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Greetings!
 The National Business Aviation Association (NBAA) convention and trade show was back in Orlando this year. The event opened on October 6, the day the Dow dropped below 10,000 and the credit markets froze. The contagion continued around the world over the next few days. (By the end of the week the Dow stood at 8.500.) October 6 was also the day that Honeywell released its annual business aviation forecast. In sharp contrast to the grim financial news, this was the most bullish forecast by Honeywell that I can remember. Honeywell has been uncannily accurate in their forecasting. More on this below.
Attendance topped 30,000, about the same as 2007. There were about 1,100 exhibitors inside the convention center; but there were a number of no-shows and others that significantly downsized their exhibit. A record-breaking 139 business aircraft were on static display at Orlando Executive Airport. XOJet (see my fall 2007 issue) was one of the no shows. Paul Touw, who was CEO of XOJet, in early October said, told BC/A Show News, "XOJet had a couple of scares, we had some leases with Lehman and of course they went belly up." He also pointed out that AIG was providing all their insurance. Just before the show opened, I learned that XOJet has a new CEO, David Siegel. He is a fixit guy usually brought into restructure troubled companies. His former challenges were US Airways, Avis, and Continental Express.
As if to cap off the week, a new company, Aviation Recovery, Inc. that repos aircraft toured the floor of the show looking for clients. It was reported that they were optimistic about new business.
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Honeywell's Outlook
The good news of the week
 Honeywell's latest Business Aviation Outlook released on the first day of NBAA, forecast a continuing boom in the business jet industry with sales from 2008 through 2018 expected to total approximately 17,000 new aircraft valued at $300 billion. This was more bullish than last year when their 2007 Outlook foresaw deliveries and sales from 2007 through 2017 of 14,000 new aircraft valued at more than $233 billion.
Honeywell pointed to the large backlog for very long-range business jets like the Gulfstream G650. Customers must make a $3 million non-refundable deposit just to get on the list. Most manufacturers are sold out through 2010, with some models not available until 2011. Backlogs have reached nearly three years of production.
Honeywell has been preparing business jet forecasts since 1986 and has an excellent record of forecasting future business jet market activity. |
J.P. Morgan's View
A mixed view
 On the last day of NBAA, J.P. Morgan predicted that the business jet market is headed for a 15% downturn after deliveries peak in 2010. However, Joseph Nadol, head of the J.P. Morgan Aerospace and Defense equity research group, said, "The downturn will be smaller than the previous market slowdown in 2001 and 2002, which resulted in a 31% decline. The effect of the financial crisis will be buffered by the industry backlog, one of the main reasons the downturn won't be as severe as the earlier decline. This industry has a massive backlog. We're going into this recession in a much better position than before. In addition, deliveries are up 11% from 2003, and profits have increased 36%. International business is expected to help keep the industry afloat, but analysts are downgrading their predictions for China and India, though they expect business to increase in the Middle East, Eastern Europe (including Russia) and Latin America."
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New Security Program for GA
Hidden reefs
 Adding to the worry list for the week, the Department of Homeland Security announced a new proposal that would extend security requirements to GA aircraft that weigh more than 12,500 pounds. The proposed regulation would require operators to verify that passengers are not on the "no fly" and/or "selectee" portions of the U.S. government's consolidated terrorist watch list. It also calls for fingerprint-based criminal history records and terrorist name checks for flight crewmembers, designated security coordinators, and check/validate property on board for unauthorized persons and accessible weapons. All the GA alphabet groups expressed concerns, but my friend Andy Cebula, executive vice president of AOPA, was the most vocal stating, "This proposed rule is an unprecedented imposition of security requirements on the GA community affecting 10,000 individual operators and hundreds of airports."
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A View from Outside the Beltway
Together we can make it happen
 As I write this, the finance ministers of the G7, the world's seven biggest industrialize economies, are meeting inside the Washington Beltway at the U.S. Treasury building next door to the White House. The McCain and Obama campaigns are moving rapidly around the US. None of these groups are traveling on the airlines. When you absolutely positively have to be somewhere in a hurry, business aviation is the solution. In the coming weeks it will be business executives, plant managers, engineers, salesmen, etc. that must be somewhere in a hurry to put out a fire or close a deal. Business aviation will feel some pain, but the industry is here to stay. My answer is NO to the Washington Post headline that appeared at the end of NBAA week, "The End of American Capitalism?"
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