2011 NBAA Convention Report

 - October 31, 2011, 3:33 PM

Las Vegas, the site of the 64th Annual NBAA Convention and Exhibition, is always a strong draw, and this year’s show was no exception, with 7 percent more attendees registering during the three-day event from October 10 to 12. While the total number of attendees–26,077–wasn’t the highest for an NBAA or for one located in Las Vegas, the overall results were a strong indicator that an industry battered by pandering politicians and economic pressure is not only facing the issues but also looking forward to doing business in this strange economic climate.

Judging from the huge “Stop User Fees” banners in the Las Vegas Convention Center halls and the ongoing rhetoric at various events, the specter of user fees is top of the mind for many in business aviation. At the same time and in stark contrast, China–a country with some of the severest restrictions against general aviation in the world–was a hot topic at the show. Clearly the vast potential of the Chinese market has marketers salivating, despite obstacles that still spell extreme challenge for general aviation.

There is always a palpable sense of excitement before each NBAA show because manufacturers like to save their biggest news for the big venue. While this year was no exception, a combination of the economic situation and the natural cycle in new aircraft development led to a dearth of big developments. Cessna was the sole manufacturer with new aircraft to announce, the new M2 light jet unveiled just before the show and the midsize Latitude that was the first show day’s big news. Almost lost among announcements from the big players, such as the provisional certification plans for the Gulfstream G650, was scrappy Eclipse Aerospace’s double-header: a new and improved Eclipse 550 that will roll off assembly lines in 2013 and also the opening of the order book for the new jet. Nextant Aerospace also brought news to the show, the freshly certified 400XT Beechjet 400/Hawker 400XP engine upgrade program.

User Fees

It’s no secret that user-fee proposals are tools of politicians who are trying to curry favor with constituents and voters, but the stunning revelation that the current administration favors taxing users of controlled airspace $100 for every departure–including aircraft flown for business and commercial airlines–still has the business aviation world in a lather. Although higher taxes used to be anathema, no one in business aviation seems to object to a tax raise via fuel taxes as a fair way of sharing the cost of running the FAA. But the proposal in President Obama’s jobs creation/deficit-reduction plan to assess the $100 fee has stirred up fierce opposition.

The proposal claims that the fee would raise $11 billion during the next 10 years. “A lot of us are scratching our heads wondering why the President put this proposal forward,” GAMA vice president of government affairs Paul Feldman told AIN, “especially when the House and Senate have rejected per-flight fees. The administration hasn’t provided any background on the assumptions behind the figures,” he added. “We really need to know more about the assumptions.”

At the opening day media breakfast, NBAA president and CEO Ed Bolen was asked what will happen to the money if that $100 fee is collected, and the answer raised fresh concerns about whether the government has any idea what it is doing.

“Keep in mind that this is different from user-fee proposals that we’ve seen before,” Bolen explained. “This wouldn’t apply just to general aviation, [but also] to commercial aviation. What we do know is that the $100 that we would pay would be enormously costly to process. When you get the invoice, the company’s got to open the invoice, validate the invoice, arbitrate it if there’s a problem, create a purchase order and send it out. We don’t know what that’s going to cost our companies, but we know that Delta Air Lines said it costs them somewhere between $85 and $125 to process an invoice. We expect it would be similar for our companies, and then after you pay that administrative burden, it costs $100 on top of that.”

The result of the $100 fee would be, he added, “to create a new federal collection bureaucracy, a ‘Sky-IRS’ branch of the FAA where they send out collection agents, billing agents and auditors. It doesn’t go into the Trust Fund the way the fuel taxes do, and we think it is fundamentally a bad idea.”

GAMA president and CEO Pete Bunce offered a more worrisome point, the specter of a per-flight fee climbing higher and higher. “It’s $100 today,” he said. “What’s it going to be next year? And whether it’s $25, $100 or $500, if you continue to feed big government, you are on such a slippery slope. We have an efficient way to pay into the system, and that’s through a fuel tax that has low administrative burden. What we have to do is continue to tell people that the user fee has had a negative impact on general aviation in other parts of the world and we cannot replicate that here in the United States.”

“That’s a real concern,” said GAMA’s Feldman. “If this gets on the books, I think aviation will be looked at again and again as a place to collect more and more funds.”

Many believe that politics is behind this $100 fee proposal, with some people opining that the Obama administration is trying to show empathy with the majority of the population who don’t travel on business jets. The $100 user fee isn’t going anywhere, at least yet, and there has already been a legislative counter-proposal and political action against such fees. The House General Aviation Caucus sent a letter to the White House–signed by more than 125 Democrat and Republican members–opposing the proposal, and senate majority leader Harry Reid (D-Nev.) introduced his own jobs bill on October 5 that removes user-fee provisions.

