LETTERS: Response to the June, 1994 "Clifford's Notes - Aviation Industry Putting its Head in Clouds"

The first two letters this month are in response to the June, 1994 "Clifford's Notes " column, ("Aviation Industry Putting its Head in Clouds", page 8).

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As a private pilot as well as a consumer rights activist, I read Robert Clifford's June column with great interest. I found the article most informative and accurate regarding the impact of H.R. 3087.

I know. I testified before Congress on this very issue in May. The House Judiciary Committee's Economic and Commercial Law Subcommittee invited me to testify as it considered this controversial bill.

As Mr. Clifford stated, the bill as an 18-year statute of repose would, in effect, wipe out all product liability claims for planes that carry fewer than 20 people.

Although the opposition claims that the general aviation industry would be saved from financial ruin if the changes in this bill were made law, there is no evidence whatsoever that such bloated benefits would occur. On the contrary, the evidence is overwhelming that the real impact would be to significantly reduce manufacturers' incentives for aircraft safety while at the same time severely limiting the rights of innocent victims of aircraft accidents to receive fair compensation for their injuries.

As a whole, the general aviation sector is experiencing a brighter financial picture - all without any changes in product liability laws, as Mr. Clifford so aptly pointed out.

Aside from sheer number crunching, from a pilot's point of view, I do not see the cost of planes fueled by product liability lawsuits - as opponents of the bill would have one believe. It is the limited demand for new aircraft that has caused the industry's problems. Pilots, business, and flying clubs do not buy new airplanes because they can get essentially the same thing for less money in a used plane.

But with this glut in the market, the cost of meeting the liability exposure of the entire fleet had to be spread over a greatly reduced number of new unit sales. And what would be the effect of lowering the payouts of companies on product liability? It is very difficult to say because the industry has failed to provide accurate, verifiable data on closed claims in product liability cases.

What is known as the Cessna's 1993 annual sales amounted to $395 million, according to Dun & Bradstreet, Russell Meyers, Cessna's president, has estimated that passage of the bill would save the company $5 to $7 million, but a small fraction of its budget.

What's more, Cessna's parent company, Textron, stated in its 1993 shareholders' report that "the benefits from Textron's 1992 acquisition of Cessna are expected to increase with the anticipated growth of the business jet market for the remainder of the decade." That report goes on to say that revenues in the aircraft division increased by 21 percent in 1992 and by 31 percent in 1993. Income also increased significantly over that same period.

It is clear, therefore, even by the industry's own report, that the aircraft manufacturing business is already quite healthy and does not need this bill to revitalize it.

In the final analysis, the bill asks the victims of accidents to subsidize the manufacturers and sellers of general aviation aircraft. Usually that means people who lost their limbs or their eyesight or their mental or physical functions be denied compensation.

Is it fair these people be asked to pay for others' mistakes? If so, there better be a very good case that it is in the public interest to do so. Mr. Clifford demonstrates that no such case exists.

Robert B. Creamer
Director
Illinois Public Action