Plane Conversations

Recently I was talking with a friend about business flying.  He is not in business nor is he a pilot.  But he had trouble getting around the notion that business aircraft are all about excessive luxury for the super-wealthy.  I commented that there might be some merit to his claim if the majority of business aircraft owners were all super wealthy individuals.  But they aren’t.  This opinion also belies a scarcity mentality that assumes if someone “has” then it is because they have taken it from someone who, as a result, “has not”.  Funny, but we forget that the vast majority of the world lives on less than 2$ per day and considers anyone who has an automobile to be “rich”.  Perspective and assumptions are often overlooked in these discussions.   Personally,  I reject the idea of a closed economic system and the resulting scarcity mentality that accompanies it.  But, alas, I digress.

Yes there are aircraft owned by the super-wealthy who utilize them mainly for pleasure.  But that is the exception (as well as their prerogative, by the way.)  However, according to a 2009 study from the National Business Aviation Association (NBAA) small businesses own the majority of business aircraft.  Less than 1 in 4 passengers on business planes are top level leadership.  More often, 70% of the time, business aircraft are used to transport mid-level mangers, sales, support and technical staff. 1  The image of the aircraft being utilized only by the CEO or COO as a luxury is simply not factual.

The practical uses of business aircraft are many.  You can more efficiently fly into airports not serviced by the airlines and reduce the expense of hotel stays and car rental.  Employees can work during the flight and not waste precious time standing in line at security or waiting for standby flights because their original flight was cancelled.  Those travelling on business aircraft said that they felt 20% more productive on the plane than in the office and felt that on the airlines they were at least 40% less effective.2

The larger businesses that operated corporate aircraft are reguarly among the most profitable (which means, in turn, they are able to hire and employ) and respected in our country.  NEXA Advisors, LLC, conducted a study to see if business aircraft ownership actually had a correlative effect on the health of the business operating the aircraft.  In short, yes, it did.  It made a solid positive difference in these companies.  The report’s conclusion was, “Business airplane users continue to outperform nonusers in terms of revenue growth, profit growth, and asset efficiency.” 3

Moreover, what is lost in the grandstanding on Capitol Hill and the media’s constant badgering of Business Aviation is how much business aviation contributes to our economy and to the success of companies that employ tens of thousands. Aviation and it’s related businesses directly employ more than 1.2 million people and infuse $150 billion into the economy.  Aviation is a signficant contributor to our nation’s health.4

The businesses operating their own aircraft were to be found on lists such as : Business Week’s 50 Most Innovative Companies, Fortune’s 50 Most Admired Companies, Business Week’s 25 Best Customer Service Companies, Fortune’s 50 World’s Most Admired Companies, and Corporate Responsibility Magazine’s 100 Best Corporate Citizens.5  Again, the caricature of the business jet operator is found to be just that -a caricature that does not accurately represent reality.

Without a doubt business aircraft have a degree of luxury about them.  And why not?  Do you chastise someone for having leather seats in their car?  An .mp3 player?  Satellite radio?  GPS?  But those things are pretty standard these days in our cars.  Perhaps one of the major issues is that business aviation stands in stark contrast to the miserable state of the commercial airline experience that we all know only too well.  If you had the choice of driving in a 76 Plymouth or a 2011 MKZ, would you really have to think long about the choice? (And for the record I drive a decade-old Ford Taurus with 140,000+ miles)  If it’s your car or boat or plane, why not make it comfortable and functional?  But at the end of the day, that’s not the point as my friend’s faulty assumptions illustrate.

Most businesses don’t operate aircraft because they simply like the luxury.  They operate them because they make practical and financial sense.  They don’t buy an aircraft so they can look cool and yet lose money.  No, they have learned that business aviation can make good business sense.  And the business aviation industry stands ready to be an integral part of the equation to help individuals and business achieve the success that, in the end, makes us all stronger.

