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General Aviation Forecast 2017

Airplane Business 5 Comments

With the election over, it is time to take a look at what the new administration is going to set for the business of general aviation.  Typically I won’t spend time on something like this, but this new administration brings to the table a lot more business related experience, along with being successful at running a business – unlike a politician who, for the most part, doesn’t know how to run anything at all.  Am I a Trumpster?  I would have to admit that I like his approach as being an outsider, and I am not alone.  Whether you want to admit it or not, America voted for Donald Trump regardless of popular vote Vs. Electoral College numbers.  So what can we expect?  I think we are in for an economy that is going to grow at a pace not seen in many decades, which will benefit general aviation significantly.  Along with less regulation, the guy gets it, business needs to be able to use capital to bring new products to the market, so lets look at how this is going to work.

Quite honestly, having someone who isn’t a politician is the most refreshing part of being an American than I can think of.  I have waited many years for someone that has business experience, to set the tone and direction of the country.  Unfortunately, President Obama put the skids to general aviation with his distaste for business aircraft use, and the entrepreneurs who needed to use this form of transportation in the furtherance of business.  You can’t tell me this isn’t incompetence through and through, as there is a significant amount of comparative data that shows aircraft business use is the competitive advantage! To ignore these facts is head in the sand ignorance, and if the job of the president is to offer opportunities for good paying jobs, he did a lousy job from A to Z!

I think the Trump administration is going to be an administration of competence, and economic expansion.  I am not playing politics here, I am stating a fact of a success record and knowing what needs to get fixed to allow expansion of small business.  In the case of general aviation, getting a lot of the certification problems of expense and ridiculous regulation over the top, I think we are in for a lot of innovation and airplane design updates we have been waiting for decades to see.  The burden for development of new aircraft has been extreme, once the objectives and methods can be put together on how best to ensure safety, I think the agencies will start to put reality in front of a regulatory function that was quite frankly…outdated!

Keying in on the basics for airplane components and airplanes in general, the performance, reliability, development, testing, and manufacturing will come together.  Anytime you have bureaucrats involved, you create so many layers of over abuse, that an efficient method of planning and taking it to the manufacturing stage is just not in the cards.  I have long asked why an iPad can’t take data inputs from a GPS, engine inputs, aircraft inputs, and utilize this in a simple tablet mounted on the panel, is a question that needs to be answered.  I get it, you need to have some testing of the components, but seriously, an iPad can withstand a lot of abuse, is reliable, and cost is very reasonable compared to a “certified” glass display that is currently available.  Technology is there, it is totally underutilized based on methods developed fifty years ago for reliability.

When opportunities present themselves, which I believe there are a lot of opportunities in the single engine piston arena, the environment may be ripe for true innovation in our light airplane sector.  If the market shows demand for a new airplane that offers performance and a lower operating cost that is half the price of the current offerings, an airplane could sell very well.  With profitability and sustainability, the best talent will be available to bring in to our industry, which is a win/win for everyone.  I know a lot of talented people who would LOVE to be involved in general aviation, but work in other industries because of the pay and stability.  We need to bring in sales teams that know how to sell, because they can reap a financial reward, we will see a more aggressive marketing and sales approach…which is HIGHLY needed in this industry.

In any business, volume solves all the problems associated with the cost of doing business.  A higher volume brings with it the economy of scale that lowers manufacturing costs, which makes airplanes more affordable, which means we sell more, which means more pilots, mechanics, fuelers, FBO’s, etc. will be needed.  Everything is downstream economics, and it works.  Trump gets it, politicians are hacks when in comes to knowing how things work, which is why I say I am optimistic.

A reasonable time table?  Who knows when our industry will be addressed, but I think the financial boom of increased GDP and opportunities for business, will quickly bring more demand for the industry.  We have sat on eight years of total incompetence, and America is optimistic.  There is a lot of psychology in the economy, in that when people think they are going to make more money, they are going to spend money, which in turn affects the velocity of money in the economy.  Spooling that aspect up, creates a lot of jobs and opportunities in an expanding economy, which is what general aviation needs to fuel it into the future.

There is going to be a major change in how we do business, you can either embrace it and prosper, or decide that aviation will never have a chance to grow again, but for me…I am optimistic that general aviation has a great opportunity in front of it, and my expectations are for general aviation to make the turn around from the downhill slide, to actual growth in numbers!

5 Responses to “General Aviation Forecast 2017”

  1. SteveSteve Says:

    Mike,

    All of your predictions are certainly possible if the economy takes off like everyone hopes it will. The big issues is going to be finding qualified labor for all these new openings.

    In my field of IT, even with a stagnant economy, the need for qualified IT personal is insatiable but the supply is anemic.

    I can drive by industrial areas and see ad after ad for qualified trades people: Diesel mechanic, electricians, plumber, carpenters, welders etc. Even truck drivers are in huge demand. If the shortage of labor is bad now then when things take off where are these folks coming from?

    If anything will slow down the hoped for expansion of business it will be a lack of qualified individuals to do the work.

