, NATA had controlled the finances of the trade show since its inception and held it in conjunction with its annual convention. A few years ago, NATA convinced the Professional Aviation Maintenance Association (PAMA) to hold its annual convention at the same time, combining the trade show activity between the two groups’ constituent vendors–many of whom had customers in both camps. The new three-day event was called the Aviation Services and Suppliers Supershow, or AS3 for short.

Consolidation of the two conventions was a good deal for the associations and the vendors, since it attracted more of the latter, which then had one fewer expensive trade show at which to exhibit. When Cygnus bought the rights to GSE International Expo and AS3 within a few months of each other last year, the company decided to take the consolidation game one step further. Ground-support equipment was deemed a close-enough fit that Cygnus melded the two trade shows. It all happened very quickly, and represented a monumental feat of logistical management on the part of Cygnus’s event-planning staff, led by Jill Hilgenberg.

As with last year, this year’s trade show floor was divided between AS3 exhibitors on one side and GSE vendors on the other. The secret code was red carpet for AS3-related booths, and blue for GSE. In the future, Cygnus hopes to integrate the vendors on the trade show floor, noting that the two constituencies have a number of common interests.

The net result of all the transformation is a larger show (close to 500 companies rented 15 percent more floor space, compared with last year) and greater attendance (12 percent more registrants than last year). The trade show and joint conventions are still a three-day event, so why “Aviation Industry Week?” With add-on seminars and educational sessions, this year’s program included a full week of aviation-related fun and games. Yes, games. As part of the PAMA/AS3 portion of the program, the maintenance association instituted the PAMA Olympics competition three years ago. Along with the legendary chili cook-off, the Olympics has become a popular landmark event (see accompanying story on PAMA).

NATA Notable News

Speaking at the opening general session, NATA president James Coyne announced the launch of a new, industry-wide risk-management program with the goal of reducing ground-related accidents by 50 percent over the next five years. Coyne said the program is designed to generate a culture of zero tolerance, in which safety on the ground equals that in the air. “The foundation of the new initiative is the creation of a safety management system for FBOs, charter operators, maintenance and flight-training providers and airline-service companies,” said Coyne. “NATA will create a Web-based program whereby any company can securely manage its internal safety reporting and analysis without needing to create its own software.”

NATA retained consulting firm Simat Helliesen & Eichner (SH&E) to help develop the program. SH&E has experience carrying out high-level assignments for airports, airlines, repair stations and FBOs worldwide.

One of the first priorities of the initiative is to create a mechanism for benchmarking accidents and incidents. For the first time, Coyne said, major aviation insurers have all indicated a willingness to work with the association to create a database to track claims and benchmark progress. Claims information will be gathered quarterly, and analysis will be disseminated to the industry. The database is planned to track previously unavailable ground-accident data, such as time of day, weather, levels of ramp traffic and so on. Categorizing ramp accidents is a first step toward creating a baseline of what such accidents cost the industry. From there, NATA hopes to be able to substantiate how much safety programs are saving.

Some major stakeholders are supporting the program with financial and manpower resources. They include United States Aviation Underwriters; Global Aerospace; Phoenix Aviation Managers; W. Brown and Associates; XL Aerospace; ExxonMobil; ConocoPhillips; and AirBP Aviation. Other major stakeholders are expected to join the effort shortly, Coyne said.

First-year objectives for the program include establishing a fee-based safety audit program; developing a self-audit for aviation businesses; producing a risk-management seminar for service providers and aircraft operators; creating an education and marketing program to educate the industry on the benefits of the system; and producing a video program on ramp communications for flight crews and ramp employees. NATA plans to establish a stakeholder advisory board to ensure that all aspects of improving ground operations are addressed.

Keynote Address: John Goglia

At the opening session, NTSB board member John Goglia, who is set to retire from the safety agency, delivered the AS3 keynote address. His outlook first considered what is happening with airlines, and how ripple effects may influence the future of general aviation. Referring to current signs of recovery, he noted that some airliners are being removed from desert storage and put back into service. Still, he was candid in his disdain for airlines’ so-called “yield management” techniques, sarcastically calling the practice a “black art in which, somehow, you lose money on each seat, but make it up in volume.” He said the airline business model is changing, with major airlines emulating the success of Herb Kelleher’s Southwest.