1.  Real World Business Aviation 2009, page 5 (http://www.nbaa.org/business-aviation/Real-World-of-Business-Aviation-2009.pdf)
2. IBID, page 6
3.  The Bizav Advantage: The case for bizav, in dollars and cents Robert P. Mark, Business Jet Traveler, Oct 1, 2010
4. Aviation Week, Kansans Demand Obama End BizAv Rhetoric, July 22, 2011
5. IBID, Mark

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This is déjà vu all over again.  By now I would have thought our Congress would have come up with a long term funding authorization for a very critical part of our nation’s infrastructure.  All of us under the big umbrella of aviation (airlines and GA) don’t agree all of the time but for once we all agree to the necessity of funding the FAA and the development of airports and Next Gen air traffic control systems.  We have even accepted the idea that fuel taxes will go up to help fund these initiatives.

ATW online reports that our Congress just passed the 20^th short term extension for funding the FAA.  That’s right, 20 extensions.  If I ran my business finances like that I would have been fired a long time ago.  Somehow our nation’s lawmakers can’t agree to get anything done about this yet no one seems to hold them accountable.

Quoting from the article “FAA Administrator Randy Babbitt, Airports Council International-North America and airport directors around the US have been saying for some time that uncertainty over FAA funding, particularly the Airport Improvement Program that helps finance expansion programs, is causing disruptions to airport construction projects (ATW’s Airports Today, Oct. 5, 2010). “For over three-and-a-half years we’ve been operating on extensions,” Babbitt noted during a recent speech. “It’s been very difficult to run an agency on extensions … We need to restore long-term stability to funding.”

In addition to the disruption of airport construction projects and the stall in developing Next Gen, the FAA has basically shut down the certification of new Airlines and Charter operators. So how do we create any new jobs in our industry if startups can’t start? Those of us already flying are also having trouble getting anything done with an agency that doesn’t know where their next dollar is coming from.

The Democratic controlled Senate and the Republican controlled House can’t seem to figure this out. But this goes back to before the Republicans got control of the house. So it seems that doing nothing about an important issue is the way it goes these days in Washington DC.

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This post first appeared on 4.26.11 in CS&A Insurance blog – Clear on Top

How do we determine is something is dangerous?  Is there a universally known definition or just a matter of opinion?  Webster defines the term as follows:

dan·ger·ous – adj – able or likely to inflict injury or harm

If we stop and think about the literal definition of dangerous, we realize that it applies to most things in our life.  We start off each day with dangerous acts…shaving, taking a shower, cooking breakfast, driving to work…all of which have the ability to inflict injury or harm.   How many of us have cut ourselves when shaving?  How about burned yourself while cooking?  And what about having an accident in a car?   The generally accepted odds are that 1 in 4 people will be involved in a serious car accident in their lifetime.  Let’s take that a step further, based on the average number of automobile trips made by Americans in their lifetime the odds of being killed in an accident are 1 in 140.  Driving is the most dangerous activity undertaken by most Americans on a daily basis and very little thought is given to the dangers encountered because it is just a routine part of life.

Why does the general public view flying as being dangerous?  Any time we cheat the laws of gravity we are entering into a “dangerous” scenario by definition; but is it really dangerous, or is it just different?  According to the National Safety Council, the odds of being killed in a plane crash are about 1 in 250,000.  In comparing these statistics you are 1,786 times more likely to die in a car than in a plane…in other words you are more likely to die on the way to the airport than in flight to your destination.

So what is it that is driving this dangerous view of flying?  In short, lack of education and the media.  This is a funny combination in my mind because the media is supposed to educate, but often times they are just as uneducated as the masses to which they are pontificating.  How does a blind man know what color the sky is?  He trusts the person describing it to him, even if that person is colorblind.  In absence of knowledge we tend to believe whatever sounds the most accurate.  So without further ado I give you some media quotes concerning recent flying scenarios making headlines.

“The Monday night close call, left Obama’s jet 2.94 miles away from slamming into the 200-ton C-17 plane…” – New York Post

This is what is known in the aviation world as a “go around”.  It happens on a daily basis and exists for just such an occasion.  When the required separation cannot be maintained or does not exist, the controllers direct the pilots to break off the approach and send them around to try it again.  Let’s put this in perspective just to give you an idea how far 2.94 miles is…try 15,500 feet.  This is a greater distance than all those aircraft that pass over your house on approach to landing if you live within 30 miles of a major airport.   If their landing lights are on when they fly over your house at night, they are probably below 10,000 feet and only 1.89 miles away from slamming into your house.

