AVwebBiz Complete Issue: Volume 5, Number 45

November 21, 2007

By The AVweb Editorial Staff
 
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Economists Wary Of Aerospace Bubble

While sales of business jets are at record highs and forecasters predict strength in that segment throughout the next eight years, economists are questioning the near-term viability of the aerospace industry ... and it's not just oil prices. Airbus sells its products in U.S. dollars but pays its employees in local currencies. With the value of the dollar experiencing a relative free-fall the impact of that arrangement may become powerful. Airbus' parent company, EADS, has lowered its 2007 profit forecast from $580 million to zero, according to ABC news, citing the dollar's decline as cause for the loss of $19 billion from the company's backlog. A weak U.S. economy is also perceived as a potential threat to worldwide airline travel. U.S. Federal Reserve Chairman Ben Bernanke has downplayed fears of a recession, but has predicted an economic slowdown into 2008. But there are many factors that affect the impact these forces have on different segments of worldwide aviation markets.

Europe, at least, has a powerful euro to help counter $100/barrel oil. In the U.S. some economists fear that high oil prices -- or even fallout from the country's subprime mortgage debacle -- may force the economy into recession, cutting demand for air travel. That situation may hit airlines hard but will affect business jet operators as well, as fare hikes to counter rising fuel costs would be difficult to apply and corporations slash travel budgets to counter high energy costs. In the doomsday scenario, fallout from that situation would lead to a reduction in sales at major aircraft manufacturers, plus the cancellation of some existing orders. One key to survival would be fuel efficiency -- already a target of designs like Boeing's 787 Dreamliner and championed by the HondaJet, Eclipse 500, and coming designs from Spectrum Aeronautical, among others. Another key is for companies to hedge currency, limiting their exposure to the dollar's downfall. Large companies like Airbus and Bombardier have such programs in place, but relief in this form is temporary. If the dollar's decline is not corrected, many in the industry fear layoffs would follow.

Relatively speaking, a weak dollar does put U.S. aerospace exporters and even U.S. airlines in a position to benefit from overseas sales and business derived from international routes. But economists fear that all the while competition will be working hard to maximize efficiency -- and that could make it far more difficult for U.S. companies should the dollar improve.

 
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Dubai Air Show By The Numbers -- Bubble, Shmubble

Dubai's Air Show 2007 at Airport Expo Dubai from Nov. 11-15 collected more than 45,000 industry-related visitors from over 131 countries in a largest-ever showing that eclipsed the 2005 event (the show is biennial) by 30 percent. The show saw record numbers for exhibitors (850) and display aircraft (140); on-site orders exceed $100 billion, one of which for Aerion's yet-to-be-built 1.6 Mach supersonic business jet. As a reflection of the booming Middle East civil aviation sector, the visitor breakdown proved high for airline executives. Emirates Airlines placed orders totaling nearly $35 billion (much of it for Airbus and Boeing aircraft) on the first day of the show. But manufacturers of smaller aircraft like Cessna cashed in with $190 million in sales to a Saudi private jet operator. Embraer sold $45 million worth of equipment to Abu Dhabi's Falcon Aviation Services. And Eclipse sold 12 of its Eclipse 500 aircraft to Dubai Aerospace Enterprise Flight Academy. The event will be held at a different location in 2009. Looking toward the future, the Dubai Air Show will move to Dubai World Central aviation community in Jebel Ali, outside of Dubai City where it will run from Nov. 15-19, 2009. Organizers will seek to accommodate those who rushed to secure positions for the 2009 event, many requesting increased show space. One company has already reserved more than 800 square meters.

 
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TAG, A Giant Among VLJ Programs

Early next year, TAG Aviation (which has traditionally specialized in management of mid-size to VIP airliner business aircraft), plans to begin pushing its light jet management program as an alternative for customers currently flying anything up to the size of a Cessna Citation CJ3. The company plans next year to formally launch its "VLJ Flying Club" ownership program -- a venture with aviation investor Rolf Ilsley. In the managed VLJ market, TAG hopes its move will place it as an established giant with pre-existing clout amongst a field of start-ups with little track record. "We realized while working on the VLJ fractional program that there is much interest from owners of small jets for a professional management company that can leverage all the benefits of a large organization." ... "We're not a start-up company for a start-up category," TAG light jet program manager Matthew Sheble told Flightglobal.com.

