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February 11, 2004

Business NewsWire Complete Issue

By The AVweb Editorial Staff

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Banning The BBJ

Rep. Rothman Gets His Way...

When is a Boeing 737 not a Boeing 737? When it’s a Boeing Business Jet (BBJ), of course. Boeing’s uber-bizjet has long been the subject of both envy and scorn -- and not a small amount of controversy -- because of its size. Yet that size, which means much more flexibility in its cabin configuration, and its commonality with the majority of airliners operated throughout the world has made it a popular choice for businesses that need and can afford all that the BBJ offers. But that doesn't mean it's popular with the general public. Most recently, residents of northern New Jersey claimed victory in a months-long effort to ban the BBJ from Teterboro Airport (TEB) outside of New York. It seems that -- despite claims to the contrary by the FAA, industry and others that the BBJ is not an airliner and not involved in scheduled operations -- the locals were not convinced. The end result was late January's Congressional approval of language sponsored by U.S. Representative Steve Rothman (D-NJ) effectively preventing the FAA from overriding a locally imposed ban on aircraft weighing more than 100,000 lbs. The BBJ's unmodified maximum gross takeoff weight is 171,000 lbs. and, despite various workarounds that have been proposed from time to time, the 69-odd BBJs in service won't be operating at TEB anytime soon.

Of course, Rep. Rothman and the Port Authority of New York and New Jersey lost no time in claiming victory: "With the enactment of my legislation, we have banned the 737 Boeing Business Jet from Teterboro Airport and sent a strong message to those who seek to destroy our quality of life: 'We don't want your jumbo jets in our backyards and we never will,'" Rothman said. Port Authority Chairman Anthony R. Coscia also praised the legislation, saying, "We thank Congressman Rothman and Senators Corzine and Lautenberg for their leadership in securing this legislation -- the first of its kind in the nation -- that will protect the citizens of Bergen County and keep Teterboro Airport operating as a general aviation facility."

...Whither The FAA...?

In addition to the immediate effect -- banning the BBJ from one of business aviation's most popular airports -- the new federal law will act to supersede a policy statement the FAA proposed on July 1, 2003, before it even goes into effect. The proposed policy sought to allow operations of aircraft heavier than an airport's local pavement-based restrictions in limited circumstances. In that proposed policy, the FAA basically noted that restrictions based on the ability of runway, taxiway and ramp pavement to support heavy aircraft without damage are based on regular use of the airport's facilities. Instead, said the proposed policy, incidental use of the airport by aircraft exceeding pavement-based weight restrictions would be allowed. That proposed policy statement also noted that, "[i]f there is no showing of need to protect pavement life, or the limit on airport use appears motivated by interest in mitigating noise without going through processes that exist for such restrictions, an attempt to limit aircraft by weight will be considered unreasonable." In other words, when a weight-based restriction is motivated by other than concerns for the life of the airport's pavement, the FAA would consider them inappropriate.

To date, the FAA has not progressed beyond the proposal stage with its policy on weight-based restrictions. Since the proposal was published, the FAA has been sifting through the numerous public comments it received but has made no decisions. Similarly, there is no schedule or deadline by which the agency will publish a final policy statement, if at all. Finally, it's not at all clear what response, if any, the FAA will have to the situation at TEB, one which is clearly a weight-based restriction for reasons other than protecting pavement. Also unclear is the extent to which, if any, other options for BBJ operations at TEB may exist. For example, the FAA recently approved a Supplemental Type Certificate (STC) allowing BBJ operators to execute some paperwork and redesignate their aircraft's operating weights. Although that STC was designed to allow the BBJ to be operated within FAR Part 135's weight limitations, it's not at all clear whether similar paperwork might be used to once again allow BBJs to access TEB.

...And Who's Really In Charge?

The bottom line, for now, is that you can't bring a BBJ -- or a heavier aircraft -- into TEB. Whether the political pendulum will swing back in the direction of reversing or diluting this ban is something else again. One thing for sure, however, is that Congress' recent action to approve Rep. Rothman's amendment will further erode the FAA's ability to establish national standards for airports and reasonable, rational access to them. These combine with the growing plethora of state and local laws designed regulating aviation operations and aviation security to make business aviation more complicated, more costly and more challenging than ever before. The state and local efforts to regulate aviation also make the FAA even less relevant than it has become in the aftermath of the Sept. 11, 2001, terrorist attacks. And there's no end in sight.

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Making Business Aircraft Ownership Less Taxing?

From Doldrums To Depreciation...

