The Truth Behind The Lies

Mark Twain once said, “There are three kinds of lies: lies, damned lies and statistics.” Well, the latest statistics about the aviation industry are not only truthful; they’re reassuring.
According to the Teal Group and G2 Solutions, two influential aerospace consulting firms, the good times in aviation will continue to roll this year, despite the recessionary storm clouds now on the horizon for the general economy. Much of this growth will be fueled by increasing aircraft orders, the pent-up demand for upgrades and a backlog of maintenance work.
However, there’s still reason for concern. While the aviation sector will more than hold its own in 2008, it won’t match the dazzling growth it racked up in 2007.
That was the consensus conveyed during a recent Aviation Today webinar: “The Aviation Crystal Ball: Predictions and Analysis for 2008,” conducted January 31. The speakers were Richard Aboulafia, VP analysis, Teal Group, and Michel Merluzeau, principal, G2 Solutions. The webinar was recorded and archived; it’s now available, on demand, on www.AviationToday.com. Also on the Web site, you can find up-to-date research reports produced by both consultancies.
From now until 2015, Aboulafia forecasted production of roughly 41,107 aircraft worth $1.163 trillion. The military component of this market is worth $321.1 billion, while the civil sector is worth $841.4 billion. The Bush administration’s proposed 2009 defense budget of $515.4 billion would further fill aerospace coffers.
Teal’s numbers exclude uninhabited aircraft, non-turbine aircraft, maintenance, overhaul, upgrades and research. If all of these sectors are included, the industry would be worth well in excess of $3 trillion to the world’s economy during the next decade.
Aboulafia pointed out that Boeing’s all-composite 787 Dreamliner and the rejuvenation of the company’s jetliner product line are propelling the aerospace giant to market primacy. He said that Boeing’s success, coupled with Lockheed Martin’s F-35 fighter jet and widespread U.S. defense export market dominance, translates into long-term prosperity for America’s share of the global aviation pie. “U.S. primes are gaining global market share, largely due to their successful embrace of globalization,” he said.
He said Europe looks set to retain its market share during Teal’s forecast period, although European industrial restructuring has not achieved its complete fulfillment. Moreover, he pointed out that Europe’s share could erode, if Boeing’s already impressive lead increases or if the F-35 achieves its greatest expectations.
Merluzeau emphasized that this global growth in aviation will spur continued demand for maintenance, accelerating the trend toward maintenance outsourcing to far-flung regions. He expressed concern about a chronic backlog of aircraft upkeep, especially in the military sector.
Merluzeau said deferred maintenance is an acute problem in the rotorcraft arena, where the inherent need for maintenance is exacerbated by the harsh, sandy conditions of Middle Eastern deployment. “If I were a junk dealer in scrap metal, I would set up shop in Iraq right now,” he said. He also acknowledged that maintenance outsourcing in the commercial sector could adversely affect aircraft safety.
For more on the topic of how maintenance outsourcing can undermine air safety, log onto AviationToday and register for the archived webinar: “How Safe Are the Skies? — Issues Fears and Remedies in Air Safety Today,” which originally aired on December 18, 2007. This webinar featured Joy Finnegan, editor-in-chief of Aviation Maintenance magazine, as a speaker.
Merluzeau was a bit more skeptical than Aboulafia about the aviation industry’s ability to continue in 2008 its record-breaking streak of growth.
“While 2007 was a milestone year for commercial aviation, it likely will not be followed by a repeat in 2008,” he said. “With the U.S. economy now feeling the pain of the credit crisis, high energy costs and a weakened dollar, the domino effect we had feared would ensue is beginning to show signs of strength in other areas. With the European and some Asian economies also exposed to a U.S. downturn, 2008 likely will be a year of economic correction; this is our best-case scenario.”
Regardless, Merluzeau sees no outright recession this year in aviation. Or as Mark Twain might put it, reports of aviation’s death are greatly exaggerated.

John Persinos is publisher and editorial director of AviationToday. You can reach  him at: (301-385-7211 or
jpersinos@accessintel.com).