Golfers, Gentlemen, and Pilots

I first met Russ Meyer 30 years ago when I was selling Cessna airplanes. Russ often gave me a ride to Wichita in a Citation when I was picking up a small Cessna to ferry back to Virginia. At one point he told me about his friend Arnold Palmer and how Arnold always bought the first of every new Citation model.

Russ met Arnold Palmer when he was a young lawyer at IMG, the powerhouse sports management firm. You can read more about this long Palmer/Meyer relationship in the February edition of Business Jet Traveler by clicking this link.

This is a great story, but what it doesn’t tell you is that Russ Meyer is a scratch golfer. Both of these men have been my heroes for years and I have dreamed of being on the golf course with them. That will never happen, but being in the cockpit with half the team has and is something I will never forget.

Note: I wrote about Russ Meyer in my Summer 2009 Newsletter when he was inducted into inducted into the National Aviation Hall of Fame along with Jimmy Stewart, and astronauts Ed White and Eileen Collins. Every living astronaut was there to honor Russ and the other inductees.

The Debacle Story Continues

In November of 2007 I posted an article, The General Aviation Tsunami.  That story was only the beginning of the disaster to come.  Hundreds of jobs were lost and over $100 million of invested capital became worthless.  Two highly regarded companies, TAG Aviation USA and AMI Jet Charter, were decimated by one of the best examples of over regulation and malicious prosecution by the Federal Government.  Supposedly the revocation of the operating certificate of AMIJC, a company with a perfect safety record for 10 years, was done in the name of safety.

Recently, Bill Garvey, editor of Business & Commercial Aviation magazine, tells the story in an excellent article, Lessons From a Debacle.  Bill says, “Now that emotions have calmed slightly, it’s time to consider what it all meant.”

I was reminded again this week about the injustice of the FAA when I read a story in the Wall Street Journal about the FAA’s plan to fine American Eagle, a unit of American Airlines, $2.9 million for a safety violation involving over 1,100 flights.  The FAA fined AMIJC $10 million, the largest fine ever, for ceding operational control of their charter flights to a foreign corporation who was an AMIJC minority investor. That investor was TAG Aviation USA, a highly experienced aircraft management company owned by a Swiss organization.  This fine was paid in full.  It is highly unlikely American Eagle will pay anything close to $2.9 million as fines like this are always appealed and substantially reduced.  AMIJC never had that chance – when they tried, the FAA simply revoked their certificate, laying waste to the company’s future.

My emotions haven’t calmed, even slightly.

Is NextGen Dead?

Maybe Not

Those who know me well and those who follow this blog know that I have been a long-time advocate of moving the Air Traffic Control away from the operational control of the FAA and making it an independent self-sustaining organization.  Today our large complicated and antiquated ATC system is dependent on the whims of Congress and the Administration.  Four of more times Congress has failed to approve a budget for the FAA.  In the State of the Union address the President proposed a budget freeze, which I initially thought NextGen, the long overdue remaking of ATC, would be pushed even further into eternity.  However, just two weeks later the White House asked Congress for a $1.14 billion budget in Fiscal Year 2011 for NextGen, a 31-percent increase from the FY 2010 figure.  There will be a lot of debate on the budget so stay tuned.

My friend Bob Poole recently asked me to review and comment on an article he has written on NextGen that will be published in the March issue of Professional Pilot magazine.  Bob is the founder of the Reason Foundation, a public policy think tank, and has for many years advised Administration officials of both parties on transpiration issues, especially ATC and airport security

Bob makes the case for the many advantages of NextGen.  But he also lays out the complications of making it happen.  The technology is here today and in a perfect world every airplane could fly the best route and takeoff on and land on time.  Fuel burns and carbon emission would be reduced.  No one disagrees on these points, but on funding NextGen there is little agreement.  Understandably the airlines and business aviation is not willing to pay for the expensive new equipment that is necessary to fly in a NextGen system until they are assured that NextGen will be in place on a date certain.  Too often the aviation community has made the investment and seen some new FAA driven technology fail to be developed or pushed far into the future.

Over ten years ago Canada “depoliticized” their ATC system, which was a part of Transport Canada, the equivalent of our Department of Transportation. Unshackled from their government except for safety regulation, the independent and not-for-profit NavCanada jumped far ahead of the United States in ATC service and technology – not quite NextGen, but they are moving rapidly in that direction.

