General Aviation in China

            With many U.S. general aviation manufacturing companies experiencing a decline in business over the past few years, Chinese businesses have begun to invest into these financially struggling companies. Leaving the American manufacturers with varying levels of independence, many in the U.S. claim that China is not simply merging with these companies, but “purchasing” them. The first example of this being in 2012 when, “Hawker Beechcraft, which filed for bankruptcy protection in May, plans to sell its civilian aircraft operations to Beijing-based Superior Aviation Beijing Co. Ltd. for $1.79 billion. Sixty percent of Superior is owned by a private entity entirely” (Hegeman 2012). As well as a few other important Kansas based airplane manufacturers. Including other general aviation giant Cirrus, when Chinese company, “CAIGA last year bought the parent company of Cirrus Aircraft in the United States. Not only did the Chinese-based firm keep its U.S. employees, but it pumped in $150 million in development costs to boost its light jet production. The plane — whose development had been slowed for years by lack of money — will be built in Cirrus' hometown of Duluth and in Grand Forks, North Dakota” (Hegeman 2012). Lastly, Cessna has been aligning with China as well. Whereas Cessna, which was not bought out, still, “signed with AVIC subsidiary China Aviation Industry General Aircraft Co. Ltd., or CAIGA, and the Shijiazhuang municipal government. The deal was a step for the final assembly, sales and customer support for the Cessna Caravan in China for the Chinese market” (Hegeman 2012).

            Why all of a sudden this need for a general aviation system in China? Because there is now a market for it, and with the U.S. G.A. market currently in a lull, these manufacturers need to turn a profit. As well as the possibility to get a foothold in an emerging region. But there is now a need for these planes that was not there before mostly because, “China now boasts its fair share of the world's multibillion-dollar companies and business tycoons. They drive expensive cars, wear expensive watches, live in expensive homes and work in expensive offices. But there is still one big thing today's high-flying Chinese executive lacks: a corporate jet in which to fly high, let alone smaller general aviation aircraft to fly as a hobby” (Jackson 2012). And with this need, someone needs to provide the product.

            So with all of these “take-overs” and business deals in General Aviation, what does this mean for U.S. interests? To me, I think it means an illusionary short term gain for the aviation manufacturing industry, with potentially dangerous implications for the extended future. This is primarily because China’s lack of current infrastructure at the moment which is forcing them to rely on an already developed industry which currently provides a substantial amount of the world’s aircraft. Once China retains all the usable information from these U.S. companies it will no longer have any use for them as they will be able to produce a lower cost product in their own country, without the hassle of importing them across the globe. And with a lower cost Chinese alternative on the G.A. market, it will most likely absorb a substantial portion of the market, resulting in even less jobs for those American manufacturers who were able to resist being “bought out”. I think this short term gain will be similar to other areas of U.S. general aviation sector. Perhaps a boom in Chinese flight students in our country, sent here by their country to fill the large number of pilot slots, giving the illusion of a thriving group of future professional pilots in the U.S. While in reality, they are only sent here because of their country’s lack of training programs, which when developed, will no longer require them to bring their business to our country. As well as a slew of other aviation professionals, ranging in their field of expertise, potentially being sent overseas to help set up the entire Chinese system.

References

Cox, J. (2010, November 3). China's awakening means vast changes to business and general aviation. Retrieved from http://blog.globalair.com/post/Chinas-awakening-means-vast-changes-to-business-and-general-aviation.aspx

Growth of china's general aviation market stunted by risks. (2013, August 1). Retrieved from http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130801000009&cid=1103

Hegeman, R. (2012, July 16). U.s. plane makers teaming with chinese firms. Retrieved from http://www.manufacturing.net/news/2012/07/us-plane-makers-teaming-with-chinese-firms

Jackson, C. (2012, May 9). China's general-aviation flight of fancy. Retrieved from http://online.wsj.com/news/articles/SB10001424052702304451104577391650977428024

Corporate Aviation: A Political Punching Bag

Often referred to as “private jets”, business, or corporate, aviation is when a company or business utilizes a general aviation aircraft for work related purposes. “It is essential to tens of thousands of companies of all types and sizes in the U.S… [whereas] The vast majority of these companies – 85% - are small and mid-size businesses… [located] where the airlines have reduced or eliminated service” (Why companies utilize business aviation, 2013). Corporate aviation has garnered a fair amount of media coverage and criticism over the past few years after the auto-industry bailout, “when all three Detroit automakers' CEOs flew to Washington on corporate jets to beg for federal bailout dollars” (Reed 2009). It was in this action that the general public deemed all things related to corporate aviation as mostly opulent and excessive. While also labeling the auto executives, and ultimately any persons with an aviation department, as greedy “fat-cats”.

Corporate aviation also gets a bad reputation because many people claim that rich company executives can benefit financially through starting an aviation department through a financial practice of “accelerated depreciation”. According to the business dictionary this is a, “Technique of computing depreciation at a rate that is faster than the rate of straight line depreciation…these methods write off larger proportion of an asset's value in the early years of its life than in the later years. The justification for accelerated depreciation is that an asset is more valuable, and has more earning potential, in early years of its useful life.” These people feel that through this practice that the federal government helped out the already rich in buying an extravagant toy. It is also commonly referred to as a tax loophole for them as well. However, the main goal of this tax incentive was to help stimulate the economy through providing companies a benefit to buying business aircraft, which is one of the few U.S. dominated production industries. President Obama has split his decision on business aviation over the past years because of this public perception of helping out the wealthy. But at other times it falls in his favor to support the industry because of the number of people it employs.

