Well, the financial house of horrors that was 2008 is almost over. Having missed the Great Depression by one generation, I’ve never before seen so much turmoil and gnashing of teeth in the U.S.
Personally, I stopped complaining about high prices at the gas pump when I learned how many people were losing their homes because of sub-prime mortgages, plummeting home values and bank failures. And just when I thought things had bottomed-out, hurricanes wiped out a few cities, mortgage lenders were on Capitol Hill looking for bailout money and people were losing their jobs left and right.
...it can take a little while before the ripple effects (or tidal wave effects) become readily noticeable.
Of course, the trickle-down effect of the 2008 financial crisis reached into other areas, leaving those of us in the aviation community wondering when it was going to hit here and how hard. Heck, it was all anyone was talking about from Heli-Expo in Houston, Texas to the air show in Zhuhai, China.
Although I’m really a helicopter guy, I have contacts throughout the aviation community who officially said everything looked great in their corner of the industry. But let’s face it, nobody ever publicly says, "Business stinks, so we’ll probably be filing Chapter 7 by Monday." (I’m sure 2,500 helicopter students wish they had heard that from Silver State Helicopters before losing their life savings.)
When I caught the right industry people at the right time, usually in private, they admitted that orders for new aircraft, new aircraft completions and all the shiny add-ons slowed in 2008. In some cases, orders were even cancelled. But the pain, I was told, wasn’t too severe because 2002 through 2007 were fat with sales.
Company spins notwithstanding, I have not personally seen, nor have any of my contacts admitted to, any blatant signs of impending economic death in the industry, at least not any that weren’t already there long before 2008. We have to be careful about assuming that all will be well, though.
Like most aspects of big-ticket industries, it can take a little while before the ripple effects (or tidal wave effects, as might be the case this time) become readily noticeable. Ever since the surge in homeland security money for public safety helicopters and increased funding for military rotorcraft came along, most airframe manufacturers’ raised their turnaround times from 10 months to more than two years. So, if you had peeked through the windows of a helicopter assembly building during the summer of 2008, you would have seen a busy line. But those aircraft would have been from orders placed between 2005 and 2006. They do not accurately reflect what happened this year.
While discussing the potential for an economy-driven reduction in helicopter orders, a friend of mine said, "Well, at least the economy isn’t going to hurt city, state and county helicopter orders." I had to disagree. There is a huge connection between an economic downturn and a local government’s ability to write checks.
A huge chunk, if not the vast majority of the money that keeps cities and counties running, comes directly from the taxes paid by businesses and property owners. Those taxes are based on sales volume and the assessed value of property, which are currently way down. Where I live, that means furloughs for firefighters, half the number of snowplows this winter, and cancelled conversations about buying new police helicopters.
Overall, 2008 looked like the early 1990s just before civil and corporate America sold off its jets and helicopters. Both sectors started buying them again after 2001. Businesses bought aircraft to avoid the hassle and inefficiency of long, post-September 11 airport security lines, and public operators ordered helicopters for their new homeland security responsibilities. Money versus need was a delicate balancing act that the unrest of the 2008 economy kept poking at with a stick.
So, what’s next?
For one thing, 2009 will start with a new president and a power shift in Congress. And without getting into politics within the confines of a helicopter magazine, that brings good and bad news. The good news is things will change. The bad news is things will change. It’s all a matter of how worldwide markets, various governments and the public respond to policy changes being considered for the military, public safety and corporate sectors.
I’m going to stick my neck out and make a few predictions. Then again, maybe I shouldn’t go there. Instead, I think I’ll just post my 2009 wish list.
First, whatever the economy brings, I hope an increase in the assembly, and acquisition and operation of helicopters will be a non-negotiable aspect of the worldwide aviation scene. That’s a tall order, but if we can put a man on the moon....
Next, I hope the arrival of all those new ships will drive an increase in student helicopter pilot enrollment, along with a way for them to get the money to complete their training. Our numbers are getting very low.
Last but not least, I hope there isn’t a single life lost aboard a helicopter. I’d much rather see thousands of lives saved by them.
Shall we cross our fingers?