Aviatinon Spending and the Economy

[Bill Greenwood]

Hows the economy and how's it affect aviation? Spending varies with the economy. EAA gen aviation is discretionary, the decisions to buy a new Garmin panel or new paint job or a new rating or add a T-6 or acro plane is of course based on wants more than need. My Bonanza still flyies pretty much the same, even with long overdue paint and an inst panel that I can actually read. But I'd like to have new, at least the paint. Pilots are more likely to transfer want into action if they or optimistic about income, jobs, even taxes, and we are in a positive trend now, not counting possible negative govt privatization. Even corp and airline spending is related to anticipated growth and needs. A corp may upgrade its jet to the latest and even companies and countries do. Boeing just got a huge Saudi order, think $15 billion over Airbus. And EAA attendance was up this year.

So is the economy and the forecast that good? Recall where we were in the recession 10 years ago, Stocks down maybe 40%, home foreclosures, business defaults and unemployment 10%, 30% for some groups. Now unemployment is 4.7%, stock market to 23,000 and lots of hiring especially for those with computer or other skills. Help wanted signs at many restaurants , hotels etc. Is this normal in history. Yes and even more so. Ken Fisher in USA Today charts largest recoveries. Current one only rates #7, up 21% so far. Biggest of all time was 2nd Clinton in 1996. And it is likely the circumstances more than the man,.2nd Clinton was only 10%, #9 rank. Roosevelt coming out of depression then war was #2 and 3., JFK #4. Another analysts has a measure of optimism at an all time high, maybe looking forward to some tax reform. Apple makes so much they can barely place it!
One caution note, hiring and especially higher wages dont hit all segments. I saw a talk by Bill Gates, and Buffet re competition from lower wage labor abroad, and Gates said that automation would have as big an impact, we are seeing it on car assembly lines. On a postive note, good effects spread, a worked gets recalled or hired and buys a new car or goes on vacation, the car dealer may hire more or the hotel or airline. and on to the next. By the way, Fisher may be a pilot not sure.

[Frank Giger]

These things are always local; one looks at what their own position is and pays attention to those around them. Even if one is in a good financial situation, if they see their friends getting laid off the tendency is to reduce expenditures.

For example, my financial position is pretty solid, regardless of the larger trends of the economy, and so I spend accordingly - but because my income isn't large, I scrimp and save.

The larger problem with aviation spending has little to do with this, though. The truth of the matter is demographics is screwing things up. There are far fewer GA pilots than 30 years ago. With that, economy of scale goes out the window. Prices for all things aviation goes up, as fewer items sold have to make up for the fixed costs of manufacturing and distribution.

However, it comes down to what one wants to do. If aviation is a high priority for a person, they will find a way to pay for it. I took a second job for the sole reason to pay for my pilot training and the cost of the airplane.

[saber25]

All (Pvt, Com, ATP) Pilots

1993 to 2003: 6% decline
2003 to 2013: 14% decline
1993 to 2013: 19% decline
Private Pilots
1993 to 2003: 15% decline
2003 to 2013: 25% decline
1993 to 2013: 36% decline
Source: GAMA 2013 Databook
Private Pilots Represent the Market for Owner Flown Aircraft
US population that are pilots (2013):
All pilots: 0.14%
Private pilots: 0.06%
Driver’s License: 67.1%

This survey gleaned from a website that had completed a study on this subject. In comparing this to similar studies the writing is on the wall

[Bill Greenwood]

This is interesting data, but not really on topic, the economy has gone up and down over that time, not just one way.. This data shows less pilots, over a long time, but doesn't give economic or other causes. Some of the economic recovery has been since 2013.And type of planes and prices have changed over the years. There may be a lot less Cessna 172s sold now, but there are a lot more Citations. And pilots flying and spending on these Pilatus and Citation, etc spend a lot more money than more basic aviation in the past, and they are not going to be flying these types of planes with just a private pilot license.
I think a couple of things have led to the decline in new pilots. First of all airports are much less lilkely to be located whate most people live. It used to be, when I started in the 70s that many big ariports were right in town. such as Austin Mueller, and Denver Stapleton, and the often had both gen av and flight schools right there. Then came the TCA and it really killed student pilot at that location inside the TCA. That and bigger airline planes have made an airport now often something that is way out of town, like Denver INt or Bush in Houston of to some extent Austin Bergstrrom. and these big airports are all or mostly airline use now, maybe a few corp planes. Great small gen av airports like Houston Andrau and Chicago Meigs are often houses now. And I think the average person thinks of an airplane as a Jet that you just ride on, rather than something you learn to fly. As a boy, I and others had horses in our back yard, in town, not so likely now and I bet there are less riders.