Is it possible that the debate over the budget freeze could finally push the unshackling of the U.S. ATC system forward and create for our country what every other non-third world nation has?  An ATC system that pays for itself and operates as any high tech business should.

A Tale of Two Standards

Remember VHS vs. Batamax? Business aircraft charter saw tremendous growth in the 1990s and received another boost after 9/11/2001 when airline travel was extremely restricted. Major corporations and fractional companies like NetJets, FlexJet and others needed to be confident that the companies operating the business jets they chartered had the highest level of safety.

Although the U.S. market had several quality auditing firms performing independent safety audits, the charter community and the buyers of charter, were desperately seeking a globally accepted solution to the myriad of audits and standards being utilized. With the support of International Civil Aviation Organization (ICAO), and in conjunction with numerous business aircraft operators and regulators around the globe, International Business Aviation Council (IBAC) developed the International Standard for Business Aircraft Operators (IS-BAO), and introduced it to the aviation community in 2002.

IS-BAO was designed to establish a professional safety code of practice for flight departments worldwide, developed by the industry, for the industry. This safety standard has applicability for domestic and international flight operations, private as well as charter, and scales from one aircraft operators to the largest fleets. Through tremendous efforts over the last 7 years, hundreds of business jet operators have gone through or are going through the IS-BAO registration process. Regulators around the world recognize the validity of the IS-BAO standard.

In 2009 a second standard was announced by the Air Charter Safety Foundation (ACSF), a new organization developed by the National Air Transportation Association (NATA). ACSF will limit audits under their standard to only members of ACSF.

ARG/US, Inc. has been a globally recognized and respected data collection, analysis and auditing firm of aircraft operators for over a decade. ARG/US has declined to endorse or join ACSF as they see no value in introducing another standard created by a U.S. trade association that has no acceptance outside of the United States. Furthermore they feel the ACSF plan dilutes the enormous efforts by IBAC in achieving global acceptance of IS-BAO.

The wounded (by the collapse of JetDirect) aircraft management/charter industry does not need a battle like this.

Business Aviation, Twittering the Recovery

The cover of the June 15th edition of Time magazine is a picture of an iPhone, or a similar device, with a Tweet about the cover story on Twitter, the innovative fast growing social network. What could this possibly have to do with the recovery and growth of Business Aviation? Read on.

In my last article for Hangar Talk I wrote about Glenn Hutchins, founder of Silver Lake, and his prediction that innovation would lead us out of this recession. This week in the cover story for Time Magazine, author Steven Johnson writes about the amazing growth of Twitter, the social networking site that has grown using "end-user innovation," a concept that Johnson explains as, "where consumers actively modify a product to adapt it to their needs.”

Twitter was introduced to the Internet and the social networking community in 2006 and like blogging was picked up first by teenagers as a way to stay connected. They have a compelling need to know what their circles of friends are doing. In fact when you go to Twitter the first thing you see is a text box asking the question, “What are you doing?”

When I first saw this my questions were, “Who cares, and why do I want to know?” But alas I am not a teen or even a 20 something, but believe me, they want to know. Not what I am doing, but what their circles of friends are doing. Then came The Campaign. Hundreds and maybe thousands of young campaign workers wanted to stay connected. With Twitter they could do so, and view the Tweets, which are limited to 140 characters, on cell phones and BlackBerries as text messages (SMS), and on computers. I have a feeling that the need for Twitter feedback, and not just email, might have been behind President Obama’s fight to keep his BlackBerry.

Johnson tells of attending a small private conference on the future of education attended by 40 educators, entrepreneurs, scholars, philanthropists and venture capitalists. At the beginning the organizers announced that anyone could record their comments and questions on Twitter. During the conference comments were being displayed on a screen. Before the end Tweets were pouring in from far beyond the confines of the room where the attendees were sitting.

This week I am attending the Air Charter Summit where over 100 business jet operators will be assembling at a hotel and discussing how to address and solve some of the very significant challenges facing the business jet industry. Will this group be Twittering their thoughts in real time along with many others not at the meeting? Maybe not, but think about how more productive the meeting might be with thoughts, not just from the 100 physically present, but from many others not able to attend in person.

