Argus Outlines What U.S. Bizav Recovery Might Look Like

North American business aviation traffic has ceased dropping and has flatlined at between 2,000 and 2,500 flights per day, Argus International v-p of market intelligence Travis Kuhn said during the company’s webinar earlier this week. He expects this to continue through at least mid-May, when the region could finally see green shoots of a recovery in flight activity, though the month is anticipated to be down 42 percent year-over-year.

The restart in business aviation flights in the U.S. will be mostly domestic driven, with Texas, Florida, and Georgia—which together historically account for 21 percent of business aviation traffic in the U.S.—being key to recovery, he said. “The faster these states open, the faster traffic will rise. These are important markets to watch.”

While Kuhn foresees business aviation to recover faster than the airlines, he said on-demand charter operators will likely lead the gains since they can respond to requests in less than 48 hours. He expects the fractionals to fare worse in the recovery than both Part 91 and 135 operators.

While the traffic declines over the past five weeks have inversely followed the rise in Covid -19 cases, Kuhn said the recovery will more closely track the stock market. He predicts that activity will be more normal in three to six months, with the U.S. election possibly helping to boost business aviation traffic later this year.

AINsight: Step Up Pilot Skills During Covid Grounding

As pilots, many of us are now doing nothing thanks to the Covid-19 pandemic. By next month, most major U.S. airlines will have slashed their schedules by 90 percent, and business aviation activity to-date is down by roughly 70 percent. Rather than doing nothing, as professionals we can take advantage of this downtime to “reset” and re-engage to be better on the backside of this crisis.

After reading an article in an industry safety publication, I began giving a lot of thought on how I could improve my takeoff and approach briefings. It has always bugged me just how scripted they have become over the years.

Alaska Airlines, roughly two years ago, revamped its briefings to focus on specific threats. Rather than hitting a specific number of pre-defined items, as outlined in an SOP, Alaska has come up with a new approach for every briefing that satisfies four goals by being threat-forward, interactive, scalable, and cognitive.

The Alaska Airlines model is also scalable. It recognizes that no two departures or arrivals are the same. Understanding that we may all fly for different operators and must comply with current SOP, there is no harm in using this model to add to or enhance the “standard” briefing.

Covid Pandemic Risks Supply Chain Squeeze

Industry executives remain concerned that an already vulnerable supply chain will become even more distressed in upcoming months as a result of the Covid-19 crisis. But those executives, who spoke yesterday during an AIN webinar about business aviation’s supply chain during the pandemic, also see an opportunity for growth in the supply chain and new ways of doing business.

First Aviation Services CEO Aaron Hollander said even before the pandemic, the supply chain could be described as “fragile” and in a fair amount of distress, some of which comes from single sourcing. Factoring in Covid-19, “We don't see how this is going to do anything but probably make it worse,” he added. 

Marc Drobny, president of StandardAero Business Aviation, agreed, “I think there have been spots of under-investment in terms of single sourcing supply…and that really has exacerbated risk.”

The executives see particular vulnerabilities further down the supply chain, as smaller companies struggle and restrictions interrupt international supply. “We have been in very close contact with our supply chain,” said Todd Winter, president and CEO of Mid-Continent Instruments and Avionics.

However, the companies also see possibilities. This includes a scenario where companies begin to diversify their supply base and/or expand in-house capabilities. “When that supply chain breaks, it's an opportunity for us to make up the gap,” Hollander said.

European Regulators Resume Embraer-Boeing Merger Probe

European Commission (EC) antitrust officials have resumed their review of plans by Boeing to buy 80 percent of Embraer’s commercial airplane operation and set a new deadline for completion of their investigation of August 7. The latest phase of the extended probe comes after 10 other jurisdictions, including most recently Brazil, approved the planned merger. The EC has repeatedly invoked a “stop the clock” mechanism meant to give the companies involved time to produce more information pertaining to the merger plan.

In late March Embraer said it expected a further delay in the review process until at least June 23. At the time Embraer CEO Francisco Gomes Neto insisted that the deal remains a top priority for the company despite a potential interruption due to the Covid-19 crisis. Embraer completed the so-called carve-out of its commercial business in January, it said.

The deal, approved by the Embraer shareholders last year, calls for Boeing to pay $4.2 billion in cash for the 80 percent stake. However, as Embraer’s stock lost value due to the coronavirus crisis, some analysts suggested that the price could prove too high. Embraer has pledged to pay its shareholders a $1.6 billion special dividend from the proceeds of the sale.

Industry Leaders Praise Passage of More Relief Funding

Industry groups welcomed U.S. congressional approval this week of additional funding for the Paycheck Protection Program (PPP), saying it provides the opportunity for much-needed relief for small aviation businesses. The nearly $500 billion measure—which included more than $300 billion to replenish the depleted PPP fund with $60 billion set aside for small lenders—passed the House yesterday, following Senate passage on Tuesday.

“We are very pleased to see Congress respond to the continuing, highly challenging needs of many small businesses and their employees,” said NBAA president and CEO Ed Bolen.