    Automation only gets you so far. People still have to be trained to run the machines and then repair them.

    My 2 cents.

  2. admin Says:

    Steve,

    You are so right…hard to find people to work the jobs…but wait, there is a true estimated seventy million un-employed, so perhaps some of these people could be used? That number varies, but I am using data of unemployment checks that went out for 18 months, and the fact that these people never did get a job. The obvious answer is to figure out a way to wean people off this dustbag. If you don’t have incentives to do so, then that is where the problem lies.

    There are many millennials that still live at home by age 30! Parents have done a WONDERFUL job raising these kids, right? But I get it, everyone has to compete, so some of these jobs that no one is filling, is going to have to raise the wage and figure out automation in more areas. This has always been a challenge throughout the ages. I personally like it. I worked my tail off my entire life, missing EVERY family event, working holidays, weekends, sixteen hour days, etc. when I would have really like to live a forty hour work week and time off. It was my choice, I wanted to get ahead.

    It will happen, because necessity is the mother of invention. With the difficulty in finding workers, there will be permits to what are now illegals working in these places. They will pay taxes, but will also receive a higher wage being that they can legally work in the country, so that will happen for sure. McDonalds will automate the order process, which makes sense since we swipe to pay anyway, so having a touchscreen menu to make order your food is no big deal.

    In the areas of aircraft manufacturing, I believe more outsourcing will have to take place. Components will be manufactured in low wage areas of the world, assembly at the plant, and life will go on. It may be an opportune time for the industry to look at automation, which is possible in the building of aircraft. Using rivets on aluminum can certainly go to the wayside, along with custom wiring harness applications, etc. Along with 3D printing, the industry can certainly change on how it builds airplanes, and this is severely needed. To this day, I can’t figure out the talent and capital poured into something stupid like a flying car, when the resources should be applied manufacturing techniques and methods.

    The IT problem is something I see all the time, and productivity out of some of these people is a head scratcher at times. Perhaps engineering can solve the problem so that more items are a plug and play type system, with configuration that is more compatible across the various platforms. Necessity truly is the mother of invention, and whoever sits down and makes this system work, will do very well in the marketplace.

    I am optimistic about the economy and opportunity. I think because the White House will be occupied by people who know how to get things done, is going to be refreshing. Truly if you look at 90% of the congress, they are lawyers! People who don’t know how to run a business, and live in some fantasy land that has high billable rates regardless of the outcome. Yet we as consumers go to lawyers and play the legal system. It just amazes me that there aren’t more astute people in our political system that have a more diverse background.

  3. Ben Says:

    I think that liability and production costs need to be greatly reduced to make GA affordable again. Not many have 500-1M for a new Cessna, Piper, Mooney or Bonanza. Even a 15 year old plane is SUPER expensive to buy so that leaves 50 year old airframes at price tags a normal middle class person can afford then MX eats up costs.

  4. admin Says:

    Ben,

    Liability cost in just about every product has gone up. I look at the recalls for motorcycles….that just 10 years ago would have NEVER happened. One incident and a jury that awards the plaintiff, seems to set up a lot of other lawsuits that may or may not have the same circumstances, but the manufacturer is liable. All these costs are carried on to the consumer. Granted, some of these events are surely a defect, and I believe the manufacturer should be culpable for these problems. However, I recall the Firestone tire blowing out, when in reality the vehicle was an SUV which has a higher center of gravity, with the tires of the vehicle to blame being a pressure under 20 psi and a blowout…which gave us the tire pressure monitoring systems, so good or bad, it is part of society today.

    I do agree strongly with your comments about the liability cost being a very expensive item, and I think it keeps innovation down because although it would improve the airplane, the one idiot who ignores something and causes a fatality ends up being ridiculous as consequences to the manufacturer. It’s like a jury doesn’t get it?

    Production costs of general aviation has been my heart ache for a long time, as we are building airplanes like we did in the 1930’s, and THIS is where we need to concentrate the talent, not on flying cars! You can’t tell me that you can’t change the process, as there are all types and methods of doing so. The Eclipse 500 had a friction stir welding process that once this technology has the opportunity to develop, should be employed anywhere it makes sense to do so. Quantity of airplanes would eventually show this to be the preferred method of building a majority of components.

    However, my real focus would be outsourcing components to more efficient companies that may or may not be in the United States. Labor is so expensive in the US, that you need a way to lower the price of the airplane, this is the primary method of doing so. In my opinion, looking at the numbers and impact on employment, it makes sense to sell 50 airplanes that will need maintenance, upkeep in components, expansion and updates to the airframe, etc. over time, while building 10 airplanes due to the much higher cost just doesn’t make sense to me.

    Henry Ford became a huge industrialist because he had ideas on making the manufacturing process more efficient. We currently don’t have that type of thinking in the industry, but is the key to development, manufacturing, and the long term solution to the industry!

  5. Ben Says:

    Part of the problem is delusion and supply/demand. New aircraft cost a fortune and used aircraft are expensive as well. Sellers want top dollar for 50 year old airframes.

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