“The one thing we can be sure of is that things will never be the same again,” he said. Airlines have negotiated deep cuts in margins among airport service providers they do business with, and they will expect the same services at the same margins once the recovery brings them out of their current dire straits. That’s bad news for business aviation service businesses that also serve airlines as part of their portfolio.

One other way that airline woes affect general aviation, Goglia said, is that, when airport revenues from airline operations (parking, landing and fuel-flowage fees, for example) are down, airport officials look to other sources for income-namely business aviation and the FBOs that support it. That means higher rents, steeper commissions and increases on other charges such as fuel-flowage fees. Also, airport services that once may have been included, such as plowing ramps in winter, might now be added to the FBO’s monthly tab.

Goglia cited his background in business and his recognition that, even as a federal bureaucrat, he could see the business side of running an aviation-service operation.
He said the NTSB’s focus is on safety, but he has tried to ensure that it has also considered the business side of the equation.

He cited his experiences traveling in Europe, and bemoaned the current state of line-service careers here in the U.S. He said, “We’ve dumbed down the job of fueling and servicing airplanes to keep costs low. That isn’t the case in Europe. The personnel and equipment there are head-and-shoulders higher than over here.”

Goglia closed with his advice on keeping good employees. He cited what he called his “80-10-10 rule” in which 80 percent of government employees are average, 10 percent are below average and drag down the system, and 10 percent are exemplary. “Those are the ones who leave government,” he said.

Very Light Jets: the Panel

NATA president Coyne told AIN in a pre-show interview that he expected the panel on very light jets to be the highlight of the week. Moderator Bill Haberstock, CEO and president of Million Air Salt Lake City, presided over Rick Adam, chairman and CEO of Adam Aircraft (A700); Mark Biagetti, COO of Avocet Aircraft (ProJet); Mike McConnell, v-p of sales and product support at Eclipse Aviation (Eclipse 500); Jack Pelton, CEO and president of Cessna Aircraft (Citation Mustang); Katherine Perfetti, the FAA’s national resource specialist for Part 135 and fractional ownership; and William Wellbourn, executive v-p of United States Aviation Underwriters.

Haberstock first asked the panelists from manufacturers what they preferred calling the new class of light jets. Each had his or her own reason, but all agreed that they didn’t like the sound of “microjet.” Suggestions included “personal jet” from Adam, “very light jet” from McConnell, “entry-level jet” from Pelton and “professional jet” from Biagetti. Haberstock turned to the media table and said, “So guys, please, no more ‘microjets,’ okay?” [AIN has favored the term very light jets for the new crop.–Ed.]

The next topic was training. What are the OEMs’ plans for training in the new aircraft?

Pelton said Cessna’s policy will be dictated, in part, by the size of the market. He raised questions involving insurance requirements, mentor programs and possible minimum currency requirements. “These have to be decided in cooperation with the FAA and the insurance companies,” he said. He closed by asserting a need to maintain the same level of safety in VLJs as in the current turbofan fleet, a safety goal that many consider unattainable given that a large percentage of VLJ operators are expected to be owner-pilots moving up from light piston twins.

Eclipse has endured some criticism for taking upon itself the responsibility for customer training. One AS3 attendee told AIN that even the perception of conflict of interest is too great in that arrangement. McConnell sought to address that implied criticism with his emphasis on Eclipse’s policy of returning a customer’s money if he or she failed to qualify in the airplane. To place the importance of training in perspective, he said, “That’s why the v-p of flight ops and training was the fourth person hired at Eclipse. That’s why we go to London twice a year to meet with insurers. We insist on a core competency.”

Pelton discussed possible mentoring situations in which a more experienced pilot would at least brief a Mustang pilot before each flight involving new criteria, such as a first trip into crowded Northeast airspace. Under certain conditions, he said, the mentor pilot might be asked to fly along.

