Long Beach Report
Operators remain upbeat despite a slower first quarter
By John F. Infanger & Lindsay M. Hitch
June 2001
In all, several thousand representatives of fixed base operations, FAR
Part 135 charter firms, repair stations, and flight training schools took
part in the meeting, sponsored by the National Air Transportation Associa-tion
and the Professional Aviation Maintenance Association.
Overall, the industry reps indicated a minor
slowdown in business during the first quarter, and cargo-related business
in particular has been slowed for some time. Observers expect to see a
continuing of FBO consolidation, although that arena has slowed in recent
months. At the same time, operators are optimistic about the prospects
for airline, business, and personal flying.
A question that remains in the minds of
many is the impact a significant economic downturn would have on the fractional
business that has transformed the business sector in recent years. United
Airlines, however, signaling that there is much opportunity in the fractional
market, announced that it will enter that arena over the next two years.
And the leader in fractionals, Executive Jet, announced at the show that
it had ordered 50 more business jets from Galaxy Aerospace. (Following
the show, it was announced that General Dynamics, parent of Gulfstream,
intends to purchase Galaxy.)
Incoming NATA chair Jim Christiansen, president
of TAG Aviation USA, which is a partner in the CitationShares fractional
program, welcomes United’s entry into the fractional fold. "It
lends another degree of credibility to what we do," he says.
Operators at the show also reiterated their
ongoing concern about rising insurance rates and the potential negative
impact, particularly on the smallest shops.
TECHNOLOGY & FBO SERVICES
The NATA convention included a session on
current and future technologies and their impact on FBOs. The discussion
which followed the presentation brought up concerns that FBO managers
are facing in light of technological advancements.
According to Paul Meyers of the Denver-based
Aviation Management Consulting Group, FBOs use technologies from four
major areas: computers/computer systems, internet, wireless communications,
and traditional phones and fax machines. Those technologies are used for
fueling, management/operations, weather, and flight planning.
Meyers anticipates conveniences from other
industries may work their way into FBO management. For example, e-tickets
and Internet seat assignments in airlines and touch screen applications
in restaurants may be adapted to the needs of FBOs.
"All of these advances are about communication
and getting it right the first time," says Meyers. "People plus technology
equals a level and quality of service."
Although online reservations systems are
a helpful concept, session attendees feel that their logistics sometimes
make it more difficult to do business. Users hope for one website that
can do it all, rather than needing to visit numerous websites to plan
one trip. And with many of the online programs, FBOs still have to take
the information from the web page and input it into their systems. The
goal of many online reservations programs is to save time, and it appears
that they do not yet do so in the eyes of many FBO operators.
Another recurring concern is the cost of
these services. Business operators need to see obvious improvements in
efficiencies and service before they are willing to shell out money, and
for those programs requiring subscription fees those efficiencies may
not be worth the cost, say participants.
On an unrelated online note, a number of
websites have begun offering fuel rate information. Session attendees
express concern that the price of fuel often depends on a number of factors
including volume and affiliations. Flight departments may choose one FBO
over another based on flat-rate fuel price quotes that may not be accurate
for their situation.
IMPROVING COMMUNITY RELATIONS
Without community support, many general
aviation airports face dismal futures. Recognizing this, NATA released
a Community Relations tool kit at the convention. As part of its American
Aviation Access Initiative, the initial tool kit is a handbook developed
to enhance airport relations with neighbors and community leaders.
The introduction sums up the need for and
purpose of the tool kit: "Of greatest concern are isolated groups of vocal
airport opponents who fail to recognize the importance of universal access
to the air transportation system."
The handbook is meant as a "how-to" manual
for developing and improving community relations.
During a session on community relations,
speaker Peter Burgher, president of Marelco Power Systems, stressed including
community leaders not ordinarily associated with the airport on an airport
support group. Burgher suggests the head of the hospital might highlight
the role of the airport with organ transplants; the sheriff might mention
the aid in prisoner transport; other participants may include the head
of a CPA firm, a major banker, a law firm partner, and representatives
of other major employers. With support from leaders in the economic community,
voters and politicians are more likely to follow suit.
The NATA Community Relations tool kit is
available for $30 from NATA. To obtain a copy, call (800) 808-NATA.
POSITIVE ECONOMIC NEWS
Richard Aboulafia, director of aviation
studies for The Teal Group, projects that aviation will continue to be
strong economically. The sales of business jets quadrupled (dollar value
of deliveries) from 1995-2000. Though they have likely leveled off, Aboulafia
expects $90 billion in additional business jet deliveries for 2001-2010.
Used planes and pricing, fractional ownerships,
airline reactions, and the firmness of orders booked are concerns of economic
analysts, but overall the next ten years in aviation are expected to be
strong.
INSURANCE AVAILABIILITY
NATA has been receiving a number of calls
from members concerned about their insurance. Five years ago, 17 companies
insured aviation businesses; today only eight remain.
Bill Welbourn, senior vice president for
USAIG, Rick Davis, vice president/LA branch for Associated Aviation Underwriters,
and Kyle Sparks, vice president of AIG Aviation Insurance, offer advice
on obtaining and maintaining insurance for aviation business owners.
"Underwriters like to have all the
information possible, especially what your company is doing right,"
explains Welbourn. He adds that companies should share all contracts with
their underwriter to explore where it may be possible to transfer liability.
Davis recommends developing and supporting
a proactive safety program. And in the case of aircraft owners opting
to postpone maintenance procedures, Davis advises having a lawyer draw
up a waiver form.
Sparks reiterates the importance of sharing
all of the details of the business with the underwriter. Plans and manuals
should be updated and followed and the insurance company should be aware
of them.
All three mention the idea of qualifying
customers. If a plane comes in that has not been maintained, don’t
hesitate to turn it away. Sometimes it’s better to pass up a small
profit to avoid liabilities later on, they say.
Insurance is expected to be more and more
difficult to obtain in the coming years, and it will continue to be more
expensive.
Airport PR Dos and Don’ts
Suggestions for improving airport community
relations brought up in an NATA convention discussion by attendees and
speaker Peter Burgher.
• Hold a car rally for Corvette, Ferrari, or other collectors’
group
• Don’t hold an airshow — makes the airport seem like a
thrill ride, says Burgher
• Hold an open house - emphasize the subtle benefits of the airport
(organ transplants, etc.)
• Attend commission meetings with supporters; the opposition may
tend to exaggerate
• Don’t do it alone; get the airport support group to attend
commission meetings and be prepared with economic, noise, and other facts
• Hold a breakfast or barbecue in support of a county commissioner
or other candidate; collect campaign fund donations
• Don’t stop fighting for the airport, even when it appears
the battle has been won
• Start campaigning for support well before there is talk of closing
the airport
• Ask organizations (NATA, NBAA, AOPA, etc.) to help speak with Congressmen
• Try to positively influence big opponents via free lessons, airplane
rides, etc.
• Hold a reporter/media day; give everyone a ride and an air tour
of the area; hand out AOPA’s Glossary of Terms for Reporters
• Hold a grade school kids’ day
• Find the people the public will listen to and gain their support
• Hold a Teachers’ Day; hand out curriculum on lift/drag, etc.;
host a paper airplane contest
• Talk to or join the community or county economic development board
• Get to know the Chamber of Commerce
• Refer to curfews as "voluntary quiet hours"; when they
are not followed, explain why to the public
• Look to cargo operators for support