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Archive for August, 2011

Government paralysis

Submitted by Paul Maurer on Friday, 08/12/2011 - 02:00

Business aviation took its lumps from the U.S. government in July between President Obama’s jabs at corporate jet owners, Congress’ inability to pass a new FAA budget, and the DOT’s continued pressure to dismantle the BARR program. Why, even the Wall Street Journal got in on the bizav bashing bonanza in the past few weeks by exposing private corporate jet activity. And, as usual, the New York Times posted another portrayal of business jet users as frivolously wealthy.

While this negative publicity is keeping the industry’s alphabet soup trade groups busy, it is certainly not helping the industry recover anytime soon. For the 3rd consecutive month, charter operators reported a double digit percentage drop in activity vs. 2010. And the fractional players continue to try to adapt to the turbulent times with creative financing approaches.

While such rhetoric might play well with cash strapped constituents, it has the long-term potential to hit these same people in the wallets – i.e. lost domestic jobs. The U.S. currently leads the world in business-jet manufacturing with 80% of global sales, and 60% of what’s produced by these companies is exported overseas.

In China, perhaps the biggest potential growth market for business jets, 2 U.S. companies currently hold the lead – Gulfstream and Cessna. While still small (the first business jet hangar just opened in Beijing last month), the Chinese market is expected to grow by 50% annually as the government slowly loosens restrictions on general aviation. In a nod to the importance of this market, Gulfstream just renamed their G250 model to G280 (the number ’8′ sounds similar to the Chinese word meaning “prosper” or “wealth”).

Foreign business jet manufacturers are even creating jobs in the U.S. to take advantage of a skilled workforce and diverse supplier base. Honda has invested $100M in its Greensboro, NC, manufacturing facility and recently announced plans to grow its employee ranks from 300 to 1,000 people next year. Embraer started work on its first U.S. assembled Phenom 100 at its Melbourne, FL, assembly plant in July and plans to hire 100 more workers in 2012, many of them former NASA employees.

Besides foreign market opportunities, political leaders need to be mindful of the domestic market – still the largest by far but still suffering through a stubborn recovery. More voices need to speak up for business aviation (thankfully, Warren Buffet made a compelling case on MSNBC) since the industry provides a substantial source of jobs and is one of the few net exporting manufacturing industries in the U.S.. One wonders if the media and political leaders will ever “get it” with regards to this important industry.

Safe and productive travels.

(Excerpted from the July, 2011, Igojet e-newsletter. To receive future e-newsletters directly to your Inbox, please click here and sign up)


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