GAMA: Things are looking up

Three green. Out of five general aviation economic recovery indicators, three—flight activity, corporate profits, and tax policies—are showing positive signs, the General Aviation Manufacturers Association reported Feb. 22 during its State of the Industry address.

“We have three greens,” said GAMA Chairman of the Board and Dassault Falcon CEO John Rosanvallon, “and that’s always a good sign in aviation.”

U.S. business jet flight activity increased 10.8 percent from 2009 to 2010, while business aviation in Europe increased 5.5 percent. Corporate profits, which drive aircraft purchases, increased 46 percent globally and 26 percent in the United States. Favorable tax policies, including the extension of bonus depreciation, also will help the market, Rosanvallon said.

However, he highlighted two areas of caution. The used business jet market is improving very slowly, with an inventory of 14.8 percent in December 2010. Asking prices continue to be depressed, he said, adding that the time to sell an aircraft remains too high.

“We’ll see what’s going on [in this area of the market] this year,” Rosanvallon said.

The area of highest concern remains the limited availability of financing for mid and light jets and small aircraft. In 2010, 78 percent of transactions for business jets were cash deals, a 13 percent increase over 2009.

Meanwhile, shipments continued to suffer for the third straight year, decreasing 11.4 percent to 2,015 units in 2010. Piston deliveries experienced a 7.7 percent decline in 2010, with 889. Turboprops declined 17.7 percent, with 363 deliveries. Business jet shipments decreased 12.3 percent, with 763 deliveries. (Download the “ 2010 General Aviation Statistical Databook & Industry Outlook”.)

GA billings increased, thanks to the business jet market and expanding global markets. Billings increased 1.2 percent in 2010 to $19.7 billion. Billings to emerging markets in Asia Pacific, Middle East/Africa, and Latin America all increased, while North America and Europe saw a decrease. This helped contribute to an 11 percent increase in U.S. exports in 2010 to 62 percent of the U.S. billings.

Although the general aviation industry is starting to turn the corner, GAMA President and CEO Pete Bunce said, “I look at 2011 with both optimism and caution.”

Bunce forecast that the economic recovery should continue to pick up, backlogs should increase, and new markets should continue to expand. However, he stressed that at a time when the government is reducing spending and releasing new regulations, the industry must collaborate with government agencies to help streamline and shape the regulations that govern general aviation.

The industry already is collaborating with the FAA and Transportation Security Administration on a number of issues, including the transition to an unleaded avgas and the Large Aircraft Security Program. Bunce acknowledged the industry’s effort to come together on the avgas issue, form the General Aviation Avgas Coalition, of which AOPA and GAMA are members, and encourage the FAA to take a leadership role. The FAA has since created an aviation rulemaking committee to advise the agency on the process of transitioning the piston fleet to an unleaded fuel.

GAMA, AOPA, other several other aviation advocacy and industry groups have worked with the TSA to develop commonsense rules that would replace the proposed Large Aircraft Security Program that received so much backlash from the industry in 2008. The TSA had agreed to go back to the drawing board and work with the industry to develop a better plan. A new proposal is expected to be released this year for the industry to analyze and provide feedback.

Bunce also advocated for international aviation safety agreements and streamlined certification and inspection between the FAA and the European Aviation Safety Agency for manufacturers and repair stations working in the United States and internationally.

“The changes needed in policy and regulation in these areas are great,” Bunce said. “We must capitalize on this opportunity to develop added efficiencies in government policies and procedures to increase safety and keep pace with industry growth.”