General Aviation Revitalization Act

The General Aviation Revitalization Act of 1994 -- also known by its initials GARA -- is Public Law 103-298, an Act of Congress on Senate Bill S. 1458 (103rd Congress), amending the Federal Aviation Act of 1958.

It was intended to counteract the effects of prolonged product liability on general aviation aircraft manufacturers, by limiting the duration of their liability for the aircraft they produce.

GARA is a statute of repose generally shielding most manufacturers of aircraft (carrying fewer than 20 passengers), and aircraft parts, from liability for most accidents (including injury or fatality accidents) involving their products that are 18 years old or older (at the time of the accident) -- even if manufacturer negligence was a cause. Debate continues over the efficacy and fairness of GARA.

• Introduced as Senate Bill: S. 1458 (103rd): General Aviation Revitalization Act of 1994
• Introduced: Sep 14, 1993 (103rd Congress, 1993–1994)
• Sponsor: Sen. Nancy Kassebaum [R-KS]
• Signed by President Bill Clinton, Aug 17, 1994.
• The bill’s title was written by the bill’s sponsor.

History

General Aviation Industry Decline in the 1980s/1990s

General aviation aircraft manufacturers, in the 1980s and 1990s began to terminate or reduce production of their piston-powered, propeller aircraft, or struggled with solvency.

General aviation aircraft production in the U.S. dropped from approximately...

• 18,000 units in 1978

...to only...

• 928 units in 1994. (p.975)

(In a 1993 speech, Sen. John McCain said "nearly 500 last year [1992]")

At the time, industry analysts estimated the U.S. decline in general aviation aircraft manufacturing eliminated about 100,000 jobs -- sharply different from other segments of the global aerospace industry, where U.S. market share was still strong. (p.975)

Those manufacturers' reported rapidly rising product liability costs, driving aircraft prices beyond the market, and they said their production cuts were in response to that growing liability. .

Average cost of manufacturer's liability insurance for each airplane manufactured in the U.S. had risen from approximately...

• $50 per plane in 1962,

...to...

• $100,000 per plane in 1988,

...according to a report cited by the Bureau of Labor Statistics -- a 2,000-fold increase in 24 years.

Rising claims against the industry triggered a rapid increase in manufacturers' liability insurance premiums during the 1980s. Industry-wide, in just 7 years, the manufacturers' liability premiums inceased nearly nine-fold, from approximately

• $24 million in 1978

...to...

• $210 million in 1985.

Insurance underwriters, worldwide, began to refuse to sell product liability insurance to U.S. general aviation manufacturers. By 1987, the three largest GA manufacturers claimed their annual costs for product liability ranged from $70,000 to $100,000 per airplane built and shipped that year.

Industry representatives and analysts variously blamed one or more of three general factors for rising product liability costs:

1. Long-lived products General aviation aircraft manufacturers chiefly specialized in small and light aircraft which often remained in operation for several decades after their manufacture -- much longer than automobiles or even most commercial aviation airliners.
2. Higher fatality rate (per passenger, per mile traveled) for general aviation aircraft than most other forms of transportation.
3. Changes in the legal system, including the rise of the rule of [[Sp[trict liability|strict liability]], increasingly applied by courts nationwide during the 1960s and 1970s, so that aircraft product liability lawsuits became a rapidly rising area of specialty for the legal profession in the 1980s, with some attorneys successfully specializing in targeting general aviation aircraft manufacturers and insurers.

However, other economics of general aviation had also begun to erode the market for light aircraft, including:

• rising insurance rates and restrictions -- for manufacturers, operators, and maintenance providers -- largely in response to the previous issue,
• aircraft market saturation (due partly to accumulated numbers of old, but still flyable, light aircraft -- built in abundance during the industry's economically favorable "boom" years).
• foreign competition, and inadequate response by U.S. manufacturers ,
• changing demographics of income and wealth distribution, reducing the number of potential buyers,
• sharply increased fuel costs,
• urban sprawl competing with airport space,(pp.6-8)
• regulatory restrictions.

