October 03, 2013
The business and general aviation community has already begun to feel the ripple effects from the U.S. government shutdown, with a range of critical services coming to a standstill – from FAA’s registration branch to an accident investigation by the National Transportation Safety Board.
Not only have more than a dozen new aircraft transactions been delayed, but an investigation of one major business aviation accident has been halted.
“It’s a problem,” says NBAA President and CEO Ed Bolen, who met with FAA Administrator Michael Huerta on Oct. 3 to express the industry’s concerns. “We are one of the most heavily regulated industries. To produce aircraft parts, buy a plane or sell a plane, all of that requires government involvement.”
Industry groups also expressed their concerns Oct. 3 to a general aviation roundtable that was hosted by the Small Business Committee, which is chaired by General Aviation Caucus co-Chair Sam Graves (R-Mo.). Bolen says he stressed to the committee, “The effects of the shutdown are really magnified for us. Business aviation is predominantly a U.S. industry and it is predominantly a small business industry.” He adds that the businesses are facing numerous challenges. “Those challenges during a shutdown are really intense. In some cases we can’t even move an airplane.”
The government shutdown, which began Oct. 1 after a congressional impasse led to the lapsing of government funding, affects all activities except “essential” services – those deemed necessary for life-threatening/life-saving issues, Bolen notes.
The U.S. Civil Aviation Registry in Oklahoma City was informed on Sept. 27 that it would shut down, and it notified industry on Sept. 30. Industry leaders call the action unprecedented – the registry remained open through the last shutdowns in 1995 and 1996.
This is not only affecting new deliveries from a registration standpoint, but also hampering title search and other activities necessary to obtain financing for aircraft sales. According to the General Aviation Manufacturers Association, at least one dozen aircraft deliveries have been delayed in the past two days, with as many as 123 more scheduled over the next couple of weeks.
The value of these aircraft total $1.38 billion, says Jens Hennig, vice president of operations for GAMA. These numbers are particularly skewed since these manufacturers typically have a fourth-quarter push of deliveries. Roughly 35% of business and general aviation deliveries occur in the fourth quarter.
Right now these transactions are on hold, but the fear is that loans will go into default if the title searches and other activities do not resume in the near term, adds Mike Nichols, NBAA’s vice president, operational excellence and professional development for the National Business Aviation Association.