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Seaman: Are We There Yet?

If you earn your living in the corporate aviation world, chances are you have been forced to apologize for the business you are in to someone over the recent past.


July 27, 2009
By Rob Seaman

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If you earn your living in the corporate aviation world, chances are you have been forced to apologize for the business you are in to someone over the recent past.

Politicians will grab at anything to get some press. They often leap before they learn or think – many bashing the biz jet and everything associated with it. The CNN Recession unfortunately gives those who really do not know something well, just enough facts to chew on – in all the wrong ways.

In case you forgot, in many cases corporate aircraft are the sole lifeline to remote regions long since abandoned by the commercial carriers. Bizcraft deliver not just people but also just-in-time parts and materials necessary for such places. Remember too the empty seat that is happily and willingly given to a needy family being transported for medical attention. Yet we find ourselves apologizing?

We worked hard to lose the image of the corporate barge. But the public opinion generators have seized upon bizjets as an opportunity to try and bring disgrace and shame. Forget that most government officials utilize a private aircraft in some way. Most continued to find a rationale for their use as and when it suited them. They then turn and place a pall over the honour of our industry and those in it. How disgraceful!

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The resurrected No Plane No Gain campaign from the 1990s has helped. The general media bashing has abated. Manufacturers’ public ads have promoted the efficiency and reliability of their respective products too. Cessna’s CEO recently reminded the world that general aviation contributes to the economy at many levels and includes at least 1.2 million jobs in the U.S. alone. According to Jack Pelton, general aviation contributes more than $150 billion annually to the US economy and is one of the few remaining industries that maintains a positive balance of trade with nearly 40 per cent of the country’s total 2007 production of $12 billion worth of aircraft being exported. And guess what – none of the folks in this industry have gone to Ottawa or Washington for bailouts. Investment and infrastructure funds – yes, but bailouts – no!

Brian Foley Associates sees a recovery of the business aviation industry by the middle of next year – but not before some more unavoidable pain. Foley predicts that there will likely be more shakeups and he feels FBOs, maintenance and other aviation service providers will find 2009 difficult, especially in light of reports that normal business jet activity was down 30 to 40 per cent. The good news as he sees it is that this activity decrease is only temporary until financial markets stabilize. Things will settle down by mid-2010 and the industry once again will be poised for growth, albeit slower than we’ve been accustomed to in the recent past, he says.

In the US, the recent Economic Stimulus Bill included a return of the Bonus Tax Depreciation Write-Off of at least 60 per cent of a new aircraft purchase. Additionally, certain demonstration aircraft that were not previously titled may also qualify and improvements such as an avionics upgrade made to a used aircraft will also qualify for 50 per cent bonus depreciation. If only Ottawa were this progressive in their thinking!
And finally, there’s the sales end of the story. True, the OEMs have been laying-off but they were ramped up to produce aircraft based on extensive back orders and wait times.

That crisis is past. But the business still remains active.

In the resale market, a lot of aircraft listed for sale really weren’t. Theatrics were put in play to appease the investors, making it appear that aircraft were being disposed of. When you looked closer, the price was such that in a depressed or recessed market, the alternatives pretty well assured limited interest. With the stock markets now heading mostly north, we should see many resale aircraft delisted. Further, many feel stable pricing and inventory will be the norm for a while. Add to that the exchange rate on the Canadian versus US dollar and now is a pretty good time to buy an aircraft – new or resale. And that is just what some are starting to do.

So – hey you – the bully! You tripped us. We took it from you. But we are still here. And will be for a while it seems. And we will even forgive you when you want to come and play with us again. Because we are bigger than you were it counts. So there!


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