Any trip to Florida invariably makes me nostalgic. I lived in Orlando for about two years, during the mid-1980s, when I was a reporter at the dominant daily newspaper here, The Orlando Sentinel. I was very ambitious back then; every morning, as soon as I was awake, I’d start obsessing about how I could get a story onto the front page. I would have stepped on my grandmother to get a scoop. Central Florida was booming; the I-4 corridor from Orlando to Tampa during the go-go Eighties was one of the fastest growing economic regions in the world. The sad results of this unrestrained growth are everywhere to be seen: sprawl, traffic, fast food franchises, and theme park schlock abound. Some establishments are so absurdly tacky, they enter the realm of the surreal.

I mourn the destruction of Florida; there’s a special circle of hell reserved for the real estate developers who have raped this erstwhile paradise. You can still find unspoiled areas in the Sunshine State if you look hard enough; certain beaches here remain pristine and provide a ceaseless source of joy. And I do miss the subtropical, easy-going hedonism of my youth. In fact, last night I revisited a few favorite haunts with some aerospace cronies — hence, my pounding headache today.

Regardless, let’s get down to business. In its latest report, aerospace consultancy Forecast International projects 15,936 business jets, worth an estimated $223 billion, will be produced from 2008 through 2017. Nearly 1,400 business jets will be produced in 2008 and 1,600 additional units in 2009, it says. Annual production will suffer a three-year decline, dropping to a level of 1,515 units by 2012. Growth is expected to resume in 2013, with yearly production exceeding 1,700 units by 2017. Forecast International’s analysts say that “warning signs are appearing” that seem to indicate a market downturn is on the way.

“Warning signs” is putting it mildly. Year-to-date, the stock market has lost about $4.2 trillion. And you thought $700 billion was a lot of money. Or, as the late U.S. Senator Everett Dirksen once famously said: “A billion here, a billion there, and pretty soon you’re talking real money.” Not surprisingly, NBAA chief Ed Bolen says “topic one” at NBAA this week is the economic crisis in the United States.

Paradoxically, hard times benefit the major business aviation players. Five major manufacturers control the business jet market: Bombardier, Dassault, Gulfstream (GD), Cessna (Textron), and Hawker Beechcraft. New VLJ makers, plus Embraer and Sino-Swearingen, claim close to 5 percent. Aviation has high barriers to entry. That’s why the dominance of the major companies will continue, at the expense of the entrepreneurial start-ups. The large companies have the deep pockets and wherewithal to develop new models – a crucial capability in business aviation – and to ride out market downturns. They also boast the far-flung sales and support networks needed to please ever-fickle customers.

Economic conditions and fuel costs are compounding the problems of the little guys. “Smaller regional jets face a double whammy,” says Paul Leighton, editor-in-chief, Aircraft Value News. “Relative operating inefficiency, as a consequence of higher fuel pricing, is being exacerbated by increasingly weak economic conditions making even short haul travel less attractive.”

Many business aviation flight department budgets for 2008 did not factor in dramatically higher fuel costs. For the first time in several years, flight departments generally are reporting that they will use their aircraft less over the near term. The evidence is in Honeywell’s Business Aviation Outlook, which points to a roughly 6 percent decline in overall business jet utilization.

My old buddy, the Teal Group’s Richard Aboulafia, pulls no punches. “VLJs, used as air taxis, cost a lot of money for almost no reward,” he said. “There´s been a lot of carnage in business aviation — six or seven dead manufacturer wannabes — and a stream of quixotic service companies.”

Echoing those sentiments is this comment posted by one of my blog readers:

You contend that, despite America’s “financial collapse,” optimism still holds among members of the NBAA. (“And yet, the organizers of this week’s National Business Aviation Association 61st Annual Meeting and Convention don’t seem fazed.”) Could this suggest that it’s time to invest in aviation stocks as a contrarian play? I’d like your thoughts on the investment potential within the broad aviation sector. Has it found a bottom?

It’s true: when it comes to investing, the “smart money” bets against the madness of crowds. I won’t presume to offer investment advice in my blog, but I’d certainly cast a skeptical eye toward buying stock in any economic sector right now.

One optimist I spoke with at NBAA is Oscar Garcia, founding partner, chairman and CEO of InterFlight Global Corporation (IFG), which he started in 1992. Oscar holds a Bachelor’s Degree in Aviation Science and Technology from the Thomas Edison State College with an Aerospace Engineering specialization from San Diego State University, as well as a Masters Degree in Aviation and Aerospace Business Administration (MBA) from Embry-Riddle Aeronautical University. He holds FAA/JAR Airline Transport Pilot and Flight Instructor licenses as well as Instrument and Multi-Engine certificates with a total flight time of over 8,500 hours in a variety of aircraft and flight simulators.

