From Airlines to Buffett's NetJets, Impacts of Shutdown Spread Through Aviation
(Bloomberg) -- The economic impact of the partial U.S. government shutdown is rippling through the aviation industry, hitting companies as diverse as Berkshire Hathaway Inc.’s NetJets Inc. and aircraft manufacturers such as Airbus SE.
NetJets, one of the world’s largest corporate jet operators, hasn’t been able to add new aircraft into its operations, while the delivery of planes made by Airbus and Brazil’s Embraer SA has been disrupted because the federal employees who must give their seal of approval aren’t working, according to union and industry officials.
“This partial shutdown has already inflicted real damage to our nation’s aviation system and the impacts will only worsen over time,” 34 trade associations and unions wrote in a letter on Thursday to President Donald Trump and congressional leaders. “We urge you to act quickly to resolve these issues.”
While U.S. air-traffic controllers and airport security officers are at work without pay and flight operations have continued with minimal disruptions, many other transactions in the highly regulated aviation sector have ceased as thousands of Federal Aviation Administration employees stay home.
More than a dozen major departments and agencies have been shuttered since Dec. 22 as Trump and Democratic lawmakers feud over funding for a border wall. Workers declared essential have been ordered to work, but the FAA has only this week begun to recall a handful of its 3,000 safety inspectors.
Those inspectors and other FAA employees are required to sign off on thousands of transactions, from pilot licenses to layers of approvals necessary before a new jetliner can enter commercial service. In some cases, employees of airlines or manufacturers like Boeing Co. have been granted legal authority by FAA to give such approvals, but many such tasks still require a government official. Even if Boeing and Airbus jets receive post-manufacturer certification, an FAA inspector must approve adding the planes to an airline’s fleet.
The shutdown has halted work on new aircraft certification, interactions between FAA and other nations, some aircraft registrations, commercial drone flight authorizations, aircraft mechanic licenses, introduction of new air-traffic technology and airport construction approvals, among scores of other actions, according to the industry letter.
Delta Air Lines Inc., for example, needs FAA inspectors to give final approval to add new Airbus A220 models to its fleet before it can begin its scheduled introduction by Jan. 31, said William Hoogenhout, a regional business agent for the Professional Aviation Safety Specialists union. Hoogenhout helps oversee Delta.
The impacts on Delta are more extensive than that, he said. The airline also is expecting delivery of about two additional new jets a week, which can’t be added to its fleet without FAA approval. Inspectors must also sign off on repairs for older aircraft, several of which are in repair stations now, he said.
Delta can use its own employees to approve when its pilots move from one aircraft model to another, but the FAA’s pilot inspectors normally share those duties and their absence has put an added burden on the carrier.
“It’s really slowing them down,” Hoogenhout said.
Delta continues to monitor the situation and work with the FAA, and expects no customer disruption or impact to flight schedules, said Morgan Durrant, a spokesman.
Airbus isn’t seeing a significant slowdown in its deliveries, said company spokesman Clay McConnell.
Aircraft manufacturers like Airbus often have employees with authority to give some FAA approvals, though not in all factories. Even if they can deliver new aircraft to a carrier, other FAA approvals are often needed before the plane can be put into service.
Southwest Airlines Co. believes the shutdown “likely” will delay its plans to begin service to Hawaii, Chief Executive Officer Gary Kelly said in a message to employees last week.
The nation’s almost 2,000 charter carriers are facing even more impacts, according to union members and industry groups.
NetJets, for example, has been blocked from adding new aircraft to its charter fleet, said Jon Jeffries, a regional business agent for the PASS union who works in the Ohio office that oversees the company. Representatives of the company didn’t respond to email and telephone requests for comment. Warren Buffett is the chairman and largest shareholder of Berkshire Hathaway.
One air-charter company has two aircraft stranded in Canada as a result of the shutdown, said John McGraw, director of regulatory affairs for the National Air Transportation Association, a trade group representing such carriers. The newly purchased planes were being painted and need a special FAA approval before they can be flown back to the U.S., McGraw said.
“It’s a big impact having an aircraft sitting around,” he said. “It costs a lot of money.”
Companies making corporate jets and other aircraft used by private pilots are also seeing increased hurdles to doing business because FAA workers haven’t been able to approve new designs or special flight authorizations, the trade group General Aviation Manufacturers Association said in a statement.
“We are very concerned about the potential effects of a prolonged shutdown on other elements of FAA operations,” the group said in an email.
“As the partial government shutdown continues, the human and economic consequences are increasing and doing greater harm,” said the letter to Trump and lawmakers. “Civil aviation supports more than 7 percent of the U.S. gross domestic product and $1.5 trillion of economic impact, creating over 11.5 million jobs, but this shutdown is hampering our ability to function effectively.”
The letter was signed by groups ranging from the General Aviation Manufacturing Association and Airports Council International-North America to the Association for Unmanned Vehicle Systems International.
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