Shutdown shock

Flight International Comment, 8 October

Like the outbreak of a deadly virus in Southeast Asia or the eruption of a volcano in Iceland, the global aviation industry faces another sudden and apparently uncontrollable financial shock.
Only this time the economic calamity comes not from the natural world, but from a political system.
A domestic squabble over how to administer health insurance policies in the USA now threatens to entangle a separate debate over deficit spending  and with it destabilise the global economic system.
It is too soon to tell how an increasingly likely ­default on US public debt payments on 17 October will harm the global economy, but there is no doubt that the aviation industry will feel some of the pain.
So far, the impact of the government shutdown has been minimal. Keeping air traffic controllers and ­Transportation Security Administration workers on the job spares airlines from immediate suffering.
Thanks to a self-certification regime, it will be ­several weeks before the major OEMs, such as Boeing and Gulfstream, feel the impact of a government shutdown on efforts to certificate new aircraft programmes.
In the meantime, defence contractors may feel a pinch. The absence of government inspectors during the shutdown means no new aircraft products can be delivered to customers. Where the shutdown will hurt most is anywhere that the aviation industry depends solely on the government to keep commerce moving. In such a highly regulated industry there are many such intersections.
Nowhere are these more numerous than the web of repair stations and completion centres around the USA. Populated mostly by small businesses, this industry depends on frequent intervention by FAA inspectors to keep the process moving.
As bad as the shutdown is, the impact still pales in comparison to the prospect of a debt default by the US federal government. Few industries are more governed by global economic growth than the aviation industry, and a shock to the financial system as seismic as a government default could wreak havoc.
But what can the aviation industry do to minimise the risk of such politically driven economic instability?
The experience may push industry leaders to press harder for more outsourcing of government functions. If a broken political system makes government an ­unreliable partner, maybe it is time to re-think who is in charge.


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