Battling the Hydra

Posted by in Politics

You don’t have to earn a B-school diploma to know stability is tremendously important for a business. As Thomas Jefferson so famously wrote, it’s self-evident.

Absent any government distortion of the marketplace, companies are infinitely more likely to bring goods and services to market if they sense the proper conditions and have at least some assurance that the environment will remain favorable. The larger the financial gamble, the more assurances are required. No one invests millions to design and build products for a niche market if they might not sell.

Sounds a lot like general aviation, doesn’t it? From FBOs to aircraft builders, GA is a truly American industry and one of the only high-tech manufacturing segments of our economy still located almost entirely in the United States. Yet it also has a history of littering the countryside with the carcasses of firms and products which never made the grade. It’s a dicey business — ask anyone in Wichita.

Jeykll & Hyde Writ Large

You’d think even the thick heads in Washington would, at the very least, want to avoid damaging a valuable industry of skilled, high-wage labor, especially when it was already beset with so much downside risk due to certification requirements, liability considerations, and most of all, the small size of the market.

Unfortunately, government is proving to be a huge impediment to general aviation even when they try to help. Just as one hand extends to lift us out of the mire, the other threatens to club us over the head. For example, one FAA rule making committee recommends allowing non-commercial aircraft owners far more latitude in how they maintain and upgrade their aircraft. That’s good.

An Aviation Rule Making Committee (ARC) issued a 346 page report to the FAA on how to streamline small airplane certification in ways that maintain and improve safety while cutting costs. In that report is the recommendation for a new certification category called Primary Non-Commercial (PNC).

An airplane in the PNC category could be maintained by its owner, and would not need to use FAA certified equipment or replacement parts. A PNC would be very much like a homebuilt in terms of maintenance and equipment requirements.

At the very same time, the FAA is proposing draconian restrictions on two burgeoning market segments that would undoubtedly kill them off completely. That’s bad.

The FAA is proposing banning passengers from flights in electric-powered aircraft and ready-to-fly Light Sport aircraft (SLSA) that have been converted to experimental Light Sport (ELSA) aircraft and stopping the aircraft from flying over built up areas or at night.

GA powerplant technology has not advanced much for half a century, while electric engines solve many of the problems we face today. They’re simple, quiet, efficient, and emission-free. Banning passengers from electric light aircraft assures that this technology will never get off the ground.

Another example: one set of regulators elects to weed out pilots through invasive medical certification, while other members of the elected royalty craft legislation to eliminate Third-Class medicals altogether.

So what’s going on here? Who are we to believe? Right now all these ideas are just that: ideas. But this Jekyll & Hyde shtick is not helpful. If the government is going to regulate the general aviation industry, they have a legal and moral obligation to do so responsibly. Instead, we are faced with a Lernaean Hydra, a multi-headed organism essentially at war with itself.

This is not limited to general aviation; from the IRS scandal to foreign policy, you can see this phenomenon everywhere the Feds have their hands. And that’s… well, everywhere. But you’d think GA would be something everyone could support. It’s an apolitical business that provides the things all sides say they want: good jobs and a manufacturing base. The bipartisan makeup of the Congressional GA Caucus proves it. This isn’t an issue of political ideology.

Legislator vs. Regulator

The real battle here seems to be between elected representatives, who are at least beholden to the voters every few years, and regulatory bureaucrats who are accountable to nobody. The evidence? Just look where the adversarial proposals originate: the regulatory bodies. Research shows that many — perhaps most — industries are beset by this problem:

Research conducted by the ERM Initiative at NC State University in partnership with Protiviti finds that executives across all types and sizes of organizations that span a number of industries believe risks related to regulatory changes and increased regulatory scrutiny represent the greatest threat to growth opportunities for 2014, reflecting a general concern that broader government and regulatory interventions may have a significant effect on profitability.

The apparatchiks have their fiefdoms and are not eager to give them up, least of all to some elected representatives who dare step on their turf. Oh, they may pay lip service to those they regulate by soliciting comments which are then ignored, but it’s merely a box they must check off on a form. These functionaries have job security the rest of us can only dream of, and have learned that the easiest word in the English language is “no”.

That doesn’t work for an industry like general aviation. Airplanes involved risk, and we’re overseen by regulators who don’t have much risk tolerance. It’s hard to envision a scenario where the many heads of this monster will provide the clarity and stability GA businesses desperately need. But since they are at odds, it’s worth considering what will happen if one side prevails.

If this battle continues to be won by the regulators, who feel they are experts in the trenches and should operate free of influence from elected representatives, there’s no question GA will continue to spiral downward. On the other hand, should Congress take bold, aggressive action to reform the bureaucracy and pay more than lip service to the concept of self-determination, happy days could soon be here again.

The Answer

Regular readers are probably aware of my definition for “bold, aggressive action”: drastic reduction in limitations with a commensurate expansion of freedom. Specifically, we need the following:

  1. Change the FAA’s mission statement, replacing enforcement and safety with “promotion and growth” of aviation
  2. Extend the E-AB freedoms to all non-commercial aircraft
  3. Eliminate medical certification for non-commercial operation
  4. Hard-core liability limits for non-commercial operations
  5. Strict, detailed Congressional oversight of the FAA on a continual basis

There are many other ways the GA Caucus (which, as I noted in my previous post, now comprises half of the entire legislative branch) could help save the industry: divert NextGen funds to construction of new GA airports and runways, task NASA with helping develop new technology and products, legislatively prohibit closure or mismanagement of any public-use GA airport, tax credits for GA businesses, etc.

It sounds very pie-in-the-sky, I know. Part of this Hydra is eating us alive — but ultimately we control the other half through the ballot box, and there’s an election in 219 days.