Podcast: Why BizAv is Hot Again
Aviation Week editors gather in Las Vegas to talk about the buoyant mood at 2021 NBAA-BACE and COVID-19’s silver lining for the business aviation industry.
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Joe Anselmo: Welcome to this week's Check 6 podcast. I'm Joe Anselmo, Aviation Week's Editorial Director. And this week we're coming to you from Las Vegas, Nevada where we are at the NBAA-BACE event. It is the premier event for US business aviation, and it's back after two years. With me is our crack team of writers, Lee Ann Shay, Molly McMillin, Bill Carey, and Guy Norris, who are all covering the show with me in real time. Molly, let's start with you. Obviously COVID was still hanging over the event, you had to be vaccinated, they had checkpoints, some key exhibitors were gone, and yet there was such a buoyant mood among the CEOs, and all the participants that this industry is on the upswing. Do you want to tell us a little bit about what you saw?
Molly McMillin: Oh, sure. It's amazing. Yes, the industry has not met for two years. So even though you did have to show proof of vaccination, and that sort of thing, any press conference you went into, if you saw folks on the floor, everyone was so excited like, "It's so good to be back, it's so good to see you." And it's also a time that, ironically, COVID has brought some buoyancy to the industry because people are using business aviation more, they're flying more, they're using business aviation instead of the airlines. So OEMs and charters are reporting a huge influx in new customers, new entrants. And so, the mood here is just really good, and really fun
Joe Anselmo: Lee Ann, that your observation as well?
Lee Ann Shay: Absolutely. It's been really interesting just to see everybody's comments about the growth. Aircraft sales are huge. And the fact that there's so little used inventory is a very telling sign. And so, naturally, most of the aircraft OEMs have been making some announcements this week, which has been very exciting. On Tuesday, of the event, HondaJet announced a new aircraft. Guy, you were covering that. What was it like?
Guy Norris: Yeah. That's right, Lee Ann, I was. Well, we did have a little bit of an inkling something weird was going to happen. Honda obviously had the HondaJet, the Elites, for some years now. But, we did hear rumors that something was going to happen. And during the week, we ventured onto the exhibit hall before it was officially opened and, sure enough, the HondaJet stand was completely shrouded behind a black curtain. It was impenetrable. We tried, honestly. We did try to sneak a look through the curtain, but we couldn't.
Guy Norris: So we were amongst the crowd today to witness when the curtain rose and revealed, basically, a stretched, super version of the HondaJet Elite, which they're calling the 2600. That's a reference to the transcontinental range of the aircraft, which is going to be a high aspect ratio wing, and it's a longer fuselage. It's a single pilot operation with 11 passengers. So, it's really like a HondaJet on steroids. And it's something which they said, when they were doing their market research on the Elite and what comes next, just came out loud and clear that that's what they needed to do. And I think Molly, you've heard from other people, haven't you, that this is basically something that the market might actually need?
Molly McMillin: Right. Well, at one point, the Learjet 75 Liberty is winding down, so that's a niche there. With the light jet and medium jet market, the forecast is for that stronger niche in the market, where before it had been the long range intercontinental. But with restrictions, and certain things, the light and medium jet has a good forecast.
Guy Norris: Right. And of course the weird thing was, as Joe was saying, this is such a strange time for the industry. And we're all here at NBAA, we didn't really expect anything. All the pre-announcements Gulfstream made, and that sort of thing, was great. But nobody, I don't think, really expected to see a new jet emerge at this show. Did they? I mean, I didn't.
Molly McMillin: Yeah. I think it was a surprise, and people were very interested, of course. There are two things though, that they did not announce. One was an engine manufacturer. And as one person pointed out today, "Well, you can't really say the range, if you don't know what engine you have." So they've got to have an idea of what engine, I would think. And, you know more about that. But the second thing was, entry into the service. So, they weren't ready to announce.
Guy Norris: Right. Yeah, and they've said that very much, it's a concept right now. But as you know, as we all know, that they've been doing a lot of research, and a lot of due diligence, and we are going to know an engine maker on this pretty soon. The rumor was that GE was big pals with Honda, of course. They jointly produced the engine for the HondaJet, of course, the HF120. And they don't have an engine in that class, but something's moving on that front. So maybe in the next podcast we'll tell you what's going to happen there.
Joe Anselmo: Guy, I was at that press conference, not in the front row like you were, of course. But they kept saying, "prototype." Some of their competitors were standing back there with me and scoffing a little bit saying, "They're not flying anywhere with that nose." This is a prototype, still. It's still got a ways to go.
Guy Norris: Oh, yeah. But the weird thing is that, when you look at the shape of it. Of course, Molly, you know the name of the creator of HondaJet.
Molly McMillin: Mr. Fujino.
Guy Norris: Thank you.
Molly McMillin: Michimasa Fujino.
Guy Norris: Who's a delightful gentleman, who stood up there and described this dream, and the new evolution of it. So, it was a great thing to have happened, I think.
