Product Liability Changes to Revive US GA Industry?

Fifteen years of course would approximate a quite sensible period for a company to be legally responsible for the primary quality of its product. After all, if that product was in any real way defective it would have become apparent well before the 15th birthday of the plane involved. What also needs to be tightened up is the specific requirements relating to the opera- tors responsibilities in relation to maintaining and operating the aircraft as specified by the manufacturer. In the past this has not always been the case and some high value lawsuits have been won on the basis of what are nothing more than ridiculous examples of negligence by the claimant. The old story of the burglar falling through the roof, then successfully . suing the householder for having a defective roof, is retold a hundred times in aviation circles with little humour.

The liability laws that so successfully decimated the once powerful US GA industry (amongst others) had their roots in the latter seventies, ironically a period when light aircraft production was humming along at its very peak.

The recession of the early eighties and dozens of financially significant, if inane, claims granted in courtrooms across America had two ill effects on the industry. Firstly, demand for new aircraft began to slow as the recession of a decade ago began to exact its toll. Secondly, the rapidly increased public liability insurance premiums that manufacturers were being forced to pay was escalating the price of aircraft by as much as athird in one year with no visible benefit to the end user. It was also at a time when the US dollar began to firm against many international currencies and that most of the traditional export markets, and in particular Australia, were also in recession with a currency of declining value.

In 1973, one Australian dollar got you $US1. 40, a decade later that had dropped to $1. 15 and today you get around 70c. In other words you pay twice for a Cessna 172 (assuming you could buy one) today what you would have paid back in 1973.

I remember writing a story in the December 1983 edition of AA lamenting the demise of the US GA industry. In that story it was that things could hardly get worse as it was expected that only 3000 light aircraft would be produced in the US that year. In retrospect, those were what we ageing hands now call ‘the good old days’ as a Newsdesk item in our June ’93 issue brought the chilling news that for the first time ever US GA production last year had fallen below 1000 units.

When we printed the first edition of this magazine back in 1977 the industry was on afterburner. In 1978, the peak year, a record 17,000 light aircraft were produced while in those halcyon days it was not unusual to see local training schools ordering a dozen Beech Skippers, Piper Tomahawks or Cessna 152s at a time. Cheaper by the dozen! However, within three years that entire market had evapo- rated in the face of drought, recession, rapidly increasing new aircraft costs, increasing charges placed upon aviation by government and a falling dollar. The only survivors were those manufacturers who had some high value assets up their marketing sleeve.

Beech got by with its excellent King Air family even if it did blow a zillion on the unsuccessful Starship. Cessna had its strong selling Citation range and launched the Caravan just at the right time for Federal Express to want such a beast of burden in massive numbers. Piper unfortunately lucked out with both the promising Malibu/Mirage and its high speed Cheyenne 400 series and finally entered Chapter 11 a mere remnant of its once former glory. It has recently emerged from Chapter 11 though nowadays producing a mere handful of near hand built aircraft awaiting better times and additional cashflow. Mooney survived by trimming back and concentrat- ing on its renowned product quality and an established market niche while Grumman sold its range of lighties which nowa- days soldier on albeit in limited production form, as does the born again Commander 114. Gone too is Bellanca, a small company which produced some goodvalue utility and aerobatic two seaters.

And whilst the US public liability laws were not the sole culprit in destroying what was once a major industry they are by a wide margin without argument the major cause of the decimation of US light aircraft manufacturing.

So how many jobs did the stupidity inflicted upon us by ever greedier lawyers cost? Cessna at its peak employed some 21,000 people, today it has less than a thousand hand crafting its Citation and Caravan aircraft. Piper employed nearly 7000 at its peak and today has what appears to be only a few dozen. Beech continues relatively strong thanks to its King Air, Beech-jet and 1900 series airliners, its government contract aircraft sales and continuing low volume demand for Bonanza and Baron piston types.

Socata of France of course has not been bitten by the US product liability laws as its products are too young to suffer the ignominies placed upon some of its competitors older aircraft. Most Socata types are also still sufficiently highly valued to keep them away from those mindless individuals who tend to abuse anything they own or operate, whether it be a washing machine, car or plane. Socata of course only really began to become internationally known in the early eighties and remained slim in a negative growth market, something that in retrospect has proven a Godsend to the innovative French light aircraft manufacturer.

So, if the US Congress does pass the latest 15 year limit proposal then what? Cessna has already expressed a strong interest at reentering light aircraft production. Piper hopefully would also be able to move ahead with expanding its existing base by attracting new areas of finance presently unavailable to it. It is doubtful whether Beech would ever return to such types as the Sierra/ Musketeer, though there is still plenty of life left in the Bonanza and Baron and the company did have some rather interesting successors to both these types on the drawing board a few years back. Certainly sales of the born again Commander 114B (refer Airtest April 93 AA) and the American General Aircraft Corp Tiger (refer Airtest Nov 92 AA) would also be boosted by a more sensible liability law situation.

However, irrespective of whether this legislation gets the nod or not, another enemy is rapidly raising its head. And that’s an enemy that we in Oz are well familiar with – The Greedy Government Syndrome.

The Clinton administration, in its far reaching deficit reduc- tion programme has chosen to lump a plethora of new taxes and charges against almost every industry sector in the US, including aviation.