(Full disclosure, Steven Johnson, the author of five best selling books, contributor to The Wall Street Journal, The New York Times, The Guardian, Wired Magazine, and a futurist much in demand on the lecture circuit, is my nephew.)

Will Innovation Lead the Way?

Glenn Hutchins one of the founders of the highly successful private equity firm Silver Lake, after studying and outlining how we got into this mess, sees the way out - Innovation.

Hutchins says, "While at times rushed and incoherent, the public policy response to the crisis has been breathtaking in its scale. The approximately $10 trillion in resources shoveled at the problem dwarfs any prior undertaking in our history including World War II - which is estimated to have cost $5 trillion in today's dollars. This is the all-important difference between today and the '30s. In contrast to the passive and counterproductive actions taken then by the Hoover administration and the world's central bankers, today's leaders - having learned the lessons of the Depression and quickly grasping the ramifications of the Lehman failure - resolved to err on the side of doing too much rather than too little."

Hutchins is may be right about innovation but consider that ninety percent of new products fail. Venture Capitalists have shoveled billions at innovation for years yet only one in ten shows any return and most are returns are modest. The aviation is landscape is littered with the wrecks of the dreams of dreamers. The Eclipse Jet is only the most recent disaster.

Tony Ulwick developed a concept he calls Outcome-Driven Innovation® (ODI) and founded Strategyn, Inc., a global innovation management firm. ODI starts not with a product but by finding the answer to the question, “what does the customer want to accomplish? Or as Harvard professor Theodore Levitt often remarked, “People don’t want drills, they want holes.” DARPA didn’t want the Internet; they wanted a way to communicate.

I am concerned that throwing $10 trillion at our current problem might result in getting a lot of “drills” that don’t work very well. It may be too late to apply ODI concepts to what we need. But perhaps in a small way we can fund innovation in a different way. Ulwick and Jay Haynes have formed a new venture capital firm, Strategyn Ventures, to fund ODI proven products and services. If they can change the odds from 1:10 to something much less, perhaps innovation will lead the way out.

A Marvel, Misunderstood

Why are we vilifying a $100 billion sector of our manufacturing economy? The business jet is an important tool that permits businesses to compete effectively in multiple locations domestically and internationally. It has been documented that the most profitable companies own business aircraft. Cessna Aircraft (Textron), Gulfstream (General Dynamics) and others are tightening their belts against the economic tsunami, but perception may be their greatest challenge.

Who is responsible for the economic mess we are in? We all are, says Steven Pearlstein in a column in the Washington Post, “Let’s Put Down the Pitchforks.” Today the villains are the AIG bonus recipients, the Treasury Secretary, members of Congress, and so on. For the last few months it has been almost anyone seen stepping on or off a business jet.

On Super Bowl Sunday the New York Times published an Op-Ed piece by Bill Garvey “The Mile High Office.” Bill gives the example of two competing companies. Both travel to a prospective client’s office. One company travels by a business aircraft that can fly directly to almost any airport. The other takes the commercial airlines. The latter suffered through security lines, perhaps changed planes and maybe missed a connection and arrived, well let’s just say hassled.

Guess which company has the best opportunity to close the sale? The business people with the corporate jet won’t just arrive faster; they’ll also show up better prepared, rested and alert. In their own airplane they were free to discuss confidential information or polish up a PowerPoint presentation. They were able to use phones, BlackBerries and the Internet en route. In other words, they were in their office while they were traveling.

Malcolm Forbes called his business jet, "The Capitalist Tool." Warren Buffett called his first business jet "The Indefensible," and then quickly renamed it "The Indispensable," and then bought NetJets, the largest operator of business jets in the world.

The business jet manufacturers are seeing orders canceled and backlogs shrink. Major suppliers like General Electric (engines), Honeywell (engines and avionics) and many others are feeling the effects of the slow down. This manufacturing industry is far different from the auto industry. Not one business jet manufacturer has asked for bailout funds, and I predict none will. The biggest threat is the negative public image inflicted by grandstanding members of Congress and a President who is trying to distract attention from a failing financial system, a broken economy, and mistakes by his own administration. CEOs do not disappear on business jets. They are off closing deals, fixing assembly lines, and yes, flying to Washington to raise funds to save the auto industry.