Biagetti cited Avocet’s partnership with Israel Aircraft Industries on the ProJet and IAI’s experience in corporate and military training. But, he said, Avocet anticipates that most pilots of ProJets will be professionals flying for air-limo operators or cargo carriers.

Adam characterized the FAA/insurance industry relationship as a “belt and suspenders” situation that would ensure that high levels of safety would be instituted. He also backed the contention that flying jets is safer than flying light piston twins or complex turboprops. He classed his buyers in two groups: those with lots of experience in turboprops and those moving up from newer piston airplanes. For the turboprop contingent, he pointed out that they will be operating one or two levers rather than six. He also said that the new generation of piston pilots “are used to looking at big pieces of glass,” and should, therefore, make an easier transition to the A700 jet cockpit.

Adam also cited an FAA study on current training that shows a lack of concentration on operating avionics at a time when avionics are evolving quickly and learning curves are getting steeper. He also suggested a more modular approach to training, saying pilots should “train for the mission, fly the mission, then train for the next mission,” rather than completing a training syllabus all at one time that is expected to cover all eventualities.

From the insurance perspective, Wellbourn diplomatically said that his company sees “opportunities” with the new class of jets, but not without hurdles. He cited issues such as single-pilot operations, lower pilot experience levels, the fact that all the new jets are new products (which traditionally take some maturation before insurance premiums settle down), product support, repairability and salvage values. “All are still unknowns,” he said.

“The benchmark for the new jets,” Wellbourn said, “is the safety level achieved by today’s professional operations. How do you best emulate the corporate flight department with a nonprofessional single-pilot? Charter operators planning to use the new jets have said they will ‘act like a corporate flight department’ in areas of safety. With mentors, there are variables, not the least of which is the evaluating pilot himself. He should help out in establishing the equivalent of an operations manual for the owner-pilot, be available for first flights into weather, congested areas and help introduce self-evaluation–the so-called ‘point system’ of evaluating the safety of a proposed flight. Taking all this from the test environment to the real world is a dynamic transition. Time will tell us a lot.”

On the subject of possible airspace congestion, the FAA’s Perfetti sounded in with the observation that air limos could, in fact, relieve congestion at airline hubs because they will be flying to and from many more airports. But she said that did raise questions of security. Eclipse’s McConnell piped up, “The skies aren’t crowded. The hubs are crowded. The arrangement of dots in the Eclipse logo is meant to symbolize bypassing those hubs.” Adam added, “There isn’t anyone in the airspace between Madison, Wis., and Des Moines, Iowa. What you need is airplanes that cost $1 million to $2 million; good airports and services; and avionics and autopilots that can get you there in bad weather.”

Addressing the regulatory issues, Perfetti said there has not been a Part 135 rewrite since 1978, and the mix of charter aircraft has changed markedly since then. She said, “There are still about 11,000 aircraft, but there has been a huge increase in the number of jets. We still have some light piston twins, but not nearly as many as we used to.”

How Many FBOs Are Too Many?

NATA attempted to address the question of competition with its panel on the number of FBOs at airports. Among the rhetorical questions posed was, “Is it better to have one or two healthy FBOs, or three or four that are struggling?”

When discussing competing FBOs on the same airport, the issue of standards and airport authority contract stipulations rises to the top of the discussion. Bryan Burns of jackson Hole Aviation said words such as “adequate” and “efficient” need to be clearly defined in FBO contracts and leases. Otherwise, one FBO could be getting by with minimal–if any–standards while the competition across the runway is complying with stiffer parameters.

NATA’s Coyne, who monitored the panel, asked if the question should remain strictly local in nature, or should there be universal criteria in deciding the number of FBOs allowed on a given airport. He said that an accepted general rule is that there ought to be an FBO for approximately every 125 based aircraft. But he also said that a new FBO should bring something new to the airport customer base. “It should make the ‘pie’ bigger, rather than simply dividing it into more slices. More isn’t necessarily better. With too many competitors, you can wind up with unintended consequences,” he said.

