CAA: GA News, "Business aviation hopes high despite downturn"

["Stephen Irwin" <stepheni@xxxxxxxxx>]

Thursday, November 7, 2002

Business aviation hopes high despite downturn 
BY BOB FRANCIS 
The Business Press

 
Fort Worth, Texas - Despite a sharp dip in sales of general aviation
aircraft, supporters of business aviation are prepared for a steep
takeoff. 

"We've seen a big increase in businesses that make use of business
aircraft since 1991 and we believe that trend will continue," says
Cassandra Bosco, a spokeswoman for the National Business Aviation
Association Inc., an industry group based in Washington, D.C. 

In 2001, there were 14,837 aircraft devoted to corporate use, up from
9,504 in 1991, according to the group, which says Texas has the most
business aircraft in the country. 

The NBAA, which is sponsoring a Business Aviation Forum and Static
Display Nov. 14 at Meacham Airport, cites several reasons for the
increase in business aviation: saving employee time, increased
productivity during travel, minimizing non-business hours away from home
and security. "We believe those factors are key in the increased
interest in business aviation," Bosco says. The increase is causing some
concern among the commercial airline industry. Last year, United
Airlines, concerned about shift of first-class passengers to business
jets, became the first major airline to move into the private-jet
business. 

Fort Worth has good reason to be interested in business aviation.
According to a study released last month by Texas Wesleyan University,
Meacham Airport contributes more than $600 million annually to the city.
The 77-year old municipal airport's business is based on corporate and
student pilot activity, including avionics service, aircraft painting
and sales. 

According to Luis Elguezabal, airport manager at Meacham, business at
the airport has picked up since its post-9/11 decline. "It's been
holding steady and that's pretty good considering the economic climate."


The city soon will benefit from a plan by Gulfstream Aerospace Corp. to
open an international sales and design center at Alliance Airport.
According to Gulfstream spokesman Robert Baugniet, the new center will
open early next year. "We may have some people out there by the end of
this year, but most likely the real work won't begin until next year,"
he said. 

The 165,000-square-foot hanger and office facility will house about 120
full-time employees. "Our vice-president for sales and marketing will
office out of the Alliance location because it's going to be the focal
point for sales for our aircraft," Beugniet says. "We see the Alliance
location as the perfect one for our customers because it's easy to
access and it's located in the center of the country." 

According to John Zimmerman, president of Aviation Data Services Inc. in
Witchia, Ks., the Gulfstream center will be its showplace .
"Gulfstream's clients are very high-end, so they plan to build something
with them in mind. I believe it will be first-class," he said. 

Gulfstream acquired the Alliance complex in June of last year when it
acquired Galaxy Aerospace. In a consolidation move earlier this year,
the company moved its aircraft completion work for the Gulfstream 200
business jet from Alliance to a facility at Dallas Love Field. That move
resulted in a loss of over 400 jobs at Alliance. 

While few in the industry like to address the issue, many in the
industry will say off the record that the 9/11 terrorist attack
increased interest in private airplanes. "The trend has been there for
some time, but security concerns have certainly made business aviation a
more attractive option," Zimmerman says. 

The cost of private aircraft, ranging from $3 million to $50 million -
plus pilots' salaries maintenance and repairs -- make owning an airplane
a significant expense. 

But in the past several years, fractional ownership, which is similar to
timeshares in real estate, have provided a more affordable option for
companies. According to the NBAA, the number of owners of fractional
aircraft shares nationwide rose to 4,900 last year, up from 3,834 in
2000. 

A company can buy a 1/16th share in an aircraft and have the use of the
plane for 50 hours a year for as little as $9,000 a month, according to
Zimmerman. 

Elguezabal says Meacham has benefited greatly from fractional ownership.
"It was increasing in the 1990s, but since 9/11 we've really seen some
strong growth there and in charter flights. Businesses just can't afford
to be down," he says. 
Gulfstream also benefited from this trend recently when NetJets, a
provider of fractional ownership jets, ordered 50 new planes in a deal
worth $1.5 billion. The results helped boost the earnings of
Gulfstream's parent company, General Dynamics Corp. 

While Gulfstream may have hit it big, business aircraft sales have not
taken off. "The economy has taken a toll on our industry, but we believe
there is growth in the future," says Ed Bolen, president of the General
Aviation Manufacturers Association, an industry group based in
Washington, D.C. 

The NBAA forum Nov. 14 will address the issue of aviation security and
include discussions on the rising cost of insurance, Texas aviation
taxes and the value of business aviation for the economy. Currently 55
exhibitors are signed up for the event, including Gulfstream, Raytheon,
Cessna and Boeing. Visit www.nbaa.org/seminars/baf or call 202-783-9266
for more information. 

Sales through third quarter 
2002 2001 % Change 
Shipments 1,766 2,118 -16.6% 
Sales $8.289 billion $10.250 billion -18.1% 
Source: General Aviation Manufacturers Association 
Reasons for using business aircraft 
To support efficient schedules - 61.2% 
To reach remote locations - 25.3 
To make airline connections - 5.3 
Other reasons - 8.2% 
Source: National Business Aviation Association


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