“Once you get the aviation bug, it never lets you go,” Oscar told me. “As a kid, I learned to speak English by reading my father’s aviation encyclopedias. I’ve been hooked ever since.”

Oscar will serve as a speaker for Aviation Today’s October 16 webinar on business jets (for more information about our webinar, click here). He is currently soliciting venture capital for a start-up OEM of seaplanes, a subject on which he waxed enthusiastic. “Most people don’t realize it, but seaplanes are a growth industry,” he said. “The advancement of composite materials makes it possible to build better, more resilient seaplanes. Also, they are very handy in areas that lack airport infrastructure.”

So, despite the hand-wringing in aviation these days, passionate believers such as Oscar Garcia remain undeterred.

This is my final blog posting from NBAA. The show closes in less than a half hour; I’m heading to the airport. To all of my readers at NBAA, I wish you safe travel. I’m gonna shut down my laptop, pop another aspirin, and say goodbye to the sun-washed squalor of Orlando…for now.

The troubled global economy is likely to slow new aircraft sales and programs, but OEMs and suppliers at NBAA are professing good times. Public optimism is expected from any company, but in this case, it’s not just whistling in the dark. Order books touted at NBAA seem to justify the optimism.

For example, Gulfstream Aerospace in September delivered the 200th unit of its popular mid-range G200 business jet. The entire in-service fleet of G200s as of June racked up about 320,000 flight hours and completed more than 200,000 takeoffs, since the model’s introduction more than eight years ago. Bombardier, meanwhile, reported a year-over-year revenue increase of 22 percent, to $4.9 billion, in its second fiscal quarter ending July 31.

But concerns remain. The Federal Aviation Administration recently reported that activity at general aviation airports has declined dramatically. One factor, of course, is the exorbitant price of fuel. Keep in mind, the general aviation community typically pays twice the price for fuel than that paid by commercial airlines. To save money on fuel, more and more operators are cutting back on flight hours, flying slower, and using airports with more than one FBO to gain competitive pricing. They’re also reducing the weight of aircraft by adopting streamlining measures, such as putting Electronic Flight Bags (EFBs) in cockpits and removing unnecessary amenities from the galley.

OEMs are stepping up to the plate, too, by implementing numerous fuel-efficient aerodynamic improvements, such as winglets and body strakes, for all types of business aircraft.

I spoke about these issues on the show floor with Michel Merluzeau, principal of G2 Solutions. A keen analyst with a strong contrarian streak, Michel put today’s economic conditions into perspective. A video excerpt of his remarks is below. As Michel said to me today during lunch at the convention center: “I am very, very worried about this economy and how it will affect aviation.” You’ll probably recognize Michel as a frequent speaker on Aviation Today webinars.

Also embedded on this page is a video interview I conducted with Marc Taylor, director of sales, Sherwin-Williams Aerospace Coatings, a company that reports strong booth traffic and sales.

When scrutinizing the market projections unveiled at NBAA, it’s important not to lose sight of a very important point: most analysts polled corporate flight departments earlier this year, well before the most recent tightening of the credit vise. Today (October 7), the Dow Jones lost more than 500 points by the end of trading, further sowing anxiety throughout Wall Street as well as Main Street.

Honeywell’s T.K. Kallenbach, vice president of marketing and product management at Honeywell, said at NBAA that his company’s well-regarded survey of 1,866 corporate jet users was already reflecting early signs of slipping demand — as far back as May-August, when the survey was conducted. The statistical evidence: fewer flying hours and more used jets entering the market. The fact is, deliveries of new business jets are a “lagging indicator” because they are bought and paid for over 3- to 4-year cycles. If there’s a downturn in the economy, business aviation doesn’t feel the adverse effects on new aircraft purchases for another 12 to 18 months.

That’s it for today. Don’t forget to read the comments posted by readers, or to leave a comment of your own.

As I walk the trade show floor today and interview various aviation insiders at NBAA, the number one issue on most minds is how broader economic turmoil could adversely affect business aviation. That said, many people I spoke with remained cautiously optimistic, pointing to a backlog of orders and continued demand for business aircraft.

For example, Honeywell’s Business Aviation Outlook, released at the show, belied concerns that aviation is entering a new recession. For the fifth year in a row, Honeywell’s closely followed outlook pointed to an upward trajectory for deliveries and sales, forecasting up to 17,000 new jets from 2008-2018, worth more than $300 billion.

Along those lines, below are video excerpts of impromptu interviews I conducted at NBAA, with Brian Wilson, director of avionics, Banyan, a business aviation FBO; Jean Menard, vice president, commercial sales, EMS Satcom, which specializes in satellite-based communication systems; and Mark Miller, VP and general manager, WSI Aviation, a provider of aviation weather solutions. All three men alluded to turbulent conditions caused by the credit crunch but none of them conveyed any panic just yet. I’ll post addition video clips on a daily basis, as the show progresses.