 
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Operational Control -- FAA's Audits Still Going Strong

Charter operators have been the FAA's target for random unannounced audits for more than 19 months. Recent audits show there are curveballs operators may not expect but for which they must be prepared. It has recently been demonstrated that companies operating with dba names approved through local FSDOs should still be concerned. If those dba names are listed on A001 Op Spec sheets in the name of management companies, FAA auditors will not be impressed by local your FSDO's approval when they stop by. The message is this: you don't have to be a bad guy to be audited, so be prepared. Modern preparation of documentation includes consistency online, where some carriers are posting their certificate numbers on Web sites to facilitate transparency for customers. For its part, NBAA offers an Operational Control Audit Checklist (PDF file) to its members. See also NBAA's FAQ page on the FAA's A008 OpSpec on Operational Control. On the heels of the FAA's emergency revocation of accident-free charter operator AMI's certificate, AVwebBiz reminds part 135 operators that an operator cannot delegate to outside entities any aspect of operational control over its air transportation/commercial services without consequence.

Since February 2005, when a Challenger 600 operated by Platinum Jet Management crashed through a fence at Teterboro airport, N.J., crossed a highway and crashed into a warehouse, injuring 20, the FAA seems to have renewed its efforts to police management of Part 135 operations. In that case, Platinum Jet claimed it was providing resources (pilots and aircraft) to another entity that was serving as the air carrier. The FAA disagreed, suspending Platinum's certificate. All operators must maintain operational control over all flights -- including oversight of all operations from initiation, to continuation, to conduct and termination of a flight. If the FAA believes a carrier is engaged in the franchising or rental of its air carrier certificate, it will act.

 
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Quotes reprinted with permission. Aviation Consumer, August 2007.
 

Embraer Joins With CAE For Pilot Training

Comprehensive pilot and ground crew training for customers of the eight-person Phenom 100 very light and nine-person Phenom 300 light jets will soon be available following formalization of a joint venture agreement between Embraer and CAE. Embraer CAE Training Services LLC will provide initial and recurrent training for pilots and maintenance crew with a program launch set to begin at CAE SimuFlite in Dallas, Texas, in the third quarter next year. CAE's U.K.-based Burgess Hill training center will add the program beginning in 2009. Each facility will be equipped with a full-flight Phenom simulator that CAE has agreed to manufacture. The $2.98 million Phenom 100 and $6.65 million Phenom 300 will cruise at 41,000 and 45,000 feet respectively, with the first 300 expected to enter service in mid-2009. CAE has provided integrated training solutions for Embraer aircraft for almost ten years.

 
XM WX Satellite Weather Uses a Continuous Satellite Broadcast to Deliver Graphical Weather Data to the Cockpit
Pilots view and interact with the data — including radar, winds, METARs, lightning, and more — on compatible MFDs, EFBs, and PDAs from a wide range of industry partners, as well as on laptop PCs. The situational awareness afforded by XM WX Satellite Weather allows pilots to enjoy their journeys with more confidence and comfort than ever before. For more information, please visit XMWXweather.com.
 

NATCA Ties Controller Shortage To Flight Delays

The National Air Traffic Controllers Association (NATCA) placed two half-page ads in USA Today, yesterday, drawing a connection between "falling levels of experienced controllers and the rising number of arrival delays," according to NATCA Director of Communications Doug Church. The actual graph associates a 105-percent increase in arrival delays with a 12-percent decrease in veteran controller staffing. NATCA says the ads also show how the FAA's action to enforce "non-negotiated pay rules" has led to an increase in attrition and retirements in spite of the FAA's public predictions to the contrary. Specific to that point, the ad includes a "Myth" versus "Reality" section that pits comments from then FAA Administrator Marion Blakey -- "There is not going to be any mass run for the exits" -- against excerpts from the Department of Transportation Inspector General Feb. 9, 2007, report -- "According to FAA officials, the large jump in actual retirements was a result of the breakdown of contract talks."