Noting the majority of its membership comprises small businesses, HAI president and CEO James Viola added, “Like most small businesses around the world, they are suffering from the effects of the economic disruption caused by the Covid-19 pandemic.”

The business and general aviation communities have been working to ensure Congress understands the harm the Covid-19 pandemic is having on the industry and continue to seek further assistance as Congress considers future measures. “As Congress considers additional legislation related to the Covid-19 pandemic, NATA has already begun discussions with key policymakers regarding the need for additional support for our industry,” said Jonathon Freye, NATA v-p of government and public affairs.

Textron Offers Financing for Citation Upgrades, Mods

In a bid to increase business for its service network and ease the financial burden of upgrades and refurbishments on customers during the Covid-19 pandemic, Textron Aviation has unveiled an exclusive financing program for certain upgrades and modifications on most U.S.registered Cessna Citations that are performed at one of its 11 service centers in the U.S. The new financing program covers upgrades such as Garmin G5000 avionics or Gogo Avance L5 connectivity.

Officials at Textron Aviation said the company has fielded numerous inquiries from customers looking to update their Citations. “Many of our customers are looking for flexibility in leveraging this unexpected downtime to complete an avionics upgrade, interior refresh, or some other modification they’ve been considering for their aircraft,” said Textron Aviation senior v-p of customer support Brian Rohloff. “By working with Textron Financial Corporation, we quickly developed a new solution to support our customers during a time when efficiency and flexibility are vital.”

The financing is subject to a credit review and approval, Textron Aviation said.

Stevens Plans Move from Nashville to Nearby Smyrna

Stevens Aerospace and Defense Systems plans to relocate from its hangar at Tennessee's Nashville International Airport (BNA) to nearby Smyrna Airport (MQY) beginning next month as the MRO provider seeks a location where it can continue to grow. “The BNA facility has served us well,” said Stevens BNA general manager Kenyon Blacker, “but as business has continued to expand, we simply don’t have the floor space to efficiently meet demand. This move will give us more room and offers our customers easy access to our operation.”

MQY is about 12 miles southeast of its BNA hangar but still close to downtown Nashville. At 30,000 sq ft, the facility sizes are about the same at both airports, but MQY offers Stevens the ability to expand in the future. “The Smyrna Airport offers ample room for growth and easy access to the attractions around downtown Nashville, as well as an airport leadership team that encourages and understands business,” said Stevens president Christian Sasfai.

Stevens's hangar at MQY will be part of the Hollingshead Aviation FBO campus. The MRO will begin performing work there on May 4 and be fully moved in by June 30. Since 1989, Stevens’s Nashville operation has been at BNA in a hangar constructed in 1938.

U.S. Air Ambulance Industry Asks for Another $816M

U.S. air ambulance advocacy group Association of Air Medical Services (AAMS) is asking Congress for $815.9 million to defray the anticipated industry losses over the next six months. AAMS formally made the request in a letter to Senate leaders Mitch McConnell (R-Kentucky) and Charles Schumer (D-New York) last week.

The organization said the funds were additional to the $363.5 million in relief it requested earlier this month. AAMS said the Covid-19 pandemic, in the aggregate, has resulted in a 40 percent reduction in flight volume to date. If the trend continues for the year, it would cost the industry more than $1.6 billion in lost revenue and threaten its long-time viability.

In addition to reduced flight activity, AAMS said its more than 300 members are receiving less compensation for the missions they do fly. It noted, “The patients that do require transport are increasingly uninsured or underinsured by government payers such as Medicare and Medicaid at significantly lower reimbursement rates. While the newly unemployed seek continuation of insurance coverage via COBRA provisions, those uninsured or underinsured patients combine to form a dramatically increasing percentage of the patients that we are transporting.”

Longer-term, AAMS is requesting a 65 percent boost in Medicare reimbursement rates for air ambulance transports “to help cover the loss of revenue associated with the uncompensated care due to rising numbers of individuals losing employer-based health coverage.”

Why Expert Aircraft Management Matters in a Crisis

Many business aircraft are either grounded or flying far less due to the Covid-19 pandemic. But these valuable assets still need to be carefully managed. AIN asked Luxaviation’s chief aviation operations officer Robert Fisch how his team is working to protect the interests of the aircraft owners they serve. He also gave us some perspective on the current crisis and his viewpoint on what it will take to get the industry back to cruise altitude.

Photo of the Week

Welcome to the latest Friday AINalerts feature: Photo of the Week. Each week, we'll highlight an eye-catching photo submitted from one of our readers. This week's winner—of a Pilatus PC-12NG with one of the splashiest liveries we've seen to date for the turboprop single—comes from Elaine Epps at Epps Aviation, which also received an Argus Platinum rating this week. Epps said the paint scheme and colors were inspired by a PC-24 that visited her facility at Atlanta DeKalb-Peachtree Airport.

If you'd like to submit an entry for Photo of the Week, email a high-resolution horizontal image (at least 2000 x 1200 pixels), along with your name, contact information, social media names, and info about it (including brief description, location, etc.) to photos@ainonline.com. Tail numbers can be removed upon request. Those submitting photos give AIN implied consent to publish them in its publications and social media channels.