Business jet industry hurt by political uncertainties, executives say
11/01/2012 10:56 AM
08/08/2014 10:13 AM
Next week’s presidential election is on the minds of some convention-goers at the National Business Aviation Association’s exhibition.
“Everyone just wants it over with,” Tim Bonnell Jr., president of PIM Aviation Insurance, said while working at his company’s exhibit on the floor of the Orange County Convention Center, the location of the NBAA conference.
Many in the business jet aviation business say they’re waiting to see what impact the election will have on the market, Bonnell said.
Whether the market for jets will improve after the election is anyone’s guess, said Matthew Henry, president of Appearance Group
The market has been spotty, although many of the typical indicators for sales of new business jets have been good, such as corporate profits.
And the number of used jets on the market is declining. Still, the ability to get financing for a jet is more difficult than before the recession began, experts say.
Buying an airplane is something that can be put off, say experts. And when the future is uncertain, potential buyers tend to wait.
The industry feels it received a one-two punch – first the recession, and then President Obama description of business jet owners as “fat cats.”
Scott Donnelly, chairman and CEO of Cessna Aircraft’s parent company, Textron, talked about the election in a conference call with analysts last month.
Cessna’s primary customers are large and mid-sized businesses, Donnelly said.
“There’s no question that a lot of these guys are looking at a very uncertain next few months,” he said. “You’ve got an election coming up … You’ve got the whole so-called ‘fiscal cliff’; you’ve got tax policy, you’ve got sequestration. There’s plenty of reasons to right now say ‘Jeez. I don’t know what’s going on.’ ”
Many in the industry have a candidate for whom they’re rooting, Donnelly said.
“But on the other hand, I think people will wake up in the morning after the election; they may be happy, they may be unhappy. But to some degree, people are going to have to dust themselves off and say ‘You know what. I’ve got to get on with my life.’ ”
No matter who is elected, “I think it takes some uncertainty off the table, and that’s probably good for the market,” he said
Who’s in control of the House and Senate is as important to the industry as who’s in the White House, said Pete Bunce, head of the General Aviation Manufacturers Association.
The most dangerous time for the industry is during a lame duck session, Bunce said.
That’s when deals can get made that could negatively impact the industry, he said, and there isn’t time to slow or change the legislation.
When legislation gets introduced during the next Congress and things progress typically, then the industry can respond in a normal fashion, Bunce said.
The House likely won’t change, Bunce said.
Once the election and the lame duck session is over, Bunce said he expects the industry can begin moving again, he said. The industry will grow when the economy does, Bunce said.