China Rising

It seemed every other announcement and conversation at the NBAA show mentioned China and the vast potential of its market for business aviation products and services. Indeed, the number of business jets in China has grown quickly and there is a dearth of local talent and thus many opportunities for flight operations and maintenance services.

Whether manufacturers and others are putting too many eggs into the Chinese basket is debatable; the market certainly can’t be ignored. And in the opinion of Stephanie Pomboy, founder of research firm MacroMavens, who was quoted in the October 17 issue of Fortune magazine, China has the resources to continue spending money for a while yet. In the article, she noted, “My view on China is that it may be a bubble, but it’s a centrally controlled economy. So it’s a bubble that can go on longer than you can remain solvent by betting against it.”

There were multiple China-related events at the show, including a press conference by Jason Liao, CEO of China Business Aviation Group, who predicts a market for at least 1,000 business jets in the next decade (as does aircraft manufacturer Embraer). Experts on the Chinese market, including Liao, Francis Chao, publisher of the China Civil Aviation Report, and Zhao Quijiang, president of Beijing Capital Group, agreed that the Chinese bizav fleet has grown from 28 jets in 2008 to 46 in 2009 and more than 90 today. Jean-Noel Robert, president of the Asian Business Aviation Association, put the current total at a higher number, between 130 and 150.

That more business jets are headed to China is clear; at the show, Minsheng Financial Leasing announced orders for $2.6 billion worth of jets, including 13 Embraer Legacy 650s and (in a memorandum of understanding) 10 Falcon 7Xs and 10 Falcon 2000Ss

Airplane Orders

This wasn’t a show of huge order announcements, but Hawker Beechcraft was happy to reveal that XOJet placed an order for 12 of the newly certified Hawker 800XPRs (seven firm and five options). “The growth of our business demanded a third fleet type,” said XOJet CEO Blair LaCorte. The company’s current fleet includes 20 Citation Xs, nine Challenger 300s and a Challenger 605. While the 800XPR mod includes Rockwell Collins Pro Line 21 avionics, winglets and new Honeywell TFE731-50R engines, XOJet will fly its initial order with the original TFE731-5BR engines and replace those as the new engines become available.

Eclipse Aerospace had its own news about orders. The company has opened the order book for the new Eclipse 550, an upgraded version of the jet that signals restarting of the Eclipse new-build production line.

Cessna’s new CEO, Scott Ernest, obviously recognizes the value of an exciting new-product introduction and took advantage of the NBAA venue to take the wraps off the new Citation Latitude early on the first day of the show. Both the Latitude and the smaller M2 are meant to compete with Embraer products and position Cessna for a rebound when the economy improves, hopefully at about the same time these new jets enter service.

Piper Aircraft was another company that logged a big order at the NBAA show, for up to 30 new Seminole piston twins from long-time customer Airline Transport Professionals. The order is for 10 Seminoles to be delivered next year, with an option for another 20 in 2013 and 2014. The week after the Convention, Piper had news of some major personnel changes.

Aircraft Developments

Honda Aircraft brought a production-conforming version of the HondaJet to the NBAA static display at Henderson Executive Airport but also news of another delay in the certification program. While certification and deliveries had been planned in the third quarter of next year, the delay pushes entry into service to mid-2013.

The delay is due to a late-stage redesign of the HondaJet’s GE Honda Aero HF120 engine. The engine’s fan has been redesigned following a failure during an on-ground ice-ingestion test, and the developers now anticipate certification of the engine during the second half of next year. A spokesman for GE Honda Aero told AIN that the redesigned fan blades are slightly thicker, but that the redesign will force a considerable portion of the “air work” performed on the original design to be repeated. The HF120’s fan is a blisk or single forging, which makes the redesign more complex. Honda Aircraft also announced plans to build a $20 million maintenance center at the company’s Greensboro, N.C. headquarters campus. The new facility will open in 2013.

As expected, Gulfstream Aerospace provided an update on two programs that are nearing fruition. The G650 and G280 were both scheduled to receive FAA certification this year, and both will do so, according to Gulfstream, but not in exactly the same manner. The G650 will undergo a two-step certification process, with provisional certification planned first this year, followed by full certification early next year. The super-midsize G280 is expected to receive full certification this year. Performance specifications for the G280 have been upgraded, based on results of flight testing. Range with four passengers has been increased to 3,600 nm from 3,400 nm and balanced field length at maximum takeoff weight dropped by 210 feet, to 4,750 feet.

