With the old year coming to a close, it's far from certain what the future holds in store for any of us in aviation. Will the industry bounce back once credit starts flowing more readily? Will lower fuel prices (if they last) equate directly to higher usage of our airplanes? And will the seeming demand for GA airplanes--there were huge backlogs for bizjets as recently as this summer--regenerate once the whole mess is sorted out and the economy starts working again?
I'd be a fool to say I had the answers to these questions, when we've never been in this kind of mess before; we apparently were incapable of even imagining a mess like this, despite what in retrospect seem like signs we should have picked up on.
But there are a few things that are clear, when it comes to aviation, at least, and not all of them are bad.
Historically, aviation has taken longer to rebound from hard times than the general economy. The downturn of the early 80s, for example, caught GA off guard, and steadying the ship took a decade of concerted efforts, in the form of tort reform legislation, a commitment to the light GA market by Cessna, and, to some degree, the added value that new design and manufacturing ideas brought to the marketplace.
And when things had cleared, we were looking at a very different kind of GA marketplace, one where jets dominate in terms of dollar value and where making small airplanes (even small jets) is a marginally profitable enterprise, one that depends in large measure on the availability of credit to keep the ball rolling when things slow down.
Bizjet makers, with few exceptions, will survive, though new programs even with storied airframers, are at risk, if not of being abandoned altogether then at least of being delayed significantly. The upside for bizjet makers is, is that their game is always played with a grand overview of economic cycles. With orders stretching out better than half a decade for some airplanes and lifespans measured in multiple decades, it has to be. So while tough times won't last forever, barring total economic collapse, the demand for new and better bizjets will be there when the smoke clears. And because bizjet makers are big, they're better suited to withstand the cycle.
None of these things is remotely true for makers of small airplanes, who lack the flexibility to recast their own images with sheer economic might, as the Cessnas, Gulfstreams and Dassaults of the jet world can do. The longterm survival of these smaller companies, and you know the names, is dependent on two things: how protracted and dramatic the downturn turns out to be, and how well these companies can downsize to keep themselves alive as the orders subside. There are incentives to keep these companies alive in one form or the other, simply because there are so many of the airplanes in the market.
Still, there will no doubt be losers, and the shape of the small GA market will certainly be different in two years than it is today. It might even be fundamentally different, as was the case following the crash of the early 80s.
What exactly that means is hard to say. I don't think anyone foresaw a pair of brothers from the upper Midwest creating a new kind of airplane and, arguably, a brand new market for high-performance singles, but we're all glad for the Cirrus phenomenon.
For those of us who know personal aviation, there's plenty of confidence in the future. And GA will certainly see technological gains made by new faces with new ideas. Will these ideas be revolutionary? Not likely. But as was the case with Beechcraft in the 1940s, Cessna in the 1950s, and Cirrus in the 1990s, the fresh thinking will be formative, shaping what we do and how we do it.
And as far as I can tell, that means flying will become safer and more efficient and ever more accessible. With the market in disarray and the future far from certain, the time is ripe for forward thinkers to figure out exactly how we get from here to there.
Excellent overview Robert...and your look into the market crystal ball is as good if not better than anyones that i have read about. Happy New Year
Posted by: dick koenig | December 31, 2008 at 04:07 PM
"The only thing we have to fear is fear itself" How about "The only thing we have to worry about is worry itself"? This is nothing more than a crisis in confidence. We have all the resources for a vibrant come-back. The squall line is past, the skies are clearing. Expecting greedy returns on investments is what got us here. Lesson learned. Let's move on.
Posted by: Jim | January 01, 2009 at 11:23 AM