Meanwhile, I’ve already received several candid and informative comments to this blog; be sure to check them out. Here’s my favorite comment, so far:

This country is in deep financial doo-doo when we’ve come to a day when C-Level executives can’t get the financing necessary to indulge their private travel requirements. If the upper management and board members of Fortune 500 companies can’t rely on the just-in-time reliability of corporate jet transportation, not to mention the on-board amenities that put them in the proper frame of mind for making the big-picture decisions their organizations rely on, jobs will be lost in the growing airport services, food catering, (soon to be) privatized air traffic control system, and taxi and limousine services sector. These are good, steady, low-paying jobs that America needs now. Frankly, I curse corporate aviation patrons every time I take my shoes off in an airport security line.

The above comment was posted by a fellow named John Mace. Bravo, Mr. Mace. Your missive is reminiscent of the sardonic humor found in The Onion. However, if you’re not kidding and you’re actually being serious, well…I think my company’s legal counsel should look into a restraining order.

Getting back to Honeywell’s forecast, the news is indeed encouraging. Honeywell sets the “gold standard” in our business when it comes to making predictions, and at NBAA the company provides plenty of reason for good cheer. “Aircraft backlogs currently equate to nearly three years worth of deliveries, so 2008 and 2009 still shape up to be strong years for the industry,” said Ron Wilson, president, business and general aviation, Honeywell Aerospace. He said that year-to-date aircraft deliveries have increased 22 percent compared to the same period in 2007. Total new business aircraft deliveries for 2007 were 1,020; Honeywell projects that number will rise to 1,200 by the time 2008 is over.

This cautious optimism also was apparent at a PJ and VLJ OEM panel today, at which OEM reps discussed the latest trends in aircraft development. A recurring theme in the discussion was how the stratospheric rise in fuel prices has focused manufacturers’ efforts on advanced composite materials, more efficient propulsion systems and streamlined avionics. Moreover, the large backlog of orders generated by the recent boom in aviation was cited as a major factor keeping companies afloat. Dassault’s Falcon jet, for example, enjoys a backlog of 500 aircraft, all backed by non-refundable deposits, for a total of 15.8 billion euros ($23.2 billion), compared with 15 billion euros at the end of 2007.

Of course, many in the industry are simply holding their breaths, waiting for the contentious (and seemingly endless!) presidential election to finally recede into the rearview mirror. Until it is known which party will ultimately control the White House, all prognostications for the business aviation sector are precarious at best.

That doesn’t stop people from trying, though. Forecast International’s 10-year study, The Market for Business Jet Aircraft, was released at NBAA. The study predicts a temporary and mild drop in demand. The consultancy’s analysts predict that annual business jet production will approach 1,400 units in 2008 and top 1,600 in 2009, before the industry suffers a three-year retrenchment, dropping to 1,515 aircraft by 2012. Forecast International estimates that between 2008-2017, OEMs will produce 15,936 business jets, including 5,600 Very Light Jets, worth about $223 billion.

Hey, that’s enough for one day. I’ve delayed the cocktail hour long enough. Look for new reportage, accompanied by new videos, in this space tomorrow. And please: keep those comments coming! I enjoy getting feedback — especially angry rants, which I find highly invigorating (as well as entertaining). Provided you refrain from profanity and libel, please feel free to give me your best shot.

Tomorrow, look for my video interview with Michel Merluzeau, principal at G2 Solutions, an aviation consultancy. Michel is never at a loss for words; he’ll give us his complete take on business aviation in general and NBAA in particular (all conveyed in his inimitable French accent).

Greetings from Orlando, the town that Uncle Walt built. Once a sleepy Central Florida enclave of farms and orange groves, this area is now a sprawling megalopolis that never stops expanding.

That whooshing sound you hear isn’t a theme park roller coaster. It’s the air escaping from our punctured bubble economy – and with it, everyone’s expectations for business aviation. Until recently, most analysts were predicting that the business aviation market would grow substantially into the foreseeable future.

What a difference a financial collapse makes. Today, the script for business aviation doesn’t seem to have any Disney-esque happy endings.

Optimistic forecasts for spending in all sectors of aviation have been radically undermined by the grim fate of several once-powerful financial titans – brand name organizations like Bear Stearns, Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Bros., and American International Group. This past week, Congress finally managed to hold its nose and pass the vast $700 billion bailout of the foundering American financial system, rendering all previous predictions about aviation as worthless as the sub-prime mortgage-backed securities that got us into this mess.

