Former Cessna Aircraft Chairman and CEO Russ Meyer was a key figure in the passage of the General Aviation Revitalization Act (GARA). Before its passage in 1994, the industry was reeling from the high cost of product liability. Cessna, the largest producer of piston-powered aircraft, had shut down its lines altogether. Listen in to hear how GARA’s passage revived the industry.
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Transcript
Molly McMillin: Thank you for joining us today. I'm Molly McMillin, managing editor for Business Aviation at the Aviation Week Network. With me today is Russ Meyer, chairman emeritus of Cessna Aircraft Company and past chairman and CEO of Cessna, now Textron Aviation. So welcome, Russ.
Russ Meyer: Thank you.
Molly McMillin: In the 1980s, the general aviation industry had an uncertain future. Cessna had ceased production of piston-powered aircraft. Piper Aircraft was facing bankruptcy and had entered chapter 11 in 1991. Industry deliveries had fallen to about half of what they had been six years before, and many experts pointed to product liability as the main culprit. Russ, you were right in the middle of all of that at the time. Can you tell us what was the climate like?
Russ Meyer: To say that product liability was the main culprit would be 100% accurate. There was a demand for airplanes. There were plenty of competitors. We had airplanes in almost every country in the world as Cessna. We produced more than anybody else at that point in time, but although there were obviously some economic issues in the 1980s, interest rates were quite high early on. There was a modest recession in the early eighties. But the decision that we made, as I mentioned to you earlier, was maybe the toughest decision that I ever made, which was totally stopping the production of propeller aircraft and stunningly and just eight years before that, as you mentioned, the industry had delivered 18,000 airplanes in both '77 and '78, and we had delivered 9,600 in both '77 and '78. And to think that eight years later, we would be stopping production of an airplane that was valuable, that was used in flight training and used to build aviation throughout the world, but we had no choice because we were being sued.
Anytime there was an accident involving an airplane, whether it was 10 years old or 60 years old, and for whatever the reason, and in almost every case it had no relationship to the quality or the safety of the plane. As you know, airplanes are certified very carefully through the FAA and they have millions of flight hours. The 172, which we had been building for many, many years, we built 2,500 to 3000 every year, had a phenomenal safety record. But if it was involved in an accident, whether someone ran out of fuel or whatever, there were a group of plaintiffs attorneys around the country who filed a lawsuit in just about every one of those cases. So, it was impossible to calculate. When you build an airplane, you know what the materials cost, you know what the price needs to be, but with an overhang of the insurance, we had to self-insure the first $25 million of product liability and then we insured above that and obviously that became a higher and higher load.
So, we stopped building prop airplanes in 1986 and concentrated our efforts at Cessna in focusing on the business jet industry and then we concentrated our efforts at GAMA, our industry advocacy group, General Aviation Manufacturers Association, on trying to convince Congress the need and the value of limiting product liability in some fashion. And the simplest way to do that was to have a statute of repose of some period. We originally proposed 12 years in legislation, which meant that after 12 years, an airplane would've flown on average 5,000 or 6,000 hours, and which is certainly a pretty good proof that it was well-built and high-quality airplane. In our early efforts, however, we added some things we probably didn't need since we were trying to get into federal court, rather than state court to make it all similar and so forth.
But we didn't get very far for the first few years. And so, we hadn't built a propeller airplane going into the 1990s since 1986. In the early 90s, we began to have some people in Congress who fully understood the impact of product liability on the industry. Senator Nancy Kassebaum from Kansas, who was a phenomenal statesperson for three terms, was chairman of the Aviation, Subcommittee, the Commerce Committee, and being from Kansas, she certainly understood the impact that it had on jobs, the economy. Dan Glickman was a Democratic congressman from the fourth district here. He'd been in Congress for almost 20 years by the early nineties. He fully understood. In fact, his district also includes the independents, where we ended up building airplanes. But any event, Dan and Nancy and John McCain and Bob Dole, who was speaker, and increasing number of members of Congress, fully understood the impact of product liability. They just weren't quite sure how it could be modified in a way that the industry would build airplanes again.
The longtime chairman of GAMA was a guy named Ed Stimson. He was ultimately succeeded by a really impressive young guy named Ed Bolen, who had worked for Nancy Kassebaum when she was in his legislation office then he joined GAMA in the early 90s. So, we had the two Eds and I had been elected the chairman of GAMA again in 1993. We had a growing number of people in Congress who we felt would be supportive. I had the good fortune in 1993 of being appointed by President Clinton to what was called the Airline Safety Commission. It had a much longer name, but it included chairman of various airlines, the head of the Aerospace Union, a bunch of other probably 16 or 17 people. The chairman was a guy named Jerry Baliles, and they took up all sorts of issues with respect to, not just the airline industry, but I certainly did my best to convince them that a major part of the industry that really needed help, was a small aircraft production.