Molly McMillin: Right. And they take a real long term view. It took a long time to get the HondaJet to market. And they've always said, from day one, that they weren't a one aircraft company, that there would always be more. And they created this facility, you can tell when you visit there, that there's plenty of land, they have plenty of room for another production line.
Joe Anselmo: You're talking about in North Carolina?
Molly McMillin: Yes. Yes, I'm sorry.
Lee Ann Shay: So Molly, I'm so glad you brought that up because, talking about families, I think that's really important to bring up. A week ago, Gulfstream announced the G400 on the lower end range, and then the G800. Even though they had only announced the 500 and 600, then they added the 700. These five aircraft were part of Gulfstream's master plan. And so, when you think about Bombardier, and Embraer, and the other manufacturers, is everybody going to need to have this bigger, broader, cohesive family? Will there be more new entrants?
Molly McMillin: Sometimes I think they look at textile aviation. Look at what Cessna did, they filled in every niche. Others sometimes look at that and say, "We also can fill these niches." There's a gap, as Gulfstream had. So it will be interesting to see.
Bill Carey: But the one thing I found really compelling about the Gulfstream announcement, prior to NBAA, is that they're filling in the gaps of a new generation of aircraft that's almost modular and concept. And across from the G400 through 800, taking in the 500, 600 and 700, they're all going to have a common symmetry flight deck, which is based on Honeywell Avionics. And all will have the data architecture. I can't recall what they call the central data processing system. And so they, going forward, plan to continue using these common systems. And they've created, with the 400 and the 800, at both ends of that, a new generation of aircraft, which I found really interesting.
Lee Ann Shay: And the common type ratings too, for the 400, 500, and 600, and the 700 and 800.
Joe Anselmo: So HondaJet stole the show, on day one of the show. But before the show, there was also big news from Embraer. What was that, Molly?
Molly McMillin: Huge NetJets order.
Joe Anselmo: 1.2 billion dollars.
Molly McMillin: Yep. 1.2 billion. NetJets says they need product. They, right now, have stopped sales on the light jet market, of their jet cards, their fraction ownership programs, their leases, because they're saying they have so many new customers, and they want to keep their service high, and they need to fill that capacity. And they've been saying that they've got aircraft on order, they want to add aircraft. This is huge. They also said, just last week, that they have a thousand people on the waiting list for their jet cards in the light jet market.
Guy Norris: They've actually said that they were sold out as well, through early '23, didn't they? 2023. Amazing.
Molly McMillin: Yeah, and their book-to-bill rate was two to one.
Guy Norris: Two to one, right. Exactly, yeah.
Molly McMillin: And what that does is format pricing. This is what the industry needs so much, because pricing has been fluid. They were having to discount to make sales. And so now with the firm pricing, an OEM told me today that, they don't have to quibble over price now so much.
Guy Norris: I thought the other interesting thing was how Embraer brought up the fact, that in NBAA, the Eve Program to develop their eVTOL program, as part of a holistic view of the future. And of course, a key part of that was sustainment because Brazil's been, maybe in a way, the leader in sustainment. Particularly, think about the alternative fuels that they've always had from sugar cane. And, and that's an Ipanema program. But sustainment, I think, is going to be such a big thing at all of the shows we're going to be at for the next 10 years, right?
Molly McMillin: Absolutely.
Bill Carey: Yeah. Sustainment is really the underlying theme of NBAA base this year. And that is an issue that both NBAA, as well as other organizations, The National Air Transport Association, The General Aviation Manufacturers Association, have really got behind their participants in a business aviation sustainability council. This morning, actually, Molly and I attended the media breakfast, at which several Business Aviation Associations endorsed a declaration sponsored by Gama and the International Aviation Business Council, to achieve net-zero carbon emissions by 2050. And that was a similar declaration that The Air Transport Industry, the airlines signed onto at the IOTA annual general meeting in Boston last week.
Bill Carey: And the media breakfast was followed immediately by the opening ceremony which Ed Bolen, NBAA Chairman and CEO, announced that this conference that we're attending will be officially carbon neutral due to offsets, which I found encouraging. There is much talk about sustainable aviation fuel, but there's other aspects to sustainability, including new proposing technology and, of course, electrification, new operational efficiencies through air traffic control, new more efficient airport infrastructure design. And so, all of these pieces are going to contribute to this net-zero carbon goal by 2050.
Guy Norris: This is probably more of an aside. But the BBJ, the Boeing Business Jet family, at the show, announced that they've just delivered their first MAX 8 version of the BBJ to a customer, and taken the first order since the MAX returned to service. And one of the things that I thought was kind of interesting was they said, "It's appealing to a younger generation of buyers, because they're much more conscious and aware of the emissions issue, and sustainability." And that's one of the reasons that they would go for a MAX 8, or MAX based BBJ, which is extraordinary. So I think you can see the beginnings of a sea change. When did you ever think about CEOs wondering about carbon emissions? But, it's a thing now.
