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Discussion: Aviation and Iowa's Economy

posted on July 18, 2008 at 11:48 AM

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Here's a look at some of the topics we'll cover tonight.
  • Iowa has the need for general aviation and the facilities.
  • So, what the potential growth for this transportation sector?
  • What could it mean to the state's economy? And how are fuel prices going to affect its development?

These are some of those questions and talking points we'll put to our guests this evening. Tim Busch of Cedar Rapids also is head of the Iowa Aviation Promotion Group and Michelle McEnany is Director of Iowa DOT's Aviation Office.

Paul Yeager: Welcome to the program. We see roads, we drive on the roads, we see railroads, we see their transportation but we don't always see general aviation and its infrastructure. So, how do you make the case, Michelle, for general aviation when we don't see it?

Michelle McEnany: Well, the case is easy to make. It is really the best kept secret. People when they think of aviation they think of commercial service and the big planes but really nationwide aviation generally accounts for 75% of the activity nationwide and Iowa represents 88%. So, Iowans really do depend on general aviation. The ag sprayers, you have the law enforcement, you have, cargo, military, law enforcement, the media.

Paul Yeager: So, that is something that you look at for a possibly growth industry. And there is a study that the Department is looking to do right now. You've already done one for the commercial or scheduled airlines. What is it on the general aviation side and what is that study that you're going to do? What do you hope to find?

Michelle McEnany: Well, it's going to be very similar to the study we did in commercial service. When we got done with that and we saw that eight airports out of 111 are contributing $1.3 billion we thought, well what are the other 103 doing? The airports are important economic development aspects for local communities. They are continually contributing and there is a high level of activity. So, we're fairly certain that when we're done with this study we're going to find that they contribute equally if not more than those commercial service airports.

Paul Yeager: From a pilot standpoint, from a support group, an advocate group what do you like when you hear a statement like that?

Tim Busch: That's absolutely the thing we're looking for in the end is that the rest of the general aviation community contributes at least as much as the airline community does. General aviation is so broad and it covers so many different topics I think the general public doesn't understand just how well it contributes to even the smallest local economy.

Paul Yeager: You're talking a business standpoint I think is what you mean whether it's a Newton or a Cresco or a Davenport or wherever it is that has a plane that can come in, whether it's a company that can come in, that's some of the impact?

Tim Busch: Some of it, absolutely. Companies come into small -- and I was even surprised that companies come into some very small communities because there is an employee base and Iowa has great people and a good work ethic, good work base and businesses want to come into those communities and use that base and develop that community and they wont' go there if there isn't an airport there.

Michelle McEnany: Absolutely, they come in with a checklist and number three is an airport. They want proximity to an airport so they can get their people and their goods in and out.

Tim Busch: But even more so the recreational side, of course, is there as well, ag aviation as you mentioned, Michelle. So many things -- flight instruction, charter operations, there's so many avenues that all use that infrastructure at the airport.

Paul Yeager: You talk about some of the infrastructure. Michelle, you had said that the FAA, the Federal Aviation group, they help the Iowa DOT, they're a big funding source for you. How big are they?

Michelle McEnany: They're huge. They probably invest 73% of the investment that is going into our airports. It probably averages about $40 million a year compared to the state's $3 million. The state typically invests about 7%, the locals are contributing 10% and then, yes, the federal government is the biggest investor.

Paul Yeager: And what is their interest on a state level? Why don't they just leave it to the state?

Michelle McEnany: Well, they absolutely see that those airports play an important role in the national plan of integrated airport systems is what they call it and they need those airports to get from point to point nationwide. So, they understand that and they are committed to maintaining and developing that infrastructure.

Paul Yeager: And some of that infrastructure we talked about at Council Bluffs. There was a new runway. I think what the director told me you could sit on one end of the runway and get to the other end and you couldn't see it so that's a huge safety reason. What type of infrastructure needs, what improvements as a pilot have you noticed over time that you have flown that have been made, that have been important for you or others to fly?

Tim Busch: Currently the one that stands out probably more than anything I think is the lack of hangar space. There's just not enough hangars out there and we're starting to run into terminals that are getting old. They've just been around for decades and they're in need of upgrading, get some new things in there. And that is also kind of the face for a community when a business person comes in from outside and wants to develop there. It's the first thing they see.

Paul Yeager: Or I would imagine if they fly into an airport and see, oh, they've got one building and another building, I guess this place really doesn't have it going on. So, that would be probably, as you said, number three on the checklist, this might not be what we're looking for.