One AS3 attendee in the crowd said that statistics show 75 percent of airports with at least 3,500-foot runways have only one FBO. Ten percent have two or more, and the remaining 15 percent have no FBO at all. Speaking from the audience, Bill Bohlke, president of Bohlke International Airways in the U.S. Virgin Islands, said he has had his share of run-ins with airport authorities and admitted he was frustrated.
He emphasized that the problem needs to be addressed with airport executives nationwide. “This discussion needs to go to the American Association of Airport Executives,” he said. “Jim Coyne and [FAA associate administrator of airports] Woodie Woodward should do a presentation to AAAE. I challenge NATA to go to Hawaii, or wherever it is that AAAE has its meeting. You’re preaching to the choir here.”

Bob Wilson, president and CEO of Wilson Air Center in Memphis, Tenn., dissented with the prevailing sentiment that competition on an airport is overrated. He cited his case as one where he can document how much less it costs an aircraft operator to use Memphis International Airport since he built his operation there. Before that, there was only one FBO on the field. Coyne praised Wilson Air Center and admitted that its case was one legitimate point for the dissenting camp.

Fuel Brokers and Discount Cards

Noel Donald, v-p of fuel discount broker Colt International, said he felt like a sacrificial lamb sitting on an NATA panel discussing his industry. He was right.

Donald made the case that fuel brokers bring new business to FBOs, provide feedback, have their own billing programs that can pay faster, stimulate communication among aircraft operators and the FBOs they patronize and hold down manpower expenses with 24-hour customer-service telephone lines. The rest of the panel–consisting of a sprinkling of veteran FBO execs and oil company representatives– weren’t buying it. Nor were the AS3 attendees in the audience.

Larry Ulrich, president of Denver Jet Center, took it a step further and challenged the role of oil companies as well. “They’re trying to take control of the FBOs’ customers,” Ulrich said. “It’s fine that they have billing programs and telephone customer service people, but when that jet pulls up to my FBO, is the operator my customer, the fuel broker’s or the oil company’s?”

He was responding, in part, to Air BP Aviation’s Terry Cross, a panelist who spoke of the oil company’s changing role in aviation today. Cross said among the new business initiatives are building relationships with FBOs and aircraft-operator customers; providing information to help the FBO operate its business; developing programs to improve the industry as a whole; and supporting the industry by supporting entities such as the Civil Air Patrol. He said, “The sense that oil companies can’t provide centralized service isn’t true. Even if the oil company’s logo or flag is not flying at the FBO, you need to work hard to make your branded oil dealer work for you.”

The general consensus among FBO panelists and members of the audience was that the broker system “doesn’t work for us.” To illustrate his point about discounting fuel, Dan Walsh from TAC Air joked, “When I checked in here at the Hilton, I told the desk clerk that I wasn’t going to be using the fitness room or the pool, and that I could carry my own bags up to my room, so how about a few bucks off the room rate? That’s what it feels like when pilots complain that they should get fuel discounts if they don’t use an FBO’s lounge, crew car, concierge or eat the popcorn.”

Walsh’s comments echoed concerns voiced by operators in the hallways and aisles throughout Aviation Industry Week. Yes, business activity is up, and no, there have been few complaints about rising or irregular fuel prices. Most agree that wide public knowledge of high crude prices–and day-to-day exposure to high prices in auto fuel–provide a buffer for FBOs. Still, with fuel sales still the prime source of FBO revenue and the largest expense for many flight departments, there is bound to be friction.

One FBO executive, who asked to remain anonymous, told AIN about a company (which he also declined to identify) that visited his operation regularly and always bought fuel. When a new flight department manager took over, to shave costs he instituted a policy of avoiding buying fuel “on the road” whenever possible. The FBO executive wrote to the CEO expressing regret that the company “was no longer one of our customers,” even though the company continued to stop at the terminal.
“Customers buy things,” he told AIN. On its next trip through, the company in question uplifted more than its usual load of fuel.