Reporter: Molly McMillin
As the new year begins, business aviation leaders make their predictions for the industry in 2023.
In this exclusive three-part series, they look at what will be the industry’s biggest story of the year, its biggest challenges, and where they would invest in the industry if money was not a consideration. Please watch for Part 2 in the Jan. 9 edition of The Weekly of Business Aviation and for Part 3 in the Jan. 16 edition. (Survey poll respondents are listed in alphabetical order by company name.)
Q. What do you think will be the most significant story of 2023 as it relates to the business aviation industry or to your sector of the industry?
A. Richard Aboulafia, AeroDynamic Advisory managing editor:
The big story will be how many of the newcomers who’ve dipped their toes in the private aviation market stick around, as the last of the COVID-related airline service cutbacks disappear and as manager or investor willingness to tolerate higher travel costs diminishes too.
A. Eric Martel, Bombardier president and CEO:
I believe that 2023 will be a story of business aviation manufacturers showcasing the resilience we have built into our respective plans and overall industry. Our industry enjoyed significant boom periods over the last couple of years as more and more people experience and appreciate the advantages of business aviation, particularly in terms of time savings. Now that we have a strong backlog and demand is stabilizing, we remain in a strong position to face uncertainty in varying economic outlooks. We can’t control the macro-economic and geopolitical forces at work, but we are prepared. At Bombardier, for example, we’re well-positioned to face ups and downs, thanks to the actions we’ve taken over the last three years. We grew our backlog, refreshed our portfolio and de-risked a large number of supply chain activities. We unveiled the Global 8000 business jet, which will fly faster and farther than any other business jet. We’re also providing a path for our current Global 7500 customers to convert their jets into a Global 8000 with its enhanced performance. We grew our worldwide services footprint by nearly 50%, and more Bombardier customers are bringing their jets home for servicing every day. We launched Bombardier Defense to further diversify our activities. All these initiatives make us stronger in an industry that has a larger customer base than ever before, and I’m optimistic about the growth potential of business aviation.
As far as I can tell, in the current situation and into the foreseeable future, supplychain issues are going to be key.
A. Nick Weber, ExecuJet MRO Services regional vice president for the Middle East:
The opening of our facility (in Dubai). It will be big for the region. It’s anticipated and it shows we’re prepared to heavily invest in the region.
A. Jack Pelton, Experimental Aircraft Association CEO:
It would have to be what the new FAA reauthorization bill, current authorization expires in November of 2023, contains for General Aviation. Privatization of ATC has been the hot topic for years in prior reauthorizations. I hope we are done with that. The more important issue will be specifically addressing General Aviation as a critical segment by including issues that will provide FAA support for its growth. There are efforts underway by Congress to collect the industry’s priorities for inclusion in the bill. This is encouraging signs of support. The bill sets the priorities for the FAA so it is critical that General Aviation needs are included. For EAA, in the last reauthorization bill it was specific that the FAA could not charge for the tower services in support of AirVenture that is already funded through fuel taxes. This again needs to be specifically spelled out.
A. Brian Foley, Foley Associates:
These will perhaps be some of the best times since 2008 for business aircraft OEMs with rising backlogs sold at or near list price.
In 2023, the congressional work to pass an FAA reauthorization bill will be a significant story closely followed throughout the industry and by policymakers. This bill will set the framework for FAA’s operations, policies, and priorities over what is likely the next five years. At GAMA, we are focused on advocating for workforce technical capabilities and policy proposals designed to improve the FAA’s performance and hold the agency more accountable to strengthen its ability to support safety and innovation. This includes, but not limited to, key policy areas like aircraft certification, validation, and promulgating rulemaking, policy, and guidance.
Setting the record straight on sustainability and our industry. Business aviation fuels economic growth, job creation and technological advancements, and at Gulfstream, we’re doing so with sustainable practices and products. Our long-standing commitment
to sustainability can be seen in the innovations we’ve introduced in aircraft technologies, engineering, manufacturing and infrastructure; in our operations; and in the use and promotion of sustainable aviation fuel.
A. Sheila Kahyaoglu, Jefferies managing director:
I think the continuation of demand could be a big story as expectations are for demand to fall apart, and maybe book-to-bills, too. But given that supply chains remain tight, I don’t have a fear of overproduction. But in terms of the big story, in terms of a new big aircraft we probably have to wait four more years for the next clean sheet from any OEM, so we won’t be talking about that for quite some time. I think if demand sustains itself at a steady pace that that would be the best thing for the industry because everything says it shouldn’t—whether it’s the fed raising rates, the stock market volatility or just the fact that money supply is decreasing and IPO volumes are down on the year significantly. It says 2023 should not be a great year for business jet OEMs. But I think some of those supply chain production delays will help. And of course, the G700 is coming online. That will be an event we all look forward to in terms of new aircraft introductions.
A. Simon Roads, Magnix USA senior vice president of sales and marketing:
I see a shift in people’s outlooks on how they fly. The voice of the customer will create a shift to flying with zero emissions. Government laws coming into play will drive change for next year.
