Business is Good, Leadership Not

Heading into the National Air Transportation Association’s second annual FBO Leadership Conference, it’s hard to ignore some big question marks hanging over the industry. But in spite of the presidential election and threat of recession, NATA president Jim Coyne says the outlook for business aviation and the fixed base operator community remains strong.

In 2007 the association split out its FBO and air charter membership segments, introducing the FBO Leadership Conference in conjunction with the Aviation Industry Expo (sidebar). It also hosted its first-ever Air Charter Summit, which is scheduled this year in June.

Comments Coyne, “We’re going to build on the success of last year.”

He says one new focus NATA will has is on the environment, with the newly formed environmental committee set to announce its initiatives.

“I think there’s one area where we, the FBOs, and the airports are going to have to work together — that’s in reducing our combined carbon footprint — as both operators of aircraft but even more so as operators of FBOs,” Coyne says. “That’s the newest thing going on — helping our members understand what is a carbon footprint [and] how do you determine what your baseline is?”

Coyne says airports will be increasingly feeling the pressure from their political overseers and passing that pressure onto their tenants. “The airport may have figured out ways of saving energy at their airline terminal; we’re going to have to show them we’re as committed in reducing our carbon footprint on our side of the airport. So it’s going to be an important initiative.”

“Our partnership with airports is going to be a much bigger part of this convention as we move forward than what existed at the NATA meeting three or four years ago,” Coyne notes.

“I think we’ve come to realize, and the airport community has come to realize, that we are locked at the hip. We are like Siamese twins. We are going to be, step by step, having to face the same challenges; we have the same economic opportunities; we have the same regulatory oversight; we have many of the same challenges in the environmental areas; and we’ve got to build support in our communities collectively.”

Upheaval in washington
Changes in Washington, from FAA to the White House, will have a big role in setting the tone this year, Coyne says. And he says the buzzword won’t be the politicians’ change but rather uncertainty.

“There’s just a big question mark over our industry’s future right now,” he says. “Hopefully our attendees will be able to leave getting some answers or at least some clarity to some of the uncertainty that lies ahead.”
Coyne is not optimistic about much getting done at FAA this year. “Within the FAA, I have said publicly that this is probably going to be one of the least productive years in FAA’s history. I have never seen it as rudderless as it is now,” he says.

Coyne points to the lack of a full-term Administrator and the gridlock on reauthorization between the House and the Senate as concerns. He notes that as time passes the likelihood of Robert Sturgell’s confirmation as FAA Administrator dims.

“We have a brand new Secretary of Transportation who seems more concerned about just airline congestion and trying to get user fees imposed than anything else, so we really don’t have any really effective management or leadership now in Washington on aviation,” he comments. “It’s dismaying because we have some really serious threats.”

A political year
The NATA president says he’s uncertain about the current presidential frontrunners as well. “It’s going to be hard for us to gauge where [probable Republican nominee John] McCain is going to go. When he was chairman of the aviation committee he was, it seemed to me, much more interested in helping the airline industry than he was in helping other parts of aviation. That raises a lot of concerns among our community as to whether he understands the importance of all the other segments of aviation.”

On the Democratic side, Coyne says neither Hillary Clinton nor Barack Obama have provided much detail on their aviation policies.

“Whoever is the president is a big player, but it’s a much more complicated equation than just one person,” Coyne notes. Not once in his tenure did President Bush mention aviation in his State of the Union address.

“It’s the first time a president has had that kind of record, not looking at aviation as an engine of economic development and growth.”

Coyne says that the need for leadership is urgent. “We have really limited public sector imagination and growth, so I’m really ashamed, frankly, of our lack of government leadership on these important issues.”

For its part, NATA will continue to focus on building allies as the key strategy. “It only takes a few dozen members of Congress, if they’re motivated, to get something done,” explains Coyne, a former U.S. Congressman (R-PA) himself.

“We have good success in the House right now, and so my hope is that we can build next year the kind of strong aviation advocates in the Senate that we have in the House. If we could solve the Senate problem then I think we’d be 90 percent of the way there — no matter who’s the president.”

Business is good
Economically speaking, Coyne says the outlook is good, possible recession and all.

“If it’s a small and short recession I don’t think it would have much of an influence,” Coyne says. “At this point it’s hard to predict past next November because the new president will clearly have an opportunity to help us to get out of a recession or to make it worse.”

He points to the wave of consolidation among the fixed base operator community in recent years as a sign of how well business aviation is doing. “The sound economics are there,” Coyne says. “I can’t think of too many areas of investment that look so bullish over a long-term horizon as private and business aviation.”

Coyne relates that many of those who are investing are not only interested in aviation but they say they’re in the business for the long haul. Add to that the fact that there’s a generation of FBO individuals who are nearing retirement.

“When you have willing buyers and willing sellers you have a lot of activity and that’s what we have now,” Coyne says.

The number of business aircraft currently on order is a central motivator for people interested in investing. “On the corporate side, we’re developing some great new airplanes, there’s no doubt about that,” Coyne says. “People are looking at the FBO business and saying, there’s a business that’s going to grow and be a much bigger business in the 21st century. The demographics are good. The people that want to travel, they know that the airlines aren’t getting any better, they know that the security regime has led a lot of people to find a better way to travel.”

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