GAMA: Neither the best nor the worst of times
If anyone went to the General Aviation Manufacturers Association’s annual review and outlook hoping to see light at the end of the economic tunnel, they had to be disappointed. “This may not be the deepest trough in modern times,” said GAMA chairman Bill Boisture, “but it is certainly one of the longest.”
Total industry billings–which now include non-U.S.-built GA aircraft–fell 14.4 percent last year, from an all-time high of $13.9 billion to $11.9 billion. Shipments of GA airplanes dropped from 2,994 in 2001 to 2,539 last year.
Luckily, the one “real bright spot” in the tunnel was not an oncoming train, but rather an increase in the amount of flying activity by business jets in the U.S., as well as an increase in the total number of corporate operators worldwide. The number of IFR flights completed by business jets was approximately 13 percent higher last year than in 2001, while the number of corporate operators increased by about 5 percent.
According to figures provided to GAMA by AvData, the number of individuals and companies in the U.S. that own a fractional share of an airplane increased approximately 20 percent last year, from 3,415 to 4,098. The number of airplanes in fractional programs, which accounted for about 15 percent of the total turbine deliveries, increased by slightly more than 11 percent last year, from 696 to 776.
“As we look back on 2002, we see that our string of record-setting billings and business jet shipments has come to an end,” said Ed Bolen, president and CEO of GAMA. “However, on a positive note, business jet flight activity increased last year, we set a new safety record–the fewest number of general aviation accidents ever–and the security of general aviation operations has been significantly enhanced.”
In an attempt to put the depressing financial outlook into some kind of perspective, Boisture pointed out that “this is not the biggest one-year decrease our industry has ever experienced.” And he reminded those at GAMA’s annual report in Washington last month that today’s GA manufacturing industry is three times the size it was just six years ago.
“In fact, if we were ranking the biggest one-year change in billings and shipments, this year would not even be in the top five,” the president of Gulfstream Aerospace said. “We’ve been through a lot worse.”
Admitting that this market “is not where we want it to be,” Boisture said manufacturers are trying to weather the tough economic times by cutting costs, stimulating sales through customer support and positioning for future growth by increasing the utility of their products. He added that almost all GAMA’s airframers have been forced to lay off workers since the economy softened, and employment at GAMA member companies is down 12.4 percent from the 2001 level.
Not surprisingly, both Bolen and Boisture see the long-term prospects for general aviation as being good. But Boisture cautioned that predicting when a recovery will take place is “anybody’s guess,” and the 2004 to 2005 timeframe appears to be “as close as it comes.”
The Gulfstream executive said that aircraft sales are expected to remain “pretty flat” in 2003, and even if the economy starts to grow immediately at a healthy rate, already-established production schedules are likely to increase only slightly.
“Historically, it takes about nine to 12 months of economic growth before we start seeing a significant upturn in airplane sales,” said Boisture. “So I don’t think the 2003 numbers are going to look any better than the ones we are seeing tonight.”
Further, before there is a sizeable increase in sales of new aircraft, he explained that some of the used aircraft on the market need to be absorbed. Figures provided by Amstat show that 17 percent of the total turbine fleet is currently on the market, well above the historical average of approximately 12 percent. “As one might expect in a buyer’s market, the prices for used business jets are around 20 percent lower than they were in 2001,” he said.
Security on the Screen
If the economy was the brightest target on everyone’s radar screen, security was certainly the second, and Bolen said that GAMA will continue to remain proactive. High on GAMA’s agenda for 2003 is building its relationship with security-related executive branch agencies, congressional committees of jurisdiction and other aviation associations to improve general aviation security.
Among its goals are improvements to the airman and aircraft registries; GA access to the Computer Assisted Passenger Screening (CAPS) systems the airlines are using to identify security threats; and bringing NBAA’s proposed Transportation Security
Administration Access Protocol (TSAAP) into reality.
“After 9/11 we learned the hard way that we can’t take access to airspace and airports for granted,” said Boisture. “Thanks to some good work by GAMA and some of the other associations, we are now back to pretty close–not quite–but pretty close to the same access we had before 9/11. We need to make sure that doesn’t change as the TSA and the Department of Homeland Security become an increasing factor.”
In his industry recap, Bolen reported that last year’s drop in business jet shipments was the first decline since 1996, and in each of the years from 1998 to 2001 the industry had set a new all-time record for such shipments. So, despite the decline in 2002, shipments of business jets still exceeded 1999 levels.
Overall, turboprops had the biggest drop of any airplane segment (single- and multi-engine piston, turboprops and business jets). Turboprop deliveries fell 33.5 percent worldwide, while U.S.-produced turboprops plunged 38.9 percent from 306 units in 2001 to 187 in 2002. Total piston-aircraft shipments were down for the second straight year, falling 12 percent to 1,576 units. Shipments of piston aircraft built in the U.S. decreased 13.4 percent to 1,496.
Billings for exports of U.S.-produced airplanes dropped 16.8 percent as the number of exported airplanes fell 26.1 percent. For U.S. manufacturers, the overseas market accounted for 25.4 percent of their total billings and 16.8 percent of their total shipments.