With the current FAA authorization set to expire in September 2023, the entire industry is collaborating with Congress as it drafts new legislation that will direct agency programs and policies for the next five years. From issues as diverse as industry workforce development grants to implementation of Safety Management Systems (SMS) requirements for 135 and 145 operations, equitable allocation of Airport Improvement Program (AIP) funds, and increased efficiency of certification and conformity functions, this legislation will touch upon all of NATA’s aviation business members. Our goal is to partner with FAA on streamlined, modernized, and transparent processes that prioritize safety, sustainability, and industry success. In the midst of this legislative push, growing interest in all business aviation segments will lead to industry consolidation as well as private equity being pumped into sustainable aviation fuel (SAF), Advanced Air Mobility (AAM), and hangar development.
A. Ed Bolen, National Business Aviation Association president and CEO:
A key thing in 2023 will be FAA reauthorization. It’s an opportunity as we move forward to make sure that here in the U.S. specifically, we’ve got a framework that allows our industry to move forward, which means that we are able to have the FAA funded, staffed, move the processes forward, make the legislative and regulatory changes necessary to fully function. I think as we go into the year, a couple of things that we’re going to keep in mind is that one, continuity of purpose is very important. We’re going to work hard with the entire GA community, the entire aviation community, to make sure that the FAA authority doesn’t lapse. We’ve all lived through those prolonged periods where we do one continuing resolution after another. I think one time we got up to 22 continuing resolutions or something along those lines. That really doesn’t serve anyone well. Trying to get a good solid bill done that moves our industry forward, particularly, as you and I know, this is one of the most exciting times in the history of aviation with the technologies that are coming forward, the opportunities coming forward. We need to find ways to capitalize on that critical moment in aviation to move things forward.
A. Patrick Gallagher, NetJets president of sales, marketing and service:
We believe that the unprecedented increase in flight demand felt across the industry is tapering off. While that demand is still quite elevated from where we were prior to the pandemic, what we are experiencing now has become much more predictable and manageable. We are proud to say that our nearly 60 years of experience and proven business model helped us to not only weather the storm but thrive. However, many operators who were initially flush with CARES Act money then over-exuberant about the prospects of long-term demand growth have heavily leveraged themselves. As interest rates and other costs rise and demand subsides, we expect that there will be continued consolidation as these companies seek strategic alternatives.
A. Janine Iannarelli, Par Avion founder and president:
The big question is what the market is going to look like in 2023. Some expect sales to decline because 2022 was the final year for 100% depreciation on aircraft for those who have a qualified business use. But what is not often discussed is the fact that one can still get 80% depreciation in 2023. My take on the market is that the first quarter of the year will be just fine, and I am fairly confident that we have a good feel for where pricing will be for most of the bizjet models. Q2 is where it gets a bit gray and foggy.
Pricing in Q2 and beyond may be influenced by other drivers than just supply. I would add that among the hot topics for 2023 will be eVTOL, SAF and new modes of air transport. A key topic of discussion will certainly be emissions with an emphasis on how our industry will continue to lead the way in working to cut them. As we continue to put COVID behind us, it is only natural that people then start to focus on anything other than immediate survival, and thus they turn their interest to other issues. The issue of the day is greenhouse gases, global warming and the groups that are following that cause. I think as an industry we need to be mindful of our carbon footprint and how we can help mitigate any damage as a result of the use of the aircraft, while strives in new technology work towards that goal of net zero emissions.
In the news lately we have heard of groups staging sit-ins and protests at primarily European airports about the use of private aircraft. As well some European governments seeking to curtail short-haul flights in the commercial airline sector, which I think certainly means a threat to business aircraft use. Thus, managing the messaging in regard to global warming and what the industry is doing, is right up there among the list of topics to discuss—and to demonstrate that we’re not idly watching things happen.
A. Ron Gunnarson, Piper Aircraft vice president of sales, marketing and customer support:
For the big picture being Business Aviation industry as a whole, I think the resilience and growth that we’ll continue to show, despite ongoing economic and political uncertainties, is the most significant. Our populations ‘need to travel’ appears insatiable. That coupled with the ongoing ‘challenging’ airline customer experience drives all sectors of our industry in a positive direction whether it be owner flown, charter, fractional or per seat mile programs.
For the later portion of the question, within Piper’s sector, I would say to keep a close eye on the advancement of the FAA’s Modernization of Special Airworthiness Certificates (MOSAIC) initiative. A whole generation of GA aircraft are timing out. Those that remain will see price increases continuing to climb every month reaching levels most owners never anticipated—much to their delight. The MOSAIC initiative, with the help of all industry partners, could possibly revolutionize how we fill the growing void between current LSA limits and more mainstream certified, safe, accessible, good performing personal and training aircraft. The possibilities are exciting.
A. Ron Draper, Textron Aviation president and CEO:
This is a great time to be part of business and general aviation as Textron Aviation continues to set the industry standard in product developments across our segments. This coupled with innovations on the horizon that are shaping the future of sustainable flight are attracting new customers to the industry.