Recessionary Paradox: GA Innovates As It Shrinks

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Last week, I was sitting in the press room at AOPA Expo pounding away at the laptop when an acquaintance wandered by with a perfectly dazed expression. “I’m having trouble wrapping my head around this,” he said. “On the one hand, the economy is tanking, Cessna is laying off people and yet Garmin is rolling out a big new product. Maybe I should get this, but I don’t.”Welcome to the rabbit hole of recessionary paradox. Economic downturns are difficult not just because of hardships they cause, but because the pain is not evenly distributed. And whether it is or it isn’t, many companies continue to do what they always do, which is to think up new products and try to sell them or try to sell in more creative ways the products they already have. Today, for example, I got a press release from Diamond offering what it calls an “economic stimulus” package. Buy an airplane before the end of the year and get free maintenance, free insurance, free flight training and a $5,000 gas card. There’s nothing new in any of this. It’s how modern capitalism and marketing work.In an earlier blog, my colleague Russ Niles opined as how he found the mood at AOPA Expo upbeat. That’s not quite the word I’d use. I found it more subdued, but with an underlying determination to drive forward into 2009 with purpose because nothing quite focuses the mind like having no choice. This naturally led to another discussion in which I heard two opinions–one that the industry is dying, another that it’s just “realigning.”Neither of these is correct, in my view. “Dying” suggests a terminal phase, implying that light airplanes will simply go away. The ramps and taxiways will empty and the pavement will be plowed up for condos. (Silver lining insertion: the real estate market is so flat that no one is building condos. Count your blessings.) We often hear the claim that user fees will “kill” GA, or that high gas prices will or new FAA regulation will. I don’t buy any of it.”Realignment” is just a kind a euphemism for what’s really happening to the piston segment: It’s simply shrinking, something that’s been going on for the two decades I’ve been covering the industry. For clarity, I describe shrinking as there being fewer piston airplanes in the fleet, fewer pilots and fewer flight hours flown. All of these metrics have been in decline since 2000. These facts simply can’t be disputed and there’s no point in trying to put a happy face sticker on it.Yet … Cirrus, Diamond and others have found a way to prosper with new aircraft that are, arguably, the best and safest ever built. New models and features appear regularly and avionics have been kept on the cutting edge. Gadget companies continue to innovate and, despite the shrinkage, we see new startups all the time. An entire new market segment has emerged in the light sport arena.In short, the piston segment of the industry moves forward even as participation in it shrinks. Worth noting is that in recent years, GA piston sales have increased and so have overall billings. Part of that is due to the fact that new airplanes cost more than they ever have and the manufacturers have found more buyer interest and profits in the premium segment of the market.This is just one reflection of why the light aircraft segment is retracting. It’s not that the industry as a whole doesn’t sell itself, or that Cirrus, Diamond and Cessna are too rapacious to make cheaper airplanes, or that fuel costs are through the roof. The big driver is a demographic shift away from mass interest in learning to fly. Given all the other fun stuff people can spend discretionary dollars on, flying is just one more and the push the industry enjoyed from the aviation-literate World War II generation has long since evaporated.AOPA, EAA and others are doing as well as they can with promotional programs such as Young Eagles and Let’s Go Flying. These bring new people into the fold, but there is no magic bullet here. There’s no missing link that the industry just can’t figure out to return to the glory days of aviation. The market force away from flying and toward other interests is just enormous.So the reality is, the GA piston segment will be smaller in five years than it is today. To which I reply, so what? There will continue to be opportunities for smart companies in the field, buyers will continue to find airplanes across a range of prices (new and used) and for those who don’t want to progress beyond the entry level, the light sport market will continue to offer affordable alternatives.This week, I got a note from a reader who picked up on incoming AOPA President Craig Fuller’s remark that GA’s best days are ahead of it. The reader’s comment was to the effect, what’s this guy smoking? But I agree with Fuller, actually, and no one has ever mistaken me for a Pollyanna. (Or maybe even for anything less than a hard-bitten, black-hearted cynic.) That’s because I accept what my eyes and ears see and hear and I also accept that an industry doesn’t have to be big or even growing to offer excellence across the board. True, vibrant growth may stimulate more innovation and new products, but lack of it doesn’t choke things to a standstill. See Garmin. See Cirrus. See Diamond. See Cessna.And that, as much as anything, explains why a company like Garmin launches one of its most ambitious products ever into the teeth of an economic slowdown. If there’s money to be made up market or down market, competent companies will figure out how. The especially competent ones will do it by realizing that there’s no short term prospect for growth even as the industry figures out what its next size will be.So that’s the slice of reality I’m chewing on post-Expo. If I’m delusional, I’m sure you’ll let me know.