Is the Current Slump the 'New Normal'? | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

Airborne Unlimited -- Recent Daily Episodes

Episode Date

Airborne Unlimited-
Monday

Airborne-Unmanned w/AUVSI-
Tuesday

Airborne Unlimited-
Wednesday

AMA Drone Report-
Thursday

Airborne Unlimited-
Friday

Airborne On ANN

Airborne 12.11.17

Airborne-Unmanned 12.12.17

Airborne 12.06.17

AMA Drone Report 12.07.17

Airborne 12.08.17

Airborne-YouTube

Airborne 12.11.17

Airborne-Unmanned 12.12.17

Airborne 12.06.17

AMA Drone Report 12.07.17

Airborne 12.08.17

Sat, Jul 07, 2012

Is the Current Slump the 'New Normal'?

Analyst Brian Foley Says Past Cycles Don't Necessarily Predict The Future

Since 2008 the general aviation industry has been reeling from a downturn that, to many, seems to be lasting an eternity. So what’s really going on? 

"That's probably the most important single question we're being asked these days," notes industry advisor Brian Foley (pictured). "We sympathize with those who worry because this has indeed been an epic correction. But historically, the general aviation industry has averaged five-year cycles, which would normally suggest another year of weakness, more or less. That's not exactly a predictor because these averages, by nature, are highly governed by extremes. This recession is concerning because it is both deep and prolonged, affecting certain companies and sectors more than others."

As an example, Foley cites the fact that large-cabin business jets have been relatively unscathed. But other segments are still a long way from recovery. The high-profile bankruptcy of Hawker Beechcraft, one of the "Big Six" manufacturers competing mainly in small and midsize jets, has caused concern throughout the industry. "This case generated a lot of media coverage," Foley says, "not only because of Hawker Beechcraft's prominence but also because of its public reporting requirements. Surely the industry must have other name-brand providers in the industry in similar difficulties that we don't know about, because they're not subject to the same reporting obligations. That's a spooky thought."

Some hail the recent business jet record breaking fleet orders from fractional provider NetJets, a Berkshire Hathaway company, as a sign that the market has finally returned. Foley is more cautious: “These deliveries are spaced out over the next decade so there’s no quick benefit, and they're principally intended to replace (as opposed to grow) existing fleet aircraft averaging some seven years in age. There’s perhaps a little bit of gaming going on here as well, with NetJets' ability strike a better bargain in low-market conditions and to have these new jets on line when the economy picks up (while still being able to defer and/or cancel orders if it does not)."

So what’s really going on? And how much longer must we sing the blues? 

Foley believes that, for most general aviation companies, the safest mindset is to view the current situation as the "new normal" and adapt accordingly. "The pessimist in me says we'll be in something of a steady-state situation for the foreseeable future, with occasional setbacks balanced out by spots of growth. For example, while Europe's situation worsens and red-hot China moderates, North America may well begin to percolate and take up slack. And the optimist in me says that companies geared to live through these hard times will invariably have the edge when this recession's over.  Generally speaking, they're the ones who can spot a welcome uptick as a gift (rather than a given) and profit from it."

FMI: www.BRiFO.com

Advertisement

More News

Canada Bails On Super Hornet Deal With Boeing

Will Acquire Jets From Australia Rather Than Purchase New Aircraft, Citing Trade Dispute Boeing's trade dispute with Bombardier has led the Canadian government to cancel its plans >[...]

AMA Drone Report 12.07.17: AMA Supports GoFly, ALPA v UAS, EU Drone Regs

Also: Drones Hunt Pythons, MI State Regs, Thanksgiving Drone Flying, Drone Collision Report A little outside our normal coverage responsibilities, nonetheless, we’re intrigue>[...]

Airborne-Unmanned 12.05.17: Mercedes Drone Deliveries, ALPA v UAVs, Tyndall RPAs

Also: ESA Eyes High-Altitude Aerial Platforms, Coptrz Provides UAS, Amazon Patent, UAS Integration In a global first, online orders were delivered in Zurich between September 25 an>[...]

Airborne 12.08.17: AMA Joins GoFly, Mackay Trophy Heroes, KSMO To The Rescue

Also: Orion Parachute Test, Workforce Shortage Issues, Cygnus Departs ISS, Myrtle Beach AirShow AMA has partnered with Boeing to support GoFly, an incentive competition that encour>[...]

Aero-News: Quote of the Day (12.11.17)

“What we turned in was a list of ideas that we had identified as things that might be helpful in terms of regulatory streamlining... Nobody had to twist our arms on this. We&>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2017 Web Development & Design by Pauli Systems, LC