Aviation Maintenance: Editor’s Notebook

How Long for the Boom?

As you no doubt quickly learned after entering the aviation arena, our industry is cyclical. There are boom times and slow times. I have seen this cycle play out numerous times in the past 30 years. Catastrophic events like Sept. 11 also play a big factor and obviously cannot be predicted. But for now we are in the boom part of the cycle, even with a slumping economy and housing crisis.

While I would like to think we are still riding the wave of record orders and backlogs, eventually, there will be a slowdown.

All of the major aircraft manufacturers have record orders and backlogs. More aircraft means more maintenance. General aviation has taken a major hit since Sept. 11 with challenges for airspace and fuel costs. Business aviation continues to grow at record rates. Some areas with high concentrations of demand for maintenance/technical personnel are experiencing "shortages" of qualified workers. These areas include Wichita, Kan. (home to Cessna, Bombardier/Learjet, Hawker Beechcraft and Spirit), Southern California and the Northeast. Other areas say they are not having any shortages. Here are two observations from more knowledgeable sources.

According to the Aerospace Industries Association (AIA), aerospace employment rose to 651,700 in March, a slight increase over the 2007 year-end average of 645,600. "This is good news for aerospace manufacturers and for workers looking for good jobs because the opportunities will continue," says Marion Blakey, president and CEO of AIA. "While overall manufacturing employment has declined, our civil, defense and space sectors are strong with a record backlog of orders fueled by major export growth. Employment is tied closely to record industry sales, which reached $198.8 billion in 2007," Blakey says. According to AIA, the industry is facing a potential workforce crisis as scores of employees reach retirement age. AIA statistics state almost 60 percent of the U.S. aerospace workforce was age 45 or older in 2007.

Ann Arbor, Mich.-based AeroStrategy has stated that the MRO market for commercial air transport will reach a value of $61 billion in 2017. The consulting firm forecasts that the MRO market will grow about three percent each year for the next decade.

I am not a pessimist but more a skeptic at heart. I have seen the slow times in this business up close and personal, as many of you have. And while I would like to think we are still riding the wave of record orders and backlogs, eventually, there will be a slowdown.

Of course, as with any hierarchy, survival will go to the fittest. Are we already seeing signs of the slowdown when we hear that DayJet has "reduced its employee base across most areas of its business," according to president and CEO Ed Iacobucci? He went on to say, regarding a needed capital infusion that did not materialize: "Suffice it to say that given the current state of the U.S. capital markets, the timing of our planned financing could not have been worse." With DayJet’s 700 Eclipse aircraft on firm order and 700 optioned, how would losing even the options order impact Eclipse? Eclipse’s order book is estimated at 2,500 aircraft. On another front, Southwest Airlines Co. recently borrowed $600 million from Citibank and seven European banks to beef up its cash position and combat soaring fuel prices and the sluggish economy, according to a report in Business Week in May.

An April report on TravelMole.com, an online community covering the travel industry, states "A warning of further airline collapses came in the wake of nine failures so far this year compared to five in the whole of 2007. Denver-based Frontier Airlines filed for Chapter 11 bankruptcy protection [in April] but operations are continuing." That report went on to state, "The current credit crunch and highest ever oil prices are simply reversing the hard efforts of many airlines who went back into profit after cost cutting exercises subsequent to September 11th."

Perhaps with the more global economy we will not have a classic slow period as in years past. Pent up demand from Asia, India and South America may shield the industry. We can hope. Are any of you seeing signs of a slowdown? If so, what are they? Or are you still seeing the boom rage on? Drop me a line and fill me in.