Business travel set to fly higher?

COURTESY CESSNA
FLYING HIGH NOW: Cessna's newest 
Citation Latitude version will be a longer-range craft geared toward the Asian market.
COURTESY CESSNA FLYING HIGH NOW: Cessna's newest Citation Latitude version will be a longer-range craft geared toward the Asian market.

You can tell a lot about the business climate from the way executives travel.
In the years before 2008, business leaders needing to meet a client, check out a hot prospect or tour a factory often used their corporate jet to get them there.
During the recession, many of those Gulfstreams and Cessnas were grounded, dealing a blow to general-aviation manufacturers, their suppliers, after-market companies and the many service businesses linked directly and indirectly to private air travel.
According to the National Business Aviation Association trade group, executive flight hours in corporate planes, charters or shared private planes – anything but commercial – declined 35 to 40 percent between the fourth quarter of 2008 and the first quarter of last year.
And with that decline, new plane orders to business-aircraft makers fell precipitously, resulting in the loss of 20,000 American manufacturing jobs over the same period, the Aviation Association said.
So with the economy now on a slow climb upward and commercial airfares also rising, many in the aviation world see corporate travel as a good bet to pick back up.
The announcement this month that NetJets, a private-plane-sharing company owned by Warren Buffet’s Berkshire Hathaway Inc., had placed a $9.6 billion order for up to 425 new business jets, described by the company as “the largest aircraft purchase in aviation history,” pointed toward a rebound.
But local and national business aviation-industry representatives say the recovery has been unsteady both on the manufacturing end and for aviation services.
“It’s been a mixed picture for flight hours and new airplanes,” said Dan Hubbard, senior vice president for the National Business Aviation Association. “We have seen flight hours come off of the bottom and incrementally start to increase again. But analysts estimate we are still 10 to 15 percent off the pre-recession peaks.” Where Hubbard sees encouraging signs of activity is in emerging markets in Asia and South America, along with some demand from American corporations looking for faster and more efficient ways to access those foreign markets.
“We see some firming up of sales in long-cabin, long-range aircraft,” Hubbard said. “We see some companies saying they want to explore other markets and in order to get them there quickly and back, they need an aircraft capable of going a long range. The marketplace is going global and companies are looking for opportunities.”
That’s reflected in the NetJets orders, which include 275 Bombardier Challengers and 150 Cessna Citation Latitudes, longer-range planes than the older models they are replacing.
Cessna, which is owned by Providence-based Textron Inc., unveiled a new longer-range version of the Latitude earlier this year with an eye toward the Asian market.
Cessna’s manufacturing is based in Wichita, Kan., but in May the company announced an agreement with the Aviation Industry Corp. of China to have final assembly of Citation aircraft at a plant in China.
Although the deal calls only for the final assembly of Cessna planes in China, and only those for the Chinese domestic market, the move has caused some to wonder if eventually that country will make a larger move in aircraft manufacturing.
Cessna first-quarter revenue increased $113 million from the first quarter of 2011 as Citation jet deliveries rose from 31 to 38.
According to Hubbard, over the last decade, the United States has moved from representing a majority of business-aviation travel to between 30 and 40 percent. Eventually, general-aviation airports in Rhode Island and New England hope to take advantage of some of the longer trips being made, but it has been slow going so far.
“I would say in 2012 we have seen things pick up, but it is still slow, only an improvement from the last couple of years, which were just generally down,” said Holly Whitaker, founder of the Business Aviation Professionals of New England and president of Exclusive Air, a New Hampshire-based charter brokerage. It sort of gets a little blip up, and then down, and then stays a little higher next time – but not big improvements.”
On the positive side, Whitaker pointed to the recent groundbreaking in Westfield, Mass., of a new $20 million hangar and service facility by Gulfstream for its new G650 long-range business jets.
The new hangar is projected to result in 200 construction jobs and create 100 new permanent, full-time jobs.
On a smaller scale in Rhode Island, Alhambra Building Co. is developing a new business-aviation park at Quonset State Airport in North Kingstown that will greatly expand both hangar space and the services available to business travelers.
On the other end of the market, Tanury Industries of Lincoln, an electroplating and metal-coating company, continues to take advantage of the demand for extravagant, luxury aircraft overseas.
Tanury refinishes the metal interior fixtures of jets with precious-metal coatings.
“We see it picking up some, and we are quoting an awful lot,” said Tanury President Thomas Tanury, who added that one of the contracts he is competing for is to refinish a 747 plane with 5,000 square feet of carpeted space.
“Aviation is not going to go way,” Tanury said. “[Customers] are buying lots of planes and the emerging markets are doing well even if domestic is not.” •

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