“The pilots landed their planes safely but without help from the airport tower.”  – ABC News

“Planes forced to land without help from tower at Reagan Natl” – America’s Newsroom     

News flash…the tower does not and cannot help a pilot land an airplane.  The tower can only give direction and recommendation just like the traffic cop at an intersection.  Pilots land without help from the tower thousands of times every day…it’s how we were trained from Day 1.

Let’s face it, flying is still a widely misunderstood activity and as long as there are reporters there will be inaccurate news reports.  As pilots, we are a relative minority and the understanding of flight is still a wondrous mystery to most.  The how’s, why’s, and what if’s are the stuff of Hollywood legend.  Entire movies have been made around the fear of flying and the perceived dangers that they instill are numerous.  Aviation activities still draw front page news, from the airshow to the accident and the engine failure to the ATC actions.  Is flying dangerous?  Yes.  Is it more so than other daily activities?  No.  It is up to us as pilots, air traffic controllers, and all other aviation support personnel to do all we can to operate as safely as possible and calm the fears of the general public.

Be professional, train appropriately, and be personable.  Just because we can fly does not mean we are above anyone else.

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Originally published on Clear On Top on 4 March 2011

Federal officials released a proposal recently to the Federal Register that will limit the use of the BARR program to owners and operators of aircraft who are deemed to have a “valid security concern”.  For a little over a decade, the Block Aircraft Registration Request (BARR) has provided a way for owners and operators with a privacy concern to have their N# and the corresponding flight information be blocked from public availability.  Without the BARR, real-time information for any aircraft on an IFR flight plan is available to the public through the internet.  Public use websites exist that provide ownership and tracking information on the aircraft including it’s location, altitude, airspeed, destination, and estimated time of arrival for little or no charge.  To take this to the next level, apps exist for the iPhone and other smart phones that allow a user to point at an aircraft flying overhead and be provided with all the aforementioned information pulled from this public domain.

If this proposal is passed owners and operations will be required to re-submit written certification of a “valid security concern” on an annual basis for approval.  The proposal defines a valid security concern as follows:

“A Valid Security Concern is a verifiable threat to person, property or company, including a threat of death, kidnapping or serious bodily harm against an individual, a recent history of violent terrorist activity in the geographic area in which the transportation is provided, or a threat against a company.”

Ed Bolen, President of the NBAA, issued a statement today saying that the proposal will grant “an unwarranted invasion of the privacy of aircraft owners and operators, a threat to the competitiveness of U.S. companies and a potential security risk to persons on board.”  Bolen’s entire statement along with much more information concerning the proposal can be found on the NBAA website.  I encourage you to take a bit of time and learn about the very real threat to your privacy that is lurking around the corner.  We have 30 days to make our comments heard before this proposal comes up for action…the time to speak up is now.

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It has been a couple weeks since I last posted on Plane Conversations.

I usually don’t go this long without checking in but the past few weeks of travel to China, and then being part of a conference back in TN, have kept me running with little time to slow down and write.

This week I was part of a conference hosted by Middle Tennessee State University and sponsored by our company and FedEx.

The purpose of the conference was to get people together from China and the US who work in the government and private sectors of aviation to dialogue and exchange knowledge on the developments and trends in General Aviation in China.

From China we had a delegation that consisted of officials from CAAC (China’s FAA), legal scholars from the Beihang University of Aerospace and Aeronautics, industry executives from Flying Dragon Aviation China, the largest general aviation company in China, as well as China’s official news agency Xinhua. Erick Wang, CFM’s VP of our newly formed CFM China Company, was also in attendance. Erick is from Harbin, in Heilongjiang Province, Northern China.

