Atlanta's Dynamic

Atlanta's Dynamic

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.

Finally, there is considerable speculation that Shell may be considering re-entering the U.S. retail market for aviation fuel. Says one supplier, "They're a major player around the world, and the U.S. market is the largest for aviation. It would be a logical move." However, a Shell spokesperson could not confirm if the company will soon move into the U.S. aftermarket.

Major fixed base operation chains continue to expand via acquisitions, with Mercury, Signature, and Piedmont-Hawthorne all making announcements at this year's NBAA. Stevens Aviation, meanwhile, offered insights into its business focus following managerial realignment.

Mercury Air Centers, host to the ’99 static display of aircraft, announced two acquisitions that bring its number of FBOs to 17. Comments John Enticknap, recently promoted to VP/chief operating office for the Mercury Air Group, Inc., subsidiary, "We're still looking for more."

Mercury's most recent acquisitions include Million Air Tulsa and the assets of Charleston Equities Inc., which includes FBOs at Charleston (SC) International Airport and one at Charleston Executive Airport on John's Island. The company now operates 17 FBOs nationwide.

Signature Flight Support, the nation's largest FBO chain, announced an agreement to acquire the Airway Aviation Services/AirBP FBO at Dekalb-Peachtree (PDK) airport, site of this year's static display. The company had recently announced it had completed or would soon complete the sale of FBOs at Palm Springs, Hartford, CT, and Centennial Airport near Denver — all the result of the previous acquisition of the AMR Combs chain by Signature.

Signature president Bruce Van Allen says that those sales, which included FBOs where AMR and Signature had competing facilities, makes the purchase price ($170 million) of AMR more reasonable.

Van Allen emphasizes that while acquisitions are an ongoing focus, upgrading of existing facilities remains a high priority as well. To date, he says, Signature has invested some $77 million in facility upgrades and another $20 million in equipment (tugs, etc.). He says that the chain is about halfway through its systemwide renovation program, and expects most facilities to be upgraded by the end of 2000.

Meanwhile, Piedmont-Hawthorne announced it is in the process of acquiring Shell Aerocentre FBOs in Canada at Vancouver, Calgary, and Toronto. Dean Harton, president of Piedmont-Hawthorne, reports the move is a significant step in building a North American network of FBOs.

"We told you that we would be very aggressive with FBO acquisitions," he says.

The three operations represent the largest FBOs in Shell's network of 17 Canadian facilities.

At Stevens Aviation, chairman Tom Foley says he will stay on as day-to-day manager of the FBO chain, a position he assumed earlier this year with the departure of Kurt Herwald. Foley says he and Herwald agreed it was time for a new leader at the operations helm. Foley is majority stockholder in Stevens through his investment company, NTC Group.

Foley says the company is also courting buyers for its Denver FBO at the Jefferson County Airport, partly because of its remote location from other Stevens operations in the Southeast. The company is based at Greenville, SC.

Stevens Aviation will refocus its business toward growing maintenance and modifications services, says Foley, particularly in turboprops and light to medium jets. The company will also begin to place a greater emphasis at capturing non-Beech/Raytheon business; Stevens for years was a leading Beech dealer.

In her opening address to NBAA attendees, Jane Garvey, Administrator of the Federal Aviation Administration, addressed safety issues, announcing that turbojet and turboprop accidents are down by 20 percent. "This is the direction we want to go," she states.

She notes that collaborating with the industry and other countries to maintain a record of achievement and raising standards are the only way to improve upon safety. "There is a need for harmonization and for the same standards in all countries," she states. Garvey announced that the FAA and JAA want to work towards one set of standards.

"This will only help business aviation get closer to developing a seamless international operating environment," she states, noting that a lack of access to international airports and congestion in the skies are in the forefront. Part of the effort to increase access to international airports will have to be resolved at the political level, she admits.

Garvey also addressed the issue of fractional ownership. Noting a 32 percent increase in traditional flight departments, she states, "The FAA's only concern with fractionals is safety and what type of framework will best foster it." She notes that there are no easy answers to this issue. An ARAC working group is expected to complete its study of the issue by December, with recommendations anticipated in January, she says.

At its NBAA press conference, AvDataInc made several positive announcements regarding the business aviation industry. Among them, statistical results on fractional ownership and flight departments.

