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Greetings!
 The last year has not been fun. As far as I can tell it looks like the week
after Christmas - at least a 40% mark down on everything. In the industry I follow the closest, business
jet service and manufacturing, there are varying opinions of what will happen
this year and next.
Last year about
1,100 business jets were delivered. This
year, estimates range from 500 to 800.
The higher number is my count of the OEMs' latest estimate and does not
count an expected downward revision by Cessna.
Remember Cessna accounts for up to forty percent of all deliveries. To put these numbers into prospective it is
helpful to remember that in the 1990's, 300 to 400 deliveries was considered a
good year. In 2000 OEMs delivered 751
business jets and 785 in 2001. The first
21st century cycle bottomed in 2003 at 518 deliveries.
For the next five years, delivery growth
looked like the proverbial hockey stick graph. The factories built capacity
in order to try and stay ahead of the curve.
Embraer entered the market and all the other OEMs added new models to
fill all niches for business aircraft needs. We now have six major
manufacturers with excess capacity competing for a much smaller market.
While the estimates for deliveries of business jets in the USA had been predicted to drop before the
economic crisis, the growth of international deliveries was projected to fill
the gap and actually grow much faster than the USA. Unfortunately the economic crisis is global
in scope and international sales are not materializing as projected. Next year should be a critical test for the
OEMs.
According to a UBS
analyst who follows this market, there are signs that the used business jet
market is stabilizing. If so, this would
be good news as it would ease the pressure off the factories trying to sell
into the headwind. The banking industry
is beginning to show some signs of improvement, credit markets are beginning to
open up, and the stock market has had a six week string of upticks.
It my not be as dark for the business jet service
industry. The population of aircraft is
continuing to grow. However a number of
the major MROs were sucked into the same overbuilding as the OEMs and have cut
back plans and had lay offs. This
segment may recover before new aircraft sales show positive signs of
improvement.
Warren Buffett suggests buying stocks and companies
when they are on sale. My guess is that
consolidation will continue as the credit markets firm up.
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When the Music Died
A Time to Remember
 Don McLean sang about the day 50 years ago when a Beech Bonanza, piloted by a very inexperienced pilot without an instrument rating, crashed in Iowa killing Buddy Holly, Richie Valens, and J. P. Richardson known as the "The Big Bopper." Business aviation has come a long way since that time. Today successful music stars, use business jets to get where they need to be on time, and safely. Music is big business.
Private jets and private aircraft of all types make it possible for not only music, sport stars, and CEOs, but lesser mortals like doctors, nurses, engineers, salesmen, deal-makers etc, to get anywhere they need to be on time. Malcolm Forbes called his business jet the Capitalist Tool, and Warren Buffett named his jet, The Indispensable. Life-saving hearts, kidneys, and other packages are delivered to airports almost anywhere in business aircraft. The list of the virtues of business aviation goes on and on.
In spite of a few missed chords, the business jet industry is still alive. Hail, Hail Rock and Roll.
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A Marvel, Misunderstood
Bill Garvey to the Rescue
On Super Bowl Sunday the New York Times published an op-ed piece "The Mile High Office" by Bill Garvey. In his Viewpoint column in the March issue of Business and Commercial Aviation, Bill explains how this came about. Bill gets the award for the most ink on this issue. (See Viewpoint January 2009 and Viewpoint February 2009.
A few weeks later the National Business Aviation Association (NBAA) and the General Aviation Manufacturers Association (GAMA) launched a new website and a campaign No Plane No Gain to explain the value of general aviation to the economy - $150 billion and 1.2 million jobs, access to communities with little or no commercial air service, and an increase in productivity. Cessna Aircraft and Hawker Beech started an ad campaign. Ed Bolen, president of NBAA and Cessna CEO Jack Pelton began making the rounds of the cable and network news and talk shows. In early March Jim Coyne, president of NBAA, wrote a strongly worded letter to president Obama.
I urge you to read or read again the documents behind each of these links, and then help carry this message to Congress, the Administration, and your friends and neighbors. This is a great industry and we should be proud of it.
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A Pilot Gets It Right
Gliding to a Soft Landing
 While the economy and the government stumbled along in turbulent waters this past winter, there was one example of superior airmanship. If anyone could keep his cool and deal with a crisis it was Captain Sully Sullenberger. As if to divert our minds from the economic mess, the President took several opportunities to be seen with Captain Sully. I wrote two pieces in Hangar Talk about my thoughts on this amazing feat and how it happened. In Gliding to a Soft Landing I discussed how my personal experiences allowed me to appreciate what Sully and his crew accomplished. Then I discovered that 45 years earlier a similar event had occurred, and again there was a personal connection. So I wrote Miracle in the Pacific. Perhaps these essays will give you a break from the grim reapers on the evening news.
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Welcome Andy
A Real Champion
My longtime friend Andy Blackburn has recently joined The Aviation Group team. Andy's dad, Al, has been an even longer friend. Please visit this page, The Aviation Group team, and read about the finest and brightest group of aviation professionals, including Andy, whom I have had the privilege of knowing and working with. It is not on their bio, but both Al and Andy Blackburn are champion sailplane pilots. In fact Andy is nationally ranked. If you read Hangar Talk, you know why this is important to me, and anyone who needs to be guided to a soft landing or a roaring takeoff. It's what The Aviation Group is best at.
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Final Thoughts
The music of Buddy Holly, Richie Valens, and The Big Bopper never really died. Nor will business aviation. Both are amazing creations by some of the finest artists in this great country. We have experienced plane crashes and market crashes in the past, will again, and each time we fly to higher altitudes.
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