Economy grounding many private planes

With a weakening economy and aviation gasoline at $5.49 a gallon, Paul DeSanctis is selling his Piper Seneca twin-engine airplane.

"It's very expensive to maintain and operate," said the technology manager at Commerce Bank in Mount Laurel. "With all the uncertainty in the economy, it's maybe not the best time to have a toy. Obviously, an airplane is not a necessity."

Airport officials here and across the country are seeing a decline in corporate and private flight activity: More airplanes are parked on tarmacs. The inventory of used jets for sale is at its highest level since 2003. Fewer students are enrolling in flight schools.

And demand is down in the last 30 to 60 days for charter flights, said Herb Hortman, owner of family-run Hortman Aviation Services Inc. at Northeast Philadelphia Airport.

"People can only pump $60 or $80 in their car fuel tank so many times - that money has to come from somewhere," Hortman said.

The National Business Aviation Association, representing companies that use business aircraft, has seen "a slowdown in virtually every measure of business-aviation operations," said Ed Bolen, president of the Washington-based trade group. "We're seeing from a 5 percent to 18 percent change vs. the same time last year."

Corporations are flying their business jets less frequently, or are consolidating executives' trips to cut costs.

Bristol-Myers Squibb Co., based in New Jersey, confirmed last month that it was shutting its aviation operation at Trenton-Mercer Airport, selling four aircraft and dismissing about 32 pilots, mechanics, and other aviation personnel. "It is part of our continuous improvement efforts to reduce corporate overhead," pharmaceutical company spokeswoman Sonia Choi said.

The business-jet market in the United States is also showing signs of peaking, although the backlog of orders remains strong, and deliveries next year will be at record levels, according to a Wall Street report.

UBS Securities L.L.C. analysts David Strauss and Cristina Fernandez said in the report that business-jet flight activity - takeoffs and landings - was down 18 percent in August from the same time a year earlier. That included declines at the three busiest corporate aircraft airports: Teterboro, N.J.; White Plains, N.Y.; and Washington-Dulles, Va.

The analysts said business jets manufactured by Dassault Aviation had the largest decline, 12 percent, in takeoffs and landings in the first eight months through August, with Bombardier Aerospace down 11 percent; Hawker Beechcraft Corp., 9 percent; Cessna Aircraft Co., 6 percent; and Gulfstream International Group Inc., 3 percent.

"Demand for business jets is largely a function of corporate profits," Joseph Nadol, JPMorgan Chase & Co. aerospace and defense analyst, noted in a recent report. With U.S. corporate profit growth likely to decline this year, a slowdown in business-jet deliveries could occur by 2010 and a production decline is likely in 2011, he wrote.

But strong business-jet orders in other markets, such as Eastern Europe, the Middle East, and Latin America, should help mute the downturn, Nadol said.

The U.S. market is "still growing, but slowing down," said Roger Whyte, Cessna senior executive vice president. "The real growth is in other places. We are seeing a bigger percentage of international sales."

While orders for new aircraft are lower this year than last, the Wichita, Kan., manufacturer of general aviation aircraft still has a $16 billion backlog of orders.

Danielle Boudreau, spokeswoman for Bombardier Business Aircraft, which makes the Learjet and longer-range Global Express private jet, said there was a "softening" of the U.S. market, but stopped short of calling it a slowdown.

John Butterworth, general manager at Atlantic Aviation at Philadelphia International Airport, has seen "a dramatic downturn in business. We're probably 30 percent off our business, year over year. Fuel sales are a good reflection of how the business is going. The fuel sales are way down."

Butterworth said that based on conversations with pilots and salespeople, "there is a glut of used aircraft on the market for sale."

Also, companies with flight departments that might have flown with one executive aboard are now "waiting until they have three, four, five employees to dispatch the jet," and consolidating flights, Butterworth said.

The sharpest declines have been among recreational fliers and student pilots. "It really hurts there," said Rusty Scioscia, an aircraft broker and president of Dominion Aircraft Inc., of Pittsburgh. "They're not buying; they're not flying. The markets in those areas have gotten flat."

Kevin Neitzel, 47, a taxidermist in Arendtsville, Pa., near Gettysburg, put his Cessna 172 Skyhawk up for sale recently. "I'm making this decision because of the economy. If my business wasn't down, I would have no reason to sell," he said. "Flying is the ultimate thrill."

DeSanctis, 39, who keeps his Piper Seneca at Wings Field in Blue Bell, flew commercially to Orlando, Fla., last week on business. His round-trip ticket on Southwest Airlines Co. was $250. That same trip in his Piper Seneca would cost $1,500, he said.

DeSanctis figures he spends $20,000 to $30,000 a year on his plane, including a $900 monthly finance payment, annual inspection, maintenance, insurance, a "tie down" fee, and gasoline.

While crude oil has dropped to around $70 a barrel, and gasoline at the pump is now below $3, the price of higher-octane aviation gas has not fallen as much. It was $3.29 a gallon when DeSanctis bought his plane in April 2006. Yesterday, it was $5.49 at Wings Field.

Ken Nierenberg, manager at Princeton Airport, said people were not interested in buying airplanes right now. "Everybody is scared. I'm seeing fuel sales down, maintenance is down, flying is down."

"As soon as stocks stabilize and things get better, people feel better and spend money," he said. "We are the first to get cut back."