According to AvDataInc, at the start of 1999 there were 11,862 flight departments in the world. As of Oct. 1, in the U.S. there were 12,999 business jet and turboprop aircraft, and 330 or 2.6 percent of those belonged to the fractional ownership program.

Addressing recent industry concerns over the threat of fractional ownership programs to flight departments, John Zimmerman, president of AvDataInc., states, "Flight departments will be closed whether they're in fractionals or not. More closings are caused by not having a belief in business aviation."

AvDatatInc has identified 20 high profile flight departments that have been closed in favor of fractional ownership participation. Zimmerman comments that even if there was twice the number of known flight department closings, though considered doubtful, the statistical loss would not register.

AvDataInc reviewed its records of more than 100,000 companies who had a business aviation identity during the previous quarter century. The research showed 80 percent of the fractional owners are new to business aviation and the other 20 percent use fractional participation to supplement their own in-house business flight capabilities.

Zimmerman notes that everyone who opts for fractional ownership does not necessarily stay in the program. The company states that 130 fractional companies have departed the market in the last decade.

AvDataInc has followed some of the aircraft sold after traditional operations had been closed. The findings show that though some traditional flight departments closed because of a company's sale of its aircraft, most sales resulted in one or more new flight departments opening with the company(ies) that bought the aircraft.

In the most recent report from AvDataInc, 21.5 percent of the largest companies with business aviation involvement have invested in fractional aircraft. Of the 74 companies who have fractional ownership, 33 companies — mostly new to business aviation — do not have and have not had traditional in-house flight departments and rely on fractional aircraft to meet their business flight requirements. AvDataInc reports a growth in deliveries to fractional fleets of 67 aircraft, with deliveries to traditional flight departments accounting for 311 new jet and turboprop aircraft.

Boeing Business Jets, the Air Routing Group, and Delta Air Lines are going for the gold via a new business relationship unveiled at NBAA. In a collaborative agreement, the companies introduced the BBJ Gold Card worldwide support program, a value-added service for Boeing Business Jet owners.

Air Routing will produce the BBJ Gold Card, which will offer a variety of benefits to BBJ customers including discounted fuel prices, global card acceptance, and 24-hour access to international operational support for flight planning, weather briefs, overflight/landing permits, security, transportation, and communications.

The card will also provide a payment mechanism for airline parts and maintenance. A network of nearly 2,000 FBOs, fuel suppliers, ground service and maintenance providers, and airlines will honor the card.

Boeing also selected Delta Air Lines' Technical Operations Division to provide emergency service for BBJ customers. This service will complement Boeing's customer service by providing telephone troubleshooting and access to additional spare parts and repairs. BBJ customers will be provided with a direct phone line to Delta's Maintenance Control Center in Atlanta. The facility provides 24-hour single point contact for all unscheduled maintenance requirements.

Delta has placed orders for 124 of the Next-Generation 737 airplanes and has supported this model for over a year. Maintenance coordinators knowledgeable of the BBJ model will handle calls.

AVCARD, based in Hunt Valley, MD, reports it has won a five-year contract extension to continue to oversee and manage the Defense Energy Support Centers (DESC) AIR Card program. AIR — or Aviation Into-Plane Reimbursement — is a program under which military and federal aircraft can obtain fuel and other services from FBOs and service companies. AVCARD provides the systems and global infrastructure for the program, and has a network of some 4,800 locations worldwide that accept AVCARD. The company says new AIR cards will be distributed soon.

AVCARD originally began overseeing the program in 1997.

AlliedSignal Inc., Phoenix, announces its introduction of two new Bendix/King Multi-Function Displays that will offer pilots the ability to view fully integrated safety information on a single display; 310-512-1656.

AMETEK, Inc., Wilmington, MA, has acquired Gulton-Statham Transducers, Inc., from Mark IV Industries, Inc., of Amherst, N.Y.; 978-988-4101.

ARINC Incorporated of Annapolis, MD, introduces WebASD Express, which provides users with unlimited Internet access for graphical flight tracking for up to five aircraft; 410-266-4651.

Automotive Air Charter, formed by General Motors Air Transportation Services and DaimlerChrysler Aviation, is a new charter company in Pontiac, MI; 888-426-8999.

Avidyne Corporation and AvroTec, Inc. of Lincoln, MA, is awarded the Highway in the Sky contract from NASA's AGATE Alliance. The contract entails designing the general aviation aircraft cockpit of the future; 781-402-7400.