As a consequence of these factors, apparently, general aviation aircraft manufacturers began to experience sharply declining revenues and rising costs, in the 1980s, with resulting declines in income and rising contingent liabilities.

The three leading general aviation aircraft manufacturers (accounting for over half of U.S. general aviation aircraft production) underwent major negative changes, which each blamed at least partially on rising product liability costs.

• Cessna Aircraft Co. -- long the world's highest-volume aircraft producer, and largest general aviation aircraft manufacturer, (following acquisition by General Dynamics Corp.), suspended all propeller aircraft production in 1986. (except the Cessna 208 Caravan commercial/utility turboprop). Cessna Chairman Russell W. Meyer said it was in response to rising product liability costs, and Meyer promised to return Cessna to propeller aircraft production if (and when) the Congress passed satisfactory changes in product liability law. In the meantime, Cessna shifted its focus to business jets and commercial/utility turboprop aircraft.

• Piper Aircraft Co. went in and out of bankruptcy, under various names, eliminating several long-popular models from its product line, such as the six-seat Piper PA-32 "Cherokee Six"/"Saratoga".

• Beech Aircraft Co. was acquired by Raytheon Corporation (and renamed Raytheon Aircraft), and shifted its emphasis away from general aviation propeller aircraft, like the Beech Bonanza and Beech Baron -- and discontinuing all other piston-propeller aircraft models (from 2-seat, single-engine Model 77 Beech Skipper trainer to 7-seat, twin-engine, pressurized Model 60 Beech Duke) -- shifting company emphasis towards professionally operated corporate turboprops and business jets, and small military and commercial aircraft.

As a consequence of these changes, and others, the general aviation industry began to suffer from a shortage of new aircraft -- particularly for training, rental and charter use. (The three main training planes of the industry in the 1980s -- the two-seat Cessna 152, Piper Tomahawk, and Beech Skipper -- were removed from the market in the mid-1980s, and never returned.)

GARA Promoted & Opposed

Opponents included (chiefly):

• The Association of Trial Lawyers of America (ATLA)
• Public-interest advocacy groups, including Public Citizen.

Proponents (supporters) included:

• Kansas politicians, led by Senator Nancy Kassebaum (Kansas is the nation's leading producer of general aviation aircraft);

• the General Aviation Manufacturers Association (GAMA), particularly represented by Russ Meyer, Cessna's Chairman & CEO;

• the International Association of Machinists and Aerospace Workers Union (IAM)/(IAMAW) -- the labor union representing workers at several general aviation manufacturers' factories;

• the Aircraft Owners & Pilots Association (AOPA), the main U.S. organization for general aviation aircraft owners and pilots.

During the 1980s and 1990s, under the leadership of Cessna Chairman Russ Meyer and Ed Stimpson, President of the General Aviation Manufacturers Association (GAMA), the industry pressured Congress, for several years, to enact limits on aircraft manufacturers product liability.

Promoters included Members of Congress with connections to general aviation were among the forces mobilized to pass the legislation, including:

• U.S. Senator Nancy Landon Kassebaum, (R-Kansas) from the home state of Cessna, Beech Aircraft/Raytheon Aircraft, the Learjet div. of Bombardier Aircraft, and light sport aircraft manufacturer RANS Aircraft. Kassebaum led the Congressional effort, and co-sponsored the legislation with Rep. Glickman (below).

• U.S. Representative Dan Glickman, (D-Kansas) from Wichita, -- "the Air Capital City" -- the hometown of Cessna, Beech Aircraft/Raytheon Aircraft, and the Learjet div. of Bombardier Aircraft, and many other aviation enterprises. Glickman co-sponsored the legislation with Sen. Kassebaum (above).

