Trade Associations Squeezed When Industry Needs Them Most

At a time of much discussion over the format of the Business Aviation associations’ industry trade events, and reports of withdrawals of staple exhibitors in recent years, what is the actual impact on the balance sheet of said associations?

Not much, if anything, has been written on the financial results of Business Aviation’s largest industry trade organization, the National Business Aviation Association (NBAA). Surely some may be wondering:

• How NBAA fared financially with COVID when forced to cancel its largest annual convention and income source?
• How recent decisions by large OEM anchor tenants to move out of the convention center and only have a static display (or skip the show altogether) impacted the bottom line?
• How NBAA’s recent financial health looks compared to pre-COVID times?

The answer to these questions is no secret. NBAA’s yearly financials are not something only board members or general members are privy to. The Association is completely transparent with anyone being able to look at the latest Annual Report on its site (link below) or Google a previous year’s result.

Why Aviation Association Balance Sheet Vitality Matters

While the industry has always seemed to have been on the defensive from one external factor or another, of late those threats have multiplied and magnified.

In the US, examples include NBAA needing to increase its recent advocacy efforts by rolling out the CLIMBING.FAST sustainability campaign to counter climate activists decrying the US Internal Revenue Service’s (IRS) seemingly arbitrary audits of business aircraft owners, and voicing concerns over the punitive five-fold increase in Business Aviation fuel taxes.

These issues will not go away on their own, and there are bound to be future assaults on the industry. Therefore, the future financial health of NBAA and other worldwide industry organizations has a direct impact on the industry and its stakeholders.

The Figures: How Much Revenue do the Trade Shows Bring?

Annual meetings and conventions are the Association’s bread and butter. In 2023 this brought in 56% of all revenue, or rounded out that’s $28m out of $51m total. This compares to conventions accounting for 63% of all income during 2019 pre-COVID (approximately $34m out of $53m total revenue).

Thus, total revenues have decreased by $2m since 2019 principally driven by a convention revenue reduction, which are also contributing less to overall revenues on a percentage basis.

To keep up revenue with conventions income falling, between 2019 and 2023 NBAA has successfully amped-up its other income sources, such as member dues ($6.6m to $8.5m), membership affinity services ($780k to $1.2m), air traffic service fees ($612k to $1.1m) and professional development ($911k to $1.5m).

While most businesses define gross profit as income minus expenses, NBAA refers to it as “Change in Net Assets”. In 2019 this figure was $3.5m while in 2023 it fell to $1.6m, a 53% decrease. Since expenses have remained around the same in both years, the decrease is almost entirely attributable to the decline in convention income.

One may wonder how the Association fared when their chief moneymaker, the annual NBAA-BACE convention, was cancelled in 2020 due to COVID. Figures for that year show that annual meetings and conventions brought in only around half of what they did in 2019 – a $16m shortfall. A reduction in expenses for hosting these events helped soften the unfavorable change in net assets, resulting in a loss of $4.4m for the year.

Fortunately, the NBAA folks aren’t naïve (having been forced to cancel another annual convention back in 2001 due to the 9/11 terrorist attacks). NBAA had the foresight to buy coverage that helped soften the 2020 COVID cancellation. Insurance recoveries provided $23.2m of income in 2021 resulting in a change of net assets of $10m.

At the end of 2023 total net assets were $20m, 10% less than in 2019.

The Future: Continued BizAv Industry Support

The industry arguably needs NBAA advocacy more than ever, but with rumors of even more anchor OEMs completely pulling out of NBAA-BACE, this is a time when NBAA needs continued industry support.

The NBAA has been resourceful with increasing its other revenue sources which could be further expanded. Another solution could be hosting more regional events, since at least one major manufacturer stated the reason for not attending NBAA-BACE is to instead participate in more local venues.

Similarly, NBAA member companies can choose to display at regional shows if not already participating in the annual conference. The Association also has many courses and certifications for employee professional development. There are even more ways to offer support.

Business Aviation advocacy groups around the world are experiencing similar challenges with fewer exhibitors and the threat of future shows being cancelled indefinitely. While the associations have been gradually adapting to these changes, they still need continued support from their constituents to effectively lobby on their behalf.

Perhaps Napolean Bonaparte’s words best describe the association/industry relationship: “Ten people who speak make more noise than ten thousand who are silent”.

2023 NBAA Annual Report