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Why It’s Okay to Say You Own Your Own Plane

Whether you own a business aircraft, sell it, build it, maintain it or fly it – you needn’t be apologetic. Corporate aircraft fuel the economy. According to GAMA, they contribute $150 billion annually in the States alone.

Biz jets play a significant, not-to-be-discounted role for heads of state and globe-trotting CEOs who need face-to-face interaction to create partnerships, broker deals and repair relationships. Think of them less like yachts of the air and more like boardrooms with a view.

C-suite types can make a good business case for using corporate aircraft. Take a CEO’s salary and bonus plan, divide those by the hours worked in a year – and you have that individual’s hourly cost or worth to the company. You quickly see how minimizing the time spent in security lines, check-in and navigating multiple connections makes aircraft ownership the more value-oriented travel solution. Ownership increases productivity by providing an office in the air – enabling confidential conversations, phone calls and meetings. Ownership also provides tax benefits that benefit the company’s bottom line.

Forget Stereotypes

The next time you hear someone bashing private aviation, remember these valid justifications. Also, point out that C-suite types make up only a fraction of those who rely on business aircraft to do their job.

Just as small business dominates commerce in the States, so does small business’s use of corporate aircraft dwarf the big guys’. According to an NBAA-commissioned study, 74 percent of flights aren’t carrying C-suite executives. Rather they’re transporting sales, technical and middle-management team members out into the field to do, get this, real work. And, they’re flying them into one of the country’s 5,000 public-use airports – rather than being limited to the 500 that can accommodate commercial airliners. They provide an indispensable link to small and medium-sized communities without commercial service.

Workhorses of the Sky

Uses are as diverse as the aircraft. Rotorcraft taking materials to rigs at sea. Piston-powered prop planes surveying pipelines or mapping wetland losses. Helicopter and fixed-wing water bombers protecting woodlands and homes. Turboprops making short, economical multi-airport hops for engineers and urban planners. Ag planes not just treating millions of acres of cropland, but often also planting by air. Emergency aircraft improving survival rates by getting accident victims to help. Fast.

General aviation advances development and enables small teams to accomplish more. Workforces become not just more mobile, but more nimble. They advance development efforts and shrink our big world. From our base in the Air Capital, we know these truths. But we need to become better proselytizers. Spread the word. If you own your own aircraft, speak up. Proudly.

Still Flying High on Earth Day

On this day dedicated to celebrating and protecting our good Earth, it’s important for those of us in the aviation industry to remind ourselves that we can still be kind to the environment even as we take to the skies. The truth is that aircraft account for very little of total atmospheric carbon. According to an estimate by Cambridge University, aviation contributes only about 2 percent of total global CO2 emissions.

But the industry recognizes its responsibilities. Even if it didn’t feel any moral obligation, economics would dictate action. Just as $4 gas will make you think twice about buying that Hummer, aircraft operators continually push for more efficient machines and for alternative, sustainable fuels.

For Earth Day, a Few Current Initiatives

• Just this week, an Argentinean firm announced that it is close to producing commercially viable jet fuel from microalgae. When you think about it, this is how we got oil in the first place. It just skips the bit about spending millions of years squeezed amongst the rocks.

• Also this week, a Slovenian self-launching glider won the Lindbergh prize as the best electric plane on the market. And yes, there is such a market, as more groups race to build airborne Priuses (Prii?).

• NASA currently is testing a substance it calls hydrotreated renewable jet fuel. Guess that sounds better than processed chicken fat. It’s just one of many biofuels under study.

Meanwhile, every aircraft and aircraft engine manufacturer is devoting enormous resources to making current technologies and fuel sources more efficient. The ones who don’t won’t last long.

We’ll make a bold prediction here: Mankind took to the skies a little over a century ago. A hundred years from now, we’ll still be soaring into the heavens.

Happy Earth Day. 

Aboulafia’s 50,000-Foot View of Wichita’s Aviation Cluster

Analyst Richard Aboulafia kicked off his recent presentation to the Wichita Aero Club with a look back at the factors contributing to aviation’s worst downturn since World War II. And, yes, Wichita was the epicenter of that pain. “If you felt like the sky was falling,” he said, “It really was.”

While Aboulafia was telling a packed room at the Airport Hilton much that they already knew, it was great to have someone with his deep knowledge provide insights and context. And hope for better days.

