... it’s a mixed economic bag these days. That’s the word from Jim Coyne, president of the National Air Transportation Association, which represents airport-based businesses like fixed base operators and FAR Part 135 air taxis. “It’s quite a checkerboard across the country,†he says. “For most of the last five, six years you could say that the industry was doing well nationwide. Clearly, today, different parts of the country have very, very different economic positions. If you’re in Texas, things are going gangbusters. If you’re up in Michigan or in Florida or some other places in the country, you have very depressed economies.
“I was up in Michigan three weeks ago and it’s a very depressed economy there, especially for the people that are involved in air charter for the automobile industry. There have been huge reductions in air charter activity.â€
On the impact of soaring oil prices, Coyne says the NATA membership is seeing jet-A sales holding level; sales of 100LL avgas are down some 5 to 20 percent. “Quite frankly, I don’t know if the impact is more the recession or more the high fuel prices. In the parts of the country that aren’t in a recession right now, like Texas, the higher fuel prices haven’t had much of an effect. But in other places the high fuel prices are having a big effect.
“It’s affected a lot of piston operators; however, there’s kind of a silver lining because in some respects piston aircraft become more economical now than larger aircraft. So it’s not entirely a bad picture for the piston side.â€
For FBOs, the challenge historically in economic downturns has been the ability to maintain profit margins. Coyne says 2008 is no different. “They’re really having a hard time maintaining margins. And, of course, their costs are going up as well. To heat a hangar this winter is going to cost twice as much as last winter. To fuel all the ramp vehicles is going to cost twice as much.
“You would think with a doubling of fuel prices the margins would double, but they haven’t. It’s much tougher to make money in the FBO business in 2008 than it was two or three years ago.â€
For charter companies, significant activity reductions are being experienced in pockets – regions like Michigan, the New York region, and Florida. “The charter industry is experiencing an effect mostly from the recession,†says Coyne. “But all in all, I’m surprised that the industry is doing as well as it is.â€
The traditional charter model continues to do reasonably well, he says. The per-seat, DayJet model utilizing very light jets is a work in progress, but Coyne thinks in time it will be a player. “These new efficient aircraft like VLJs are really catching the imagination of consumers who have never chartered before, especially for flights under 500-600 miles. I think there’s going to be big growth in that activity.â€
Overall, comments Coyne, “I’m cautiously optimistic.â€
Thanks for reading. jfi