Advocacy needed now more than ever
Airline consolidation has presented the business aviation industry with the greatest opportunity it has ever had to advocate for business aviation, according to AvBuyer Publisher Jack Olcott. He told delegates at the recent US Corporate Aviation Summit (USCAS) in Fort Lauderdale, FL that the industry needs to take advantage of it.
The former NBAA president pointed to the loss of air service since 2000, noting that the promise of deregulation has only been delivered to the large markets. That has left smaller markets without air service. This gives the industry what it needs to cast itself accurately as an essential part of transportation, Olcott said.
“Seats and prices are up at the top 10 hubs while seats are down 14.5% and fares are up 6.4% at the next 90 airports,” he said. “Primary hubs have been reduced by nearly 9% while departures at secondary and tertiary hubs are down 20%. The 20 carriers in operation in 1978 have been reduced to six, which control 82% of the domestic market. Scheduled airlines serve about 10% of the nation’s airports but only about 1% of flights are business friendly. That means business aviation is necessary to serve rural America. Business aviation is a required element within our nation’s air transportation system. Business aviation and scheduled airlines are partners in serving our nation’s air transportation needs, not competitors.”
Growth in air taxi service
ImagineAir CEO Ben Hamilton and LinearAir CEO Bill Herb noted that changes to the airline industry will likely produce a private aviation industry worth between $15 billion and $17.5 billion. They both pointed to the market potential of the new air taxi/charter services that are leveraging technology to demystify the process, streamlining the business aviation market and bringing down the price.
“Our goal is to have mass market adoption within five years,” Hamilton says. “What has been lost are trips under 500 miles. We are targeting people who are now taking three-to-five hour road trips. That is five times the number of long-distance airline travelers. There are at least a million routes that need service. That is a $15 billion market no one is tapping. This is the largest opportunity our industry has ever had.”
Linear Air CEO Bill Herp agrees: “The current air taxi market has 2,000 aircraft, each doing about two trips per week per aircraft. It now does $500 million in annual billings which is not an insubstantial market. But the total available regional marketplace is about 14% of U.S. domestic air travel and has the potential to become a $17.4 billion industry.”
Need to advocate
Olcott said U.S. business aviation industry can no longer afford to remain silent of the value of business aviation and must become very active during the coming election year, because corporate aviation will likely be in the political cross hairs because this election is about income equality.
He reviewed the income inequality data. “It is a hot topic for politicians,” Olcott said. “Real wages for the top 19% of earners are up 9.7% since 20000. In 1970 68% of GDP went to labor while 32% went to capital. In 2010, labor’s share dropped to 62%. But the median buying power for the average works has remained flat since 1964 when the average hourly wage was $19.18. Today it is $20.67. Corporate aircraft will be in the cross hairs as politicians pander to get votes.”
What makes this new message critical is FAA reauthorization, which includes ATC privatization. Airlines are advocating the privatization of the air traffic control system, which would be funded by the user fees business aviation has been fighting for so long, according to Olcott.
The problem with transplanting the privatization trend to the US is none of the current privatized systems handles as much traffic as in the US or, more importantly, treats business aviation well. On the other hand, proponents suggest NextGen would be accelerated, Olcott surmised.
“Business aviation’s image and future will be challenged significantly in the next year,” he concluded. “The election, the airline lobby, ATC reform and FAA reauthorization are all threats to business aviation. Congressional and public perception of business aviation will determine our future. Today, more than ever, our nation needs business aviation. Everything business aviation wants – access to airports and airspace and reasonable cost of participation – depends on our acceptance as an essential part of the national air transportation system.”