Although indicators in the business aviation industry have pointed in different directions this year, NBAA President and CEO Ed Bolen remains optimistic. In an interview with Monitor, he shares his reasons why and outlines the issues that are top of mind for the association, including keeping air space public and minimizing the industry’s environmental impact.
A theme of uncertainty has dominated just about everything in 2016, and business aviation is no exception. While the National Business Aviation Association (NBAA) — an organization for companies that rely on general aviation aircraft to help make their businesses more efficient, productive and successful — does not make predictions about the health of the industry, it does analyze the environment. This year, the association has been keeping an eye on both positive and negative factors throughout the global economy.
“Here in the U.S., which is the largest market by far, we do see that the economy is pretty stable,” says Ed Bolen, president and CEO of NBAA. “We see that flight hours are up, fuel sales look strong and many maintenance and repair shops report that they are busy. So there is some positive news.”
On the other hand, the most recent report from the General Aviation Manufacturers Association (GAMA) indicated year-over-year declines, with industry airplane shipments down 4.5%, airplane billings down 11%, rotorcraft shipments down 16.1% and rotorcraft billings down 32.5%. In a press release issued with this data, GAMA President and CEO Pete Bunce stated that this is a “challenging global climate.”
While Bolen agrees that the data from GAMA is disheartening, he retains a bullish outlook for the future. “By historical standards the pre-owned market is softer than anyone would like, so there are different indicators pointing in different directions,” he says. “The good news for the industry is, historically the fourth quarter is usually a strong one. There is some optimism as we are finishing 2016 here in the U.S.”
A Global Economy
“Internationally, it continues to be a little bit of a mixed bag,” he says. “But when we look at some of the events that have captured the imagination and attention through the early part of this year, including Brexit and the situation in Brazil, we see some certainty now in those areas as we move forward.”
The overall message of the NBAA is optimistic. Bolen points to signs of strength within certain areas of the global economy, such as Southeast Asia and Mexico. Thanks to steady growth in the Asian market, NBAA has hosted its annual Asian Business Aviation Conference and Exhibition (ABACE) in Shanghai for almost a decade, and Bolen says China and other growing markets in Asia are a continued area of focus for the association.
Despite these positive factors, Bolen offers a word of caution: “If there’s one thing we’ve learned over the past several years, it’s that we’re all operating in a global economy, and this economy is very difficult to predict.”
Vital to Economic Health
One thing is certain: Business aviation plays an essential role in the health of the economy. “Business aviation generates an enormous number of jobs in the U.S.,” Bolen says. “Our most recent study said it’s over 1.1 million. These are really good jobs in a variety of areas, certainly manufacturing and training but also jobs in law, insurance and finance.”
According to NBAA data, general aviation creates more than $200 billion in economic activity every year. “It’s very important for economic development, particularly in those small- to mid-size communities that may not have the very best scheduled commercial service,” Bolen adds. “It can generate jobs in locations of all sizes.”
Business aviation also helps companies improve efficiency and productivity. “They can do more in less time,” Bolen says. “That’s a valuable commodity — the ability to turn travel time into productive work time by moving teams of people and allowing them to discuss proprietary information onboard the plane and visit three or four cities in a single day. Companies are better able to retain workers because they can have a little more certainty about their lives and their schedules.”
The geographic scope of general aviation makes it vital to business. While scheduled airline service is only available in about 500 U.S. cities, more than 5,000 small U.S. towns have general aviation airports that support business aviation. Despite the known benefits of the existing system, NBAA is closely monitoring pending legislation that seeks to privatize air traffic control.
Keeping the Air Space Public
“The big airlines have been pushing an agenda item for the last several years that would effectively give them control of our nation’s air traffic system and fund that system with user fees,” Bolen says. “That is, and continues to be, a top priority for our industry because it has the potential to impact our access to airports and airspace and to determine who can fly where, who can fly when and who can fly for how much. We believe the public air space belongs to the public and it ought to be run for their interest, not some combination of special interest groups.”
Although the House Transportation and Infra-structure Committee approved a multiyear bill featuring air traffic control privatization earlier this year, ultimately, the final Federal Aviation Authority reauthorization bill approved by both houses did not include this provision. However, according to the Wall Street Journal, since the bill approved a brief 18-month extension of FAA authority, legislators may resume working on the privatization measures after the November elections.
While the next FAA reauthorization is top of mind for the NBAA, many other important issues are on the association’s agenda, including minimizing the industry’s environmental impact. In October, the International Civil Aviation Organization formalized a global agreement for addressing international aviation carbon emissions. Although the agreement is still taking shape and will not be implemented before 2020, Bolen says NBAA and the International Business Aviation Council (IBAC) are continuing to help ensure its implementation will be workable for operators.
The Next Generation Air Transportation System (NextGen), which proposes a shift in U.S. air traffic control from ground- to satellite-based is another important issue. “We’re very involved with projects like the NexGen,” Bolen says. “NBAA’s primary goal is to make sure that the overall system is operating in a way that maximizes its potential for all users of the air space and takes advantage of technologies, policies and procedures that have the potential to enhance safety, reduce our environmental footprint, increase capacity and throughput of the system.”
Bolen says NBAA focuses on a broad scope of issues. “We just endeavor to create an environment that’s going to facilitate or foster business aviation operations and allow our country and the world to have the benefits that our industry brings, which includes increased commerce, increased economic development and bringing different countries and different cultures together. It’s an essential industry, and one that we think generates some very important benefits for the U.S. and the world.”
To ensure the health of the industry, Bolen would like to see NBAA’s membership continue to grow. “More and more people in our industry are becoming very active, informed, engaged and are really becoming part of the political process,” he says. “Not just understanding what the operating environment is or the laws or regulations that impact our industry, but actually reaching out as the founding fathers envisioned and getting active in making sure that their thoughts and hopes are communicated to those representatives at the federal, state and local level.”
Nick Lionello of Beacon Funding discusses the benefits, as well as the risks, of offering flexible financing solutions and how it can lead to new business.
Patrick Gaskins of AmeriQuest Transportation Services outlines what’s at stake for the transportation industry, the Highway Trust Fund and the nation’s infrastructure in the upcoming elections.