According to the US Aircraft Owners & Pilots’ Association (AOPA), the effects on aviation of a wide range of proposed charges will cause considerable damage to an already struggling industry. Amongst some of the proposals are a four-cent-a-litre tax increase on avgas/avtur and an increase in aircraft registration charges from just $7 now to as much as $400 a year with the same being paid for a aged Cessna 150 as a Citation. AOPA also point out that the fuel tax on aviation has increased by 47% since 1990 and will be 83% higher than a decade ago if the legislation is passed. And where will the dollars go? You guessed it-consolidated revenue though some of the registration fees would find their way into that wonderful American device-the Aviation Trust Fund. The AFT presently has some $10bn (yes billion!) to its name yet returns almost none of this money to the provision, maintenance and development of airways and airport infrastructure as was its original intention so many decades ago. Today the booty sits firmly on the right hand side of the government’s ledger and thus comes up nicely as a vehicle for visually reducing the deficit. It seems that no President, Republican or Democrat will liberate it for the purpose it is so desperately needed.

On the primary matter though of product liability, AOPA is now wisely suggesting that perhaps it is time to team up with other gravely affected sectors of industry to take the fight to Congress where the very powerful Trial Lawyers Association rules the stage. US Vice President Al Gore recently stated that almost a third of the nation’s healthcare budget was destined for unnecessary pathology type tests and procedures – serv- ices principally requested to ‘double indemnify’ the medical profession against lawsuits.

Unfortunately, in America you can take an issue to court and even if you lose you are only financially liable for your own expenses whilst often this is funded by the State under some of their more liberal, and mostly abused, welfare legislation. In Australia, if you lose, you pay everything. That naturally tends to introduce some clear and lateral thinking into whether or not it is worth pursuing the matter in court in the first place and places the onus of credibility on those who initiate the challenge.

In the US, lawyers regularly tout for service on a commission basis thus the potential claimant is up for absolutely nothing should their case lose and if it wins then the lawyer takes a cut of the gold. With a lunatic system like that is it any wonder that nobody is really serious about producing better products where year over year product improvements and updates are often represented in a courtroom as remedies for supposed previous failings? Whilst there obviously is a need for some firm product liability legislation to protect consumers from unethical or irresponsible manufacturers the present situation is thus that it generally resembles little more than a lawyer inspired gravy train of fiscal opportunity. As one AOPA representative laconically stated “Is this a great country or what?” Thus, even if the revamped product liability legislation is passed in Congress sometime this year it may be delivered to an industry already reeling from the ill effects of other govern- ment induced trauma. Sounds familiar, doesn’t it? However, let’s just for a moment be really naive and look on the bright side of all this. Imagine a world where GA wasn’t taxed to death by our elected legislators. Where it was actually encouraged to produce new environmentally friendly light aircraft that were substantially quieter than their predecessors, used significantly less fuel and were actually cheaper to buy and fly. Wouldn’t that be wonderful. Yet all the technical capabilities are there to produce such products if only the legislators would get off industry’s back and allow it to resume manufacture, invest in research and development and promote its products just as most other industries do.

The technology is all there. The exciting kit plane industry has led the way with lateral thinking and new and innovative designs despite having to use boat anchor vintage engines that haven’t changed much since the fifties. If proper GA aircraft production did begin to ramp up again then there would certainly be much interest from a number of automotive concerns who nowadays could offer a new generation of powerplants that would be significantly more reliable, more fuel-efficient, quieter and compact than the geriatric Lycomings and Continentals that are little more than leftovers from the DC-3 era.

Subaru has, for instance, two potentially excellent powerplants in their 2. 2 litre Liberty series flat four and the 3. 3 litre flat six from the sporty SVX. For the record, the turbocharged version of the Liberty engine weighs in at just 114kg for a maximum power output of 220hp as against an equivalent Lycoming 10-360-A of 200hp at 133kg with considerably more bulk to boot. Also remember that anything with ‘aviation’ against its name is worth an extra 100% surcharge when it comes to servicing or buying spares.

Both Toyota and Nissan have excellent 3. 0 litre V6s that could be configuredfor aircraft use whilst Porsche only dropped out of the game in the mid eighties because of the prevailing US product liability laws and the fact that there simply wasn’t enough volume production at Mooney to warrant serious long term investment in the project which nevertheless was opera- tionally proven on a Mooney 231, Cessna 182 and a Socata Trinidad.

However, there is more. Waiting in the wings are such new generation engines as that being developed in the US from what was Ralph Sarich’s Orbital Engine Technology unit. This revolutionary high power/low bulk/high fuel efficiency engine will be commercially available in a Ford car before the end of this decade and holds the promise of being probably the greatest breakthrough in automotive engines in recent dec- ades. Also waiting in the wings, though a long way from becoming operational, is the Split Cycle engine being presently promoted worldwide by Sir Jack Brabham. We are proud to say that both powerplant concepts are the results of Australian ingenuity.

Also a product of Aussie ingenuity is the little 1. 6 litre air cooled four stroke flat four from Jabiru Aircraft in Bundaberg, Qld. This compact 55kg unit was definitely a product of neces- sity due to Jabiru’s innovative VLA (Very Light Aircraft) two seater requiring something better than the Italian KFM or Austrian Rotax engines generally used in these aircraft!Whilst the present engine is far too small to power anything other than a lightweight VLA, it would be a relatively simple exercise to design a larger version capable of powering a four place FAR Part 23 light aircraft. If the US situation changes then this would also naturally make the pursuance of capital to under- take such a project a much more likely proposition.

So, there we have it. A whole new era of technology is available to produce the light aircraft of the 21st Century. Will it every get to fly-well that my friend really depends upon what the US Congress is going to do about finally tackling the unfair and much abused product liability legislation issue which has decimated many sectors of that nation’s inventiveness from cars to medicine to aviation.

Stay tuned, but definitely don’t hold your breath!