Industry analysts offer predictions for 2013

December 27, 2012

The general aviation industry saw its highs and lows in 2012, including the defeat of user fees (again), the third class medical petition, a slow recovery for aircraft sales, and new products. Industry analysts weighed in on what they thought would be the big issues facing GA in 2013.

Richard Aboulafia, vice president of analysis for Washington, D.C.-based Teal Group, said the industry tends to focus on the small things when there’s a gigantic issue looming. “You might be able to handle taxes and user fees, but 90 percent of the problem is actually things that are out of the industry’s control—the economy, credit, and business confidence,” he stated. “The industry needs business confidence to return, it needs the economy to show more signs of recovery, and it needs credit to be more available.”

Brian Foley of Sparta, N.J.-based aviation consultancy Brian Foley Associates noted that the fixed-wing propeller segment was hit harder in the downturn than any other category, with worldwide deliveries falling two-thirds between 2006 and 2011. “The free fall seems to have finally stabilized with GAMA reporting a 3.5-percent increase in deliveries for the first nine months of 2012 compared to the same period in 2011,” he said.

While a recovery is inevitable, it will not reach its full potential due to the uncertainty surrounding avgas, Foley warned. “Buyers of high performance aircraft that rely on leaded fuel are intelligent consumers, and will delay their purchase decisions until there’s some definitive clarity on the future availability of fuel to run their significant investments,” he advised. “These types of sophisticated aircraft drive the dollar value of the industry’s overall piston deliveries, making them crucial contributors to the recovery.”

“Just hoping for an avgas solution at some unspecified point in the future will prolong the high-end sales limbo since buyers don’t like uncertainty,” said Foley. “It doesn’t appear that a resolution is imminent, exacerbating the situation.”

So how does this eventually play out for new aircraft deliveries, Foley asked? “Manufacturers already recognize that continued production of aircraft that rely on lead is dicey. We’ve already seen them begin to offer alternative engines, such as Cessna’s 182 JT-A and Diamond Aircraft’s DA42 derivatives,” he said.

Even Beechcraft recently hinted that the venerable Baron and Bonanza may become jet- or diesel-fueled, said Foley. “You can bet that all major manufacturers are either evaluating or have plans in the works to retrofit the rest of their model lineup with engines that don’t depend on avgas,” he predicted. “This trend will become more of a scramble or even a mad dash, resulting in the majority of key money-making piston models offering alternative engines within the next five years. This will put the industry in the position to eclipse 2006 delivery numbers, since it opens up the rest of the world market where avgas is non-existent.

Robert Mark, CEO of Chicago-based aviation consultancy CommAvia and publisher of Jetwhine.com, said the shortage of aviators though is a problem that promises to rise to the front and center issue position in 2013 because companies like Boeing say we'll need 467,000 pilots—100,000 alone in North America—to cope with the worldwide demand over the next 20 years.

Mark bemoans those deeply embedded in the aviation industry who roll their eyes when anyone mentions a pilot shortage. “We've been hearing the same story for years haven't we? And aren't there still thousands of airline pilots on furlough? Most of all the economy stinks anyway, right?” he asked. “The short answers are yes, yes, and (sigh), yes.”

The reason why the industry should care is simple—a shortage of people to fly airplanes is not simply limited to the airlines, said Mark. “In fact, the legacy carriers are least likely to suffer from too many airplanes and too few aviators. That's because flying for Southwest, or United, or Delta is still a job pilots clamor after,” he stated. “Flying for regionals like American Eagle, SkyWest, or Pinnacle just isn't. Look to pay, benefits, and working conditions for the whys on that.”

The pilot shortage—more accurately named a shortage of qualified pilots—would already be upon us if the economy hadn't tanked in 2008, Mark observed. “Regional airlines were already cancelling trips, while flight training schools were beating the bushes for anyone with a valid flight instructor certificate,” he said. “This time around though, Cessna, Embraer, Bombardier, Piper, Gulfstream, Dassault, Beechcraft, and the other aircraft manufacturers all have a stake they need to acknowledge, because without pilots of all experience levels, no one is going to be buying airplanes, because no one will know how to fly them.”

Aviation is and always will be a pipeline, said Mark. “Big jet pilots begin as little piston-engine pilots. The magazines and shows produced by the AOPAs and EAAs of the world get the juices flowing for people young and old. For some, the ERAUs, the UNDs, the Purdues take over and feed the young professional aviators what they need to be ready—or at least close to ready—by the time they graduate,” he said. “How those new pilots will make it to the magic 1,500 hours is anyone's guess. And since the new Part 121 regulations that demand that ATP for new pilots also demands closer scrutiny of every checkride a pilot has ever taken, the number of pilots who never make it to the airlines will probably increase.”

Then we can begin blending in the problem AOPA and other groups have been trying to tackle—an ever-shrinking pool of people even interested in, much less able to afford, aviation, said Mark. “The flying club focus is one of the best solutions I've seen in a long time. It’s the focus on an aviation community being pressed by AOPA and Sportys.”

But the question is whether it's too little too late, Mark said. “Do we have enough time and capacity to produce what we'll need to maintain the aviation industry we all know, which is a mere thread of the one I grew up with in the 70s?” he asked. “If we're going to produce enough pilots to tend to the world's demand, we're going to need to get flight training and industry career education out of the low, now just shifting into second gear we've been stuck at for decades,” he stated. “We should be in high gear right now, but we're not because too many people are still trying to figure out whose problem the pilot shortage really is. The answer is spelled `everyone's.’"

Finally, Rolland Vincent of Plano, Texas-based Rolland Vincent Associates targets three issues he feels will be front and center in 2013. First is the GA industry appearing on the National Transportation Safety Board’s top 10 hit list.

“How do we increase flying skills, create more interest in flying as a career, and get off the NTSB radar screen?” Vincent asked. “Part of it is getting more people in at the front end, get them flying early on,” he said. “But in the bigger picture, there may not be a pat answer.”
Vincent said he admires what the NTSB does, but it hurts to see GA on the hit list. “Safety is vital and basic flying skills are invaluable,” he said. “You need to know how to fly in all conditions. Video game flying is not real flying.”

Second is generating airline pilots with 1,500 flight hours. “How do we manage the gap between where we are and where we need to go as an industry to fulfill this mandate?” he asked.

It is a real concern, said Vincent. “Going forward, the cost to train will be too high. Who will pay for it?” he asked. “Someone will need to step forward with a solution. You want to make sure that these kids keep coming into the industry and I’m afraid this will be a huge hurdle for them. Kids are looking at career choices and suddenly, it becomes a long, high mountain to climb and discourage people from coming into the industry.”

Last—but not least—is the cost of aircraft ownership and flight operations, said Vincent. “We need to make flying more affordable, more practical, and more attractive to a broader population,” he said. “Go back 30 years—the price of buying and operating aircraft has grown faster than the general inflation rate.”

It’s troubling because fewer and fewer people can afford this wonderful pastime, said Vincent. “Anything that can make flying and ownership more affordable, I’m all for it.”