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Archive for October, 2010

Persistent uncertainty

Submitted by Paul Maurer on Monday, 10/04/2010 - 04:25

While commercial airlines are enjoying a return of revenues and passengers close to pre-recession levels, the business aviation sector continues to adjust to persistent weakness and uncertainty. Although the industry has largely improved from recession levels, it appears to be lagging behind the economy at large (as usual). In just the last month, Cessna announced a further round of layoffs, Hawker Beechcraft cut 350 workers, and Piper reduced its workforce by 6%; reflecting lowered forecasts for business aircraft sales. Lastly, stalwart NetJets is considering the possibility of shutting down in light of challenges including negative publicity from ex-employees.

The business aviation industry is not without its supporters, however. Congress incorporated as part of the recently passed Small Business Jobs Bill a “bonus depreciation” provision allowing companies to take a bigger deduction on business aircraft purchases, 50%, in the first year of ownership. Kansas Senator Sam Brownback is calling for the International Trade Commission to study questionable foreign government subsidies of the business aviation industry. That announcement came (not surprisingly) as Embraer announced increasing market share and an unbelievable 50% share of the light jet and entry level jet market just 2 years after entry.

Furthermore, a couple of mainstream press articles enumerated the potential cost savings versus commercial air travel achievable (in rare cases) through chartering aircraft and through brokered jets or fractional shares. As travel managers increase their attention on the ROI of travel expenses, this type of publicity will help business aviation providers open more doors in the corporate travel world. Although one would think that ever increasing airline fees, capacity cuts, and ambiguous fare pricing would be plenty to encourage an investigation of business aviation alternatives.

Attempts by certain business aviation providers to re-brand, form partnerships, and put a new spin on traditional per-seat service are not without merit in attracting needed attention. However, one gets the feeling that a truly cost saving business aviation alternative, if one is possible, just might cure both commercial and business aviation travelers’ woes.

(Excerpted from the September, 2010, igojet e-newsletter. To receive future e-newsletters by email as well as the latest version with links to industry articles used for this entry, please subscribe here)


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