AIN Blog: Sound Bites Insufficient as Bizav Braces for European Financial Implosion
My job at this month’s NBAA show in Las Vegas was to present our AINtv webcasts. I’ve been working on AINtv since its launch in 2006 and it really is great fun—in fact, don’t tell my boss, but it’s light relief from the daily grind of churning out articles for AIN’s print and online editions.
Apart from the dangers of using excessive blusher, one of the challenges of television is the need to distill complex news into almost microscopic bites of information and comment. Five years ago, during my first week as an AINtv reporter, our producer told me that she needed “something short” on the state of the global business aviation industry.
“No problem,” I told her confidently. “I can let you have a 500-word script in the next 30 minutes.”
“Thanks,” she replied, “but I was thinking of more like 90 words by the time I finish this cup of coffee. And I’d like you to make three separate points in those 90 words and cue up a sound bite.” Roughly speaking, 90 words equals about one minute of air time.
So how does one boil down the current state of an industry based on weeks of preparation before NBAA 2011 and three intense days at the industry’s biggest annual show itself? Here’s my take in 90 words. Remember, this is live TV so sweeping generalization is the order of the day:
“The bizav community is fatigued and demoralized as starts what for some will be a fourth successive year of the downcycle. It is masking this fatigue and trying to boost its own morale with a fanfare of optimism for recovery that largely is not grounded in reality. I arrived in Las Vegas irritated by what seemed like Pollyanna-esque self-assessment by the industry. I left Las Vegas with genuine admiration for hardworking people who, in their heart of hearts, know things are grim but are pushing on with a glass-half-full mentality.”
Back home in Europe, I started to see my bizav brothers and sisters in an even better light, when I contrasted them with political leaders whose engagement with the continent’s mounting debt crisis is nothing short of delusional. As I write this on Friday, October 21, Eurozone leaders have scrapped plans for a summit meeting in Frankfurt on Sunday (October 23) that was supposed to finalize a deal to conclusively bail out Greece’s vast public debt and provide protection against Italy and Spain following Greece into the fiscal cesspit.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are the lynchpins to the rescue plan and they have, once again, failed to reach agreement—weeks after we were told that Sunday’s meeting was our last hope. Now they will try to reach agreement in time for a rescheduled summit next Wednesday (October 26). If they don’t, the prospect of a full-blown Greek government default will be seen by many as a near certainty and that’s when we’ll find out just how badly banks are exposed to this debt.
Earlier this month, I met with a group of business aircraft brokers and financial consultants who tried valiantly, but failed, to convince me that the banking sector has the ways and the means to lubricate bizav’s recovery. Yes, some institutions are still lending and, quite sensibly, they are being more prudent in how they do so. But if Europe’s sovereign debt crisis implodes, wholesale lending in financial markets (i.e. banks lending to banks) could once again seize up, as it did around this time in 2008, and then even those banks not directly exposed to the default will find it hard to keep the wheels of commerce turning.
But there’s always light at the end of the tunnel, right? When the bizav community reconvenes for the EBACE show next May in Geneva, it will find itself back in what is now officially the wealthiest nation on earth. According to the Credit Suisse bank, one in twenty of the world’s 84,700 super-rich (defined as people worth more than $50 million per head) reside in this small but perfectly formed country. Thanks to the epic over-valuation of the Swiss Franc, the average Swiss citizen is worth more than $500,000—the first time any country on earth has achieved this distinction. Switerland is now a country of half-millionaires.
So surely this will bolster Switzerland’s position as a happy hunting ground for business jet salespeople? Until the Swiss government intervened to burst its currency’s unfortunate bubble, the Swiss Franc was worth more than one-third more against the U.S. dollar, compared with where it had been in 2009—meaning that Swiss customers had more than one-third more buying power when purchasing goods priced in dollars. But by the same token the Swiss franc’s strength is also making the country’s significant business aviation service sector uncompetitive for those who have to pay them in Swiss Francs.
The Swiss government continues to plough its own money into currency markets to buy up euros and dollars to suppress the franc’s value in the hope of restoring the nation’s competitiveness, but how much longer can it stem this tide? [Memo to self: When leaving for EBACE next year, be sure to pack peanut butter sandwiches for the trip, because my per diem allowance will put me on the breadline in Geneva.]
And on that cheery note, I thank you for watching AINtv (www.aintv.com).