AirportBusiness Blogs

… at least, that’s the conclusion one might reach from two news items out this week. Forecast International, the Newton, CT-based research firm, in an upcoming December report predicts that production of the Eclipse 500 VLJ will come to a halt in early 2009. And, the Rocky Mountain News reports that AAI Acquisition, a Russian investment group which purchased the assets of bankrupt Adam Aircraft, has laid off most of its 200-plus work force and has suspended development of its A-700 VLJ.

Comments Forecast International analyst Douglas Royce, “”We have forecast production of 162 Eclipse 500s during 2008. We believe that the company will be able to push production out into early 2009 but will be forced to cease production within the first quarter of 2009.” Forecast International predicts only about 12 Eclipse 500s will be produced in early 2009, and “even this forecast may prove too optimistic,” says Royce.  Forecast International says that Eclipse Aviation’s business plan depended on delivering a twin-jet aircraft at an extremely low price relative to its competition.  The low price was dependent upon the use of a high-volume production strategy made possible by importing methods of production from the technology and automotive industries.  The anticipated production ramp-up never happened.

Prior to May 2008, the list price of the Eclipse 500 was $1.52 million, notes FI; the price has since jumped to $2.15 million, but Eclipse Aviation is required to deliver aircraft at the earlier, lower price to customers who entered a purchase agreement and paid the required 60 percent deposit.  Every aircraft delivered under the old price is delivered at a loss, says FI. Eclipse Aviation has stated that it needs $200-$300 million in new equity investment, a tough hill to climb in today’s investment markets.

At AAI, based at Centennial Airport south of Denver, only a handful of employees remain, according to the Rocky Mountain News. The newspaper quotes Jan D’Angelo, a company spokesperson whose job was among those eliminated, as saying that the Russian investors that control AAI decided to scale back because of the global financial turmoil and the dramatic hits taken recently in the Russian stock market. “I think the investors are probably regrouping to figure out their options, and I’m sure they’ll update the world once they figure that out” is how D’Angelo puts it. Adam Aircraft filed for Chapter 7 bankruptcy in February.

For a decade now, the VLJs have injected enthusiasm into the general aviation marketplace. Cessna continues producing its VLJ, the Mustang, and it appears that once again the Wichita manufacturer has figured out how to take an industry concept and make a product that is sustainable. Unfortunately for the others, the path to the future looks more like a downward spiral.

So much for the theory of a mosquito wave of VLJs clogging the skies.

Thanks for reading. jfi

Hmmm …

I was talking with a fellow traveler recently (or, as we say in the South, “the other day”) when I mentioned an upcoming four-hour layover at ATL. “The sad thing about that,” he opined, “is that there’s no comfortable place to sit in the entire airport.”

Lawd, y’all, the man is dead on. In fact, there is no comfortable place to sit at any big airport in the United States. Not for four hours, anyway.

Back in the old days when we could afford to ride the same airlines everywhere, I was a high muckety-muck Platinum or Gold and used to wait in the so-called executive suites. They didn’t have a comfortable place either. The bathrooms were closer and so were the sodas. But the places weren’t really comfortable.

ATL has one restaurant wherein it’s comfortable and enjoyable to sit and eat for a good while, but after that it’s fidget and squirm. The restaurant is Paschal’s, a downtown Atlanta legend since 1947, owned all that time by an African-American family named—what else—Paschal. They now have three locations at the airport. It’s a fine place to eat, even if you didn’t grow up on collards, candied yams, fried chicken, and peach cobbler, as we Southerners did.

In the old days, I took pride in being able to find a place to nap during a long layover. I was a master at it. I slept in construction areas, at unused gates, and in other dead areas of the airport. My favorite was a meeting room behind the Billy Mitchell area at MKE. Another airport had a hotel in which you could always find an empty meeting room.

I enjoyed a lot of great naptime in such areas, but that all stopped immediately after September 11, 2001. You could still find a few such places but were scared to use them lest you wake up surrounded by drawn guns.

I keep reading about airports with bunk rooms but have never seen one. If you have plenty of time, catch a ride over to the FBO and slip into the pilots’ lounge.

Anyway, I have two long waits this week. Wish me luck.

We’d love to post your comments. Please click the comment tab at the top.

… the thing that stands out most is the quiet. The ‘hum’ that is almost a trademark of the engines on other Airbus airliners isn’t heard. Rather, on the rollout down the LAX runway, the conversations of the passengers (mostly media) seem louder than the noise of the aircraft itself.

