Inside the Fence

July 8, 2003
A season of spring meetings leads one to reflect on where we are ...

A season of spring meetings leads one to reflect on where we are ...

Funding, at least for aviation (and for AIP), appears to be on a fast track for multi-year authorization. Of course, appropriating the money in Congress is never a slam dunk. And then there is security funding, the monkey on everyone's back.

But the fact that aviation funding is not the battle of the ages, as in past Congressional sessions, suggests something has changed. Is it that Congress finally recognizes the ongoing need? Or is it the Bush Administration? Most likely, it's the latter.

Genesis has a song, Undertow, that laments about the pull of an inevitable force against the tide one seeks to ride in life. It should become a theme song for the major airlines. The undertow of low-fare economics is proving the inevitable force that ultimately will pull the "legacy" carriers into a new mainstream, or out to sea forever.

The times, they are a'changing.

Look at charter. Jim Coyne at NATA suggests that charter is about to boom, perhaps doubling in size within several years. Some see the Eclipse 500 and similar new small jets as a catalyst for growth. These factors alone are reason enough for FAA to begin seriously rethinking the Part 135 regulations, a process now underway.

The expanded interest in chartering aircraft is a derivative of the selling effort fractional providers have made to bring new users to business aviation. Yet, fractionals are having other impacts on the market. The initial influx of fractional aircraft-high time though still young in aircraft terms-are now entering the used market. It has come at a time when aircraft values were already plummeting. The aircraft market, a hotbed just a few years ago, is stifled. Still, it's nothing like the slump of the ‘80s.

Another derivative of fractionals (on the horizon but signs indicate the time is now) is coming for the service sector. Fractionals have evolved into a major fuel customer for many FBOs. If the fractionals could self-fuel at their bigger markets, they might realize significant cost savings. The FBOs would realize a corresponding drop in sales. The question is how individual airports look at a fractional tenant-not quite corporate, not an FBO. Mini-mum standards may need an additional clause.

Finally, general aviation is in relatively good shape, particularly with the new recreational certificate ready to have an impact. But there's security, and the overreaction to regulate by state and local governments. It helps that AOPA is working with TSA on the awareness program. But security and GA are not quite settled.

Thanks for reading.