ARNAV Systems, Inc. of Puyallup, WA, announces its new weather products and an Internet gateway to its WxLink Weather Service; 253-848-6060.

Bombardier Aerospace based in Montreal, reports it is adding its latest business jet model — the Continental — to its Flexjet¨ fractional ownership program; the Continental business jet will join the fleet in 2002; 404-222-5029.

CAE Inc., Toronto, acquires its largest business jet contract from SimuFlite Training International for the purchase of four Level D business jet flight simulators; 416-865-0070.

Cessna, Wichita, KS, announces its Citation Encore is scheduled for certification in the second quarter 2000 and first customer deliveries later in the year. The company also announced the rollout of its 100th Citation X; 315-517-8181.

Chevron announces its new electronic credit card processing agreement with Multi Service. The system allows Chevron FBOs to accept all major credit cards; 913-663-9575.

Commuter Air Technology, Inc. of Scottsdale, AZ, signs an agreement with DynaComp Corporation, British Columbia, to produce a high technology cargo pod for the King Air enhancement program, CATPASS.

Contrail Aviation, Baltimore, announces the launching of its Supersonic Business Jet Program. Manufacturers, including Gulfstream, Dassault, and Sukhoi, are developing the Supersonic Business Jet; 410-666-6123.

Eaton Aerospace, Cleveland, OH, announces it is the integrated hydraulic system supplier for Raytheon's Hawker Horizon transcontinental business jet; 216-523-5000.

Fairchild Aerospace, San Antonio, TX, unveils its full-scale cabin mock-up for its Envoy 7 aircraft. Scheduled for production later this year, 28 orders for the aircraft have been made; 210-804-7751.

Flight Options, Cleveland, OH, announces the signing of its 150th customer, AM General Corp.; 216-261-3500.

Garrett Aviation, Phoenix, is in the final stages of completing its first Falcon 50 engine retrofit under the AlliedSignal program, replacing the TFE731-3 with the TFE731-40. The company's first Boeing Business Jet completion is scheduled for November and is one of four BBJs in the process of completion; 402-475-2800.

Gulf Coast Avionics relocates from its former home at Tampa International Airport to a new facility at Lakeland-Linder Regional Airport; 863-709-9714.

Hartzell Propeller Inc., Piqua, OH, announces its development of a four-blade composite propeller for the JetPROP DLX, a Pratt & Whitney PT6 turbine conversion of the Piper Malibu/Mirage; 937-439-4800.

Ibis AErospace Ltd. of Kerrville, TX, announces its final production stages of the Ae270 multi-mission, single-engine turboprop aircraft. Joint venture partners are Aero Vodochody of the Czech Republic and AIDC of the Republic of China; 830-257-8201.

Innotech-Execaire, Montreal, announces the purchase of five Cessna Citation business jets, worth more than $40 million; 514-636-7070.

Jeppesen, a Denver-based international aviation services company, announces a three-year contract with Executive Jet to establish an international trip planning organization at EJ's NetJets flight operations center in Columbus, OH; 303-784-4399.

Lufthansa Technik delivers its first customized Boeing Business Jet, the XXL Class; 49 40-5070 3667

MedAire, Phoenix, introduces its comprehensive disaster management program for business aviation, which complements flight departments' overall disaster management plan; 602-452-4300.

Pan Am International Flight Academy of Miami announces its flight training services expansion with the acquisition of Westwind Aviation Academy; 305-256-0842.

Raytheon Aircraft, Wichita, KS, announces the delivery of its 500th Beechjet 400A; 316-676-7689.

Rosen Products LLC, Eugene, OR, introduces the first stand-alone aircraft Cabin Entertainment System; 310-479-8999

Sino Swearingen Aircraft, San Antonio, TX, has signed a 20-year agreement with FlightSafety International to provide the official worldwide factory-authorized pilot and technician training for the SJ30-2 entry level business jet; 210-258-3992.

TRW, England, will supply thrust reverser actuation systems on the CF-34 engine for Bombardier's new CRJ700 regional jet; 404-222-6140.

Universal Weather & Aviation, Inc., Houston, signed a license agreement with Navetech Systems Support, Inc., to employ Navetech's Aurora flight planning system to generate flight plans; 713-944-1622.

WSI Corporation and Dimensions International (DI), Billerica, MA, announce Flight Explorer for PILOTbrief Vectorª, a satellite-delivered Aircraft Situation Display product; 978-262-0175.

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