The new year is here and with it the effects of Congressional wrangling over the so-called fiscal cliff. Maybe the political leadership have found some temporary resolve, but eventually cuts appear inevitable.
Some aviation groups have gloomily predicted as much as $80 billion in GDP losses if the FAA takes an estimated $1 billion haircut … a 6% slice off of its annual budget. Even if such results of restrained government spending may be overstated, a budget cut will likely affect the Light-Sport and recreational aircraft end of the market.
The FAA employs around 50,000 people, some of whom are bound to be furloughed if a budget cut is implemented. Some may even be permanently released through a reduction in force. This means less personnel to conduct the agency’s actions. When the FAA issues directives, but lacks the resources to implement them, planned mandatory actions may flow slower than molasses in wintertime.
In the summer of 2012 the FAA issued new directives that significantly increased the chance the agency will insist on performing highly detailed audits of LSA producers, ostensibly to enhance safety. What does this mean to airframe producers and customers?
Let’s say you own a company and you’ve been working overtime for the last couple years or more on a new model you hope to bring to market. Last year you were told that new models or new companies were likely to require an FAA audit before the new aircraft could be sold to customers. The FAA forecast a pace of two audits per month. Several companies took the precaution of putting their name on the wait list for an FAA audit. Now even that languid pace may be threatened by budget cuts.
One possible outcome is that your new model — however well tested and otherwise ready — may not get an FAA audit for weeks, possibly months. If your company is overseas, add more months for the FAA to budget travel and get approval from their counterpart authorities in the other country. Can your company survive without making a sale of that new model for what could be many months?
If you get that, you can see clearly why some companies are growing anxious. They are told they must get an audit, but an audit could be a long time coming. That’s the stuff of nightmares, which makes fiscal cliff negotiations as real and present a concern as making the payroll at the end of the month. Maybe we’ll know by spring. What’s your guess?