From the US side, attendees included senior level FAA/ATC, AOPA’s International Affairs Director, representatives from FedEx’s international legal affairs and international feeder operations, MTSU aerospace professors, Chuck Howell, CEO of Great Lakes Airlines, executives from BAE Systems and Cirrus Design.

Mike Vaughn who is President of CFM China and Director of Government Sales for CFM here in the US was the conference moderator.  

This is my first experience with co-hosting and sponsoring a conference of this magnitude and I now have a new found respect for those who organize these type events. Hundreds of hours and months of planning and preparation go into an event like this, especially when trying to coordinate schedules, logistics and visas for delegates coming from the other side of the world.

Many thanks to the Aerospace Department at MTSU for hosting this conference at their facilities at the Murfreesboro Airport, and thanks to FedEx for being the major sponsor.  

My post conference impressions about what was learned and gained center around relationship building.

Nothing replaces face to face dialogue and some of the more important interactions happened, not at the speaker’s podium, but at the dinners and social times when conversations between the Chinese and US delegates was relaxed and informal in nature.

Our new aviation friends from China are no different than aviators here in the US. They are passionate and knowledgeable about their profession and have a sincere desire to learn. Aviators around the world share a common bond that trumps any cultural or political differences.  

The Chinese are very intent on growing their industry in China. They have been restrained by restrictions on use of airspace by the PLA, but nonetheless they know what they are doing.

The Chinese recognize that they need to open up their airspace for commercial activity including GA. Their government now recognizes that a healthy general aviation industry is good for economic development and prosperity in China. The country and the government are massive and opening the skies will not happen overnight, but it will happen. Before laws are enacted, policies and procedures will be put into place to allow more GA operations in the skies.  

The Chinese also recognize that the US has one of the most developed and successful aviation systems in the world and there is much to be gained by learning from both the successes and mistakes of our long history in aviation. They have a unique opportunity to leapfrog many of the inefficient systems we have and go straight to the best practices and advanced technology of today and the future.

GA in China today is small relative to the country’s economy, geography and population, so it will not take much to steer the industry quickly into a world class player.

China has done it in many other areas of their economy, first in manufacturing, now in technology and communications, and in the past two decades in the airline industry. Once the ball gets rolling in general aviation it will be fascinating to see how it develops. In my lifetime I may get to see China surpass the US in GA activity.  

The US, Brazil and Europe, with advanced GA aircraft design and manufacturing capability, expertise in operating and maintaining GA aircraft, and capabilities in training pilots, mechanics, and operations management, stand to gain in a big way as China’s GA takes off.

I believe those in the US who are willing to look at the long term, and develop relationships now, will see the payoff in 5-10 years when the door opens wider.

One of the senior delegates from China conveyed to me words of wisdom that relationships, trust and friendships must be developed first and business will naturally follow. That sounds very much like the way the US used to do business before we got in a hurry to make a quick dollar. I personally enjoy this way of doing business because it is more than just today’s profit that counts. The personal relationships come first.  

I have new found friends from China that I believe will be friends for life.   

We will write more about this conference in future blogs and an official press release.    

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The elections should be good not only for business aviation, but also for the overall aviation industry in the United States.

Less government meddling and more free-market forces will ultimately lead to a more efficient system.

A significant change has taken place with the defeat of Congressman James Oberstar (D) Minnesota, who was the powerful Chair of the House Transportation Committee. Even had he not been defeated, with the change in party control, John Mica from Florida would still take the leadership position on this committee.

Josh Mitchell writing for the Wall Street Journal in a November 5 article talks about this in more detail.

If you have tracked Congress’s work (or lack thereof) in passing the FAA Funding Reauthorization Bill, you know that this bill has been held up from final passage due to non-related issues being attached to it regarding unionization of FedEx’s drivers. Mr. Oberstar was a friend of the unions; but, his tenure in Congress is over.

Could it be that the gamesmanship might finally be over? Maybe we will get funding of NextGen and the FAA can take a long-term view of the development of the infrastructure this country needs to have an efficient air transportation system.  

Another post-election articlein Bloomberg discusses the major airlines gaining allies with the new Republican House on out sourcing and anti trust issues.

