At NBAA, Business is Good

Orders strong, activity high — and the changing FBO sector remains a hot topic.

ATLANTA — This was not a year in which a slew of new general aviation aircraft models were unveiled, but activity at the 60th annual Meeting & Convention of the National Business Aviation Association remained robust. Cessna alone reports sales of $1 billion for the week, including orders for its entry into the very light jet (VLJ) market, the Mustang. VLJs were high profile again, as they have been at recent shows. In all, some 32,000 attendees and a record 1,152 exhibitors were on hand. Besides the ongoing aviation system reauthorization debate, hot topics continue to be the changing landscape among fixed base operators, where the influx of new investors in recent times has led to consolidation and an emerging segment of new players, and the growing charter market.

The NBAA annual meeting has grown into the eighth largest trade show in the country, which is creating more challenges on where to hold the event. In particular, the featured Static Display of aircraft presents a unique challenge. [For more on this, see “Inside the Fence”, and “Inside the Industry”.]

Regarding FAA and system reauthorization, once again the ‘no user fee’ beat played on.

Comments NBAA president and CEO Ed Bolen, “The good news is, we’re still standing. We’ve taken a lot of shots from the airlines and what we’ve found is they haven’t knocked us out yet. We’ve passed a bill in the House of Representatives that truly does keep its eye on modernization.

It’s now time to come together, to redouble our efforts.” As of press time, Congress had not passed a joint reauthorization bill.

Meanwhile, VLJs show no signs of waning. Piper Aircraft highlighted its expansion into the jet market at the show with PiperJet, scheduled to begin deliveries in 2010. Cessna reported a sale of 30 more Mustangs to a European air-taxi operator. Cessna’s total sales at NBAA were worth more than $1 billion for 208 new aircraft orders.

Adam Aircraft has a target of 1,000 units over ten years for its composite aircraft, and is currently focusing on establishing its service center network. At Eclipse, the original VLJ manufacturer, the company is delivering Eclipse 500s and has a production rate of one per day. It is also looking at developing a single-engine, wing-tail VLJ. [After NBAA, Eclipse announced labor cutbacks due to slower than expected production levels.]

Brazilian manufacturer Embraer, which projects a market for some 14,000 executive jets through 2017, has four aircraft in its Phenom 100 testing program. It reports 500 firm orders for its larger Phenom 300, with a first test flight set for 2008.

The changing FBO landscape
While mergers and acquisitions remain a staple of the FBO sector, a central focus in Atlanta was on what will happen with the 33 FBOs under the Landmark Aviation brand. Earlier this year, Dubai Aerospace Enterprise (DAE) acquired Standard Aero and Landmark Aviation in an effort to focus on worldwide technical support. At that time, it announced it would divest itself of its fixed base operation network.

The current major players and potential new buyers are expected to take a look at the DAE operations, although some express concern about lease lengths at a number of the Landmark locations. Lou Pepper, president of Atlantic Aviation, says his company will probably pass on this round, having recently added 24 Mercury Air Centers to its portfolio. Atlantic is owned by Macquarie Infrastructure, an Australian firm.

Speculation is that, like Macquarie and BBA, which owns Signature Flight Support, a new offshore investor could emerge to establish a FBO network with a Landmark acquisition.

Yet, BBA president Bruce Van Allen says his firm is “definitely interested” in considering the Landmark FBOs and bringing them into the Signature network. On the issue of leases, Van Allen points to Dulles International as one location where the leasehold could be a stumbling block because of the changing footprint of commercial operations.

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