Premium 2018.10 – The FAA’s January 1, 2020 ADS-B mandate

By January 1, 2020, the FAA says that your aircraft must be equipped with ADS-B Out to fly in the most controlled airspace. Federal Regulations 14 CFR 91.225 and 14 CFR 91.227 contain the details. The FAA estimates that between 100,000 and 160,000 general aviation aircraft may need to equip with ADS-B. Approximately 40,000 aircraft have been equipped with ADS-B Out avionics and are ready for the 2020 mandate. More than 30,000 aircraft have equipped with ADS-B In avionics. Amstat and ADS-B Exchange (a global co-operative of ADS-B/mode-S/MLAT feeds) released a study that estimates that only 40% of US-based general aviation aircraft will meet the FAA mandate. They report that 39% of US-based business jets and 38% of US-based business turboprops are currently known to be compliant. The most recent FAA survey (General Aviation and Part 135 Activity Surveys) is dated 2016. The following charts list the number of aircraft and the hours flown in that period. First turboprops. As we can see the fleet use varies considerably. The FAA estimates there to have been 10,257 turboprops in use and of these 9,779 were active (95.3%). These aircraft have an average airframe time of 4,900 hours. Most of these aircraft are flying 500 or fewer hours. there is a sharp dropoff until we get to the air taxis where hours spike again. Next, let's look at the jets. Here we see a more steady pattern. The fleet is large (14,336) but use drops quickly in terms of 300 hours. The FAA reported that this fleet is active with an average 4,335 airframe hours. Note that between one and 200 hours, the fleet is not flown much at all. We estimate that 43% of the fleet does under 200 hours per year. As we can see from the FAA data, these aircraft average a lot of down time. So while there are many aircraft, and most them are active at some level, it seems there might be several that are forcibly retired by the FAA's mandate. As these aircraft age, they cost more to maintain and operate. As the following table illustrates, the biggest "type" of use is Other, but take out the FAR135 operators and we can see use is relatively low. We would suggest those aircraft that are mostly for "personal" use are the leading edge of the fleet that might not see an ADS-B install. GAMA provides the following table from their 2016 report. Looking at the turboprops, we can see that these have averaged over a decade old. As we noted in the charts above, the turboprop fleet is more active. Having lower operating costs, these aircraft tend to be used more frequently. But looking at the jet fleet we saw in the charts a distinctive use pattern. The GAMA table shows just how old, on average, the fleet is. It is these older aircraft that we believe will skip the FAA mandate and simply be parked. Those that fly regularly are likely to be new and owned by fractional operators or corporations. These aircraft are already ADS-B equipped. The Bottom Line: There simply isn't enough MRO capacity in the industry to convert all of the remaining aircraft to ADS-B compliant status by 2020. Even if all operators wanted to comply, it would be physically impossible at this point. The FAA, which provided operators ample time to bring their aircraft into compliance, is unlikely to grant waivers. As a result, we can expect to see a large number of aircraft, particularly older aircraft, come off the active fleet and either be scrapped or queued up for conversion post-deadline. We would, however, expect the FAA to grant one-time ferry permits to an MRO facility to obtain compliance. Will ADS-B finally take a large number of older but relatively inactive personal aircraft out of the mix? We believe so. Given the pre-1978 levels of 14,000 plus new piston aircraft per year compared to the meager, by comparison, 1,000-2,000 manufactured in a good year today, the fleet remains quite old. The number of active piston aircraft, whose average age is nearly 40 years, will soon come tumbling down as modification requirements make them uneconomic. Will this be a tectonic shift at the lowest segment of the market? The answer is yes.

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