Activity Amid Uncertainty: Interviews, press conference reports, and news briefs from NBAA 2002

Interviews, press conference reports, and news briefs from NBAA 2002

ORLANDO – After settling for an abbreviated show in 2001, the National Business Aviation Association was determined to recapture the position of its annual convention as the premier aviation show in North America. Toward that end, NBAA 2002 was a success, with some 27,785 attendees and a record 1,011 exhibitors. Yet, the ongoing recession, the threat of a widening war, and a slowing of business aviation activity in recent months left this event short of the vibrancy of the 2000 show.

The introduction of new aircraft (see sidebar) and associated purchase orders again were center stage, with Cessna perhaps stealing the show with the unveiling of its new Mustang business jet.

Fixed base operators and other aviation service companies and a handful of airports were on hand, exhibiting their products and services to the business aviation community. Various discussions reveal that most operators remain optimistic about bizav activity, yet the economy and changing security requirements at the nation’s airports leave them guarded.

Honeywell Aerospace shared the results of its 11th annual Business Aviation Outlook at the show, projecting a strong business aviation market for the next ten years, with some 7,600 new units at a value of $121 billion being delivered. Due to the economic climate, Honeywell sees a modest decline in new aircraft orders this year, followed by a renewed upswing in 2003-04. However, the caveat is growth in the U.S. economy, according to the report.

Central to future bizav growth, says Honeywell, will be the fractional ownership segment, which the report says accounts for some 45 percent of the business jet order backlog. Honeywell figures that fractionals represent some 7 percent of the global business aircraft fleet, which will grow to an estimated 10-12 percent by 2012. Honeywell says that despite the dramatic growth of fractionals in the past five years, only a small portion of the potential has been developed.

Fractionals Don’t Skip a Beat

In Orlando, the two largest fractional providers, NetJets Inc. and Flight Options, continued to make news. NetJets placed orders for 100 new Cessna CitationJet 3 and 12 Citation X aircraft, with a total value of over $300 million including maintenance services. NetJets also placed an order worth some $1.5 billion with Gulfstream Aerospace for 100 new wide-body G150 business jets. The G150 is currently under development by Gulfstream and the Israel Aircraft Industry and is scheduled to enter service in 2005.

Flight Options, which in March merged with Raytheon’s Travel Air fractional program, announced that it is adding the Cessna Citation X to its fleet, which is made up of predominantly pre-owned aircraft.

At an NBAA press conference, Flight Options CEO Kenn Ricci said he expects the company to report 2002 revenues of $800 million, and remains bullish about the marketplace, foreseeing the company growing to $2.2 billion in revenues by 2006. Ricci says the potentially greatest impediments to growth for his company will be airport infrastructure – a "lack of concrete" – and new security requirements that could lead to metal detectors becoming a lead factor in where business jets land, not runway length.

BBA/Signature Flight Support

Beth Haskins, president of the industry’s largest chain of FBOs, Signature Flight Support, echoed the guarded optimism of other FBOs, while playing up the role her company has taken in heightening security efforts at its operations.

Haskins told AIRPORT BUSINESS, "Let’s face it, all the security in our business is about access to the aircraft. So we’re watching what’s going on on the ramp and allowing no undue access to aircraft."

Signature has restricted access to caterers and limousines and taxis as well, she says, moves that have been received positively by most users. "I actually had one airport write us a letter asking us to open the ramp, due to pressures by local business people. We found a secure way of doing that."

Bruce Van Allen, president of Signature parent BBA Group, says the FBO chain will continue to make news with acquisitions. He says the company has spent some $60 million on acquisitions in 2002 alone, and points out that the monies for those acquisitions came from the Signature chain rather than from the deeper pockets of parent BBA. Van Allen predicts Signature revenues to be up 2-3 percent in 2002, despite a "tough" market. In addition, he says BBA is currently in the process of developing a new brand that will bring its maintenance companies, led by Dallas Airmotive, under one global name.

Meanwhile, regarding potential obstacles to future growth, Haskins says she is concerned that major hubs fail to appreciate the importance of business aviation at their airports, though that concern has been alleviated somewhat since 9/11 because of the drop in commercial traffic. She is also concerned about some airports with Signature bases where operators are allowed to fuel aircraft on public-use ramps while having no facilities. She cites the lack of minimum standards at those airports as a cause.

Regarding the ongoing closure of Washington Reagan National Airport (DCA) to general aviation, Haskins remains hopeful that officials in D.C. will change the policy. However, she is concerned that creation of a new Department of Homeland Security, which would oversee the Transporta-tion Security Administration, could ultimately sidetrack that possibility. According to Haskins, Signature has received no compensation from the federal government for its loss of business at DCA, though the airport authority has abated its rent since 9/11. The Signature DCA base has gone from 55 employees to two, with 20 laid off and the others relocated to other bases.

Says Haskins, "I do believe that [DOT] Secretary Mineta has tried to get us opened [at DCA]."

Million Air Chain Revitalized

Among the more optimistic exhibiting companies at this year’s NBAA was the Million Air Interlink franchise, with new CEO Roger Woolsey leading the charge toward a new image, with plans for expanding the network of participating FBOs in North America and even Europe.

Woolsey operated charter companies before purchasing the Million Air Houston FBO in 1999. Earlier this year, he orchestrated the deal for ownership of the franchise, Million Air Interlink, linking independent FBOs through national marketing.

Says Woolsey, "Million Air is one chain with 24 locations. We are working on one culture, one solid image, but we are 24 individual owners. Each owner has a lot of passion. There’s really a lot of power to be harnassed by aligning ourselves better.

"The passion we have is to work on our image and our consistency, and to institutionalize what we call the Million Air experience."

Woolsey says that the chain’s marketing efforts are being doubled, while at the same time the company is increasing its emphasis on training and safety. At NBAA, the company announced formation of Million Air University, dedicated to developing effective leaders and teams at the individual FBOs. Woolsey also supports the Safety 1st program sponsored by the National Air Transportation Associ-ation, and says that all franchises are now required to participate in the program which offers training and certification for line personnel.

The 35-year old Interlink owner says a renewed focus is being placed on quality control as well, with regular visits to franchise FBOs by a Million Air inspector.

Woolsey says he is changing the fee structure for franchises. Entry now costs $45,000, down from $75,000, and a fee on fuel flowage is being replaced by a percentage of revenues formula. Franchises also pay a monthly advertising fee. "We’re changing the model," says Woolsey.

He also predicts significant growth, beginning in 2003, with new franchises signing on in North America and Europe. "We really believe that we’ll see 60-70 FBOs in our chain," he says. "But it will not be come one, come all, but are you a fit? Do you have drive, passion?"

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