TECH TALK
BY JOHN PAWLICKI | OPM RESEARCH
MARKET — WHAT MIGHT HAPPEN? TRUMP AND THE AVIATION As of this writing, we await
President-elect Trump taking over the White House. The question of how he will affect the aviation market awaits the entire industry. No matter how and if any of the campaign rhetoric (and Twitter commentary since the election was decided) becomes actual policy, the next four years will impact one of the most heavily-regulated, government- dependent industry sectors in our country, let alone the world. Aviation is an industry that is heavily reliant on the government, partially for revenues, but more for providing needed structure and services as to allow it to operate. For this reason, politics is of keen interest to air transport, perhaps more so than it is to many other industry sectors.
WHERE AVIATION
STANDS TODAY Before we delve into to the possible effects which a President Trump might have, let’s examine where we stand today. The single largest customer by far for the aerospace and defense industry globally is the U.S. government. Military-focused purchases of aircraft and related products and services have an outsized effect upon commercial aircraft and operations, as they provide many of the larger aerospace
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companies with a reliable revenue stream, allowing many of them to better compete in the more volatile commercial market. (This is one of the arguments presented by Airbus in its never-ending legal battle with Boeing over subsidies.) Either directly or indirectly, the DoD, NASA and DARPA have a large influence on aviation in general. Another key point is that the commercial aviation sector relies upon the government providing airports (controlled by local municipalities typically, but often dependent upon federal/state assistance), logistical links to support aviation needs in travel, tourism and cargo (roads/bridges/rail/ communications/pipelines/etc.), and one of the biggest needs of all, air traffic management (without which, air travel is no longer feasible in today’s world). Often times, the decrees from the federal government run counter to local government needs, and this is one of the drawbacks of the American system of federalism as compared to more centralized governments in other countries. Often times an airport cannot simply expand or add more capacity as market needs dictate, and airport officials are out-lobbied by airline groups at the federal level.
The booming drone market is
growing by leaps and bounds, despite NIMBYism in various locales, and will continue to expand. Companies are expanding the capabilities of these low-cost vehicles, which magnifies the missions for which they can be used. The FAA will be forced to regulate them better and balance out local laws, and will do so under increased pressure from the drone industry. A Trump administration will have a delicate balancing act here as the drone market grows exponentially and local control versus the FAA will come to head at some point. Due to political gridlock these
past few years, not only has the budget of the FAA experienced near-continuous challenges, but so have the budgets of NASA, DoD and other agencies that touch on aviation-related projects. Late or delayed funding has impacted many needed projects, and this has a long-term negative impact upon the country and our economy. The hope generated by the recent election is that gridlock will be alleviated for now so that stabilized funding for the industry can be achieved. Trump’s promises to shake up the
country could swing either way for the industry, so let’s examine some potential outcomes, and potential
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