Air Capital Insider

National Business Aviation Association’s president and chief executive Ed Bolen has received the Aviation Leader of the Year award from the Kiddie Hawk Air Academy.

The academy is affiliated with the Airport Journals publications and is a Colorado-based nonprofit group interested in fostering young people’s interest in aviation careers.  It annually awards individuals who have made significant contributions to aviation.

Bolen has consistently articulated the role that general aviation plays in serving companies and communities across the country, said academy spokesman Paul Lips in a statement. “Ed understands that general aviation is central to job creation, business investment and economic activity in countless local areas,” Lips said.

Interest for airline orders from worldwide airlines has deteriorated, financing has “dried up” and airlines seem  more likely to defer delivery of new aircraft they have on order, UBS analyst David Strauss said in a new research report.

UBS conducted a survey of worldwide airlines to gauge their ordering intentions and delivery expectations in a weak economy, the report said.

Thirty-eight percent of airlines surveyed said they are in order discussions or plan to be within the next year. It’s the lowest response in the company’s survey history, and 52 percent below the last survey, taken three months ago.  Financing is more difficult to obtain. Only 45 percent of the airlines said they thought financing was currently available — down from 72 percent in the last survey.

Almost one-third of those surveyed said they were likely to delay delivery of aircraft they had on order, up from 8 percent in the last survey, the report said. One-third of them, however, said they would consider moving up their deliveries if earlier slots became open.

Jim Ziegler,  who had a long career leading Bombardier Learjet in Wichita, is leaving Jet Aviation, where he’s been working as chief operating officer of U.S. operations since 2007.  Ziegler had moved from Wichita to St. Louis for the position.  Under his leadership, the Zurich, Switzerland-based company significantly expanded its presence in the U.S. with the acquisition of Savannah Air Center and is expanding its aircraft management and charter operations in Brazil.

Ziegler is becoming an advisor to Jet Aviation and plans to return to Wichita and his consulting business  sometime this spring.

J. Twombly, associate editor at Aircraft Owners and Pilots Association, poses an interesting question on his blog today: Is aviation splitting in two?   What do you think?

Twombly wonders whether aviation may be splitting into two distinct camps, as he says, the “no foolin’ around go-somewhere types, and the very light airplane fly around the pattern type.”

The first types use the airplane as a tool, for business or pleasure. The second group uses it purely for fun, and wants flying to become even more fun as time goes by, Twombly says

“In other words, we have one group that wants airplanes to be faster, carry more, and have a high dispatch rate, and another group that wants the airplane to be cheap, slow, and carry one or two people. An extreme view might be that when the dust settles, no airplanes exist between a Cirrus and a Sport Cub. Well, nothing except for 172s used for training,” he says.

The catalyst is money, Twombly says. As credit tightens and things get more and more costly, a family’s income is increasingly dedicated to survival.  “Those who believe the middle class in this country is going away probably also think our industry is changing to reflect the split scenario,” he said.

What do you think? I’d like to hear your views.

Outlook For 2009

GUEST COLUMN By Saj Ahmad; Aerospace Analyst, FleetBuzz Editorial.com

Airbus releases its final year end tally for 2008 later this week and many eyes will be on how many orders were canceled.

Boeing already reported its figures last week, marred largely by the decline in deliveries due to the strike by IAM members lasting almost two months.

The big question on many analysts lips is how bad 2009 will be.

There isn’t a simple answer to that, and in any “guess-timation”, the propensity to get it wrong is all too high. During the order boom of 2005 through to 2007, a decline in orders was all but inevitable – on the face of it, Boeing’s 662 orders captured during 2008 is nothing to be scoffed at.

Critically, of the 3,700+ jets on its books, the bulk of them are for the 737 family. Airbus too, with a similar backlog has the A320 family comprising the majority of its order book.

Oil too played its part in 2008, causing the likes of Skybus to fold, along with the likes of Maxjet, EOS and Silverjet amongst the most notable casualties of the highest oil prices ever seen. The 737 and A320 backlogs both sport airline customers with a dubious, if not outright junk credit rating. In a climate where financing some of these long lead deliveries is challenging because of the wider economic collapse and freefall of various financial institutions on both sides of the Atlantic, the risk to these two models in inherently clear.

Widebodies too, have seen their fair share of woes too, and that’s not least because of a massive decline in premium traffic, witnessed by the double-digit drop seen by British Airways. Thai Airways and Cathay Pacific are carriers seeking to defer A330 and 747-400ERF deliveries as they battle the downturn. IATA’s summing up of the cataclysmic environment for airlines shows the fragility of the entire system.

While most analysts agree cancellations will occur, it is these higher volume production rates of the 737 and A320 that will suffer first and foremost if deferrals lead to cancellations as airlines fold. Uniquely, where 2008 was synonymous for bankruptcies because of high fuel costs, 2009 will see airline collapses due to insufficient traffic, despite a fall off in fuel/oil costs. Prices are tumbling across the board, yet the premium market is suffering the biggest slump in almost a quarter of a century.

That doesn’t bode well for airlines with vast sums of money ready for future capital expenditure, nor does it solve their problem of how to generate revenue from falling yields. System capacity cutbacks have failed thus far to shore up demand and the knock on effect from the previous few years of boom-time ordering means deferrals will be the first step on the path to contractual termination, if they survive the traffic fallout.

At risk, well, you could argue that around 30-40% of the firm backlogs for the 737 and A320 are primed for long term deferral. An equal number of those jets will be terminated over the next 5 or more years. Its completely unfeasible to coalesce the dive in traffic with demand while capacity cutbacks and fleet renewals are painfully slow.

While large jets take longer to build, the risk they have is equally stark – Airbus plans to increase A330 production has fallen flat on its face. Boeing’s saving grace was the IAM strike, however, both will wait with baited breath as to which customers seek deferrals of these high value airplanes (777, 787, 747-8I/F, A380, A330 & A350XWB).

Going full circle, the delays to the 787 too seem like a “manna-from-heaven” God-sent saving grace too, given that the need to expedite fleet replacement of long haul jets is slowed by yield erosion and traffic numbers falling.

That said, this is the first time where pricing and demand are both falling and the bottom of the cycle seems as distant as ever.

While the cockpit may alert the pilot to “Pull Up”, no such mantra exists in the intertwined aerospace/airline industries. The first sign we get of a recovery?

You’ll know when air fares go up, driven not by oil price, but because there wont be enough airplanes to accommodate all the traffic.

There’s a long wait for that, so enjoy your time in that airport lounge!

Saj Ahmad

Aerospace Analyst, FleetBuzz Editorial.com