Buying and owning an aircraft is anything but an inexpensive proposition, even if its use is strictly for business and therefore, totally deductible. But the benefits from aircraft ownership accruing to a company as a result of its employees' increased productivity, privacy and security -- especially in recent years, as airline services to business travelers decline -- has resulted in a recent resurgence in sales of new and used business aircraft of all shapes and sizes. For many of the same reasons, fractional aircraft ownership was invented and now thrives. As one result, the position in which the business and charter aviation industry finds itself today is in sharp contrast to the late 1980s and early 1990s, when "doldrums" barely described its condition. What has changed since then? Well, in addition to the product liability reforms called for in the General Aviation Revitalization Act of 1996, more favorable tax laws have gradually made it onto the books since 1986, when a number of "reforms" began to slowly erode the advantages of owning and operating an aircraft. Among them was elimination of the investment tax credit. Most recently and in the aftermath of the Sept. 11, 2001, terrorist attacks, the federal government enacted tax laws designed to spur investment and to jump-start an economy reeling from uncertainty, among other ills.

...GAMA Seeks Extension...

Since then, one of the most-used tax benefits is the so-called "bonus depreciation" incentive that helps a taxpayer recover investment costs more quickly than before. That tax provision was enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003 last May and allows companies to depreciate an additional 50 percent of their new equipment in the first year of ownership. In order to qualify for the incentive, equipment must be purchased and placed in service before Jan. 1, 2005. According to the General Aviation Manufacturers Association (GAMA) it works. GAMA tells anyone who will listen that sales are up 43 percent in the first three months since bonus depreciation was increased to 50 percent and says that a recent survey of aircraft purchasers revealed that bonus depreciation is a deciding factor in a large percentage of sales. According to GAMA, 14 percent of survey participants chose to buy now rather than later, 5 percent opted to buy new rather than used aircraft and 3 percent bought a more expensive model of aircraft. Despite the seeming insignificant percentages cited by GAMA, the association last week said, to no one's great surprise, that an extension of bonus depreciation was needed, beyond the current Jan. 1, 2005, expiration date.

GAMA's rationale is that it generally takes manufacturers eight to 14 months to fill a customer's order for a business or charter aircraft, depending on model. This means that, for some models of aircraft, bonus depreciation will soon cease being an incentive for purchase. Unless the 50-percent bonus depreciation incentive is extended now, GAMA says that orders for new aircraft are likely to drop off precipitously -- particularly in 2004 -- effectively stalling the economic recovery the incentive was designed to foster. And that would be a bad thing. Importantly, GAMA contends, bonus depreciation does not increase the total "deduction" allowed companies buying new capital equipment but, instead, it "front loads" it. Look for more on extending bonus depreciation to come from the industry in the coming months.

...And Industry Gears Up "How-To" Sessions

Never missing an opportunity to jump on a good thing, industry groups have been actively marketing seminars, training sessions and other informational products designed to help business and charter aircraft operators deal with tax-related issues. Most recently, the National Air Transportation Association (NATA) announced it is offering a special tax seminar specifically geared toward Part 135 air charter operators. The Tax Seminar for Air Charter Operators is designed to provide answers to some of the most common tax-related issues faced by the charter industry. The one-day seminar will take place on Monday, May 17, 2004, in conjunction with the association's annual convention in Las Vegas, Nev.

NATA has partnered with one of the nation's leading aviation consultants, Conklin & de Decker, to provide up-to-date information designed to help operators comply with all IRS regulations. Nel Sanders-Stubbs, a partner with Conklin & de Decker, has over 15 years of experience in aviation tax matters and will serve as both the moderator and a speaker for the tax seminar, along with other presenters. Content will include:

  • Application of Federal Excise Taxes
  • State Tax Problems
  • International User Fees
  • Common Tax Errors
  • Completion and Filing of IRS Forms
  • Receiving the Fuel Tax Credit
  • Structuring of Aircraft Management Agreements
  • Tax Implications for Personal Use of Aircraft
  • Compliance with Rules for Carriage of Elected Officials.