By a coincidence, we were seated alphabetically, and I was seated next to a guy named John Peterpaul, who was a chairman of the union who had lost many, many, many jobs, obviously - the Machinists Union. So, we got acquainted. The airline CEOs fully understood the impact on flight training that this had. And one of the recommendations that we made of that committee when we issued our report in the latter part of 1993, was that there should be a limitation of product liability. We simplified our bill. The only thing we really needed was a statute of repose. We needed nothing else. It was a one sentence, practically a piece of legislation, that was introduced by a guy named Jim Hanson, who's no longer in Congress. I think he was from Nevada. He had great support in the house, great support in the Senate. In fact, the Senate really took the lead through, as I mentioned, Nancy Kassebaum and we had a lot of support. The trial lawyers had a lot of support as well.
Senator Metzenbaum in Ohio was one of those who was one of the opponents of the statute of repose, and there were a handful of others that were similarly, but we were making great progress in the Senate. We thought we could get it passed, and we did in fact get a bill passed in the Senate with a 15-year statute of repose, which meant that after 15 years we could not be sued for an airplane that ended up flying for 15 years or more. The really difficult part was in the House. I could make this probably a two or three-hour summary, but I'll try to be a little brief. There was a congressman named Jack Brooks in the house who was chairman of the Judiciary Committee. And when you get a bill passed of the kind that we passed, you have to testify before both the Judiciary Committee and the Senate House and the Commerce Committee and the Senate and the similar committee in the house.
I testified before all of those committees ultimately, but we were always asked in every case whether or not we would go back into production if they passed this bill. And we said we would do it in a heartbeat. Our problem was that we got the bill passed in the Senate. In fact, there were so many cute stories getting to that point, they're kind of funny today. Howard Metzenbaum saw Nancy Kassebaum on the elevator one day before we had it passed, but it was going to be. And Howard looked down at Nancy and said, "Nancy, rather than do the statute of repose, why don't we just do maybe a rebuttable presumption?" And Nancy looked up at him, she was about five feet three, and she said, "Howard, don't even think about it."
So, I think the bill was passed in Senate by about 89 to six or whatever, but I mean, we got resolve. But now we had the House and Jack Brooks refused to give us a hearing. And it was in the spring of 1994, and well, this was really our one chance to get it done, because everything was falling in place so well, and since Brooks would not give us a hearing, there is an opportunity to file a discharge petition. I can't remember when they passed that in the House, but no one had ever filed a discharge petition. And what it meant is if you got 60% of the House to approve the discharge petition, you could take a bill to the House without going through a committee hearing. And early April of 1994, Dan Glickman, Dan and I, and Tom Foley, who was then the Speaker of the House from Washington, and Ed Stimson, the four of us met, and Dan said, "I'm going to file a discharge petition because I think we can pass it." And Tom Foley said, "I'm begging you not to do that because I don't want to set precedent." And Dan said, "Tom, I live in Wichita, Kansas. We've lost thousands of jobs for the last number of years, and I fully respect your view. But," he said, "I'm going to file a petition." And he did.
And two days after he filed it, Jack... There's a booklet, the secretary of the woman whose name I've forgotten, handles the booklet. And if you support the discharge petition, you get it out and sign it. And Brooks went soldering down the aisle one day. "Well," her name was Margaret something, "Margaret, how many signatures does Congressman Glickman have on that bill of his?" And this was less than two days after it's been filed. And she said something like 185. I mean, it was clearly.... So Tom Foley went to Jack Brooks and said, "Jack, I'm telling you that discharge position is going to be passed. It'll be the first time one's ever been passed. Give these guys a hearing so we don't have to file it." So, Brooks gave us the hearing. Great, great story.
John Peterpaul, as I mentioned, was the head of the union at that point in time, and we asked him to testify with us at that point. And he was unable to testify, but he sent a wonderful, big, burly guy named John Goglia, who ultimately became a member of the National Transportation Safety Board. Really, really good guy. He looked like a linebacker. And Jack Brooks was asking a bunch of questions, and he turned to John Goglia. And he said, "Mr. Goglia," he said, "why would the union support this legislation?" And I was sitting next to John Goglia, and John looked at him and he said, "Because we want our jobs back," and he slammed the table. And I think Jack Brooks says, "I have no further questions," at that point in time. But we'd gotten our hearing, went to the House, passed, and what was it? August 7th. [inaudible 00:14:38] over there on that plaque. We all went to the White House --- , and Bill Clinton signed the bill.
I was standing behind him, and he looked around at everybody and he said, "I'm signing this legislation because I know it will create new jobs." And he signed it. And that was a great understatement of what the bill would accomplish because I walked out of the White House, we were all just overjoyed, and someone from CBS was there and put a microphone in front of me. And they said, "Well..." Oh, by the way, at every hearing, a very key question that was asked of me was, if they enacted the legislation, would we go back in production? And I said, "In a heartbeat." And the gal from CBS said, "Well, does this mean Cessna will go back in production?" And I said, "Just as soon as we can get everything organized." We went back to Wichita in August. We had a groundbreaking at Independence, Kansas where we decided to build a whole new facility to build propeller airplanes.