While some of these CEOs that have their own business aircraft may indeed be greedy people, I think people are taking their frustrations out in the wrong areas, as corporate aviation has many redeeming qualities.

 There are many reasons for a company to establish an aviation department. Some of them would be: accessing communities with little or no airline service, reaching multiple destinations quickly and efficiently, moving equipment, and supporting the travel needs of many types of company employees. But more importantly would be the ability of the owning company to conduct business throughout all phases of flight, and maintain productivity. Especially considering the ample space and privacy not found even in “first-class” commercial flying. Much of the aviation community, including myself, believe that corporate aviation is also a benefit to the national economy as well, since it, “employs 1.2 million Americans and generates $150 billion in economic activity” (Frank 2013).  It is because of this benefit to business and economy that I feel that if a company can afford an aviation department without significant detriment to their employees, they should be allowed to have business aircraft.

References

accelerated depreciation. (n.d.). Retrieved from http://www.businessdictionary.com/definition/accelerated-depreciation.html

Frank , R. (2013, February 6). New dogfight between obama and private jet industry. Retrieved from http://www.cnbc.com/id/100439712

Lucas, F. (2011, June 30). Obama for corporate jet tax break before he was against it. Retrieved from http://cnsnews.com/news/article/obama-corporate-jet-tax-break-he-was-against-it

Reed, D. (2009, March 3). Economy, 'fat cat' label hit corporate jet makers hard. Retrieved from http://usatoday30.usatoday.com/money/industries/manufacturing/2009-03-02-corporate-jet-makers_N.htm

Why companies utilize business aviation. (2013). Retrieved from http://www.noplanenogain.org/Advocacy_Tools.htm?m=47&s=407

UAVs: A Commercial Future?

Referred to most commonly as drones, UAVs (unmanned aerial vehicles), or UASs (unmanned aircraft systems) are a hot topic in today’s society. Mostly grabbing headlines about their military implications overseas, there are starting to be more commercial applications to unmanned aircraft at home. To clarify, a UAV is, according to theuav.com, “an aircraft with no pilot on board…can be remote controlled aircraft (e.g. flown by a pilot at a ground control station) or can fly autonomously based on pre-programmed flight plans or more complex dynamic automation systems. UAVs are currently used for a number of missions, including reconnaissance and attack roles… and capable of controlled, sustained level flight and powered by a jet or reciprocating engine”. In this week’s blog post, I will focus mainly on the many uses they can serve in U.S. commercial aviation and their integration into the National Airspace System (NAS).

Because UAVs are relatively inexpensive and have to potential to explode onto the marketplace, the FAA is taking its time to implement them into the NAS by the Congress approved date of 2015. Requiring new regulations from training to airspace restrictions, the implantation of drones into the commercial industry will be daunting. According to Adams, “more is required to get there than one might think, including real-world operational data and work on sense-and-avoid, ground control station, and command and control (C2) technologies”. And, “ground control station (GCS). GCS issues may be the biggest challenge in the program since not very many people are working on them”. Currently the only way to obtain permission from the FAA to operate a UAS is, “to obtain an experimental airworthiness certificate for private sector (civil) aircraft to do research and development, training and flight demonstrations. The second is to obtain a Certificate of Waiver or Authorization (COA) for public aircraft. Routine operation of UAS over densely-populated areas is prohibited” (Dorr & Duquette 2013). But with such an upcoming deadline and high demand, how and when will these UAVs really be implemented?

Because of their previously mentioned low cost (compared to their piloted counterparts), ease of use, and low maintenance, there is no doubt that there are probably, “about a million uses for civilian UAVs” (Gantenbein 2009). Because they are not burdened by the physiological limitations of humans, most current civilian applications of UAVs involve police surveillance, pipeline patrol, wildfire mapping, and other jobs deemed tedious and mundane. But because of restrictions on certification of current UAVs, the public demand for them greatly outweighs their legal ability to use them. “As of February 15, 2013, there were 327 active drone certifications. But once a regulatory framework is in place, the FAA estimates, 7,500 commercial drones will be viable within five years” (Haldane 2013). Once they are more open to the public, the applications of UAVs will be only limited by one’s imagination. Just some of the areas that would greatly benefit from UAVs would be aerial photography, weather surveillance, test beds for scientific research, crop monitoring, parcel delivery, and many other unexpected uses. An example of which would be when a UAV, “was used in the north Pacific to hunt for ghost nets—drift nets that have escaped from fishing vessels and then float with the current, devastating marine life” (Gantenbein 2009).  As for higher level duties, such as part 121 operations, time will only tell if UAVs will be the future in that sector as well. But in an industry that deals heavily in public perception, how will passengers respond to a plane with no pilot in the cockpit? If UAVs are to ever make that jump, there will most likely be drones in smaller cargo operations first before their implementation into the airlines.

References

Adams, C. (2013, August 1). Integrating uas in the nas. Retrieved from http://www.aviationtoday.com/av/military/Integrating-UAS-in-the-NAS_79730.html

Dorr, L., & Duquette, A. (2013, February 19). Fact sheet – unmanned aircraft systems (uas). Retrieved from http://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=14153

Gantenbein, D. (2009, July). Unmanned traffic jam. Retrieved from http://www.airspacemag.com/flight-today/Unmanned-Traffic-Jam.html?c=y&page=3

Haldane, M. (2013, August 8). U.s. slowly opening up commercial drone industry. Retrieved from http://www.reuters.com/article/2013/08/08/us-usa-drones-commercial-idUSBRE97715U20130808

Uav overview. (n.d.). Retrieved from http://www.theuav.com/