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Honeywell Kicks RAAS (Out The Door)

The FAA on Feb. 5 granted Honeywell the certification papers for the company's Runway Awareness and Advisory System (RAAS), a new safety system aimed at reducing aircraft accidents on airport surfaces. Honeywell's RAAS is a software solution grafted onto its Enhanced Ground Proximity Warning System (EGPWS), currently deployed on over 20,000 aircraft, and provides ten aural advisories to pilots. These advisories include alerting the crew when:

  • The airplane is approaching a runway – either on the ground or from the air
  • The airplane has entered and is aligned with a runway
  • The runway is not long enough for the particular aircraft
  • The distance remaining to the end of the runway as the aircraft is landing or during a rejected takeoff
  • A takeoff is begun from a taxiway
  • When an aircraft has been immobile on a runway for an extended time

Because it is a software-based product, RAAS can typically be added with no new hardware or wiring changes needed. The system is currently available for Honeywell Mark V and Mark VII EGPWS with the latest software upgrades. The Mark V and Mark VII are typically installed in air transport, regional and large business jets. FAA approvals for EGPWS with RAAS include manufacturing approval under a Technical Standard Order and a Supplemental Type Certificate utilizing one of Honeywell’s flight-test aircraft. Cessna will offer RAAS as an option on most Citations with a Honeywell EGPWS installation.

The King Air Turns 40

On Jan. 20, 1964, the original Beechcraft King Air Model 90 lifted off from Beech Field in Wichita. Now, 40 years later, parent Raytheon Aircraft is preparing to commemorate the lineage with a special, 40th anniversary edition. That aircraft, a King Air 350 -- serial number FL 400, registered as N40TH -- will receive a special paint scheme and interior treatment. The company is also creating a special Web site -- address pending -- for the anniversary. That Web site will feature owners' stories and King Air facts and photos. The company also is asking King Air owners and pilots -- both civil and military -- to send in their unique experiences and photographs for publication to a special e-mail address.

The type's 40th anniversary celebration will culminate at NBAA 2004 in Las Vegas with the delivery of FL 400 to its new owner. So far, sales of the Beech King Air in all its flavors and sizes are approaching 6,000 copies. According to the company, no other business aircraft has been manufactured in the same quantities. "What has made the King Air so successful -- other than the excellent original design -- is its constant refinement," said Randy Groom, president, Beechcraft Division of Raytheon Aircraft. "From that first aircraft we have listened to our customers and applied the latest technology to bring incredible value to the King Air family."

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Cessna's Stats

Cessna Aircraft Company recently announced its 2003 production results. The numbers include some 842 new aircraft delivered, $2.3 billion in sales revenue and a year-end order backlog of $4.4 billion. Of the 842 airframes delivered, 197 were Citations, 57 were Caravans and 588 were single-engine pistons. Lost in those numbers is that Cessna also delivered its 4,000th Citation since production began. Said Cessna President and CEO Jack J. Pelton, “We expected 2003 to be a challenging year and it was. In spite of the adverse 2003 economic conditions, the Cessna team showed tremendous flexibility in responding to the necessary reduction in production schedules. Our cost structure has been adjusted by implementing a number of efficiency improvements in our manufacturing processes. We can be proud of our 2003 accomplishments, and are confident that our planned 2004 delivery schedule is stable."

The company also introduced several new models and model upgrades in 2003. The Citation XLS, Citation X interior and options upgrades, and G1000 glass-cockpit avionics on Skylanes and Stationairs were announced in October. Also, Cessna’s company-owned and authorized Citation Service Centers have modified 1,970 Citation with RVSM solutions. This is more RVSM upgrades than any other manufacturer, according to the company. Expected in 2004 are full type certification and customer deliveries of the Citation Sovereign, XLS, CJ3, and GARMIN G1000-equipped Skylane and Stationair, and delivery of the 5,000th single- engine piston aircraft since single-engine piston aircraft production was restarted in 1996.

Light Lears Away

Bombardier Aerospace last month followed the delivery of its first Challenger 300 super mid-size bizjet by placing five -- count 'em -- copies of its new Learjet 40 light business jets into service. Two Learjet 40s were delivered to U.S.-based traditional operators, two entered service with Bombardier’s Flexjet fractional ownership program and one aircraft was delivered to a traditional operator based in Germany. The newest Learjet is certified to FL510 and, with full fuel and a maximum payload, it can fly up to 1,762 nm. Bombardier introduced the Learjet 40 at the 2002 Farnborough Air Show.

"This new aircraft combines legendary Learjet performance with exceptional comfort, value, and versatility," observed Peter Edwards, president, Bombardier Business Aircraft. "In every regard, it is poised to become today’s premium light jet." Based on the proven Learjet 45 platform, of which there are currently some 235 jets in service worldwide, the Learjet 40 shares all major systems and benefits with its parent. It received FAA type certification on July 11, 2003, and got its European Joint Aviation Authorities (JAA) paperwork on Jan. 9, 2004.

