26 March 2011

Aviation Is a Big Issue in The 2011 Election

The federal election was kicked off today with Prime Minister Stephen Harper's trip to Rideau Hall to ask the Governor General to dissolve Parliament. This was after Harper's government was defeated on a non-confidence motion for not disclosing the costs of new prisons and aircraft. That's right, aircraft. As a result this election campaign is going to feature a lot of discussion about aviation. In fact, this will probably be the first election since Diefenbaker was tossed out in 1963 where aviation will be a central issue.

The Globe and Mail framed the issue succinctly: "Liberal Michael Ignatieff says his party will move a motion of no confidence on Friday, one that will declare the government to be in contempt of Parliament for withholding information related to the cost of Conservative crime legislation and the purchase of 65 fighter jets."

The Canadian Press indicated: "The battle over the cost of the Harper government's stealth fighter has escalated into a war of numbers between the Parliamentary Budget Officer and the Defence Department. Kevin Page today released a rebuttal to senior defence officials, who questioned the math in his latest report, which says the cost of the F-35 Lightning II could reach $30 billion over three decades...The F-35 program in the U.S. has seen huge cost overruns, which Page says will drive up the price tag from an estimated US $75 million to US $148 million for each plane. The department dismisses the figure, but Page pointed out today the Pentagon's latest estimate is US $151 million [per aircraft] and that Washington does not sell aircraft to allies at a price less than what it pays. The jet-fighter deal is expected to be a big issue in the expected spring election because the Liberals have promised to cancel it."

Here is what the opposition has to say on the issue:

so you can see how the battle lines are drawn.

In short it is the biggest government contract ever and it is a sole-source, untendered contract which will see the the aircraft built in the USA and no guaranteed industrial offset contracts for Canadian companies. Instead they will be able to bid on F-35 work against companies in other nations participating in the manufacturing program. The government claims that the F-35 is the only aircraft that meets Canada's specifications, so a competition is not necessary, but they have made the specification "secret" so it is hard to tell.

Critics have noted that the F-35 is short-ranged and single-engined, a factor that has eliminated competitors for past fighter contracts, such as in the late 1970s when the F-16 was ruled out for Canada because of its single engine and we bought the twin-engined F-18 instead.

The F-35 is a stealth strike aircraft, not an interceptor and that brings up the question of what mission does Canada need a stealth attack aircraft for, when our primary role is the air defence of Canada?

If elected the Liberals have promised to not sign the future contract to buy the F-35 and instead hold an open competition to pick an aircraft. Many other global aircraft manufacturers have indicated they would like to be in that competition, including Boeing with their next-generation twin-engined F-18E/F Super Hornet, Eurofighter with their twin-engined Typhoon, Dassault with their twin-engined Rafale and even Saab and their single-engine Grippen.

Price is obviously an issue with the F-35 program behind schedule and over-budget. Unit costs have risen to somewhere around US$150M per aircraft, although the government claims that when the contract is signed in 2013 the price will be US$75M per aircraft.

Another major issue is access to the source code for the software for maintenance and in-flight remote control of the aircraft. On 24 March 2011 Turkey announced it is placing its order for 100 F-35s on hold due to the refusal of the US to provide the software codes to any of the countries buying the aircraft. (This includes Canada). Turkish Defense Minister Vecdi Gönül said without the software source code Turkey could not accept the aircraft and will cancel. This should be a big issue for Canada as well, as without these codes the aircraft cannot be fully maintained in Canada, not to mention that the US, or even hackers, could prevent them from being started or control them in flight, changing their targets enroute.

All of this adds up to a very big issue, one that will put aviation at the front of this election, something we haven't seen in many years.

A really complete summary of the Canadian F-35 procurement controversy can be found in this article.

Engage the Election Candidates for GA

By Kevin Psutka

The federal election presents an opportunity for members to engage the candidates on their awareness of and support for GA.

The pressure on GA airports is reaching a critical level where real damage will be done to the national air transportation infrastructure from such developments as the closure of Toronto’s Buttonville and Edmonton’s City Centre airports. Regional and smaller airports are being neglected by several levels of government, thanks to the National Airports Policy (NAP), whose goal was to offload the airport system to local interests. The NAP’s fundamental assumption is that community leaders can make decisions about their airports that are in the best interest of the users of the airport and with consideration for the national network of airports. In fact, this assumption is proving to not be the case as many communities are neglecting their transportation asset or actively pursuing closure options.

I encourage everyone to contact the candidates (find your candidates here) and ask the following question:

“Given the important role that smaller airports play for linking our vast country together and for training pilots and maintenance personnel for the air transportation industry, and given that the National Airports Policy has resulted in a significant deterioration of the air transportation infrastructure, will you support a review of the National Airports Policy with a view to creating an adequate and sustainable network of large and small airports?”

Ask for a written response and copy me on anything that you receive. If I get enough input from members, I intend to produce a list of candidates and their positions on our web site just prior to the election date to help members with their election choice. For those who receive a positive response, I encourage you to follow up after the election to remind election winners of their commitment.

21 March 2011

Diamond lining up for handouts

Diamond Aircraft, with a large plant located in London Ontario, is lining up for money from the federal and provincial goverments and has indicated that the company's future will be very uncertain without the bailout loans. The Financial Post described the company as "in rough shape".

It seems that piston sales have been pretty slow though the ongoing recession and the company has been unable to move its D-Jet single engined jet development project forward, due to lack of investment money, despite a firm 230 orders for the $1.89M per copy aircraft.

To get the D-Jet into production the company has located $20M in private investment, plus a committment of an additional $35M from the Government of Ontario. The Ontario government investment is contingent on Diamond also getting an additional $35M from the federal government. A decision by Industry Canada on that was still pending in late March, due to the government conducting "due diligence on the loan".

If both the federal and provincial loans are provided then, combined with funds already provided, the total provincial and federal government investment would be $100M.

Diamond Presdent and CEO, Peter Mauer indicated "If we don’t get the funding from the federal government, it puts us in a difficult situation. If the D-JET, for example, in a worse case scenario, were not to continue it would have a negative impact on the rest of the company’s operations. [The company debts are] at a level that would be very difficult to satisfy out of piston sales,” he said. “I’ll let you do the extrapolation."

Further reading:

* Financial Post - Planemaker Diamond in rough shape
* AvWeb - Diamond's Future Contingent On Loan?