• U.S. Senator James Inhofe (R-Oklahoma), a general aviation pilot from the home state of Commander Aircraft, provided substantial support to the proposed legislation.

Congressional support included:

• U.S. Senator John McCain, (R-Arizona), who gave a

[sponsoring speech in favor of the GARA, Nov.11, 1993 on the floor of the U.S. Senate,

• U.S. Senator Kay Bailey Hutchison, (R-Texas), who offered a defense to Sen. Metzenbaum's critique, remarks, March 16, 1994 on the floor of the U.S. Senate.

Congressinnal opposition included:

• U.S. Senator Howard Metzenbaum, (D-Ohio), who gave a detailed speech, March 16, 1994 on the floor of the U.S. Senate, critiquing the proposed provisions of the GARA.

In "A Good Idea Stretched Too Far: Amending the General Aviation Revitalization Act to Mitigate Unintended Inequities," (Seattle Univ. Law Review, vol.31/p.973, Jan.2008), Kerry Kovarik argues that the exact language of the final draft of the Act exceeded the intent of Congress -- as indicated by the generating committees and the Congressional debate record -- creating "inequities" and poor judicial interpretations, with unintended negative consequences for crash victims, far beyond what Congress intended -- to include any aircraft with less than 20 passenger seats, operated in any activity other than scheduled commercial service, including helicopters and business jets, despite a lack of Congressional discussion of those exemptions.(p.982)

GARA Passed

The General Aviation Revitalization Act was passed by the Congress in 1994, and signed by President Bill Clinton in a White House ceremony August 17, 1994.

The final law exempted manufacturers of general aviation aircraft (aircraft with less than 20 passenger seats, not operated in schedueled commercial service), and their component parts, from liability for any of their products that were 18 years old or older at the time of the accident.

Certain exceptions apply:

• If the manufacturer withheld or concealed information from the FAA, or misrepresented information, that is directly related to the accident's cause;

• If the accident victim is a passenger on an air ambulance flight, or otherwise in flight, to get medical treatment;

• If an otherwise-exempt aircraft killed or injured someone not aboard the aircraft (e.g.: a person on the ground, struck by the aircraft); or

• In suits over a written warranty involving an otherwise-exempt aircraft.

Further, the statute is a "rolling" statute: The "clock" resets when modified or replacement parts are installed, so that an 20-year-old aircraft may still be the object of a successful suit against a manufacturer if it contains manufacturer modifications or parts installed within the last 18 years.

Outcomes

There is debate about the results of the GARA. Some believe it has revitalized the industry, and some believe it has made little difference -- even encouraging continued or resumed production of high-risk vehicles.

Manufacturing Outcomes

Among the three leading general aviation manufacturers, the following changes have occurred following passage of the GARA:

• Cessna Aircraft Co., was acquired by Textron Corp., and in 1994, shortly after passage of the GARA, resumed very limited propeller aircraft production of its three most popular (and statistically safest) models that had been suspended in 1986:
  • Cessna 172/Skyhawk,
  • Cessna 182/Skylane, and
  • Cessna 206/Stationair

Cessna Chairman & CEO Russell W. Meyer said it was in response to passage of GARA, and in keeping with his "promise."

However, Cessna did not resume production most of its propeller aircraft line, including it's most efficient and high-performance piston-propeller aircraft, or any of its twin-engined propeller aircraft. Cessna continued to focus chiefly on business jets and commercial/utility turboprop aircraft.(p.985)

• Piper Aircraft Co. continued in and out of bankruptcy, but continued producing the planes that had survived during the 1980s, and restored some that it had cut from its product line, such as the Piper PA-32, reintroduced in 1995, the year after GARA was enacted.

• Beech Aircraft Co. / Raytheon Aircraft), and continued production of the general aviation piston-propeller aircraft models that had survived the pre-GARA shakeout -- the Beech Bonanza and Beech Baron but never restored any of the propeller planes that it had cut during the GARA debate.