Why So Much Pain in the Air Capital?

The nosedive in the bottom half of the bifurcated business jet category (aircraft selling less than $25 million) caught even Aboulafia by surprise. That bottom half, he says, is now the bottom one-third.

Some of the reasons for that drop include:

• Greater third-party reliance for financing

• Greater sensitivity to economic cycles

• More discretionary users of aircraft

• Greater fractional exposure

• Less exposure to emerging markets that have stayed intact (think the Mideast and Asia)

• Greater exposure to economic conditions in North America

• Less exposure to government demand, especially head-of-state aircraft

New Global Competition

Another unpleasant convergence of events for Wichita: Embraer’s new competitiveness. Fortunately for Wichita’s general-aviation OEMs, Embraer seems to be shifting its focus to commercial aircraft for future growth.

During the lively Q&A, Aboulafia fielded a question about the Chinese government’s entry into general aviation manufacturing and design, saying, “If you really like this strategy, you should buy your car from the department of motor vehicles.” He went on, to the audience’s delight, to call it the worse plane ever built.

The New Normal

Corporate profits, a big driver of demand, are coming back where they need to be, but pricing is still suppressed, partially because of continued fire sales spurred by the inventory of used business aircraft still hovering around 13.5 percent. Some of these may be technologically irrelevant or too fuel-thirsty, so they won’t go back into service, Aboulafia said, but he conceded that “13 percent may be the new normal.”

A Supply and Demand Thing

Aboulafia forecast a turnaround in 2012 with a six-year, 10 percent compounded annual growth rate. While that’s down from 17.4 percent in earlier years, it’s a conservative rate Aboulafia feels comfortable with.

Optimism rose with statements such as – “This is an industry that snaps back fast.” and “Corporate profit numbers look really good.” – but he quickly tempered spirits with other more sober observations: “Wichita could lose in total market share. We could be looking at a permanently altered industry.”

Following his assessment of the large jetliner markets – Boeing and Airbus – Aboulafia pulled the word “stagflation” into play: stagnant demand while other costs remain high. He talked about all the complexities facing the manufacturers, noting, “God knows, it’s a really confusing situation.” Even defense, he said, is “not the same fantastic market we’ve enjoyed in past years.”

The one part of the market that performed strongly throughout the downturn: rotorcraft. “Firing on a single turbine, but it’s a big one.”

Each manufacturer faces challenges – from parent-company funding to new-product execution. But Aboulafia emphasized, “The business jet market is poised for recovery.”

Getting Back to Altitude

The importance of aviation to the world economy from 2001-2020 will be roughly $130 billion, Aboulafia said, with long-term growth and the ability to weather what comes – including tragedys such as Japan’s earthquake, tsunami and resulting nuclear meltdowns. Those sorts of supply disruptions create more of a psychological impact that produces uncertainty, he said, and the risk of a let’s-hold-off-buying mentality.

“The only place on the entire globe that wasn’t sheltered unfortunately during this downturn was Wichita.”

Wichita stands as the most diverse of the world’s five major aviation clusters (which also include Dallas-Fort Worth, Montreal, Puget Sound-Seattle and Toulouse, France). It also has the highest dependence on business aviation. As Wichita – and Kansas – thinks about ways to support our aviation OEMs and suppliers we’d be wise to keep in mind Aboulafia’s often-repeated statement, “Clusters can’t be created. They can only be destroyed.”

Using Website Analytics to Develop New Digital Products

Modern website analytics technology has blown open the pipeline of usage data. Website owners and marketers have a wealth of information about their site visitors: where they’re from, what technology they’re using, what content they find most interesting and more. By digging a little deeper into this data, companies can draw informed conclusions that help them develop digital initiatives that deliver big time.

Signature Decides To Develop An iPhone App

When Signature Flight Support, the world’s largest FBO, wanted to develop additional platforms to deliver fuel prices and service information to customers, they didn’t need to conduct expensive research. They could, and did, spend time with their website analytics. From that they made a simple connection.

Traffic stats to showed a high usage of mobile devices, particularly the iPhone. This helped drive the decision to have Greteman Group develop iFBO, a mobile app featuring Signature’s industry-leading fuel price calculator and location services information.