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By Chuck Cox, CEO and president Northern Jet Management
Special to MiBiz
The 2008 economic meltdown put the brakes on the momentum experienced by the aviation industry the previous decade. Thankfully, the most dire predictions for the industry never came to pass. However, the industry did take some very hard hits.
As CEO of Northern Air and Northern Jet Management and as National Air Transportation Association Treasurer and board member, I see great opportunity for aviation entities, commercial and private, to grow their businesses by providing more and improved services for the business traveler.
On the plus side, West Michigan is very fortunate to have one of the few self-funded airports in the nation. The prudent and well thought-out airport master plan continues to be the foundation of the Gerald R. Ford International Airport’s (GFIA) success, as underscored by recent renovations and expansion. For years, the Kent County Aeronautics Board and airport staff have planned their work and worked their plan. By continuing to follow this master plan, the airport can continue to pay big dividends to county residents and business owners.
The beautiful new parking structure and covered passenger drop-off area, new car rental facilities, as well as all new passenger jetways have provided for improved customer service for all passengers coming in and out of Gerald R. Ford International Airport.
With the assistance of the Regional Air Alliance of West Michigan, the Gerald R. Ford International Airport has attracted four new airlines resulting in record 2010 passenger levels. Approximately 50 percent of passengers are traveling on business.
Planning has also facilitated the growth of private aviation at Gerald R. Ford International Airport. Northern Air recently razed outdated hangars and renovated the Northern Air facility. The $2 million-plus investments in facility renovations and new construction we have completed is in addition to the $10 million in lease and fee revenues Northern Air has paid to the airport since 1994.
While we remain cautious, we are seeing slow, but real business recovery. Aircraft charter and fractional jet hours have been trending upward for the past 12 months. New corporate inquiries about fractional jet ownership programs and aircraft ownership opportunity are keeping the Northern Jet team very busy with client presentations.
Why does private aviation continue to grow? Two words: business productivity.
When I visit top management at their corporate offices, they tell me that increased productivity has spared our business community from some of the meltdown and continues to solidly move it forward. The use of a private aircraft increases this productivity in many ways.
For example, on the commercial carriers, flying from one non-hub city to another takes a full-day, one way on a good day. The airports, TSA and airlines are doing their best, but more flyers and fewer flights mean more delays.
On the other hand, a private jet can land in three locations and have a six-person sales team back home in one day. One CFO told me that he calculated that a 1/8 share of a fractional jet (100 hours) can add 20 days a year of productivity to his sales and management teams.
All aircraft sales are expected to rise. During 2010, sales were 4.8 percent higher than in 2008; used business jet sales rose by 16 percent. Some of those gains in sales were the result of an average 18.5 percent drop in prices. Decreased inventories have stabilized most prices. For 2011, new and used aircraft prices are expected to appreciate or remain stable in the U.S. The Middle East and Asia are expected to have strong sales growth while sales will most likely remain flat in Europe. Appreciation in first generation business jets is not expected as these low prices are the new normal.
Ten- to 14-passenger models, such as the Dassault Falcon 900EX and Bombardier Challengers, remain the best new aircraft sellers. Late model, longer-range, large cabin jets are at the top of the used bestseller’s list.
Many diverse West Michigan businesses – including GE Aviation Systems, L3 Communications, and Scott Group Custom Carpets – are benefiting from this growth by providing parts and equipment for these aircraft
With the retirement of US Rep. Vern Ehlers, I believe it’s vital that West Michigan realize the value of having a strong aviation presence. Ehlers was a very strong advocate for both private and commercial aviation as a leader and member of both the House General Aviation Caucus and the House Transportation subcommittee. He understood that effective, well-managed, commercial and private aviation services are imperative to increasing any community’s economic development.
Thanks to an effective master plan, adept airport leadership and effective alliances between the Kent County Aeronautics Board, commercial carriers and private aviation businesses, the West Michigan aviation industry has stood up to the economic meltdown with flying colors.