 
AFSS Is Up to Speed. And Gaining Altitude.
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Aviation Week VLJ West Management Forum

In support of an expansion for the VLJ air-taxi market currently budding in the East, key industry players will meet in San Diego Nov. 27 and 28 to continue discussion (initiated in a May forum) of popular business models for VLJ operators. The event offers an opportunity to interact with industry peers and business partners with an overall objective of ensuring the market succeeds. Panel members will speak on subjects including analysis of trends and opportunities throughout the value chain -- operators, manufacturers, MRO, FBOs and other service providers. Other topics range from a dissection of established business models to explore their hits and misses, exploration of funding strategies and a discussion on how to grow the VLJ market both in the U.S. and abroad. The two-day event will explore all aspects of the emerging market, covering risk management and the effects of current and future distribution of technology and airport infrastructure. Register online

 
Get into the Cockpit!
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Carburetor Line Sold

Precision Airmotive has reached a tentative deal with "a group including Tim Henderson, President of Aero Accessories, and others involved in the manufacture of the Tempest brand of general aviation products," to buy Precision’s line of MSA aircraft carburetors, according to a news release from Aero Accessories/Tempest issued Monday. The group says it plans to move the manufacturing facilities for the carbs to a facility in an undisclosed location in North Carolina. Precision announced earlier this month that it was suspending manufacture and distribution of the carbs and parts after it was unable to obtain product liability insurance. There’s no mention of the insurance issue in the Henderson Group’s release. Precision has been involved in several high-profile lawsuits concerning the carburetors and the company said it was unable to get insurance coverage, at any cost, necessary to continue supplying carbs. MSA carburetors are used in most normally aspirated Continental, Lycoming and Franklin engines. There is an inventory of carbs and parts available. The deal with the new group is expected to be finalized by the end of January.

 
Avidyne's New MLB700 Broadcast Datalink Receiver Really Delivers!
Avidyne's MLB700 Broadcast Datalink Receiver delivers aviation-quality datalink graphical weather from WSI InFlight® and audio entertainment from SIRIUS® Satellite Radio. With the MLB700, you get WSI's industry-leading NOWrad® radar mosaic displayed on your EX500 or EX5000 MFD for the most up-to-date and highest-quality aviation weather available and over 130 channels of music, sports, news, and talk radio right through your aircraft's audio system. Click for more information online.
 

AVweb's Special Biz Podcast — Debriefing Dubai with Analyst Richard Aboulafia

File Size 7.6 MB / Running Time 8:19

Podcast Index | How to Listen | Subscribe Via RSS

Last week's Dubai Air Show may have been a turning point in commercial aviation history. Oil-rich Middle Eastern countries have apparently decided that they want to takes the area's historic role as crossroads of the world and give that a modern context. Airlines there accounted for most of the hundred billion dollars in aircraft orders tallied up at the show. AVweb's Russ Niles spoke with industry analyst Richard Aboulafia on why other airlines should be nervous.

Click here to listen. (7.6 MB, 8:19)

 
New Gift Ideas Have Been Added to AVweb's Holiday Marketplace
When purchasing gifts for family, friends, and flying buddies, go to AVweb's Holiday Marketplace. AVweb is the perfect place to find perfect gifts for pilots and aviation enthusiasts. And for yourself — forward the link to your family and friends as a hint as to what you want! It's easy online, with AVweb!
 

AVweb Original Videos

Affordable collision avoidance for general aviation. The Zaon XRX/Garmin solution....
(Note: If the video is not visible, below, click here to view.)

 

Meet the AVwebBiz Team

AVwebBiz is a weekly summary of the latest business aviation news, articles, products, features, and events featured on AVweb, the internet's aviation magazine and news service.

The AVwebBiz team is:

Publisher
Timothy Cole

Editorial Director, Aviation Publications
Paul Bertorelli

Editor-in-Chief
Russ Niles

Contributing Editors
Mary Grady
Glenn Pew

Features Editor
Kevin Lane-Cummings

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