Olivier Villa, Dassault Falcon senior vice president of civil aircraft, revealed additional details of the so-far-super-secret SMS program. He said that detail design has begun and that more than 1,500 engineers are working on the program. The fly-by-wire SMS will be a super-midsize jet larger than the Falcon 2000, and it is pegged for entry into service in 2016.

Production of Bombardier’s composite Learjet 85 has officially begun, the company announced at the NBAA show, and certification remains on track for 2013. The critical design review has been completed and now assembly has begun. Bombardier has finished the first phase of expansion of the Learjet 85 final assembly facility in Wichita and is moving tooling into the facility and developing final-assembly processes and techniques. Next year, construction of a new production flight test facility will begin, and a new paint facility and delivery center will also be built.

Embraer’s two midsize jet programs, the fly-by-wire Legacy 450 and 500, are well under way, with the first 500 model still on schedule to fly before the end of this year and achieve certification in the second half of next year. The Legacy 450 will be certified about a year later. Embraer expects to deliver 118 business jets this year, about the same as in 2009, but less than the 145 it delivered last year.

Avionics and Electronics

This has definitely been the year of the touchscreen, and Rockwell Collins is leaping directly into the fray with touchscreen-controllable displays as part of the company’s move into the Part 23 market with the Pro Line Fusion system. Hawker Beechcraft announced plans to tap into Fusion technology for a retrofit program on Pro Line-equipped King Air turboprops. The Fusion retrofit will also include Rockwell Collins’s “autonomous backup with one-touch emergency control.” According to the avionics maker, this is the first ever one-touch emergency mode for business aircraft, affording disoriented pilots extra time to recover by putting the aircraft into a safe-altitude holding pattern with the push of a single button. It also provides guidance cues to the nearest airport during an engine-loss event. Plans calls for the first application of Pro Line Fusion in a light business aircraft to be certified by the end of 2013. Retrofits will be available for turboprops and light jets.

Business aircraft cabins got a lot of attention during the NBAA show, with Heads Up Technologies and Mid-Continent Controls both announcing new cabin management systems (CMS).

The Heads Up Technologies Lumin system employs touchscreens designed to blend seamlessly into the cabin interior and also offers manufacturers the option of branding the system according to the desires of the aircraft manufacturer and customizing it to the owner’s personal tastes. The new Cessna Latitude’s Clairity CMS will be Lumin-based.

The new Mid-Continent Controls Pulse-nHD system is 100-percent digital and runs on an Ethernet backbone, with 1080 HD distribution throughout the cabin. Pulse-nHD incorporates a diagnostics system that recognizes all equipment connected to the network and provides diagnostic health monitoring, including component temperature, input voltage, output loads and fault indication.

Honeywell announced that its Ovation Select CMS received FAA certification just before the NBAA show began. Ovation Select is also all-digital and runs on an Ethernet backbone and is scalable for small aircraft to larger transports.

Aircraft Galore

The NBAA show is much more than exhibits in the convention halls, although this year there were 1,106 exhibitors, 2 percent more than last year, and many of those were first-time exhibitors.

New this year was the convention center static display, consisting of 14 aircraft positioned right next to the main show entrance. This static display offered attendees an opportunity to get up close to some aircraft without having to drive the 16 miles to the main static display of 85 aircraft at Henderson Executive Airport. But there were also five aircraft inside the convention halls, including a freshly refurbished and re-engined Nextant 400XT as well as a sparkly painted Eclipse 500 that is entering service in the northeast U.S. as part of Sikorsky’s Associated Aircraft Group charter division.

In what has become an NBAA tradition, Honeywell Aerospace released its annual Business Aviation Outlook, which predicts that after four years of decline, business aviation is poised for moderate recovery beginning next year. The forecast, Honeywell’s 20th, sees 600 to 650 deliveries of new business jets this year (GAMA numbers show 261 deliveries in the first half, meaning 339 would have to be delivered in the second half for Honeywell’s forecast to be accurate), followed by fewer than 700 during 2012 (but still higher than 2011). During the next decade, Honeywell expects deliveries of 10,000 business jets worth $230 billion, 2 percent more than were predicted in last year’s forecast.

“This year’s convention underscored the fact that the people and companies in business aviation are optimistic and forward-looking,” said NBAA’s Bolen. “NBAA’s convention continues to be a key part of that forward-looking vision, serving as the premier venue for bringing the industry together and advancing its interests. Our thanks to everyone who helped make this year’s event a success.”