Interviews, press conference reports, and industry briefs from this year's NBAA Convention
BY John F. Infanger, editorial director, and Jordanna Smida, assistant editor
November / December 1999
ATLANTA — The annual business aviation pilgrammage that is the convention of the National Business Aviation Association was again robust, reflecting the state of the business today. In fact, NBAA president Jack Olcott released J.D. Power & Associates survey numbers that show aircraft utilization has increased by 45 percent for member corporate flight departments during the past year.
A total of 29,960 attendees, 963 exhibitors, and a record 4,221 booth spaces were all part of NBAA ’99.
While a frequent staple of the NBAA show, new aircraft model introductions, were off for the major OEMs this year, the debate over how to regulate fractional ownership aircraft remained hot. FAA Administrator Jane Garvey touched on it, NBAA's Olcott dwelled on it by reiterating survey results (AIRPORT BUSINESS, Oct. ’99) on how member companies feel it should be regulated, and it was perhaps the number one topic of conversation on the floor and at evening events. Yet, by show's end, whether to regulate fractionally owned aircraft under FAR Part 91 or 135 remained a budding regulatory challenge that still needs to be addressed by FAA.
In this special section, our editorial staff reports on major news from this year's convention, along with information from select interviews conducted during the show. Parallel to what has been occurring in recent months at automotive pumps across the U.S., the prices of aviation fuels are on the rise, driven by what is happening on the world's crude oil market. In the aviation retail market however, the increase in wholesale prices is not readily being passed on to the customer at many fixed base operations, a topic of concern to some suppliers interviewed at the NBAA convention.
"We have a sincere concern to make sure some dealers understand that they may have to raise their prices" to maintain reasonable business margins, comments one supplier.
Says another, "Dealers have seen an increase in prices, and there are probably some FBOs that have not felt they've been able to pass it along. They're probably still doing well because of the dynamic market, but they're getting less margins."
Regarding prognostications about future supply and pricing, suppliers say the former shouldn't be a problem while price is being driven by today's crude market. "Price has dramatically increased because crude has gone from $10 a barrel to the mid-$20s. There's a direct relation to product prices."
Driving the price of crude is a production cutback by the major producers of OPEC (Organization of Petroleum Exporting Countries), agreed to earlier this year. While the U.S. has increasingly shifted its petroleum dependence to Venezuela and other South American countries, says one analyst, OPEC moves still significantly impact the world market.
Comments another supplier, "We're in a high volatility time. It's a crude-driven market and will continue to be for some time. You have to watch the crude market for an indication of what's going to happen with prices."
Meanwhile, another fuel industry market indicator to keep an eye toward, say insiders, is the ongoing consolidation as evidenced by the merger of BP and Amoco and the pending merger of Exxon and Mobil. "It's all part of the drive toward efficiency," says one supplier. Adds another: "Everyone's trying to find ways to reduce costs."
According to an Exxon spokesman, the merger with Mobil will provide the company jet fuel supply in regions of the U.S. in which Exxon currently does not have ready supply, such as in the Midwest and the Los Angeles area.
Regarding avgas, says one supplier, "There's tremendous interest in an unleaded fuel." Supply is not expected to be a problem.