Tony Velocci FORBES
General Aviation Headwinds Persist
February 12, 2015
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  • The fact that year-end worldwide aircraft billing and shipment numbers—officially released Feb. 11 by the General Aircraft Manufacturers Association (GAMA)—were mixed should come as no surprise, as discussed in this space at the end of January.

    What does might as a surprise, however, is that business jet shipments increased 6.5%, to 722 units, from the prior year. Billings for business jets rose 4.5%, to more than $22 billion.

    What’s surprising? Europe’s economy is stagnating, and economic sanctions against Russia, a big market for business jet manufacturers in recent years, are inflicting a lot of pain. China’s economy is slowing down and air space and infrastructure issues continue to dampen market demand. Moreover, the U.S. market, the largest in the world for business jets, isn’t nearly as robust as it otherwise might be, even though it accounts for some 52% of the global market. Despite all of this, shipments still showed significant growth.

    In other segments, shipments of piston-engine airplanes increased 9.6%, while turboprop shipments declined 6.5, to 603 units. Rotorcraft shipments slowed for both piston and turbine aircraft by 31.3% and 22.4%, respectively, compared to strong deliveries posted in 2013.

    “The mixed results among segments indicate that the general aviation manufacturing industry is still facing headwinds, given the tepid U.S. economic recovery and the political and economic uncertainties in Europe,” GAMA President and CEO Pete Bunce said.

    He added: “The 2014 year-end numbers make crystal clear the need for GAMA’s priorities in 2015—specifically, reform that facilitates the introduction of new safety-enhancing products to market, reduces the inconsistent application of regulations, and strengthens the global engagement and cooperation among aviation authorities.”

No less important to the future of U.S. original equipment manufacturers (OEMs) is congressional reauthorization of the Export-Import Bank of the United States. Technically it’s operating on borrowed time until June, when Congress is scheduled to vote on whether to reauthorize the lending agency. Since 2012, Ex-Im Bank has provided some $1.9 billion in financing guarantees for U.S.-based general aviation manufacturers to facilitate the sale of their aircraft in other countries.

    Reauthorization would ensure a level the playing for U.S. OEMs, since16 other countries operate similar credit agencies to provide low-cost financing. “We have got to get this financing extended so that our products can compete on their merits,” GAMA Chairman Joe Brown said. To illustrate the gravity of what reauthorization means for GAMA members, Brown said he knows of a case in which 40% of the sales of a GAMA-member company is depends on being able to finance its sales through the Export-Import Bank.

    Considering that general aviation supports about 1.1 million jobs and some $219 billion in economic output in the U.S., according to an updated study by PricewaterhouseCoopers, reauthorization is no trivial matter and should be among Congress’ highest priorities when it comes up for vote.