Qantas recently took delivery of the first of 20 A380s it has on order, and this week launched service to LAX from Melbourne. Regular service to Sydney is next, followed by London, once Qantas takes delivery of two more A380s by year end.

The Australian carrier launched its new service amid much fanfare on Monday, including crewmembers ‘Captain’ John Travolta and Aussie star Olivia Newton-John. A demonstration flight took media reps and other guests up the coast of California, circling the Golden Gate Bridge before returning to Los Angeles.

Wally Mariani, senior VP for the Americas and Pacific for Qantas, says that it is the quiet of the A380 that airports should be promoting to their communities. “This is the quietest, greenest aircraft in the world,” Mariani says, “and airports need to help get that message across to their neighbors.”

Los Angeles mayor Antonio Villaraigosa stresses the economic impact, projecting that the A380 service to Australia will generate some $600 million annually for the region, along with some 3,000 jobs. The region can use it – Los Angeles World Airports’ director Gina Marie Lindsey estimates that airlines have cut back service by 14 percent this fall at LAX and by 30 percent at Ontario International.

As the aviation industry undergoes a redefinition globally during these economically stressful times, the A380 is going to play a key role in future international travel. For airports like LAX, it can’t come soon enough.

Thanks for reading. jfi

Two days ago, I received an e-mail that really surprised me. A nonflying, highly-respected friend, Dean Masters, sent it out of the clear blue sky. It was a story saying that Chuck Yeager was not the first to break the sound barrier.

The story goes that George “Wheaties” Whelch, a WW II ace, was a leading test pilot given the job of test flying North American’s XP-86 prototype at Muroc Field (later renamed Edwards AFB).

Wheaties became convinced that the XP-86 could break the sound barrier in a dive. The word was out from the USAF not to do this because they didn’t want to divert any thunder from Chuck Yeager, who was planning to do that in level flight in the Bell SX-1.

Wheaties, not one to cater to the brass, announced to the crowd at Pancho Barnes’ famous watering hole that he was going to let them hear a sonic boom, and he did.

Now that’s the story. Even though it cited great aviation resources, I was still a little less than totally convinced.

One of the greatest sources of aviation history is AVSIG, the great aviation online forum. I put the story to them, and got back responses from some of the best aviation historians I know.

Folks, the story is almost certainly true. On the other hand, it was not official because Wheaties’ flight did not have instrumentation to document a supersonic flight. Besides, Wheaties did it in a dive,  not in level flight  as Yeager did in his official flight.

And now you know the rest of the story.

We’d love to post your comments. Please click the comment tab at the top.

…during recent hurricanes Ike and Gustav, but issues remain for this ‘airports helping airports’ initiative. SEADOG – the Southeast Chapter Disaster Organizational Group – was formed following relief efforts by airports during the very active 2004 hurricane season. (The March 2008 cover story of AIRPORT BUSINESS offers more details on the program.)

While Savannah International director Patrick Graham is recognized for getting the initiative started, he and others credit SAV’s director of operations Greg Kelly as the key cog in the SEADOG machinery. Says Kelly of the recent hurricane relief efforts, “Overall the operation went really well. We had a lot of participation by airports from around the country. We had conference calls; more coordination. We had state DOT aviation departments on the conference calls too — from Florida, Texas, Mississippi, Alabama, and Georgia — which was key to our operation. In addition, the FAA and TSA joined our conference calls, which was helpful. ALPA was there, so we had the airlines’ input. And FEMA jumped in on a couple of conference calls as well.

“Communication is better than it’s ever been; more agencies are involved; better execution.”

Yet, challenges remain. “What we’re trying to do is to get a process set up like the utility companies, who just get rolling when a disaster strikes,” explains Kelly. It is an inter-agency issue, he says, involving counties, states, and the feds. Airports can play a greater role in preparing for a disaster and in playing a key role in the overall emergency response coordination effort, he says.

“The problem is,” says Kelly, “if the state of Georgia, say, is flooded with calls, they may not process an airport request and may not recognize why we need an electrician from Jacksonville when other electricians are available. They don’t understand that an airport electrician is different. These are airport-specific requests, and a lot of them are out of state.”

“What SEADOG does is identify airports that might get hit and identify where the aid will come from. Here is what we know we’ll need up front with a Category 3 about to hit us.”