Michelle McEnany: Well, and they want their aircraft undercover. They want it to be protected and what we're hearing from the aviation community is that they have aircraft on waiting lists and the aircraft aren't coming to their airport because they don't have those hangars. The state right now invests $750,000 in hangars. Well, an average hangar costs about $300,000. That means we can maybe invest in two, three hangars a year.

Paul Yeager: And with how many airports?

Michelle McEnany: 103.

Paul Yeager: That doesn't go very far. So 103 airports and some of those some of their business, some of their development has been in the fuel sales and that's also been a big part. Is that covered under federal money to help increase some of those?

Michelle McEnany: Well, actually the state is playing a bigger role in that and we've put the fuel facilities as one of our top priorities because we know it's an important service for pilots. We want the pilots to use our infrastructure and we need to have fuel for them. So, the state has been doing a lot of investment in that.

Paul Yeager: We've seen a lot of fuel prices go up for cars. What has the fuel price been like? In some places it's gone two to three dollars up a gallon in a short period of time. What has that done to pilots like you, Tim, or other pilots?

Tim Busch: For the most part I'd say the business, the corporate operators, the flight instruction, we're still going fairly solidly. The recreational pilots is where it showed up first and it hit the hardest, big decrease there I'd say.

Michelle McEnany: Big decrease, we've seen next to no decrease on the jet fuel. It's holding its own because like Tim said it is part of their business, they just roll it into the cost of doing business.

Paul Yeager: And when you talk about a big decrease are we talking cut in half here? Is that just a gross estimate that you could make?

Michelle McEnany: That would be a gross estimate. It's probably about 25% down.

Paul Yeager: So, that's significant to whatever is flying because how many pilots do you have that are friends that you have that have said, you know, sure I'd like to go out on Sunday but I just don't think I'm going to be able to.

Tim Busch: A few, it kind of depends on the community. And what I've seen is in the larger communities, Des Moines, Cedar Rapids, Davenport, those kinds of communities, they're pretty solid yet. The smaller ones are really being hammered. They just don't have the income base to support that kind of recreational flying as much. So, there you'll see variation in how much the effect there was.

Paul Yeager: You also talked about instruction which made me think of a point. You're a flight instructor as well. Right now who are you instructing? Who are the people that are coming in to become pilots? Are you seeing across the board? Are there people coming in going this looks like a pretty good job opportunity?

Tim Busch: Yeah, it varies all over, literally, men, women, all races, all ages, a wide variation of goals. Some are airline bound, some want to be in the military, some want to remain local or corporate, ag division, you name it. They're all over the place. Many, probably more so than I remember in the past, are doing it so that they can participate in their business with aviation. So, there is a noticeable upswing.

Paul Yeager: So, there's one part. Is that a good thing for the state when we see people from all ages and with all goals? Why is that important?

Michelle McEnany: Because the more they contribute to our aviation system -- the state receives revenue from the usage of the system. So, the more the system is being used the more we have the ability to re-invest and keep it healthy.

Paul Yeager: I want to talk a little bit about the state and where you can fly in say a three-hour time period. I believe your office has a graphic that they have on their Web site that talks about where you can get to in about a three-hour time period. The yellow circle is where you can fly with a smaller aircraft and that gets you about halfway through to Nebraska, halfway to Minnesota, south to the Ozarks there in Missouri but then it also shows where you can get in about a three-hour time period on a commercial airline. What is the significance, Michelle, of putting that and how you call the airplanes the time machine?

Michelle McEnany: Well, it really shows people visually that there are extreme efficiencies and time is very important, time is money and if people can get to their point destination and back in one day it is a huge savings. They can be with their family. They're not doing overnights. So, it's very important to people.

Paul Yeager: If you had to guesstimate how many companies in Iowa would have an air taxi service? We'll get into a day jet model in a moment. But are there those types of companies that exist in Iowa that would say I'm going to take you from Sioux City to Burlington or is that an area that there could be growth in the state with the type of business?

Tim Busch: There's certainly charter operators today all across the state and that certainly exists. And they typically operate from their base airport to wherever the traveler wants to go. The day jet model where you basically call me up and tell me where you are and where you want to go which is a little bit different than what we have in our current charter operation has a lot of potential. And there are already national level companies doing that and we see them in the Cedar Rapids area every day.

Paul Yeager: I should have explained a little better, it's a group out of Florida that has looked and analyzed where there could be money to be made for flying maybe a four or six seat plane from one city to another. Michelle, you have a different take on this type.

