Industry News

The public has frowned upon the use of private jets for business since the chief executive officers of the United States’ “Big 3” automakers flew in theirs to tell Congress how broke their companies were.

In light of the nation’s continual struggle to get back on solid financial ground, those who still believe private jets demonstrate opulence and extravagance should face the facts: private jets are not only good for business, they’re good for the economy.

Contributions to the economy

Business aviation contributes $150 billion to the U.S. economy. The industry employs more than 1.2 million people in the way of pilots, dispatchers, engineers, manufacturers, mechanics, technicians, airport workers, FBO staff and more.

The benefits also extend to those who may not directly use business aviation. This includes communities with little or no airline service, recipients of humanitarian efforts, businesses that operate in more remote locations and others.

An organization dedicated to reinstate the honor and validity of using private jets for business, Noplanenogain.org, offers some facts about airplanes, airline travel and private aircraft.

Necessity, not luxury

For the companies that use private jets, the machines aren’t a luxury: they’re a necessity and often short on glamour. The most commonly used jet for business is the Cessna CJ1, which has an 11′ x 4’9″ cabin and seats five passengers. This small plane needs only 3,250 feet of runway to take off, so it can alight on any of the 5,000 public-use airports scattered throughout the nation’s suburbs, small towns and back country, as well as land at small city airports abandoned by airlines decades ago.

If two companies are competing for business, the one using a business aircraft can fly directly to one of those smaller airports and get to lunch with the client before the other guys taking the commercial airlines show up.

And the business people with the corporate jets won’t just arrive faster; they’ll also show up better prepared. After all, most companies send teams of people, and in their own airplane they’re free to discuss confidential information or polish up that PowerPoint presentation.

Business jets are also widely employed by the government for search and rescue missions, surveillance, medical evacuations and crew training. Such aircraft are also valued as speedy, secure executive transportation that is appreciated and used by high-ranking military and civilian officials, including many members of Congress and even the president.

The Latin American Business Aviation Conference and Exhibition (LABACE) is gearing up for its 9^th annual event. This conference is a huge international business aviation fair, second only to the European Business Aviation Conference and Exhibition (EBACE).

The Latin American private aircraft segment is a steadily growing market. In the region, analysts predict delivery of nearly 1,000 business aircraft over the next decade as part of a total 2,285 deliveries between 2012 and 2031. To meet this demand, Blackhawk is adding staff and will introduce them at this year’s LABACE. Also, Brazil has become the second largest market for Hawker-Beechcraft outside U.S.

The Latin American business jet market doesn’t get the recognition it deserves according to some industry watchers. Brian Foley, an aviation analyst, asserts that the Latin American market “will continue to play a key role in sustaining what has been a troubled industry, hopefully until the U.S. market regains its strength.”

LABACE 2012 takes place next week, Aug. 15-17 in São Paulo, Brazil. There is already a lot of buzz about it. Here are some of the highlights to expect:

• An unprecedented 71 aircraft at Congonhas Airport

• Bombardier showcasing its Vision Flight Deck.

• Hawker-Beechcraft displaying 6 aircraft

• 4^th annual Business Aviation in Latin America (BALA) Summit on Thursday called “A Vision for the Future”

Let us know what you’re excited to see at this year’s LABACE!

It’s been all over the aviation news sites for the past couple of days. Research In Motion (RIM) is selling one of its two jets: A nine-passenger Dassault F50EX. While this may sound like a bold, cost-cutting move, it really isn’t.

RIM, the maker of the BlackBerry, is facing serious losses. It has endured a 95 percent drop in its market value in the past four years. Ouch! After declining sales in the U.S., the company depends on sales in South Africa and Indonesia.

So the big cost-cutting plan is to sell one private jet? This is a symbolic gesture at best.  RIM needs to cut costs by $1 billion. According to a source close to the deal, RIM hopes to sell the jet for $6-7 million. That’s a mere 0.7 percent of the total needed to be cut!

However, Jim deDecker of jet consulting firm Conklin & deDecker puts the sale in perspective: “With corporate aviation, the symbolism far outweighs the dollars.”

Companies don’t do a good enough job of justifying their jets to shareholders and the public. Corporate jets are an integral part of business, especially in a highly competitive, global economy. They save time for valuable executives and allow travel to remote locations.

If RIM’s largest markets are in Africa and Asia, you can be sure executives will still be traveling to those areas frequently, racking up expensive commercial flights. Will the company’s symbolic gesture really deliver value to its shareholders?

A new study released in April by the U.S International Trade Commission (USITC) provides an in-depth look at the performance of the business jet market over the past five years. At almost 250 pages, Business Jet Aircraft Industry: Structure and Factors Affecting Competitiveness focuses on business jets weighing less than 50,000 pounds.

How bad was it?

For most industry watchers, the results may not be surprising. The number of delivered business jets peaked in 2008 then fell off sharply from 2009 through 2011. From 2008 to 2011, business jet deliveries fell by 57 percent. The demand for very light business jets was hardest hit, with a staggering 71 percent decline in deliveries during the same three-year period.

In spite of these sobering statistics, aviation industry experts are forecasting slow, steady growth over the next few years — though nothing like the double-digit increases enjoyed in the past. The Teal Group predicts 13,879 business jets to be delivered over the next 10 years, with a measured 4 percent growth in 2012 and 6 percent in 2013.

Homegrown opportunities in manufacturing

The USITC’s report underscores the importance of sustained U.S. business jet production to both domestic and global economic recoveries. Three of the world’s six leading business jet producers are U.S. held companies: Lear, Gulfstream and Hawker Beechcraft Corporation.

