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PURPOSE

BACKGROUND

WITNESSES

The purpose of this hearing is to review issues important to keeping the U.S. aviation manufacturing industry competitive in the global marketplace.

Overall, sales of new aircraft, engines, and parts rose $2.2 billion in 2004 to $66 billion, led by strong growth in the civil engine and engine parts sector. Data compiled by the U.S. Census Bureau showed civil aviation sales ended a two-year decline by rising 6.6% to $40 billion.

The civil aircraft industry produced and delivered 512 more aircraft in 2004 than it did in 2003. Accounting for the majority of that increase, production of civil helicopters jumped from 517 to 805. Similarly, general aviation aircraft shipments grew by 222 to 2,352—ending a three-year slide in production and billings.

Transport aircraft shipments rose by two to 283, but their value declined for a third straight year. Likewise, domestic shipments of transports rose by 18 whereas exports dropped by 16 to 198—the lowest level since 1996. Both domestic and foreign shipments of helicopters and general aviation aircraft increased.

In 1994, Boeing's commercial aircraft backlog of 1,126 was nearly double Airbus's 615. By the end of 2000, Airbus had reached parity with 1,626 vs. Boeing's 1,612. As of 2004, Airbus' backlog surpassed Boeing's by more than 400 aircraft (1,500 vs. 1,092).

Wichita is the heart of general aviation manufacturing in the United States. While there are over a dozen U.S. airplane manufacturers, the three companies residing in Kansas accounted for approximately 55 percent of the airplanes produced in the United States in 2005. The three general aviation airplane manufacturers in Wichita are Cessna, Bombardier, and Raytheon.

In 2005, the U.S. general aviation (GA) manufacturing industry produced 2,857 new airplanes at $8.67 in billings, which accounts for approximately 80 percent of the number of GA airplanes produced worldwide. Many argue that the current good health of the U.S. GA industry is a direct result of the General Aviation Revitalization Act of 1994. Last year, the number of general aviation airplanes exported from the U.S. surged, with a 67 percent increase from 2004, while export billings rose by 82 percent. Of all GA airplanes manufactured in the U.S. in 2005, exports made up 19 percent of the total.

Wichita, Kansas is also the headquarters for Spirit AeroSystems, which purchased by Onex Corporation from Boeing Commercial Airplanes in 2005. The purchased operations include Boeing's commercial airplane manufacturing facilities in Wichita, Kansas, and Tulsa and McAlester, Oklahoma. The new business has entered into long-term agreements to supply Boeing fuselage sections, struts and nacelles, and wing elements on Boeing's 737, 747, 767, 777, and 787 platforms, making it the largest Tier 1 aerostructures manufacturer in the world.

FAA Certification of New Products and Designs

Budget pressures have led the Federal Aviation Administration (FAA) to reduce the number of aviation certification engineers. As a result, the FAA has reduced the level of aircraft certification services provided to the general aviation (GA) industry, delaying the introduction of new products and technologies. This places U.S.-based GA manufacturers at a competitive disadvantage. If the level of certification services is not restored, the aviation industry’s positive contribution to the U.S. trade balance may be in jeopardy.

For fiscal year 2006, Congress added $4 million to the FAA’s budget request to restore staffing levels in the FAA’s Aircraft Certification Service. The goal was to reverse the downward trend of certification engineers and address the current delay in the certification of new aerospace products and designs. However, there is concern in the industry that the FAA is not using this funding for its intended purpose.

International Markets and Export Control Issues

Ensuring foreign markets are open to U.S. products is vital to the industry’s long-term growth. In addition to opening new markets for U.S. products, the aviation manufacturing industry must meet stringent regulations with respect to the State Department’s Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). With military components increasingly being sourced from the civilian sector, it is a growing concern of the industry that these export control regulations threaten to harm U.S. manufacturers and could potentially divert business to foreign suppliers who can offer “ITAR-free” components for export.

Modernization of Our Nation’s Air Traffic Control System

The aviation industry strongly supports the modernization and development of the Next Generation Air Transportation System (NGATS). The fundamental tenant of modernization is the transition to new technologies for air navigation, communication and surveillance. In each of these areas, modernization involves more digital communication and more space-based, and fewer ground-based, systems. The industry also strongly supports the efforts of the FAA’s Joint Planning and Development Office (JPDO), which allows government agencies and industry to work cooperatively on the strategic goals for our modernization efforts.