Quoting from that Article:

“The current Congress has been anti-airline,” said William Swelbar, a research engineer specializing in air transport at the Massachusetts Institute of Technology in Cambridge. “There will be a new set of ears to listen to the industry.”  

The consensus seems to be that the new guard will be less intrusive into the affairs of the airlines and general aviation, letting the market work things out.

This is good news for the air transportation system and, ultimately, good news for the business and general aviation segments.

Less interference will allow us to demonstrate our value without legislation unbalancing the system towards unions or big business interests.

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In less than three weeks those of us in the US will go to the voting polls to cast our votes in what we call the mid term elections, mid term between the four year interval of the Presidential election cycle. This election is probably the most important one in my 32 years of being old enough to vote.  

We are now two years into a new presidential administration, and the economy is still not healed from the crisis that became apparent two years ago when the banking industry started collapsing. Unemployment is in a  holding pattern at near 10%.  

This administration did not cause the crisis and is glad to let us all know that they inherited it. This administration also has the misguided belief that “big government” in Washington can solve the problem by becoming “bigger government”.

Congress on the other hand can’t point the finger to the politicians that are no longer in office. Most of the leadership that is in place today in Congress, in both the Senate and the House of Representatives, has been around for a long time. Possibly too long?  

So what does all of this have to do with Business Aviation in the US?

Business Aviation is dependent on the success of all business in the US economy. Or maybe better put, the success of business aviation as an industry is intertwined with the success of the economy. Those of us in this industry believe we are a contributor to the overall prosperity of the economy by increasing the efficiency of business through time saving and productive travel. Our industry contributes to the success, but also feeds off the success of the economy. If the economy is productive and prospers then individuals and businesses have the ability to use business aircraft as a means of travel, both in their business and personal travel needs.

A big majority of the elected politicians and those that feed off of the system in DC believe that prosperity emanates from inside the beltway. They have lost touch with reality. They do not understand that that the real prosperity, that has built this nation, comes from small and large businesses alike, and the men and women work in those businesses; People who innovate, create and produce goods, services and new knowledge that increase the standard of living.

When you go to the polls to cast your vote, think about voting for the candidate who is most likely to support small business and free market capitalism. Has the candidate ever started, run or worked in a small business? Have they ever stayed up late at night worrying about how they can make the payroll on Friday and the year end tax payment? Have they created jobs and paid health insurance and contributed to retirement accounts by putting in long hours delivering a product or service that the market values? If not, are they close to someone who has?  If so, then they probably get it.

Who are the politicians that are friends of Business Aviation?

I would posit that those politicians who understand businesses, large and small, must prosper in a global economy are friends to our industry. Those who understand that wealth creation is not a bad thing, because a poor man can’t give another one a job, are friends to business aviation.

When the US economy prospers, then our industry will be one of the ships that rises with the tide. If the ecnomy sinks the only people riding in business jets will be the politicians.

Party politics don’t mean much to me. There has been a lot of sell out to big government and fiscal irresponsibility on both sides of the aisle.

It is time for a change with people serving us in Washington who get it and will not forget who they work for.

Consider seriously who to vote for and make sure to take the time to cast the vote on November 2.

Business Aviation needs people in Washington who understand Business!

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9-14-10

We arrived in Brisbane as very tired humans and enjoyed a restful night at our hotel.  The following morning, after a hearty breakfast at the hotel, Steve Maltby (owner of Sunland Aviation) and I began the arduous task of working with the Civil Aviation Safety Authority (CASA) in trying to complete my temporary license to fly in Australia.  In the US, we may sometimes complain about our own FAA.  From my experience, the FAA is far and away much easier to work with than CASA is here.

I began the application process in July, but arrived here with it still imcomplete.  The big hang up for CASA was that my US license  was endorsed “English Proficient.”   That requirement was supposedly put in place to make us pilots in the United States compliant with international standards, since English is the international language for aviation operations.  Guess what—the endorsement doesn’t mean beans to CASA without an official English language test.  And from what I hear, the US will soon be administering such tests to all of us as well.

