John Persinos interviewed a long-time aviation industry veteran, Nick Lappos.
Nick has extensive career experience in aviation. He’s committee chair at the American Institute of Aeronautics and Astronautics. He’s also senior technical fellow, advanced technology at Lockheed Martin’s Sikorsky Aircraft.
Among his long list of previous positions, Nick is former VP of government programs at Gulfstream Aerospace and a former test pilot at Sikorsky. He studied aerospace engineering at Georgia Tech. The following article is an edited excerpt of the interview. John’s questions are in bold.
First, I want to tackle the massacre we’re seeing in global financial markets. How is the current macroeconomic climate of recession fears, rising inflation, elevated interest rates, and a plunging stock market impacting the global aviation industry?
We’re starting to see people getting out of markets and into cash, which probably means they’re looking for places to put it. Good bets on future technology could be a nice place to park that cash. It may actually be good for those people who have something relatively proven but need the capital to get it going.
Yeah, that’s a good point. Buying the dips and looking for undervalued bargains that have been unfairly punished during the overall stock market swoon.
The Trump administration has imposed tariffs, during so-called “Liberation Day” on April 2nd. How will tariffs hurt the aerospace industry globally?
Well, you know, I’m not an economics guy. I’m an aerospace engineer, but I was program manager on large civil programs. I had a chance to work with suppliers all around the world, and I can tell you, it is not an individual nation’s job anymore.
We find aerospace capabilities across the world and a need to be sure that our products have content in them so they’re attractive to other folks in other countries. I believe therefore that the idea of having walls between countries is probably not conducive to the kinds of world that a Sikorsky, Airbus or Boeing wants to go into.
A phenomenon known as the Advanced Air Mobility (AAM) ecosystem is under development. What is AAM? What are the entities driving it? And why is AAM important for everyone involved in aviation?
AAM is a catchphrase for the new world that’s opened up by two major technological changes. One of them is the use of computer controls, which allows you to not only create flight controls that allow the average person to fly a hovering machine, but also flight controls that’ll eventually end up with full autonomy.
The other aspect of AAM is doing away with expensive and complex transmissions and engines and moving toward electric drive. Electric motors have very few parts and therefore allow greater simplicity and maintainability, with a lower cost to produce.
Is there an imbalance between aircraft supply and demand? Aircraft values and lease rates, of course, are very much contingent on supply and demand dynamics. Is there not enough supply to meet demand right now in global aviation?
Demand is indeed strong and OEMs are scrambling to meet it. Global aviation overall is growing. It’ll continue to grow. One of the things that we see in the world today is the number of so-called third world countries that are beginning to develop wealth. As that wealth develops, so will travel and business needs.
The average American citizen burns five times more energy than anyone else on the planet. Well, what happens when Africa gets a greater degree of the same freedom, societal growth, and wealth? Its citizens will increasingly seek to travel. I believe aviation travel today is really relegated to only about 20% of the world’s population. When that becomes 80% or 90%, aviation demand will grow exponentially.
The Asia-Pacific region is the fastest growing economic region in the world, and it’s also the fastest growing in terms of air travel demand. Accordingly, do you think the Commercial Aircraft Corporation of China (COMAC) poses a challenge to the Boeing-Airbus duopoly?
As China enters a market, it’s big and capable enough to influence that market strongly. I also believe that aviation market conditions are ripe for COMAC.
Modern code and computer capabilities make it easier to break into a market. The old market barriers that used to exist because you needed a thousand engineers in order to be good at something is no longer true. The code is available and young bright folks can easily start to influence a market.
Boeing and Airbus have been struggling with supply chain disruptions. The supply chain mostly healed after COVID, but there are still disruptions in the global supply chain, and aerospace is very much interconnected on a global basis. Do you see supply chain problems persisting this year and beyond?
I was in that game very deeply when I was running a couple of major programs. The disruption of COVID on aviation supply chains was terrible. I think we’re getting back on our feet, but the long-term flow of parts and equipment will be disrupted again by tariffs.
Consumer sentiment has been plunging. I can’t imagine that the current high demand for airplane tickets will be sustained in the current economic environment. How do you think the threats of inflation, elevated interest rates, and economic recession will affect the global aviation industry?
The growth of air travel demand is inexorable. I also believe that as long as airlines stay low in cost, and we’ve managed to see the emergence of some really good low-cost airlines, the public will view air travel as a safety valve and an escape from the challenges around them. So far, we’re not seeing any slowdown in consumer demand for air travel.
Aviation is like the world’s subway system in a lot of ways. It’s the globe’s mass transit system.
That’s a great comment.
Do you think Boeing is doing enough to change its culture to recover from its safety and regulatory woes?
I’m looking at Boeing right now as an interested observer, as someone who does understand how OEMs have to behave. And I must tell you, Boeing has an enormous legacy. They’ve got terrific talent. The company has got some great technologies under its belt. So in this crisis, I also see opportunity for Boeing to set things right.
One aircraft manufacturer to watch which fascinates me is Brazil-based Embraer. That company is really on the upward ascendancy. Do you think Embraer will continue to gobble up market share, especially in regional markets?
Yes. I’m gung-ho on Embraer and on several other companies like them. Embraer has a talented engineering team that’s accomplishing impressive things.
Nick, any final thoughts you want leave with our viewers?
The significance of Advanced Air Mobility is being underestimated. The amount of dollar volume for package express, from delivering prescription drugs to pizzas, is probably three times the size of today’s airline industry. And it’s being done in box trucks and people in Toyotas. It can be done in aviation. It’s entirely possible to have an AAM machine that carries a 50 or 100 kilogram payload that has no pilot and costs 25 or 30 cents a mile to operate.
Every day, about 10,000 box trucks drive into Manhattan, deliver packages, and they crawl along at 11 miles an hour on the street. If they flew, you could have layers of them and deliver, as I said, on the order of 25 or 30 cents a mile. Think how much it costs to operate a truck. All of that overhead disappears with AAM.
Yes, AAM represents a disruptive technology that’s being underestimated by the public, so I’m glad you emphasized it in this interview today. Nick, it was great talking to you. Your remarks were insightful as always.
John, thanks for thinking of me.
Editor’s Note: For the full interview, which includes several charts, watch the video.
