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, 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, and aircraft parts, from liability for most accidents involving their products that are 18 years old or older, even if manufacturer negligence was a cause.
While GARA is considered a landmark event in the modern history of America's general aviation industry, debate continues over the effects and ethics of GARA.

History

General aviation industry decline in the 1980s and 1990s

Manufacturing downturn

aircraft production in the U.S. -- following its 30-year peak in the late 1970s—dropped sharply over the next few years to a fraction of its original volume—from approximately 18,000 units in 1978 to 4,000 units in 1986. to 928 units in 1994.
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.
At the time, industry analysts estimated that the U.S. decline in general aviation aircraft manufacturing eliminated somewhere between 28,000 and 100,000 jobs—as unit production dropped by 95% between the 1970s peak and the early 1990s—sharply different from other segments of the global aerospace industry, where U.S. market share was still strong.

Product liability costs

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 increased 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.

Product liability factors

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 - for general aviation aircraft than most other forms of transportation.
  3. Changes in the legal system including the rise of the rule of 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.

    Other changes to general aviation economics

However, other economics of general aviation had also begun to erode the market for light aircraft, including: rising insurance rates and restrictions for aircraft manufacturers, owners, operators, and maintenance providers, largely in response to the accident-liability issues; inflation and recession, and rising interest rates in the general economy; termination of the investment tax credit for light aircraft purchases; aircraft market saturation ; kitplane and foreign aircraft competition ; declines in consumer discretionary income; the changing demographics of income and wealth distribution, reducing the number of potential buyers; sharply increased fuel costs; urban sprawl competing with airport space; and regulatory restrictions.
The 1981 labor-relations battle between President Reagan and FAA air traffic controllers, and Reagan's subsequent firing of most U.S. air traffic controllers, resulted in significant reductions of U.S. flight operations -- particularly in general aviation, which was subjected to a new system of "flow control" regulating flights from busy airports, undermining the utility of general aviation in the U.S..
Also cited by some was an unsustainable surge in student pilots, triggered by the proposed elimination of government-funded private pilot training under the GI Bill for military veterans—with veterans scrambling to get the training while it was still available. The surge, some analysts have indicated, consumed most of the veterans' demand for flight-training that would have been spread out over several years if there had been no fear of program discontinuance. This surge in student pilots also triggered a transient surge in orders for light aircraft—for training and personal use—which also quickly consumed the veteran-related aircraft demand that would normally have been spread out more evenly over several years—creating, instead, a sudden, fleeting "peak" in aircraft purchases in the late 1970s, in place of what might otherwise have been a lower, longer, more-even "plateau" in the data.

Cumulative effect on manufacturers

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.

General aviation manufacturers' changes

The three leading general aviation aircraft manufacturers underwent major negative changes, which each blamed at least partially on rising product liability costs. Specifically:
Cessna Aircraft Company -- long the world's highest-volume aircraft producer, and largest general aviation aircraft manufacturer, posted its first-ever annual loss, in 1983. Following acquisition by General Dynamics Corporation in September 1985, Cessna suspended all propeller aircraft production in 1986. Cessna Chairman Russell W. Meyer, Jr. said it was in response to rising product liability costs, and Meyer promised to return Cessna to propeller aircraft production if 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 went in and out of bankruptcy, under various names, suspending or eliminating some long-popular models from its product line, such as the 2-seat Piper Super Cub, and 6-seat Piper PA-32 "Cherokee Six"/"Saratoga".
Beech Aircraft was acquired by Raytheon Corporation, 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, shifting company emphasis towards professionally operated corporate turboprops and business jets, and small military and commercial aircraft.

General aviation aircraft shortages

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 Beechcraft Skipper, were all removed from the market in the mid-1980s, and none of them ever returned.

GARA promoted and opposed

During the 1980s and 1990s, under the leadership of Cessna Chairman Russ Meyer and GAMA President Ed Stimpson, the industry pressured Congress, for several years, to enact limits on aircraft manufacturers' product liability. The proposed legislation became known as the "General Aviation Revitalization Act.
Proponents included:
Opponents included :
Promoters included Members of Congress. Some, with connections to general aviation were among the forces mobilized to pass the legislation, including:
Congressional support included:
Congressional opposition included:
The bill's language was reportedly drafted by Sen. Kassebaum, Rep. Glickman and GAMA/Cessna Chairman Russ Meyer, with Meyer pushing for simplification to a bill focused only on a statute of repose, and no other purpose. Meyer also promoted the bill as a "jobs" bill, to win the support of aircraft industry unions and other organized labor, traditionally popular with Democrats.
However, in a Jan.2008 article in the Seattle Univ. Law Review, 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.

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, 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:
Further, the statute is a "rolling" statute: The "clock" resets when modified or replacement parts are installed, so that a 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

Following passage of the GARA, U.S. general aviation aircraft production, in units, roughly doubled in five years, but still remained far below the 1970s production quantities. Meanwhile, contrary to an implied goal of GARA, average general aviation aircraft prices continued to rise. This was largely attributable to the shift of GA manufacturers towards building high-end turbine business and luxury aircraft, while keeping piston aircraft productions at a small fraction of their 1970s levels. The manufacturers were able to get increased income with smaller numbers of far-more-expensive airplanes.
The "big three" GA planemakers reacted to the enactment of GARA in differing ways:
Cessna, in 1997, resumed very limited propeller aircraft production of its two most popular models that had been suspended in 1986; the 172 and 182. In 1998, they resumed the 206. Cessna Chairman and 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 of most of its propeller aircraft line; including its 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.
Piper Aircraft continued in and out of troubles, but continued producing the types that had survived during the 1980s; and restored some that it had cut from its product line, such as the single-engine PA-32, reintroduced in 1995, the year after GARA was enacted; and twin-engine Seneca and Seminole. Some credit GARA with helping New Piper to emerge from bankruptcy and survive.
Beechcraft continued production of the two piston-engine aircraft models that had survived the pre-GARA shakeout, the Bonanza and Baron, but never resumed production of any of the types that it had cut during the GARA debate.
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. 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, purchase prices of various types of light aircraft 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:
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.

Safety outcomes

Economists
Eric Helland and Alexander Tabarrok, have argued that the outcomes of GARA demonstrate that product liability limits motivate safer behavior by consumers.
However, others have argued that safety improvement in general aviation have 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, advances in pilot education and training, and better operating methods and practices." A reduction in flight hours, owing to economic factors, is also suspected to contribute to a decline in accidents.