AIN 2016 Year End Report

 - December 5, 2016, 3:41 PM
Wilson Leach
AIN's Wilson Leach

In the months leading up to November’s U.S. presidential election, I shared with colleagues my belief that no matter who won, business would get back to the business of doing business. I still believe that was a correct assessment. The long, bitter campaigns caused unprecedented turmoil and anxiety, and they also caused paralysis in the business sector.

With a new president elected, I believe that paralysis is now behind us, and that the corporate sector will get back to fully ­focusing on the management of business enterprises.

I was happy to note that the annual GDP growth rate in the third quarter was among the highest we’ve seen in eight years—2.9 percent. What is more exciting is that consumer spending drove this increase; disproportionately little of it resulted from business/capital investment. Another good sign is that monthly mergers-and-acquisitions volume in the U.S. hit a record $250 billion in October. If my prediction is correct—that businesses will now move forward and make the capital investments that have been lacking—the sluggish economic growth we’ve witnessed in recent years will likely be a thing of the past.

In the aviation industry, Europe remains flat, and not-so-good economic reports continue to arrive from emerging markets and from former big buyers in China, Russia, and Brazil. Meanwhile, the U.S. economy is the shining star in the world. I like the saying that the darkest hour is just before the dawn. 

Discussions we’ve had with OEMs and with the higher-end brokers suggest that preowned airplane prices have dropped about as low as they are going to go. In fact, several brokers have told me that they’re quietly “inventorying” aircraft—something no expert would do if he thought prices would keep declining. To me, this signals the beginning of at least a modest and gradual turnaround in sales.

That said, I heard talk at November’s NBAA convention about possible structural changes in the business aviation industry. Discussion focused on whether oversupply coupled with weak demand would correct itself in the reasonably near term.

That’s impossible to predict, but I’ve spent 45 years in business aviation, and during every downturn two questions have arisen: Will video conferencing and other forms of communication ruin the industry? And will an oversupply of business jets prevent new ones from selling?

I can state unequivocally that the first concern is a non-issue. With more and more people relying on email and social media, the value of conducting business meetings and negotiations face-to-face seems clearer than ever.

The oversupply question is more difficult to answer. Short term, yes, I am afraid we do have an oversupply, particularly in the large-cabin category. That sector is going through what the light and midsize-cabin sectors experienced over the last five years. The excess inventory of five-years-old-or-younger large-cabin jets needs to be absorbed back into the market, for a reasonable balance between preowned and new aircraft sales to occur. That, combined with the OEMs’ continuing ­development of exciting technologies in their new models, should help drive new aircraft sales back to acceptable levels. 

Moving Forward at AIN

I’ve often said that as the aviation business goes, so goes AIN. That was certainly true in 2016, which was mainly flat for the industry and for us. My view is that our business will remain about as it is through the first half of 2017 as the industry rebuilds, and as the world adjusts to the ­results of the U.S. election. Then, by around mid-year, we and the ­industry will return to an upward trajectory that should continue well into the next decade. Our business plan reflects this scenario.

It has been disappointing to all of us that the recovery we all have been forecasting keeps moving into the future. At one point, it was going to happen in 2016, then 2017, and now we are looking at 2018. As disappointing as that is, it is not uncommon to have a 10-year recovery cycle after such a serious downturn as we saw in the Great Recession of 2008–09. So…maybe we are finally looking at a steady and sustainable recovery.

Why AIN Is Different

The overall economy isn’t the only challenge facing those of us in the ­media field, where business models continue to go through an excruciating paradigm shift. This is something that keeps us on our toes 24/7. But we are succeeding extraordinarily well, certainly vis-à-vis our competitors, and also in relation to media businesses outside the aerospace industry.

As I have often shared, a big reason is that we are a privately held company and have based decisions on common sense and what our readers want—not on what Wall Street says. Many subscribers continue to tell us that they like the printed product; others want our growing array of digital and immediate-access online publications, such as our AIN Alerts e-newsletter, which has an unheard-of open rate of 42 percent. Some want both. As such, we have never turned our backs on print, but at the same time, we have invested in digital and online products that are second to none.

We continue to believe that our marketing partners should be doing the same—reaching our audience with a balanced approach to print, digital, and custom products, all tailored to each company’s specific marketing/branding objectives.

Yes, you increasingly need an online presence, but you can’t dispute the visual and tactile impact of a well-done print message. Just ­recently, I’ve seen at least half a dozen pullouts, gatefolds, and other print ­messages that have completely blown me away.

The New York Times Magazine, for example, had an eye-catching ­double-cover gatefold advertisement for high-end residential apartments. Google, meanwhile, ran an oversized insert (folded into publications) that effectively touted its new phone products. IBM employed powerful full-size, four-page pullouts. And the PGA Tour ran a moving full-page tribute to Arnold Palmer in all the major newspaper and trade publications around the country. I defy anyone to show me ad campaigns in any digital platform that had the same sort of impact as these.

Our Pledge to You

Whether you advertise in print or online, you need to be in a well-read environment. That’s why AIN’s biggest focus is not on any one medium but on providing journalistic excellence in every medium. To do so, we maintain a substantially larger editorial payroll than any of our competitors. We realize that trusted, quality content is our biggest competitive advantage, because it’s what keeps readers coming back to our products, and it’s what gets your messages delivered.

As the year winds down, I want to once again thank the industry we serve—you truly are our partners. We are deeply grateful for your continued vote of confidence in our special brand of journalism, and we look forward to working hard in the year ahead to continue earning it. 

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AIN 2016 Year End Report (445K)

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