May 12, 2008
Nathan A. Ferguson and Alton K. Marsh
By Nathan A. Ferguson and Alton K. Marsh
The general aviation industry’s economy is either growing or softening depending on whether you fill up with Jet A or 100LL. Thanks to foreign sales and tax incentives, manufacturers are so far weathering the economic storm.
The piston-powered airplane segment has seen a 28-percent decrease in shipments—399 units from 554—when comparing the first quarter of 2008 with the same period last year. Things are boding much better for business jets with a 40.8-percent increase. While total industry billings were up by 16.1 percent or $5.3 billion, an all-time high for the first quarter, total shipments were down by 7.5 percent.
“Last year, 67 percent of piston deliveries were to the North American market, making this segment the most susceptible to softness in the U.S. economy,” said Pete Bunce, president and CEO of the General Aviation Manufacturers Association. “However, as worldwide markets continue to expand, we see more capability to insulate manufacturers from the economic dynamics of any one specific region.”
Helping the piston market was a tax incentive called bonus depreciation as part of the Bush administration’s economic stimulus package. While it applies to both piston and turbine airplanes, Cirrus Design President Alan Klapmeier said it more proportionately benefited piston manufacturers because of the current backlog of jet orders. The tax break applied to purchases made in 2008 with deliveries later in 2008 or 2009.
Cessna Aircraft shipped the most single-engine piston airplanes with 113. That includes the newly acquired 350 and 400 models of which it tallied 16. Cirrus, meanwhile, shipped 76 airplanes.
“For us, the economy was not much of a factor,” said Cessna spokesman Doug Oliver. “We had a supplier issue that delayed a number of Q1 deliveries, and changes we made to the airplane and POH took a little longer to gain EASA [European] certification than we originally forecast. This is not to say the economy is not playing a role, but I think it usually takes a bit for it to impact due to lead times. I don’t think cancellations were a factor either.”
Diamond Aircraft officials said they weren’t at all disappointed by the slight decline in deliveries, caused mostly by Thielert Aircraft Engines entering bankruptcy.
“One hundred and one units puts us in solid second place in total number of piston aircraft delivered. Outperforming all others and coming a close second only to Cessna is bittersweet success. Had it not been for a disruption of supply of TAE engines, we would have produced a total of 118 aircraft in Q1 and been able to claim the No. 1 spot in piston deliveries,” said Heike Larson, Diamond’s vice president of sales and marketing.
Updated May 14, 2008
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