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Monday, September 1, 2014

BizAv’s Big Comeback From Bailouts to Connectivity Surge

Though business aviation has suffered the throes and falls of a downturned economy and tighter business budgets since 2008, the simple fact that companies which have business jets make more deals than those who don’t has launched the bizjet back into the spotlight. Now business aviation professionals look forward to connectivity as the catalyst to push the ever-instrumental jet into a new golden age.

by Chelsea Bryan

As the economy goes, so follows business aviation. Duc Tran, former Bombardier aircraft product manager and Rockwell Collins’ current director of cabin systems & IFE Marketing, can attest to that personally. “There’s a very strong correlation between the GDP gross and corporate profit. These things turn around, business aviation will follow that,” he says. But that GDP record, particularly in the case of business aviation, had a long way to fall before it could come back.

Fall of 2008 was perhaps business aviation’s worst moment ever, as U.S. House Representative Gary Ackerman leaned in and asked three American auto company CEOs a famous question: “How are you getting back to Detroit?” The collective answer was “On business jet, of course.”

According to Jack Olcott, veteran business aviation publisher, a past National Business Aviation Association (NBAA) president and 10-year-plus industry consultant, it was not Ackerman’s question that doomed business aviation — it was the way the executives answered.

“The executives’ stonewalled any questions about why they flew to Washington on business aircraft. … They had justifiable reasons to fly on business aircraft, but they didn’t express those reasons. The lack of any sort of discussion resulted in the worst image possible,” says Olcott.

The failure to explain and the apparent irony of disembarking on a business jet when there were dozens of daily nonstop flights between Detroit and Washington left the media, the public and the administration to wonder the obvious: Would these guys have needed the bailout if they had cut costs on expenses like business aviation? Actually, yes, says Olcott; Chrysler, Ford and General Motors still would have needed bailouts if they’d sacked their jets — in fact, the bailout would’ve even come much quicker.

But why is that? Six long years later, the lack of an obvious answer shows that corporate jet use is not better understood than it was in 2008, and that bizjets are still the popular scapegoat for excess. Meanwhile, the strong business case at the heart of the business jet has justified a merciless comeback. In Olcott’s words, that is simply to say that companies with jets statistically and consistently bring in more business than those without. Even unions can agree on that.

“The unions have said, ‘We need to have business for our workers to be employed and the executives going out in their business aircraft help bring in contracts that run the factories of our country,’” says Olcott.

According to the NBAA, nearly 92 percent of successful public companies are regular users of business aviation. And, according to Olcott, and contemporaries at aircraft management and charter company Clay Lacy Aviation, and Maintenance Repair and Operations (MRO) company Jet Aviation, there aren’t really any obstacles on the horizon.

As Clay Lacy Director of Avionics Jim Lauer says, “It looks pretty good right now.”

But Tran says that, though the industry faces no obstacles on the whole, business aviation’s health is becoming more rooted in regional growth, where markets like China and Russia face military airspace control, while others have not yet recovered from the recession.

Scott Brooks, Comlux’s regional sales manager for the Detroit and Great Lakes auto bailout-area, has observed that for small- to mid-size aircraft, target businesses’ finances are still low. Beyond that, he sees obstacles standing in the way of sorely needed Air Traffic Control (ATC) improvements.

Commercial and business aviation share ATC, a system Brooks calls “old and antiquated.” The more reasonable separation distances slated to come with Automatic Dependent Surveillance-Broadcast (ADS-B) systems will help, he says, but Brooks feels European initiatives like Future Air Navigation Systems (FANS), including Link 2000+, are leading ATC innovation. “All these initiatives are coming across the ocean to us,” he says, wondering why the United States isn’t moving at the same pace.

From the fuel savings, reduced flight times and more direct routes FANS brings, “you’re going to have far more efficient communications,” Brooks says. This champions the data link over the unreliable and hard-to-hear High Frequency (HF) and Very High Frequency (VHF) radio currently used for communication over oceans. Lauer attests to the popularity of such systems, seeing frequent FANS, ADS-B Out and CPDLC going into planes.

In the meantime, the rise of Wide Area Augmentation System (WAAS) capable GPS — required as part of the ADS-B mandate — mean more accurate, satellite-based approaches and landings in places not sufficiently equipped with reliable and redundant Instrument Landing Systems (ILS).

Fast equipage rates on these systems put business aviation in the lead compared to commercial Air Transport (AT) for upgrades, says Lauer. “They don’t mandate Synthetic Vision Systems (SVS), they don’t mandate Heads-up Displays (HUD), but we have those in almost all of the new, larger aircraft. … We’ve always been at the forefront of things,” he says.