I spent most of my day on the phone, on hold, searching for someone to officially administer an English language test.  Steve came through like a superman!   While working on his own issues of paying bills, collections, and managing a 30-member team, he found someone to administer my test…Peter Franks. 

In the United States, Peter would be considered to be a Designated Examiner.  He invited us to his home and began to administer an official CASA English test in which I had to listen to numerous air traffic conversations with controllers speaking English but with a variety of country-specific dialects….sort of like someone from the south trying to communicate with someone in Brooklyn.  I had to copy clearances and explain what I heard to Peter.  I passed and now have an Australian English proficiency level of “Expert.”   Good thing I was in South Australia!  This process took ten frustrating hours to complete and it could not have been done if not for Steve getting through to a CASA team chief and getting them to realize that they had dropped the ball on this in a big way.

We emailed all the results (rather, Steve did) first thing the next morning in hopes that my license would soon follow.

9-15-10

The day began with good news! CASA promised to expedite my two-month-old paperwork and indeed they did—the license came in by 12 noon.  This day winds were holding up to 40 knots ( that’s pretty brisk for you non pilots); so, we remained on the ground and did some serious chart and flight planning study.  The Australian international flight plan forms are a bit different from the ones I’m used to; but, seem to work very well.  One big difference I learned is that your filed plan does not get you an entire route clearance as it does in the US.  Can’t wait for my first flight tomorrow!

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In an article in The Street online magazine titled “Why US Airlines pay more to finance jets” an interesting issue is raised about how the US Export Import Bank might be giving unfair advantage to the strongest of competitors to the US major air carriers.

I am a proponent of the US Export Import Bank (Ex-Im) as it promotes US exports through the financing of major capital purchases manufactured in the US. The assumption, or at least my assumption, is that this financing would be offered to companies in other countries who might not be able to obtain financing in their own country and thus not be able to make the purchase.

Under this assumption US industry wins with more jobs and import dollars.  

ExIm has been used to facilitate sales for the US aircraft manufacturing industry and especially Boeing. What would happen if Ex-Im did not exist to serve this purpose? I am not sure anyone could answer that question and I would bet that Boeing does not want to test the theory of no Ex-Im bank help. 

What is surprising about this article, and the information is conveys, is that the US is offering favorable terms to airlines who would have access to capital from their own financial markets.

These same foreign airlines are also competing heavily with the US mainline carriers like Delta on international routes. Delta and the ATA are crying foul ball.  

With a lower capital cost structure we are indeed giving the carriers like Emirates Airline a competitive advantage.

I don’t think this was the original intent of Ex-Im, which seems to have twisted the original purpose to help out Boeing.

Boeing needs to sell aircraft in a world market and by doing so they create a lot of high paying jobs and import dollars to the US economy.

Delta and other large US carriers need to compete in the international airline market with as level a playing field as possible.

This issue pits Boeing against the major US air carriers, some of their best customers.

Quoting from the article:

“The airline beneficiaries from the financing include nine of the ten most profitable airlines based outside of the U.S., France, Germany and the United Kingdom, May said. Among them: Air Canada, Air New Zealand, Cathay Pacific, Emirates, Japan Airlines, Singapore Airlines and WestJet. They all “compete with U.S. airlines for U.S. passenger traffic,” May said. WestJet, founded in 1996, has received nearly $1.7 billion in Ex-Im Bank financing since fiscal 2002 — and has been able to take traffic from U.S. airlines as a result, he said. ”  

I wonder if Boeing’s major competitor EADS Airbus is able to offer similar government  backed financing terms as Boeing can offer through Ex-Im.

If so, then Boeing would be put to a disadvantage in selling its product to the world’s airlines without Ex-Im.

In a global economy working through these issues is complicated. Boeing and EADS Airbus are multinational companies with the makeup of their aircraft coming from worldwide suppliers, but at the end of the day Boeing is still made in America and Airbus is made in Europe.

The issue becomes political with the “Aircraft Sector Understanding” which codifies aircraft financing standards between the 33 countries that make up the Organization for Economic Cooperation and Development.

It will be interesting to see how this plays out.  What is your take on this?

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