The Government Shutdown and Business Aviation

Bookmark and Share

Report: Government Shutdown Costly for Business Aviation

Nov. 18, 2013

A report issued this month by the U.S. Office of Management and Budget (OMB) indicates the delay in delivery of aircraft caused by the federal government shutdown in October held up $1.9 billion worth of aviation assets.

That number is based on the delay of 156 aircraft deliveries slated to have taken place between Oct.1 and Oct. 16, during what was the second-longest government shutdown since 1980. In all, OMB estimated the U.S. economy suffered a loss of between $2 billion and $6 billion in lost output as a result of the shutdown.

Read: “Impacts and Costs of the October 2013 Federal Government Shutdown” (PDF)

The delay in aircraft deliveries came about because the FAA Aircraft Registry, based in Oklahoma City, OK, was closed for the 16-day duration of the government shutdown. The registry closure came at an especially bad time for aircraft manufacturers, dealers and brokers, as a high number of aircraft deliveries traditionally occur during the fourth quarter.

“Imagine if no citizen of the United States could buy or sell a car, purchase or re-finance a home, or if the sale of any other critical goods came to a complete and grinding halt – that’s what has basically happened in business aviation,” NBAA President and CEO Ed Bolen said at a Capitol Hill rally of aviation leaders held during the shutdown to draw attention to its effect on the industry. “Because business aviation is more regulated than other industries, the shutdown has had a far more dire impact on business aviation than for other industries.

In addition to the financial toll from delayed aircraft transactions caused by the closure of the FAA registry and highlighted by the OMB study, the government shutdown also prompted some transactions to be cancelled entirely, further deepening its impact on the industry.

Janine Iannarelli, president of NBAA Member Par Avion Ltd., a business aircraft marketing firm based in Houston, TX reports that the shutdown’s effect on the FAA Registry still lingers, weeks since the closure ended on Oct. 17.

“The registry is pretty much caught up on aircraft transactions, although almost all FAA document processing is delayed by about four weeks,” Iannarelli said. “But in the days just after the shutdown, the backlog was considerable and you had to wait for closing.

“Things just weren’t happening in a timely fashion. I am concerned about deals we now have in the pipeline,” she added. “All we can do is to keep clients apprised.”