Adds John Clark, director of Jacksonville International, “We have to figure out a mechanism well in advance of hurricane season so that we get all the documentation done. It’s not the financial issue; it’s the liability issue. I don’t think any Florida airports responded this time because there was a lag in the necessary paperwork. But we can take care of that. It’s a program I think we will stay in. We’ve got to figure out how to get the paperwork and the releases of liability already set up in advance so that when we get the call we can just go.”

Kelly says that the amount of airport participation in the voluntary relief effort has been “incredible”. Improving the process will just facilitate airports helping airports in times of disaster.

Thanks for reading. jfi

… which is the incredible economic downturn. But it’s there.

Reporting from Orlando, the site of this year’s annual NBAA annual convention, the mood is cautious. Attending a series of press conferences prior to the show opening on Sunday failed to reveal the rush of big orders or new aircraft introductions. This is an industry segment that has been on a high for some 15 years … the run has ended.

The world of business aviation just changed overnight. No one wants to say it; but they recognize it. (At least, in reality, it’s not the airline or airport biz, which are taking much bigger hits.) Yet, all questions related to the potential fallout from the current economic crisis meet with the same answer — it’s a time of caution.

The sky isn’t falling, but the sun is rising in a different direction. No one wants to predict what the end game will be.

The bottom line may be that, corporate aviation is taking a big hit, but not as big a hit as commercial aviation. The bigger fallout is more focused on the FBO sector, which has gone through an incredible buyout frenzy in recent years. Life is changing for that sector. The question that is out there is how committed is the new money that has bought up FBOs in recent years? If the recent ‘money’ buyers aren’t on board for the long term, that may in turn mean opportunities for the committed players.

The sense of NBAA ’08 is this: We don’t know where this is going; we don’t want to even speculate. Yet, for those who lived through the trying times of the 1980s or the early ‘90s, the current economic challenges aren’t as dire. Yet.

Thanks for reading. jfi

The title is from Shakespeare’s Romeo and Juliet. It also represents my feelings about both houses of our Congress.

Congress has just passed a bailout bill that was necessary, according to representative and senators, to avoid a dire economic disaster. Forget the rightness or wrongness of the bill itself for a moment and just consider the pork they slipped into it.

One would think, for once, our Congress could think of the country and leave aside pork barrel and earmark spending.

They couldn’t.

Check it over, folks, the bill contains enough “sweeteners,” as one Congressperson called them in public, to make any lowlife con artist green with envy.

Congresspersons have finally proved, in public and under dangerous circumstances, that it is impossible for them to think only of the country. They cannot act for the good of the country, nor can they put aside for once their shady little greedy pork barrels.

I am totally disgusted.

Mark Twain got it right when he said that Congress was America’s only native criminal class.

Again, a pox on both their houses.

We’d love to post your comments. Please click the comment tab at the top. 

… which in time could prove a watershed moment in U.S. airport history, or be a one-off. The City of Chicago announced the deal this week in which it expects to receive $2.5 billion for a 99-year lease of Midway to a group that includes Citigroup’s Citi Infrastructure Investors unit; John Hancock Life Insurance Company; and YVR Airport Services, Ltd.

The move falls under an FAA pilot program for U.S. airport privatization and still must get the agency’s approval. However, DOT Secretary Mary Peters is quoted as calling this “a very good deal.”

For many who work in the U.S. airport arena, this is viewed as little more than legalized revenue diversion, which is a concern. It’s reported that Mayor Richard Daley plans on using some $1.4 billion to pay off Midway debt. Much of the remaining $1.1 billion is expected to be used to boost pension funds, but it’s reported that the mayor will reap some $100 million for city coffers.

Perhaps the most interesting aspect of the arrangement is the involvement of YVR Airport Services (YVRAS), which is partially owned by the operator of Vancouver International Airport, recognized as a leader in bringing technology to the airport and in creative private development. YVRAS currently owns or operates some 18 airports on three continents.

George Casey, president of YVRAS, recently related that he sees potential for more privatization initiatives in the U.S. market once a “cornerstone” airport makes the move. Midway is seen as that cornerstone.

In Chicago, the move is seen largely as one that will result in higher fees at Midway. Mayor Daley, who has already led similar privatization initiatives with the Chicago Skyway toll road and the city’s parking garages, is positioning it as a creative way to bring private money to the city and the airport.

Either way, the path to U.S. airport privatization is now officially open for business.

Thanks for reading. jfi