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December 28, 2004

Business NewsWire Complete Issue

By The AVweb Editorial Staff

This issue of AVweb's Business AVflash is brought to you by …
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Check Your Six: 2004 In Review…

For business aviation, 2004 likely will be known as a year in which the industry withstood a number of challenges – internal and external – to emerge in at least as good a condition as when the year started. At the same time, other segments of the aviation industry did not fare as well; whether those failings will affect business aviation – and if so, how – probably will not be known in 2005. Yet, numerous signs indicate that the continuing decline in airline service is driving more companies and professionals to at least consider some form of business aviation, from setting up a formal flight department, to fractional ownership, and to charter. While it’s good for business aviation to have these kinds of problems, the industry has not weathered them without change and, in some cases, upheaval.

Still, just about every forecast of business aviation’s future includes a healthy and prosperous outlook. Formal studies by several groups – some of them without an axe to grind – all projected long-term growth. Reasons for the rosy projections include an aging in-service fleet and high utilization rates among corporate flight departments and fractional operators. Also driving anticipated growth is the coming market entry of light-light, or micro, jets like the Cessna Mustang, the Eclipse 500 and the Adam Aircraft A700. The real questions about the industry’s future center around who will be standing in, say, 10 years when the low-hanging fruit of the market for new aircraft has been picked. For that, we’ll all have to stay tuned.

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Perhaps the most visible and significant change to occur in the industry during 2004 was the spring cleaning at the NBAA, in which new President and CEO Shelley Longmuir abruptly departed amid internal staff turmoil and dissatisfaction among board members, taking with her Bob Warren, the association’s executive vice president and COO, who was hired by Longmuir. That episode left the NBAA with several challenges – finding new leadership and reassuring its membership perhaps chief among them – but also opened the doors to what seems to have been both significant and beneficial changes. Once the association decided to bring in Ed Bolen, the former General Aviation Manufacturers Association president, to run things and get the NBAA back into level flight, additional and inevitable staff changes followed. In the fall, the organization had one of its largest and most well-attended annual meetings ever, which seemed to drive the final nails into the coffin of the NBAA’s year of living dangerously.

However, the real news at the NBAA likely will occur in 2005 and will involve the extent to which Bolen and Steve Brown seek to transform the organization. As AVweb reported at the time, “one of the reasons former association President Shelly Longmuir left the organization earlier this year was her perceived failure to implement change.” We added, “it's a pretty fair bet that the Bolen/Brown team is in this for the long haul and won't make Longmuir's mistakes. Another fair bet is that the association will not closely resemble itself by this time next year, either in the composition of its staff or the impact of its policy-related activities at the FAA, on Capitol Hill, in the GA manufacturing sector or in the domestic and international operator communities. And for the rank and file NBAA member, that's probably a good thing.”

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…Among New Players…

With all that upheaval in one segment of business aviation, what would a year be without a set of new players promising new airframes and powerplants? In late 2003, Honda’s long-rumored development of a light-light jet finally became public. This year, the company announced an engine, possibly designed to power it. Still, the company has made no announced decision to produce the airframe and no manufacturers have chosen the engine to power their creations. But Honda’s long-standing interest in business aviation – if it results in new products being brought to market – could both fundamentally alter the landscape other companies are used to while bringing potential new customers to the table, especially from overseas. Given the Japanese company’s keen ability to compete in various markets with innovative design and cutting-edge technology, this will be a story to watch in 2005.

At the same time, other new companies have sprung up to either create or fill new market niches. Perhaps most exciting among them are two new players purveying supersonic business jets, or SSBJs. Aerion, a Reno, Nev.,-based company “formed to reintroduce commercial supersonic flight," went to the NBAA’s annual meting with a business jet design it says could enter service as soon as 2011. The company says its proposed SSBJ will have a low sonic-boom signature and will be designed to cruise at up to Mach 1.1 without a boom. Another company, Supersonic Aerospace International (SAI), told the NBAA assembly it had "successfully confirmed the design” for its entry in the SSBJ sweepstakes, the Quiet Small Supersonic Transport (QSST). The QSST program is under the direction of J. Michael Paulson, son of former Gulfstream head Allen Paulson, "using funds Allen Paulson left in trust for this project." Like Aerion's effort, SAI maintains it has developed an engineering solution to the sonic-boom problem.