Beech/Raytheon continued to focus on professionally-operated corporate turboprops and business jets, and small military and commercial aircraft, as it struggled with many problems that led to its sale to Onex Corp., renamed as Hawker-Beechcraft, ultimately declaring bankruptcy in 2012 -- shedding its troubled business jet line to become Beechcraft in 2013, selling only propeller aircraft (and military drones).

The General Accounting Office of the U.S. Congress estimated, after GARA's passage, that 25,000 new jobs had been created -- exactly the quantity predicted at the hearings. (p.985)

However, the public-interest advocacy group Public Citizen has cited testimony March 1997 by Cessna senior vice president John E. Moore, before the Senate Commerce Committee, March 6, 1997, acknowledging that Cessna's product liability costs had not been reduced after the passage of the GARA.

In fact, various light plane prices (including some Piper, Beech and reintroduced Cessna planes) went up sharply during the early years of GARA, leaving doubt about industry representatives' claims that GARA would cut airplane prices.

Liability Diffusion

Since GARA, attorneys have begun pressing other segments of the general aviation industry and community as alternative defendants to the manufacturers, including:

• parts manufacturers
• maintenance organizations
• flight instructors and utility/charter pilots
• flight schools
• aircraft owners' insurance and personal assets.

(This list includes "FBOs" (fixed-base operators) typically airport-based aviation service businesses providing flight training, charter flying, rental aircraft, aircraft storage, fueling and/or maintenance.)(p.985-986)

The result of shifted liability focus has been an increase in costs elsewhere in the industry, and directly to aircraft owners and pilots, and their estates.(p.985-986)

Safety Outcomes

Libertarian economists (Eric Helland) (Claremont McKenna College) and (Alexander Tabarrok), (George Mason University) have argued that the outcomes of GARA demonstrate that product liability limits motivate safer behavior by consumers. (article summary by author Alex Tabarrok at: "Aviation, Liability Law, and Moral Hazard"

However, others have argued that safety improvement in general aviation has been chiefly the result of a market shift away from owner-flown aircraft, towards professionally operated aircraft, and due to other changes, such as improving technology.

See Also

"GARA: The General Aviation Revitalization Act of 1994 (Public Law 103-298)," AVweb.com, complete text of the 1994 law, as provided by The Editors of AVweb, from documents Provided by the U.S. Department of Transportation, January 14, 2001

Clinton, William J., President of the United States, "Statement on Signing the General Aviation Revitalization Act of 1994, August 17, 1994," online by Gerhard Peters and John T. Woolley, The Presidency Project online archives, Univ. of California at Santa Barbara.

C-Span Video, "House Session June 27, 1994," video and notes, C-Span Video Library, Washington, D.C. (video of House of Representatives discussion of GARA and other topics.).

Kovarik, Kerry V., "A Good Idea Stretched Too Far: Amending the General Aviation Revitalization Act to Mitigate Unintended Inequities," Seattle University Law Review, Vol. 31, No. 4 (2008), Jan.2008, p.973, Seattle Univ. School of Law, Seattle, WA, USA PDF download.

Ladomirak, Deborah C., William L. Greene and Diane Manifold, Competitive assessment of the U.S. commuter and business aircraft industries, Report on Investigation No. 332-204, Under Section 332 of the Tariff Act of 1930, USITC Publication 1817, United States International Trade Commission, March 1986, as reproducd by GoogleBooks.com

Truitt, Lawrence J. and Scott E. Tarry, "The rise and fall of general aviation: product liability, market structure, and technological innovation," Transportation Journal, June 22, 1995, American Society of Transportation and Logistics, Inc. , as reproduced on the website FreePatentsOnline.com'

Aubert, Garth W. and Michael A. Hession, "Trends and Developments: The General Aviation Revitalization Act," 2004 Law Report, Aircraft Builders Council. (a legalistic dissertation on the evolving use and interpretation of the statute).