AIN's 2011 Year-End Report
Orville and Wilbur got things airborne just over one hundred years ago, and for the most part it has been a reasonably steady climb-out. But don’t try to sell that to today’s aviation executives. More than three years have passed since the Great Recession began, and an increasing number of my business colleagues are telling me they are tired of hunkering down. So am I. But these times are the cards we’ve been dealt, so rather than become demoralized let’s see where we are and how we might get to a better place.
The economy’s downturn affected the three sectors of aerospace we cover — business/general aviation, airlines and defense — to differing degrees. The defense sector (15 percent of our business) survived almost unscathed but now faces severe budgetary pressures. (I have a contrarian view here and believe the defense cuts being discussed will not materialize to the extent many people think.) The airline sector (20 percent of our business) also has weathered the economy’s decline well, with carriers pulling back capacity but increasing yields and profitability. They are ordering the latest-model, fuel-efficient jets at record rates.
Business aviation (65 percent of AIN’s business) suffered the most, with revenues dropping 30 percent in most parts of the industry and some sectors, such as charter, declining even more. I don’t know of a single company in business aviation that did not experience major corrections in late 2008, all of 2009, and to a certain degree, 2010 and 2011. Business jet deliveries declined from an all-time high in 2008 of 1,313 units to 870 units in ’09, 763 units in ’10 and an estimated trough of 650 units this year.
Industry pundits are quietly forecasting slight increases in deliveries starting next year. While I hope they’re right, I don’t anticipate substantial improvement until we have a better business climate in the U.S.
I won’t delve into politics other than to state that I encountered almost no Obama administration supporters at the recent NBAA convention in Las Vegas. My belief is that we won’t see a sustained business recovery in the U.S. until more confidence returns to the private sector, which may not happen before Nov. 6, 2012. By the way, next year’s NBAA convention will be held from October 30 to November 1 in Orlando — just days before Election Day. It should be a fun and interesting time. The following week should be interesting, too. Let’s hope that whether Obama is reelected or replaced, we wind up with an Administration that will show much greater support for our industry than we’ve seen in the past four years.
No matter what happens on November 6, we as an industry will continue to work hard to represent the true value business aviation brings to commerce and the economy. On that note, I am proud of the leadership role Business Jet Traveler has taken in representing the positive side of private lift. BJT has become a true advocacy arm of our industry, and you can expect more of the same in the coming years.
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