Michelle McEnany: I do, I'm a little more pessimistic about it. I don't think Iowa has the population base to support that kind of activity. Like Tim said, we already have charter operators providing that point-to-point air travel. So, that need is being met and the other thing that I keep thinking of is the fact that Iowans absolutely have no problem hopping in their car and driving three to five hours. It's just something that they've come to expect. And they do -- they drive to Minneapolis, they drive to Chicago, they drive to Kansas City. So, I don't know if you can get Iowans out of their cars to support that type of service. But he's trying.

Paul Yeager: That model could work or is trying to work because they've gone with more efficient planes. Maybe instead of being a twelve or a twenty seat plane they've gone to a four or a six. Is that helping the industry when you see more economic or more efficient planes that can get in the area?

Michelle McEnany: Absolutely. It does a couple of things. One, it increases the access to the system. And then two, like you mentioned, there's a fuel efficiency component to it and it makes it a little more affordable for people to use air transportation.

Tim Busch: More and smaller airports gets you access to more of them. The airlines are using, what, 250 airports or so?

Michelle McEnany: About 500.

Tim Busch: Okay, out of 5600, much, much larger number of places and therefore when you get there you have very little intermodal transportation time.

Paul Yeager: The state of Iowa used to have a fleet to fly planes. They had about three planes mostly in the 80s, got rid of them about a decade ago. Does that give a signal, Michelle, that the state doesn't see as an economically viable option? Or have they looked at maybe we ought to look at doing that again?

Michelle McEnany: I think with each new administration there has been that let's look at this again. I really think the big barrier to the state owning aircraft, this is coming from my perception, is that there is a misperception out in the general public that aircraft ownership is a luxury item. They don't understand what a time machine -- Governor Culver, he's been all over the state with the flood. He needed to use aircraft, he needed to get in and out as quickly as possible so he could visit as many places as possible. He can't do that in a car. So, yeah, it's an important thing.

Paul Yeager: Is it seen as a rich person's hobby? Is that what aviation looks like? Is that a thing you have to overcome?

Tim Busch: We have to overcome that. That has certainly been a perception, it's decades old and for every one that is in the middle of it and understands how much of a time machine and how much of a cost benefit it is to people that use aviation they know -- but getting that barrier across to everyone else that doesn't see it every day and they may benefit but not see it. They may get cargo transported that they never see but it happens overnight and they don't know how.

Michelle McEnany: Business users really understand it because the state, we have about 3500 registered aircraft and 1300 are owned by businesses. It's important to them, they're going to own their own aircraft, they're going to get their people in and out efficiently.

Tim Busch: And out and back in the same day is huge.

Paul Yeager: We saw a lot of it used during the floods or during any time of weather. You, in Cedar Rapids, I'm sure saw plenty of planes like whose plane is that that came in? Well, they brought this part for the pump to help get the city -- I know they use that on one of their pumps for drinking water.

Tim Busch: Some of my former students fly pump sales and materials to some of these places.

Paul Yeager: Do you see Iowa on the same level nationally, general aviation, are they on the same plain right now? Are they both going up or down? Are they nearing each other? How do you see the health of Iowa?

Tim Busch: I've been measuring them for a couple of years now and in general I'd say it's kind of a slow drift downward, very, very slow and it's almost I'd say stagnant but maybe a very slight drift downward. That's one of the things we're trying to change at the IAPG is to get that understanding out there and start it growing again. It really needs to do that in order to service businesses.

Michelle McEnany: But comparatively speaking Iowa is doing really well. In fact, just yesterday, it's kind of ironic I got a call from General Aviation News, an industry publication based in California, and they're doing an article on Aviation Iowa. And I said, oh, what are you talking about? She goes, we can't believe how much activity there is in Iowa. She said, it's the busiest state in the nation from where we sit and what we can see. So, they wanted to write about that.

Tim Busch: I wonder what their measure is for that.

Michelle McEnany: Well, I think she's on my hot news that I send out every month. And the thing is we have 15 events this month and those fly in events and those aviation events at those airports are on the weekends. So, that means any single weekend there's three to five events that people can participate in.

Paul Yeager: Lots going on and their discussion is just getting started but we are out of time. Thank you so much for coming in, Tim Busch and Michelle McEnany, thank you so much for coming tonight to The Iowa Journal.

Tags: airplanes airports aviation economy infrastructure Iowa jobs military transportation


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