(Quick aside: I’ve scrutinized my own checkbook and proclaimed myself: “Too big to fail.” Due to unforeseen liabilities tied to stagflation and a weakened dollar, I need a bailout. I expect funds from the U.S. Treasury to be wired into my checking account any day now.)

And yet, the organizers of this week’s National Business Aviation Association (NBAA) 61st Annual Meeting and Convention don’t seem fazed. NBAA gets underway Oct. 6-8 at the Orange County Convention Center in Orlando, Florida. Despite a slowing global economy, a jittery financial system and an extremely volatile stock market, NBAA officials expect activity at this year’s get-together to exceed the 2007 event in Atlanta. This year, NBAA will host 30,000 attendees and 1,200 exhibitors.

The north and south halls of the convention center will house the indoor exhibits and informational sessions; the 100-aircraft static display will be located at Orlando Executive Airport. Speakers at the Opening General Session, scheduled for Monday at 8:00 a.m., will be NBAA President and CEO Ed Bolen, Roberto Kobeh Gonzalez, president of the International Civil Aviation Organization, and the nation’s political “Bickersons”, James “Ragin’ Cajun” Carville and Mary Matalin.

The backdrop for this year’s NBAA is the worst financial and economic crisis since the Great Depression. And regardless of the professions of optimism that you’ll hear at NBAA this year, the storm blowing through Wall Street also is buffeting aviation. The defense sector is somewhat immune from the credit crunch, but little else is escaping the financial contagion. Notably, International Lease Finance Corporation (ILFC), the world’s largest aircraft buyer, is on the selling block as its owner, the beleaguered American International Group, desperately tries to raise cash to pay back its $85 billion loan from the U.S. Federal Reserve.

ILFC is the world’s biggest plane lessor by fleet value, with almost 1,000 planes on its books that are worth $55 billion. It’s also a debt-heavy operation. Based in Los Angeles, ILFC is a crucial customer for aircraft OEMs, such as Boeing and Airbus.

ILFC depended on AIG’s blue-chip credit rating for access to inexpensive capital with which to purchase aircraft, but when AIG’s rating went down the tubes, ILFC was shut out of the debt market. ILFC’s woes have in turn depressed the stock prices of manufacturers throughout commercial aviation.

Moreover, VIP travel is the first to feel the pinch, when profits (and C-level executive compensation) take a hit. In trying to figure out the business aviation sector, uncertainty abounds.

One thing is certain, though: a brutal shakeout in this sector is imminent. That will be the topic of a new Aviation Today webinar: Business Jets: Winners and Losers in the Shakeout, scheduled for October 16. You can register for this timely webinar by clicking here.

Business aircraft OEMs already are sending warning signals. Notably, Brazil’s Embraer, the world’s third-biggest commercial jet maker, said last week that airlines were encountering financing difficulties because of the credit crisis, posing a big risk for Embraer and other manufacturers like it.

“We see signals that the customers’ financing options are getting scarce. But so far we have had no direct impact,” Embraer president and CEO Frederico Fleury Curado told a media briefing in Singapore.

Planemakers’ global airline customers are on course to post losses of USD$5.2 billion this year, because of still-high oil prices and a global economy that is seriously weakened by the credit crunch, the International Air Transport Association said this month.

“If this crisis goes on longer and deeper, then everyone will be affected. But we will have to wait and see,” said Curado, although he emphasized that Embraer remained on target to deliver its forecast 195-200 regional jets for 2008. Embraer, the leading producer of regional jets in the world, also makes business jets and military aircraft and competes directly with Canada-based Bombardier.

To be sure, pre-show announcements today at NBAA reflect optimism in the bizjet sector. Case in point: Gulfstream Aerospace on Sunday unveiled its G250 super mid-size business jet, which boasts a range of 3,400 nautical miles at 0.80 Mach. This sleek aircraft, the latest addition to the Gulfstream family of business jets, is slated for first flight in the second half of 2009. (For more details on the G250, consult the Avionics news channel on the home page of Aviation Today.)

One NBAA informational session tomorrow (Monday) looks particularly interesting to me:

NBAA Personal Jets (PJs) and Very Light Jets (VLJs): Panel Discussion with OEM Leaders, 2:00 p.m. to 3:30 p.m., Room S230B. The speaker panel of this session will include executives from PJ and VLJ OEMs. Each OEM representative will provide an update on the status of their respective aircraft programs and how they view current conditions in the business aviation market. I’ll share with you the highlights of this discussion, in my new blog dispatch tomorrow.

That’s it for my “pre-show” analysis. Look for my reporting, complete with video clips, from the show floor, starting October 6. And don’t forget: this blog is an interactive medium. Please don’t be shy about leaving comments.