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…And Old Ones…

Meanwhile, long-standing participants in the bizav marketplace have kept up the pace of developing new aircraft and new technologies. On one level, Gulfstream Aerospace leads the pack with the widest selection of large-cabin, long-range bizjets, especially now that its top-end products – the G350, G450 and G550 – have been certificated and will enter service in 2005. Gulfstream’s Enhanced Vision System (EVS) was well-positioned to take advantage of the FAA’s rule allowing certified enhanced flight vision systems (EFVS) to be used to determine "enhanced flight visibility" for Part 91 operators. Cessna, too, added several new models to its lineup, including the Citation XLS, Citation Sovereign, the CJ3, and upgraded versions of the CJ1 and CJ2. And 2005 likely will see the Citation Mustang’s first flight, followed by certification in 2006.

Raytheon, in turn, celebrated the 40th anniversary of its venerable King Air turboprop line, and last week added the Hawker Horizon to its stable, after obtaining a provisional FAA type certificate. But not all the news coming out of the traditional business aviation companies was good. For example, earlier this month, Bombardier Aerospace’s parent company experienced a turnover at its highest levels. And Safire, which struggled for many years to bring its light-light jet to market, ceased operations, probably for good. Eclipse, however, recently rolled out a certification test airplane -- complete with new Pratt & Whitney Canada engines – which will be the first of five flying test beds that will go through the certification process. In all, 2004 mostly brought stability to the industry’s major players, ushered in some new players and saw the weaker ones depart, sometimes without a whimper.

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…While Ongoing Challenges Include Regulations…

Regulatory changes were also in the business aviation news during 2004. Perhaps the biggest change was in how the FAA views fractional ownership operations. While the new “frax” rules were published in September 2003, they didn’t become effective until Dec. 17, 2004. By most accounts, they have been implemented without too many challenges, perhaps because industry had a lengthy time frame in which to read, understand and make them effective. Another widespread change is the coming Jan. 20, 2005, deadline for RVSM to be implemented in domestic airspace.

However, the potential for the greatest, longest-lasting change to the regulations under which business aviation operates lies in the (still) ongoing Aviation Rulemaking Committee (ARC) convened in 2003 to rewrite existing rules governing FAR Parts 125 and 135. A successor to the joint government-industry efforts on the frax rules, the 125/135 ARC has met throughout 2004, with its final meeting scheduled for early in 2005. Hundreds of industry participants have been working behind the scenes to develop a wide range of proposals for changes to existing rules, as well as a few new ones. At this writing, much of the ARC’s efforts are still not yet formally agreed upon, however. Nevertheless, this rule-writing effort promises to be one of the biggest business aviation stories in 2005 and – because of the lead time necessary for new rules to go into effect – subsequent years, also.

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Despite 2003's being one of the industry’s safest on record, 2004 ended on several sour notes. Although the NBAA noted in January there were no fatal accidents among corporate operators – its core constituency – in 2003, by the end of the year one notable corporate fatal accident had occurred, the Oct. 24 crash of a King Air 200 operated by Hendrick Motorsports into a Virginia mountaintop while attempting a missed approach. Though not “corporate” operations in the technical sense, the same-day crash of a Learjet 35A operated as an air ambulance near San Diego – along with other highly visible crashes and fatalities late in the year – will leave a black mark on 2004.

Two other fatal crashes involving business jets – although not corporate operations – included the Nov. 22 fatal crash of a Gulfstream G-II on approach to Houston’s Hobby Airport and the Nov. 28 Bombardier Challenger 604 crash during takeoff from Telluride, Colo.. The Gulfstream crash made national headlines because it was inbound to pick up former president George H.W. Bush; the Challenger event achieved the same dubious distinction because it carried NBC television executive Dick Ebersol. All three aboard the dead-heading Gulfstream died; one of Ebersol’s sons died in the Telluride crash, as did both pilots and a third crew member.

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…And Security

Last, but not least, aviation security continued to play a huge role during 2004, not only in how business aviation operations were conducted and in how much visibility they received but also in considering the industry’s growth opportunities. On one hand, the industry should consider itself fortunate that it was not subject to more restrictions and security regulations imposed at the local, state or federal levels during the year. On another hand, 2004 came and went without any kind of major security “scare” or fear-mongering among the mainstream media.

Whether the ongoing security issues among scheduled carriers will be eclipsed by recent service problems is anyone’s guess. But, for whatever reason, well-heeled airline passengers are throwing in the towel on airlines and opting for alternatives, including fractional operations, charters and private ownership. Business aviation’s challenge will continue to be to convince policy makers and the media that its operations are secure and do not need anything approaching airline-style security. In this and in many other ways, what was 2004, will be 2005.

Watch Your Inbox...

...the next issue of AVweb's BizAVflash will be e-mailed to you on Jan. 12. See you next year!

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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:
AVweb's editorial team: http://avweb.com/contact/authors.html.

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Send it to AVweb's sales team: mailto:sales@avweb.com.

Enjoy your holidays!

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