EDITOR’S NOTE: We asked the original publisher, Mike Murrell, to reflect on the state of the aviation marketplace prior to the launch of FBO magazine in 1986, and conditions which led to its changeover to AIRPORT BUSINESS six years later. Here’s his analysis.
Airport Business, like so many enterprises, is the result of timing and a number of fortuitous events necessitated by an unfortunate downturn in business. And like a number of products and people in general aviation, Airport Business can trace its roots to Lock Haven, PA.
Johnson Hill Press (now Cygnus Business Media) developed several custom programs for Piper Aircraft, then headquartered in Lock Haven, in the mid-70s. Those were the famed “glory days” of general aviation when the industry annually shipped some 18,000 mostly piston-powered planes. That production surge was primarily powered by a unique combination of tax code and inflation.
The code included generous accelerated depreciation schedules and a tasty 10 percent Investment Tax Credit (ITC). Folks could literally order a spiffy new airplane, put it in a leaseback program with a fixed base operation, save tons of dough at tax time, and sell it in three years for more than they paid for it. Airplane factories were running at full throttle. The increased production heightened demands for FBOs, maintenance facilities, flight schools, and consumables — especially fuel. Life was good.
So good, in fact, that the Fed started tapping the brakes by raising the prime rate — 1978 ended with the prime at 9 percent. It remained in double digits through 1984 and barely slipped under ten points to 9.9 percent in 1985. Controlling inflation was a priority for the new Reagan Administration. It led the charge to overhaul the tax code, resulting in the demise of general aviation’s ol’ pals, accelerated depreciation and the ITC. The Fed pitched in by jamming the brake peddle to the floor. (Prime in 1981 was just under 19 percent.)
And there was an incipient little factor about all that production of those ‘70s glory days: Industry only counted planes as they left the factories. No one was keeping track of sales to end-users, which had dropped like a plane’s nose in a hammerhead stall thanks to consumer interest rates above 20 percent and the demise of the friendly tax code. Factories were slow to cut production; their ramps (as well as those of distributors and dealers) were jammed with unsold planes. Life was not good.
The economic pressures resulted in drastic changes to the general aviation landscape. By 1984, Piper was in a spiral that would end in bankruptcy in 1991. Many of its distributors and dealers were in financial trouble.
These industry fortunes resulted in Johnson Hill immediately initiating an effort to inventory its aviation assets and knowledge, and determine if they might be redeployed profitably within the industry. The mission became to test the viability of a business-to-business magazine that would serve owners and top managers in the nation’s then 3,000-plus FBOs. Content focused on managing and marketing.
The question was: Would FBOs have enough economic value to industry suppliers that they would commit to buying advertising schedules in a publication designed to help FBOs succeed? Obviously, the answer was “yes” with the launch of FBO in November of 1986.
The only other trade publication in this space at the time was Airport Services Management (ASM). In 1991, Johnson Hill acquired ASM. By that time, the business side of the airport was beat up; most suppliers to airports at that time didn’t “market” because most business was based on personal relationships, referrals, and the lowest bids.
In time, an interesting trend emerged. The prevailing relationships between management and tenants at most airports historically had been adversarial. That was changing. Just about every instrument for measuring the economic health of the nation’s airports pointed south. The number of flight operations, airplanes, pilots, students, and other business indicators were all down. FBOs were closing or consolidating at a rapid rate. For airport managers, this all was translating to reduced revenue, government funding and, in many communities, support for the airports themselves.
Working in a spirit of partnership rather than confrontation would be in the best long-term interests of everyone involved. The publisher was in a unique position to combine the two entities and seize on the opportunity that this evolution presented. That led to the 1993 launch of Airport Business.
