S.D. Aerostar Drops Air Balloon Line Due to Liability Costs, Popularity Decline

Sioux, S.D.-based Aerostar International Inc., a subsidiary of Sioux Falls-based Raven Industries Inc., is getting out of the hot air balloon market.

A gradual decline in the popularity of the recreational activity and rising liability insurance costs have made the hot air balloon business no longer profitable, said Mark West, Aerostar’s president and chief engineer,

“Unfortunately, we cannot afford to stay in a business which is not profitable, even though it is the product line that founded Aerostar,” West said.

Aerostar, which Raven spun off in 1986, manufactures high-altitude research balloons, military parachutes, blimps, protective wear and advertising inflatables used in parades. The company will continue with its other lines.

But Aerostar will quit taking orders for balloons and major components early next year. It will, however, continue to provide giant inflatables for the annual Macy’s Thanksgiving Day parade in New York City, West said.

Raven entered the balloon business in the late 1950s. In 1960, four Raven engineers launched the first modern hot air balloon with a propane burner and sport ballooning took off.

Aerostar, which also has operations in Huron and Sulfur Springs, Texas, is the smallest of Raven’s four units with $18 million in annual sales during fiscal year 2006.

It now sells about 50 balloons a year, compared with nearly 300 per year in the late 1970s, West said.

The popularity of hot air ballooning has slowed since the heyday, and business has also suffered from the terrorist attacks of Sept. 11, 2001.

The Federal Aviation Administration changed rules to prevent aircraft from loitering in areas near dams and power plants to protect against terrorism.

Orvin Olivier, a member of the board of directors of the Balloon Federation of America, said Raven and Aerostar are known worldwide for producing some of the most high-quality balloons and parts.

“It’s kind of sad, but it was expected; you could see it coming,” said Olivier, of Sioux Falls. “Worldwide, Raven is acknowledged to be the founder of the modern hot air balloon.”