Business and general aviation have always been whipsawed by economic cycles, usually with a big lag for us at the end of a recession. This time it’s been especially painful, but change is in the wind – and most of it suggests that things will be getting a lot better in the coming months.
I’m no Pollyanna and don’t deny that many domestic and international political issues make forecasting a risky business, but it’s almost impossible to ignore the positive signs that should make us all optimistic about the future.
1. Great planes are for sale at great prices. We all know that airplanes are expensive, but in terms of true aircraft value per dollar of purchase price, the market hasn’t been this good in decades. Clean, low-time used aircraft are available with huge discounts and new planes with a whole new generation of technology give today’s buyers a lot more for a lot less.
2. Buyers have the money to spend. Business aircraft are, by definition, bought by businesses – and America’s largest companies have lots of cash. But two things are needed to turn them into aircraft buyers: Optimism about their company’s growth prospects and confidence that what they buy will give them a good return on the investment. More and more companies are concluding that spending money now on airplanes is a smart thing to do – a decision that will look even smarter in the years ahead.
3. Oil prices are lower. High oil prices hit all of us in the pocketbook and aircraft operators are no exception. It wasn’t long ago that crude was selling for nearly $150/barrel. Since then, new supplies and a cooling of the global economy (not to mention a respite from runaway speculation) have brought prices down nearly 50% (and natural gas prices have fallen even further). Even hard-core liberals are saluting the energy industry for developing new resources, new fields, new technologies, and new bio-blends that make American energy independence more likely now than it has been in years.
4. Interest rates are at historic lows. Immediately after the financial collapse in 2008, many lenders turned a cold shoulder to aircraft buyers. Today, the tables are turning with low rates and more predictable aircraft values giving our financial partners good reasons to take a second look. Buyers with strong credit will probably never see rates this low again in their lifetimes.
5. Airline travel is still airline travel – only worse. The simple truth is that the airlines’ new business model makes business travel much more onerous, inconvenient, uncomfortable, unpredictable, uneconomic, and insulting than ever before. Frequent flyer programs don’t work anymore. Airplanes are more crowded. Security lines can be a huge hassle. Decent food is a distant dream. There are fewer direct flights. Hidden extra fees make flights more expensive. If anyone wants to find a ‘friendly’ sky, they fly on their own airplane.
6. The elections of 2012 can give the economy a huge boost. The American business community is already feeling optimistic about positive political change in government at all levels. The Wisconsin recall election results in June were a signal that the political pendulum is starting to change direction. Many other states are pursuing business-friendly policies and even the Supreme Court is playing a role, helping restore balance between the public and private sectors.
7. The pace of technological change is accelerating. American business is no longer hunkering down. Hundreds of sectors, from touch screen computers to smart credit cards, from insulin implants to 3D TV, from military drones to shale fracking, are experiencing unprecedented transformations. The modern aircraft cockpit, as one example, is now filled with GPS guidance, Wi-Fi connectivity, iPad approach plates and more. All this change means a whole new era of growth.
8. America’s workforce is more productive than ever. While Europe muddles and other parts of the world struggle with civil wars, corruption, or oppressive government controls on capital, private property, or speech, the American worker is becoming more and more productive. Our mobile, tech-savvy, educated workforce, especially in right-to-work-states, is helping restore our nation’s manufacturing might.
9. A new generation of smart kids is getting into business. The oldest of the “baby boom” generation are soon to leave our nation’s economic and political stage. In their footsteps are millions of smart men and women who are drawn to careers in business. Thousands of them aspire to be the next Steve Jobs or Warren Buffett. They will also be the most mobile generation in history and personal aviation should be an important part of their lives.
10. America is poised to be the global economic leader. Global leadership is, as always, a very competitive question. China, India, and other rising Asian nations, with low cost labor and rapidly-growing middle classes, have seen their influence grow, but they are still uncertain business partners and many of their political leaders are fearful of true economic freedom. The price of Europe’s costly promises to unions and pensioners and a fraying monetary system makes European political leadership less and less likely. Other nations, from Brazil to Saudi Arabia to Russia, are important players, especially in specific sectors, but on the broad global stage their role is much smaller. The fact remains, as politically incorrect as it may be, that America alone has a people, united by history, language, infrastructure, culture, education, and spirit, who are ready, willing, and able to lead the global economy.
This is arguably the first century in world history where the economic actions of every individual are so closely tied together in an interconnected global economy. For this new system to work, there must be a global system of business and personal air transportation. There is only one place on the globe where such an air transportation system thrives. It is here. It is American. And it is poised to fly!
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Jim– great piece but I still wonder if we can say current fuel prices can advantageously spur on business aircraft travel. We are not at the levels of the 1990s nor do I think we will ever be.there again. I worked during that period at P66 and have expert knowledge on the bottom line value to an aviation department when fuel pricing was only 25% of its budget.–especially when crude was well below $50 a barrel. Today’s Fuel Pricing will be the leading indicator to allow for a favorable impact on business aviation resurgence…
Second, ETS or carbon tax will play havoc on a aviation department’s bottom line; Why will this happen? Our leaders (still on impermanent vacation) will never change that European law and as such will help in discouraging travel across the pond. But i have an answer for that too.
Third, is the fact that congress will not act in supporting the growth of business aviation until maybe the mid-year 2013. It will take that long to sort out who in the nation’s capital wants any type of business to grow–let alone business aviation
Lastly, we are losing a great leader in yourself and that alone means one less strong advocacy on the hill.
Bill Coleman