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Bell's XV-3 Tiltrotor Returns Home

Late last month, a truckload of aircraft parts was delivered to Bell Helicopter’s Flight Research Center at the Arlington (Tex.) Municipal Airport. Normally, such an event would simply mean that testing of a new or improved model could continue. But this time, the truck held the remains of the Bell XV-3, the world’s first successful tiltrotor aircraft. Over the next two years Bell employees and volunteers will restore the aircraft to museum-quality display condition. Built by Bell in 1954 in Fort Worth under a joint Army/Air Force contract, the XV-3 successfully demonstrated the concept that by rotating its outboard prop-rotors up or down, the aircraft could take off and land vertically like a traditional helicopter as well as fly with the high speed and range of a fixed-wing airplane.

Bell Helicopter will keep the XV-3 in Fort Worth, until 2008, when the historic plane goes on permanent display at the U.S. Air Force Museum in Ohio. Bell officials pointed out while the XV-3 will never fly again, it remains an important part of America’s aviation heritage. The XV-3 restoration project will take place near where the first V-22 tiltrotor aircraft were built and test flown as well as where the newest and first civil tiltrotor, the BA609, is being developed.

Raytheon, NetJets Get Closer

Continuing an already-close relationship, Raytheon Aircraft and NetJets Inc. announced they have signed a 10-year maintenance contract covering the fractional operator's Hawker 1000, Hawker 800XP and Hawker 400XP business jets. The contract, which includes options beyond its initial 10 years, will provide NetJets with full maintenance for the three aircraft types. Also, NetJets added two more Hawker 800XPs to an order it placed in December, bringing the order's total value to more than $385 million.

Deliveries of the Hawker 400XP will begin in 2004 and continue through 2009. The first Hawker 800XP was delivered in December 2003 and deliveries will continue through 2005. With respect to the ten-year-plus maintenance contract, Hawker 1000 and 800XP heavy maintenance work will be performed at the Hawker Service Center in Little Rock, Ark., and Raytheon Aircraft Services -- Tampa will handle such service for the Hawker 400XP.

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Cessna Promotes

Cessna Aircraft Company announced it promoted David Brant to become senior vice president, Product Engineering. Brant’s responsibilities will include new aircraft creation, development, design, interiors, flight test and certification, plus product improvements for all aircraft in production and in service. Brant will report to Cessna’s President and CEO Jack J. Pelton and serve as a member of Cessna’s Senior Leadership Team.

Brant originally joined Cessna in 1974 and served in various engineering capacities until 1980. He rejoined Cessna in 2001 as director of airworthiness, Engineering Flight Test and Product Safety. In between, Brant was at Galaxy Aerospace. He has also held positions at Learjet and Piper Aircraft. Brant holds an ATP and multi-engine certificates. He is type rated in the Citation 500/525S and has over 2,700 hours of experience.

Bell Ups Jet Ranger Useful Load

In addition to receiving the original XV-3 tiltrotor for restoration, Textron's Bell Helicopter unit last month announced completing a certification program that increases the internal gross weight limit for the 206B to 3,350 pounds, an increase of 150 pounds. Takeoff at internal gross weight above 3,200 pounds will require that airspeed is limited to 78 KIAS until a corresponding amount of fuel is consumed. The useful load increase will enable the JetRanger to be more competitive in the light helicopter market, according to the company. The additional capacity will benefit the law-enforcement market in particular, as agencies will be able to expand mission capabilities and aircraft effectiveness. The internal gross weight increase will be certified as an FAA STC and will be applicable to all Bell 206B Jet Rangers in the field.

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GAMA's Crystal Ball

Looking for the latest information on the state of the general and business aviation industry? Need to know what the future may hold for your company's private aviation investment? Look no further than the General Aviation Manufacturers Association's (GAMA) Annual Industry Review & 2004 Market Outlook. This year's event is set for today, Wednesday, February 11, well past the deadline for this installment of AVweb's Business Aviation NewsWire. However, GAMA's Web site will include electronic versions of the association's reports and presentations. Look for more on what GAMA has to say in two weeks.
_____________________________________
We Welcome Your Feedback!

Business AVflash is a twice-monthly summary of the latest business aviation news, articles, products, features and events featured on AVweb, the Internet's Aviation Magazine and News Service. http://www.avweb.com

Have a comment or question? Send it to mailto:newsteam@avweb.com.

Today's issue written by Joseph E. (Jeb) Burnside:
http://www.avweb.com/contact/authors.html#jburnside
AVweb's editorial team: http://avweb.com/contact/authors.html.

Have a product or service to advertise on AVweb? A question on marketing? Send it to AVweb's sales team: mailto:sales@avweb.com.

Let's all be careful out there, okay?



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