Domestic aircraft producers supply much-needed jobs in manufacturing, and U.S companies are also leading the way with safety innovations and technological advances. Companies with plants in the U.S. are also a leading source of parts and systems manufacturing.

Of course, the contribution that business jets make to the U.S. economy doesn’t end with aircraft manufacturing and production. U.S. companies that rely on private business travel help stimulate the economy with increased productivity and by creating new business opportunities worldwide. Due in part to the benefits private air travel provides, these organizations earn more revenue and profits and ultimately create new domestic jobs.

As lawmakers make legislative decisions that affect U.S. business jet production companies, the study may bring some positive attention to a less-than-optimal situation. For that, there’s plenty of reason to hope that the sector will continue to improve, preferably at a faster rate.

The U.N.’s International Civil Aviation Organization (ICAO) is working on international emissions standards. The secretary-general of ICAO, Raymond Benjamin, announced on June 18 that the organization plans to have a draft proposal by March 2013. Right now, the ICAO is studying four different options: two cap-and-trade systems, mandatory off-setting, and mandatory off-setting with potential revenue production.

It’s important for the ICAO to develop and implement international aviation emissions standards to fend off a brewing conflict over the EU’s greenhouse gas management system.

The EU instituted its Emissions Trading System (ETS) in 2005. Since Jan. 1 all domestic and international flights to, from, or between EU member states must comply with ETS. In this system, companies are allotted a specific number of CO₂ allowances which can be bought, sold, or traded depending on a company’s need for them. For example, if an airline predicts it will exceed its allotted allowances, it can either take steps to reduce its emissions or purchase excess credits from another entity.

As you can imagine, several countries aren’t fans of the ETS. Non-EU countries believe the ETS infringes on their rights as sovereign nations. China and India refuse to share their emissions data or participate in the program.

This conflict has a negative effect on aviation in general. The EU has promised disciplinary measures against Chinese aircraft for non-compliance, and China announced it will implement countermeasures. As a result, China has suspended long-distance jet orders from Airbus that add up to about $14 billion.

There is a lot of optimism for growth in the aviation sector in the next 10 years; conflict over emissions isn’t doing anyone any favors. Will the ICAO’s efforts to create international standards be completed in time to diffuse the situation in European airspace?

Michael Huerta, acting administrator of the Federal Aviation Administration (FAA) spoke at the RTCA Symposium, June 5, 2012, about the status of NextGen implementation.

NextGen, basically, is the movement from World War II-era technology to satellite-based technology for air traffic control. It has many benefits:

• Pilots know precise locations of nearby aircraft.

• More direct flight paths and descents.

• Enhanced safety.

• Fuel savings.

In his speech, Huerta explained how successful industry-wide adoption of NextGen depends on collaboration among all aspects of aviation, from airports and air traffic controllers to equipment manufacturers and pilots.

Huerta also discussed four areas of NextGen implementation:

• Metroplex initiatives – Creating new routes to relieve congestion. These initiatives include programs such as Greener Skies in Seattle, which is working to demonstrate that curved a RNP approach is predictable and safe

• DataComm – Integrating communications in an air/ground network

• NextGen metrics – Providing performance data for NextGen initiatives in four areas (safety, capacity, efficiency and environment)

• Equipage incentives – Encouraging aircraft to upgrade to NextGen capabilities

The stages of implementation, which are predicted to take place between 2012 and 2025, are starting now in some of the larger airports in cities including Atlanta, Memphis and Seattle. Ideally, processes will be perfected in local and regional areas and standardized in order to be applied everywhere else.

It is exciting to witness all of the different innovations occurring simultaneously in the world of private jet design. In this blog, we’ve covered the economical HondaJet, the electric hybrid Volta Volare GT4, and the massive double-decker Boeing 747-8 Intercontinental in just the past five months. Fuel efficiency is cool, and who doesn’t want to lie flat when traveling across the ocean? But now it’s time to increase the sexy factor: Speed!

Enter Aerion Corp. with its experimental Supersonic Business Jet (SBJ). This is gonna be cool. According to Bruce Dorminey of Forbes, here are the projected numbers:

• Mach .99 — The jet’s overland speed in the U.S.

• 45,000 feet — The predicted cruising altitude

• 4.25 hours — The length of flight from NYC to Paris

• 148 feet — The length of the Aerion SBJ

• 8-12 — Capacity of the SBJ

• 1/20,000” — The leading edge of the Aerion SBJ wing (Yes, sharp as a knife!)

• 50 — The number of Letters of Intent Aerion already has

• $80 million — The price tag

Of course, testing is still happening, and then Aerion has to partner with a manufacturer. Also, there are plenty of skeptics and the FAA to win over. In any case, Aerion hopes to have SBJs ready for delivery by 2017. Sign me up!

The European Business Aviation Convention and Exhibition (EBACE) ended yesterday, May 16. The annual event is hosted jointly by the European Business Aviation Association (EBAA) and the National Business Aviation Association (NBAA — the premiere organization dedicated the U.S. business aviation industry).

EBACE by the numbers:

• 12,638 attendees

• 99 countries represented

• 491 exhibitors

• 2,280 booth space

• 60 aircraft at Static Display of Aircraft

• 12^th annual EBACE

Each year, EBACE brings together representatives from all aspects of business aviation — avionics vendors, aircraft companies, governmental entities and business leaders just to name a few. This is an incredible forum for all things related to business aviation. Here are some of the newsworthy announcements from EBACE:

• Cambridge Airport plans to invest $32 million in its facility to encourage business aviation there.

• Greater helicopter presence than ever before.

• EBAA and NBAA leaders spoke out against the European Union’s Emissions Trading System, claiming it is unfair to business aviation.

• Bombardier unveiled two new Learjet models.

If you attended, please tell us what you think the most important event was.