Molly McMillin: Right? Even in interiors, because now they have suppliers coming out with vegan leather, veneers that's not wood that looks like wood. And even, one person told me today that, one thing they're looking at is vegan leather made out of a tobacco base, and eucalyptus, and that. And so, it's all in sustainable fabrics, for the interiors.
Joe Anselmo: I'm not going to ask you what vegan leather is. I was at a press conference yesterday with the Outgoing Chairman of the General Aviation Manufacturers Association. General Aviation, that's pretty far down the food chain in aviation for Boeing and Airbus. And he was saying, "Hey, we have to wake up to this sustainability. It's a business imperative for everyone in the century to wake up. It's not just something nice to do. It's now a business imperative. You've got to get on board."
Lee Ann Shay: Absolutely.
Molly McMillin: And they are, they're all very much aware, even though Business Aviation contributes very, very little in carbon emissions. But it's also, Business Aviation, 10 years ago, had the black eye. They were the fat cats flying to Washington to ask for handouts. Not handouts, but incentives, especially in Europe. So they need to improve the image too, as well as protect the environment.
Joe Anselmo: How about bailouts?
Molly McMillin: Bailouts. Thank you.
Guy Norris: My last point was that it's always encouraging to see at NBAA, there's always a little area tucked away in one corner, which is gradually growing, where you've got these wacky eVTOLs there. There's electric powered vehicles at this year's NBAA again. And yeah, okay, there's still mock ups of models. But I know pretty soon, maybe the next time we come back here, there's going to be a real one sitting in that floor show. I think it's joined at the head pointedly with the Business Aviation Community, because entrees are going to be through FBOs. The people who are going to be using these, are going to be the sort of people who would then walk onto a business jet to start with. Anyway, before the democratization begins.
Lee Ann Shay: So maybe we won't be talking about 8,000 nautical miles [crosstalk 00:16:01], something shorter...
Guy Norris: Yeah, 18 miles!
Lee Ann Shay: Yeah.
Molly McMillin: Well as I said, the example here, for the very first time, BLADE is offering helicopter rides from the Convention Center out to the static display. And, they sold out in two days.
Guy Norris: Is that right? I didn't know that. Wow.
Molly McMillin: Yeah. They, of course, don't have the vehicle. But, they've sponsored it. And, they've partnered with Maverick Helicopters to actually do the flights.
Guy Norris: Fantastic.
Lee Ann Shay: I think the overarching thing I would say is that we've just got growth. And so, the industry does need to continue to address sustainability in a very real way, because the Business Aviation Community is going to continue to grow both in aircraft, the number of people. Just look at the new entrants that have come into the market the last couple of years. This is, as Joe said, a buoyant industry.
Molly McMillin: I hate to be Debbie Downer, a little bit. But there are two things too that are really big challenges in this industry, that they're all looking at, and they're interrelated. One is the lack of skilled labor. And second is supply chain. If there's something that will slow down that growth, it's when you talk to the suppliers. They don't have enough people to be able to ramp, and to get the product. They all are looking for workers. And they're all trying to figure out, how do we address this problem of not enough skilled labor? How do you get young people into this industry? How do you encourage that? And how do you fix the problem?
Joe Anselmo: Absolutely relevant, what you just said about supply chain, in particular, because every industry's feeling that. In 2019, before COVID, this industry seemed to be treading water. And now, it's on an upsurge. Honeywell's 10 year forecast is projecting 3% growth a year. That's not bad, right? 3% a year?
Molly McMillin: That's very steady. Right.
Joe Anselmo: It's steady for an industry that went through a decade of horrors, after the 2009 crash.
Molly McMillin: And, another big question is stickiness. Do these new entrants stay? And maybe the guy, or woman, or man who's checking around for the cheapest flight, the cheapest charter, may not stay and return to the airlines. But the people that are out buying airplanes, they're going to stay.
Lee Ann Shay: But we also have new business models that are coming out, smarter technology. Separate people have said, "This industry has a lot of technology changes from the way aircraft are booked." So it'll be interesting, in the next year, to see how that evolves.
Joe Anselmo: Lee Ann, unfortunately we're out of time. But, I want to end with an advertisement for Aviation Week. You lead our Business Aviation team. We just premiered Aviation Week's first all digital show news. How did it go?
Lee Ann Shay: Well, I'm a little biased. But I think it went pretty well. We put out a couple days of all digital show news for the listeners. If you haven't seen it, please go to aviationweek.com and look at the NBAA coverage. And you'll be able to see our wrap up that includes not only news, but photos, videos, photo galleries. So hopefully, you'll get a better taste of what it was like to be here live.
Joe Anselmo: And, we gave people the news more in real time. So we let go, and we're sailing. So, we'll see where it ends. Hopefully, a good thing. Lee Ann, Molly, Guy, Bill, thanks so much for your time and your insights. That is a wrap for this week's Check 6. Special thanks to our producer in London, Guy Ferneyhough. You can subscribe to Check 6 on Apple Podcast, Google Podcast, Stitcher and Spotify. Have a great week, and stay safe.