David Loso, manager, avionics sales at Jet Aviation St. Louis, cites that Enhanced Vision Systems (EVS), HUD and even SVS are in the aircraft that come in for MRO now at Jet Aviation St. Louis. Olcott, Brooks and Tran agree that business aviation leads ahead of AT in tech, because routes are far broader, and aircraft have the need to fly places without services that frequented commercial routes boast. Next on the horizon, Olcott thinks, will be Health Utilization Management Systems (HUMS), especially ones that ensure maximized fuel efficiency.

The number one business opportunity upgrade however, is not for the cockpit. It is, as Tran says with a smile in his voice, “for the cabin.” The experts could not be more in harmony with their emphatic response: Connectivity in business aircraft is going to be huge.

“Airlines are starting to have connectivity on board, there’s no way a business aircraft can mess that up. We don’t have it, and buying a $1,000 ticket gets you more than what it can get in a private jet? That’s just unacceptable. To me, [connectivity] is the biggest, universal thing that is coming,” says Tran.

Loso’s reasoning echoes Tran’s. “A lot of the growth is going to come from advanced cabin systems,” he says. “As the consumer market goes, so goes the airplane, in many cases.” Loso points to the next five years as an explosive time for this line of tech. “We’re just now on the cusp of systems that are capable of doing high-definition distribution on an aircraft. [Cabin entertainment and cabin management systems,] those things are just now really starting to come on,” he says guessing obsolescence of current Cabin Management Systems will further drive popularity.

Loso hopes antenna gurus will figure out how to make products that will open up even more business aviation connectivity markets. But Tran says what’s available today, all antennas aside, is not adequate. The advent of Ka, according to Tran, with Inmarsat’s GlobalXpress network, is going to be the real beginning of the connectivity surge.

“We know a lot of the OEMs are putting that in their aircraft because it really does meet the needs of the customer,” he says, noting that the smaller, better antenna will become critical once GlobalXpress launches. “If you can fit an antenna in an aircraft, you’re going to want Ka,” he says.

And, according to Lauer, already 80 to 85 percent of people absolutely demand Wi-Fi to fly via bizjet, or else they cancel their flight. “That’s where it is right now,” says Lauer, citing numerous times customers have cancelled flights ready to take off sans connectivity.

Olcott goes so far as to say that the whole future of business aviation lies in “this whole area we call connectivity … I believe that the more that technology — broadband technology — is developed, the more business aviation will embrace it.” Markets that need work, he says, aren’t limited to antenna design. Riding the surge will take smarter routers, software that can determine the least costly way of connecting the passengers to their audience outside the airplane, and many more applications.

While the market waits on satellite technology to come up to speed, Loso says new server-based content applications that make use of cloud or Bluetooth services are growing in popularity. “The ViaSat stuff, that gets as close as you get [to streaming-level speeds], but they can’t do really effective streaming on that, it just doesn’t happen. There’s no bandwidth for it,” he says. In the meantime, DirecTV (being acquired by AT&T) fills the gap, with free usage in Europe and file servers compatible with Personal Electronic Devices (PEDs) starting to appear on many of the aircraft he sees.

As with tech in general, the business aviation professionals agree that the bizjet sector will beat out the airlines by miles when it comes to connectivity. “I doubt if any airlines have ever had a customer come up to the counter and say, ‘I’ve decided I’m not going because you don’t have high speed data on this airplane, give me my money back,’” says Lauer.

Though business aviation may take the lead in the connectivity surge, according to Lauer, Loso and Tran, this isn’t the key to capturing business travelers that might otherwise go with airlines. Tran says that, to the high-worth business individual, flying on an airliner just kills productivity. Other than offering comprehensive connectivity on board, business jets can simply get to more places more quickly than airlines. Serving about 500 airports in the United States, airlines cannot compete with the roughly 5,000 airports frequented by business aircraft. Yet 70 percent of all airline passenger employments are at less than 50 airports, according to FAA route maps. That 50-airport travel concentration means that business aviation has de facto service of 100 times the locations that the scheduled airlines serve with a business-friendly frequency.

In other words, while airlines may be a good way of getting between Detroit and Washington, D.C., they’re not that effective at going from Trenton to Detroit, in terms of frequency, cost and flight times.

But there should be no real competition between business aviation and commercial airliners, Olcott says. “Companies that really understand the need for a transportation resource use a combination of airlines and business aviation,” he says. It’s all part of the big transportation network that allows success in business.

“When I was at NBAA over a decade ago, we looked at the airline expenditures of our member companies and they were literally in the billions of dollars. These were companies that are the prime users of business aviation, yet they spent far more dollars on airline tickets than they did on their business airlines,” says Olcott. “They just needed transportation, and they used the airlines when it was appropriate, they used business aviation when it was appropriate.”

Though that may have been the case 10 years ago, as the connectivity surge intensifies and its imminent golden era dawns, business aviation just may push “appropriate” into the mbps range a bit beyond what business class can offer. Only time — and antennas — will tell.

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