A year and a half later in 1996, we delivered the very first new 172 that we built in 10 years, I think we built 1,500 in the first 12 months we were there. And the “N” number on the airplane on the first 200 airplanes was ended in ES, Echo Sierra, which stood for Ed Stimson. And Ed was so proud of that. But in any event, there is no way I could possibly overstate the value of that legislation. We have built, I think the last number I've seen, almost 20,000 airplanes at Cessna since 1994. We have created in the industry, I think the number would be millions of jobs. Think about worldwide, the numbers of airplanes that have been delivered. The flight training business has just blossomed since 1994.
Many, many colleges and universities, including K-State here in Kansas, and of course Embry-Riddle, and many, many, many others have 2-year and 4-year professional programs you can get type ratings at Kansas State just like you can get them at Flight Safety. We are providing pilots. There are so many airline guys who are retiring for the next 10, 15 years. It's a great opportunity for young people. We would never have been able to handle those training requirements if we hadn't gone back into production and [provided] great opportunities for young people to make their career here.
Molly McMillin: Just to give an example of how people were suing. You carried a copy of a lawsuit in your pocket, didn't you, that you would share?
Russ Meyer: Oh, Molly. I'm glad you mentioned that. A nice guy, and I don't remember his name, nice guy in Philadelphia, bought a, I think it was 49-year-old Cessna 150, and he called up his friend the next day and he said, "Hey, I want to take you for a ride in my new airplane." And so, they went out to the airport, jumped in, and they were flying around, and he forgot to check how much fuel he had in the airplane. He ran out of gas, and he did a really amazing job. He found a decent place to make a forced landing. He made a forced landing and had some modest injuries, but both of them survived. But a lawyer out there named Volk, who would sue anybody that had an airplane accident, filed a lawsuit.
And I mentioned it in all four of the hearings. They said, "Well, give me an example of why these costs are so high." And I said, "Well, good example." And I gave the example and whether it was the House or Senate, they were stunned to think that we would be sued for an accident involving a 49-year-old airplane. So the lawyer did us a good favor.
Molly McMillin: And that wasn't the only lawsuit like that, right?
Russ Meyer: Oh, Molly, I still look, every time there's been an accident involving a Cessna airplane since I started 50 years ago, or I still get every accident report. Amazingly few. But I would say over 90% of the accidents that I see involving propeller airplanes are airplanes that are at least 40, 50, 60 years old. And so, we're no longer responsible for whatever those actions are. And there is absolutely no problem. I've owned an airplane that was 70 years old, and if it's maintained well and flown well and flown professionally and safely, there's no reason you shouldn't fly an older airplane. But typically, it's a lower time pilot. Typically, there's normally some sort of weather issue or some sort of pre-flight issue. So, you still have to know what you're doing to fly an airplane, but it's not the airplane's fault in 99.9% of cases.
Molly McMillin: Going back to the legislation, without that, there wouldn't be these training programs, like you mentioned. Like, the tagline for Cessna has always been, "We teach the world to fly."
Russ Meyer: Exactly.
Molly McMillin: You go to the schools or training programs, and I understand there are other [aircraft] out there as well, but you need that size of aircraft to get started.
Russ Meyer: You couldn't be more accurate. And I love your memory. We had bumper stickers that said, "We teach the world to fly." I love it.
Molly McMillin: I remember those.
Russ Meyer: We had an expression that, "If you are anywhere in the world and you hear an airplane and you look up, chances are better than 50/50 that it's a Cessna." So, in all those years, we made more propeller airplanes than all of our competitors combined. So, we were very, very proud of that. But without the airplanes that we and others are building and are building today because of GARA, there's no way we could have handled the [inaudible 00:22:06] requirements that we need to continue to grow and build the industry all the way through all the airlines too. So, it was an effort that sometimes things, for whatever reason, just sort of fall in place. And Ed and I always said we should write a book about this, because I'm sure I have omitted 40 or 50 interesting issues that I could have mentioned. But when you're trying to pass legislation of any kind, and you're dealing with Congress, and I don't mean to be critical, but there are tons of things that they're looking at.
Everybody has a little bit different issue. We have a relatively small industry compared to many others, but to have had the right people in those jobs, I don't think we could have done it. I know we couldn't have done it without Dan Glickman because without the discharge position, Jack Brooks would never have given us a hearing. But the sum total of everyone, Jerry Baliles was a very good chairman and allowed all these, and Greg Principato was his executive assistant during those hearings. So, a lot of those guys are still hanging around. Not all of them, but you look back on something that is so vital. And we just thought for a few years there was just going to be no chance to get it done. But we did. And it has been a phenomenal 30 years, and the next 30 will probably be even better.
Molly McMillin: Great. Well, that's a good place to end. Thanks, Russ, for going back and talking about that important piece of legislation and what's happened since then. And thank you all for listening, and thank you to Jeremy Kariuki, our producer today. We'll catch you next time.
Russ Meyer: Thank you.
Speaker 3: Thanks for listening to the BCA Podcast by Aviation Week Network. This week's episode was produced by Jeremy Kariuki and Guy Ferneyhough. If you enjoyed the show, don't forget to like or follow us on your podcast app of choice. If you'd like to support us, please leave a rating wherever you listen. Thanks again, and we'll see you next time.
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