... is thankfully coming to a close. A year ago at this time we were still talking in aviation about the capacity crisis, communities expanding their air service options, a vibrant business aviation sector … and the inability of an inept Congress to pass long-term FAA and aviation system funding. (Well, the latter hasn’t changed.)
As the year progressed, oil prices skyrocketed; airlines failed; and FAA and the carriers got wrapped around the axle over inspections. Communities across the U.S. began to see air service pulled back, with some losing commercial air service entirely. By the time airport managers met in June for the annual AAAE convention, a sense of shock was pervasive. At the time, business aviation seemed almost immune from the crisis, until the financial markets tanked globally. By the time the bizav sector met in Orlando for NBAA, reality began to set in, marked most notably by the lack of significant new aircraft introductions, a hallmark of the annual convention.
Yet, there is hope.
In fact, two items that stand out today are the dramatic decline in oil prices (today at $39/bbl), which has industry observers projecting a profitable airline industry down the road; and, the renewed sense of hope that has come with the election of President-elect Obama. Harry Reid, Nancy Pelosi, and company no longer have the convenient excuse of Bush-bashing as cover for doing nothing. The hope here is that accountability will return to Washington.
There is a whole generation in this country that has never experienced a significant economic downturn. Older folks remember the stagflation days of the ‘70s; interest rates at 21 percent; general aviation deliveries going from over 17,000 annually to under 1,000; the number of fixed base operators going from more than 10,000 to estimates of 3,500 by the mid-80s; the bust of 1987. I recall a conversation in the late ‘80s with a long-time FBO manager who predicted the ultimate demise of the general aviation services sector … that, of course, was before the onset of NetJets and the fractional revolution.
If past is prologue, it’s reasonable to expect that the dark clouds on our horizon will clear in time. When the sun reappears, the industry it is shining on will remain, albeit changed. It’s hard to imagine 2009 being more volatile than this year. But we do have one thing going for us that we did not have last December – hope.
Thanks for reading. jfi