GAMA: Business Aviation on an Upswing

Business and general aviation manufacturers finished 2017 on an upswing, pushing up global shipments on the year 2.5 percent, to 2,324 units, and providing momentum into 2018, according to year-end statistics released by the General Aviation Manufacturers Association (GAMA). At the same time, the rotorcraft market underwent a turnaround, with total shipments jumping by almost 7.5 percent in 2017.

“The news is good this year,” said GAMA president and CEO Pete Bunce, adding, “I am very bullish on where the industry is going right now.”

The fixed-wing gains were led by increases in the piston market (up 66 units in 2017 to 1,085) and the business jet segment (up nine units to 676). The only dip in fixed-wing shipments came from turboprops, with 563 deliveries in 2017, a decline of 19 from the previous year.

However, even with the 1.3 percent increase in business jet shipments and a 6.47 percent gain in piston-aircraft deliveries, billings were down by more than $900 million in 2017 to $20.2 billion. Bunce attributed the slide in billings to a shift in the mix of aircraft delivered.

On the business jet side, gains were made from a continued ramp up of the HondaJet, from 23 units in 2016 to 43 last year, as well as the Cirrus Vision SF50, from the first three units in 2016 to 22 last year. Textron also saw its Citation Latitude deliveries increase by 12 units.

At the same time, though, Bombardier’s Global and Challenger shipments fell by 13 units, to 139, and Dassault’s deliveries were flat at 49. Gulfstream’s large-aircraft shipments, meanwhile, were down four.

Also affecting billings was the continued pricing pressure that the aircraft manufacturers faced.

The turboprop drop came primarily from the multi-engine models. King Air deliveries slid by 20 units and Piaggio Avanti Evos were down by one. The single-engine turboprop models, meanwhile, were up by six units, to 473. Bunce called the overall dip a “minor blip” and noted that there is activity on the turboprop front with new models and technologies in the works.

Encouraging Outlook

Overall, Bunce was encouraged by the outlook in the turbine market, and he pointed to positive signs in the used market. “You have an interesting dynamic coming into play with the used market," he said. "We’re getting some really nice action happening.” He added that this has a ripple effect on new models and suggested that many factors could be playing into this strengthening, including the recently passed 100 percent expensing option for used aircraft, as well as the right aircraft with the right equipment. “There are some great deals to be had that won’t exist forever in the used market,” he said. Conversely, he sees new aircraft also being helped by upcoming equipage mandates, such as ADS-B, that may be forcing purchase decisions.

Bunce sees this dynamic carrying forward, noting that with a more solid gross domestic product, tax reform, and stability in many global markets, “All indications are that it’s been very healthy for the jet manufacturers.

In the piston market, trainers have provided a significant boost to deliveries. Piper Aircraft reported a 50 percent year-over-year jump in single-engine primary trainer aircraft deliveries and a 70 percent leap in multi-engine trainers.

Bunce sees a different dynamic playing into this improving training market for both fixed-wing aircraft and rotorcraft. “We know that pilot wages are coming up because there is a very strong demand for pilots, and no one sees that abating anytime soon,” he said. With a rapid improvement in wages, the training market now has a need to build up fleets. “On the rotorcraft side and piston side that’s very good news,” he said.

As for rotorcraft results, the piston market increased by 40 units, to 264, and the turbine market by 25 units, to 662 (turbine market totals do not include Leonardo fourth-quarter tallies, since the company does not report results until this month).

Along with an improved training market, Bunce sees the rotorcraft market, particularly on the turbine side, benefitting from a strengthening oil-and-gas industry along with emerging markets. China in particular has been strong for rotorcraft, he said.

While Bunce admits he is not an economic prognosticator, he remains upbeat about the prospects throughout the industry. “There’s nothing out there…that leads to pessimism about where we are going,” he said. “We’ve got some very healthy markets out there. If we can get some geopolitical stability in other parts of the world, then we can really get going.”

Market Challenges

However, the GAMA chief cautioned that pitfalls still may lie ahead for the industry. Chief among them, he said, is the continued push to carve the U.S. air traffic control organization out of the FAA and create an independent, user-funded organization controlled by an appointed board. “We absolutely have got to beat that back. [This] would be very debilitating not only for our industry...it would be terrible for all of aviation,” he said.

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Bunce questioned why backers are insistent on tinkering with a system he called the envy of the world. He noted that the U.S. system is an example to other locations with capabilities not found elsewhere. He added that other countries come to the U.S. to learn technologies.

Another concern is the “bandwidth within the FAA” to keep up with an increasing list of responsibilities, including the regulation of unmanned and urban mobility vehicles. The FAA will need to address how to fold them into the airspace and develop operational rules. “It’s going to happen,” he said of these markets, but he added that the FAA will need the resources to facilitate these initiatives. Bunce suggested that the aviation community, working with government, should develop means for new users to contribute to the system to provide the necessary resources. This would pave the way for such additions to the airspace, he said, expressing concern that otherwise, the technologies will be ready long before the operational rules.

On the certification side, Bunce is more optimistic, saying the new Part 23 is providing a means for certification of such new technologies. And he added that he is “absolutely convinced we are already seeing benefits” of the rewrite with new safety technologies coming on the market.

However, Congress still needs to push through with certification reforms to help on the Part 25 side, he said. This includes increased access to organization designation authorization (ODA). Companies invested heavily to transition to the ODA system, but the benefits have yet to be fully realized, he said.

ADS-B equipage remains a concern for GAMA, and Bunce said he believes aircraft will be left grounded when the 2020 deadline rolls around because owners don’t book their slots early enough. The capacity is still there, but it is slowing down, he said.

Editor's Note: The 2016 tallies were updated to reflect a change in Gulfstream accounting, which added six large aircraft to its delivery report in that year.