[L16 Pilot]

I learned to fly at age 39-40 in the late 1970's. The local FBO had half a dozen rentals 150. 152, 172, etc. and you had to schedule ahead of time if you wanted one. I think they have probably one or two 172's now and I doubt scheduling is a problem. Regarding the overall economy we seem to be doing OK in our area however I noticed the price of gas just went way up again which is a more or less fixed cost that anyone who travels to work and cuts into the loose change anyone might have for other uses (flying for example). One thing which might be slightly off topic but still adds into the picture is the move in some states towards legalizing some drugs yet many businesses require mandatory drug testing. Every business I've been involved with has drug testing. Not a problem for me but there are some who whine about not being able to get a good job because they can't pass the pre employment drug test or lose the job because they can't leave the stuff alone.

[Bill Greenwood]

The only drug that I know that is legal here is pot and it has been for a few years as in over half states. There are a number of dispensaries about town, and statewide, and it brings in a LOT of taxes. One doesn't notice any real change, its just like when someone opened a cigar bar once, if you didnt go in it didnt affect you. I asked our largest employer and they don't do drug testing unless there was an accident. You are not supposed to use in public or I guess while working, people probably do it at night like youd have a glass of wine. It just doesn't seem to cause any problem, but like many places the police weren't really looking for pot even before it was legal. Good thing is we don't seem to have an heroin problem. They do enforce DUIs, and we have a lot of bars. My big drug is ADVIL, like a lot of those of us who have ski raced, glad its legal, the old struts get a bit stiff!

[Bill Greenwood]

Mike, if you take a look at so many assembly lines, not just auto, there is automation where there used to be more labor people, like the high wage union jobs that used to be in Detroit on the assembly lines, and certainly compare it to the ultra modern production like Honda, Boeing etc even at Harley Davidson. Think of machine made printed circuit boards vs hand soldering all the connections for tvs computers, avionics,appliances . My examples may not be the best or most up to date. And you may dislike Buffet or Gates and call them names that you feel are derogatory, but really, if you want to talk about making money and our economy, who would you want to listen to, someone who was not successful? If for marketing Sam Walton would be a "rightist" authority., or the Whole Foods ceos. etc. Ive seen the Ford/Jaguar auto paint system in the same factory where Spitfires were built. Gates and Buffet dont need to open any factories offshore, or really any more money. Gates gave an informed opinion with automation only one part of the discussion that I recalled. But hey, if you dont like them and therefore dont respect what he said, then you can find someone who is right wing and a business failure to follow.And the largest value company in the history of the world, Apple certainly didn't make all those millions of items by hand labor.

[Bill Greenwood]

L16, If you dislike mj dont use it, but I think you are off on some facts. I just phoned the FAA med experts re the renewal form. If does not ask if you have ever "used any drugs" or alcohol, it asks if youve been arrested or convicted or suspended for drugs or alcohol, a much different matter. And there are states like Colorado with a thriving economy with legal mj just as there are without it. Its probably healthier for you than cheese curds!

[L16 Pilot]

If that's the case I stand corrected but I remember a question on drugs and alcohol when I recently completed my "basic med" so your "FAA" answer is most likely correct. I don't eat cheese curds either which is why I'm still in pretty good shape considering my advanced age.

[Bill Greenwood]

Neither Gates nor Buffet in the discussion that I heard ever said anything like "shipping the same job to somebody who will do it cheaper being equivalent to automaton". Those are your words, and since they didnt say them, but you attribute "mixed message" to them, its reasonable to see that's your bias towards them. Did you even heard the talk on tv that I refer to, or you just suppose that is what they must have said? And my friends usually call me Bill, but for us Mr. Greenwood is it.We've never met either ,but dont think that would change like or dislike.
Mr. Mike, I did take a look at your expert book from 1946, could not make much sense of it nor see it apply to the 2017 economy, and I never heard of him in business school. My topic was the economy now and affect on aviation. Not sure what yours is but not what I m interested in .