Wednesday, June 17, 2009

More Layoffs at Cessna in Business-Aircraft Malaise

Cessna Aircraft is cutting another 1,300 jobs, following the 6,900 job cuts it announced last month, citing lower demand for new aircraft. Last year, Cessna employed over 15,000 people.

Cessna, based in Wichita, makes the popular Citation line of business jets and other general-aviation aircraft.

The depression -- this is beyond a "slump," folks -- in the business-aviation market this year has been a stunning reversal of recent years of robust growth.

Obviously, corporate cutbacks in a poor economy are by far the main driving force. But I will say this again: A portion of the problem can be laid at the feet of those three auto-maker CEOS from Detroit who swanned into Washington in their heavy metal luxury jets late last year to beg for taxpayer bailouts.

The business-aviation industry simply failed to appreciate the public reaction -- the "optics", if you will -- of that boneheaded stunt, which was a perfect example of how not to use a business jet. It occurred at a time when public sentiment was already boiling over outrages such as the $400,000 junket the insurance company AIG held at a luxury resort, a week after getting its own staggeringly big taxpayer bailout.

Instead of publicly denouncing the feckless Detroit grandees, the industry made a serious mistake by dropping into a defensive crouch and ... blaming the media.

Lost in this reaction was the perfect opportunity for the industry to firmly and clearly state, without equivocation, that using private luxury jets to transport three corporate pantloads and their tin cups on trips to ask for bailouts, on a short route readily served by commercial airlines, was a clear example of how not to use a corporate jet.

Throw them in!

Instead, the National Business Aviation Association, which had firmly established the case for business aviation in recent years, watched an awful lot of good work go down the drain, as people simply were repelled by the CEOs' excess and obvious sense of entitlement, and as that reaction came to envelop the entire concept of "business jet."

Even Cessna dropped the ball, optics-wise, with a campaign it launched earlier this year that seemed to scoff at the perfectly reasonable public reaction against the Detroit grandees.

The campaign addressed corporate executives: "Timidity didn't get you this far. Why put it in your business plan now? In today's corporate world, pity the executive who blinks," the ad says.

By the time the industry got around to clearly re-stating its case for the cost-effective use of business aircraft -- and as I said, that case is a very good one -- it was fighting a defensive action that it still fights today, against a now entrenched public perception and revulsion that can be laid directly to the Detroit fiasco.

On the other hand, some slightly less-dreadful news might be emerging for the industry, though it ain't much. ARG-US, the company that monitors business-aircraft activity across the country says that operations increased 3.3 percent in May over April, although total business-aviation flight activity -- measured by arrivals and departures -- has declined 21.52 percent in the last 12 months.

Here are the percentage of flight declines by cabin category in May 2009 vs. May 2008: Turbo-props, down 10.1 percent; small-cabin jets, down 23.5 percent; mid-size jets, down 15.7 percent; large-cabin jets, down 10. percent.


1 comment:

Seth said...

Great article Joe - Can't agree with you more on the lack of response from NBAA and the industry in general.