Discussion in 'Hangar Flying' started by nucleus, Mar 30, 2016.
Icon A5 Purchase Contract May Be More Complex Than The Aircraft Itself... | Aero-News Network
10 year life limit!
I stopped reading after that.
30 years: airframe overhaul at the ten and twenty year marks then toss it at thirty. Unless you fly lots, then it's an overhaul at 2,000 and 4,000 hours and toss it at 6,000 hours. If you had a busy school flying them you could be scrapping an Icon every six years!
Either the Icon is a "hot mess" or they didn't buy enough ANN advertising and are getting the "Jim Campbell treatment"!
Oop, you are correct.
But an average flyer logs less than 50 hours a year (after the first year thrill wears off). So in the first 10 years they have 500 hours logged and need to pay for an airframe overhaul. If it is anything like the mandatory Robinson R-22 ten year overhaul, it could cost more than half the purchase cost.
Figure the cost per hour!
Makes having to buy a 'service agreement' for your glider to keep the certification in force seem like a bargain. :shock:
Guy on another forum had a friend who'd had a reservation for an Icon, relatively early in the production schedule. When they dropped the purchase contract on him, he told them he was no longer interested. They gave him his deposit back, plus what the person described as, a "nice chunk of change that could overhaul most of our engines." Sounds like, with production deliveries (supposedly) going to start happening, Icon is trying to get back early production spots so they can sell them for more money to the over-eager.
The service life limits seem to be increasingly common. Cirrus aircraft have an airframe life of 12,000 hours, Columbia (Cessna) 400 is 25,200 hours...in both cases it's stated right in the Type Certification Data Sheet (TCDS). Diamond doesn't mention life limits in its TCDS, but Cirrus claims that the wings must be removed for inspection every 1,000 hours, with a more-in-depth structural inspection at 3,000 hours.
The Icon's life appear to be shorter, but we ARE talking about an amphibian. Operating on water is rough on an airplane.
Apparently you guys are missing the point of ICON's business model: They are in the business of creating jobs for themselves by selling dreams to naïve investors and want-to-be pilots. I submit to you that they have been VERY successful.
I am sure I am not alone in this, but for me:
skepticism = hype ^2
And the hype machine has been dialed up pretty high on this one.
It's simple math.
100 million of investments. Just to cover the interest you need 6 million a year. Even with good profit margins and without interest accrued so far, it's beyond me how they intend to earn that back...
The top people will live quite well, I suspect, off of the return on their investments made from their salaries, bonuses, and perks.
The lawyers will do well dealing with the bankruptcy.
Some notes and comments in no particular order:
I interviewed for a position at Icon last year, in the process of which I had a good look at their facility and tooling, and talked with a couple of their top people. I asked what sort of NDA I should consider myself under, and they pretty much just shrugged. They didn't seem to have anything in particular to hide.
Here's the important thing: These guys are tooled up the wazoo. I don't know if they can sell as many airplanes as they say they can. But I sure know that they can make as many as they can sell. They've clearly been talking to the right people about how to move composite airframes down a production line and out the door.
They also very clearly have a very nice airplane to sell. They've focus-grouped the crap out of the initial concept that the head guy (I forget his name) did for some business seminar at Stanford, and it seems to me that they've wrestled it into aerodynamic effectiveness. The cockpit is magnificent, and the detail design everywhere is really good.
You know the parable about boiling a frog? To my way of thinking, that's the kind of trouble these guys have gotten themselves into. They started with an appealing concept, refined it, developed it , got it flyable and manufacturable, and now it is an incredible product. All along, they were working in good conscience towards a an admirable goal. However, along the way they, slowly, incrementally took on so much debt that they have now priced themselves not only out of their target market, but out of reality altogether.
If they'd met the $100,000 target price pencilled into the margins of their original concept sketches, these little airplanes would be flying out the door, and each morning Bombardier and Cirrus execs would raise their coffee mugs towards Tehachapi and Vacaville in silent salute. Even at a $130k price tag, there would be plenty of takers. Because for their targeted aspirational international men (yes, mostly men) of adventure, $100k is the price of a fast boat or a motorhome or a starter cabin in the Sierra.
But at $250k you're up there in supercar territory. And where do supercars live? In garages. Occasionally to venture forth on a Ferrari-sponsored track day, or on a drive within the bounds of where you feel secure.
And you know what's pretty secure? Most GA airports, thanks to post-9/11 hysteria. So nobody blinks twice at $half-mil Cirri found at every small airport when they're not taking canopy rides into congested areas. What's not secure are the kinds of remote lakes and backcountry airports that are the adventure playgrounds that Icon is trying to sell. And if we've learned anything from the success of the Hummer and its gun-slit windows, it is that nothing sells like the feel of security.
Furthermore, at a $250k price tag, you're in the territory where a less debt-laden company can move into the market you've developed and pretty much eat your lunch. Consider for a moment the RV-12. Ditch the aluminum fuselage and replace it with a carbon fiber molding that looks enough unlike the A5 to get you around the bizarre patent laws that protect boat hulls. Plug the RV-12 wings into the top, hang the RV-12 motor onto the back, plop the RV-12 stabilator onto the carbon fiber fin, and there you are. The big plastic parts and the retractable gear have bumped your price by about 35%, and it is not going to have that lovely supercar interior, but you've achieved 90% of the performance and functionality for 50% the price.
Thanks, Bob K.
That's a good analysis, Bob. This airplane was always going to be a "toy", in the sense that few, if any, people are going to be able to justify its use for business trips, conferences, and other write-off travel. A Bonanza, it isn't.
At $100k or even $130k, it's "swing off the back of the yacht" material. They could've sold a whole whack of them at that price point, to that market, especially with the wing-fold to make it not take up too much space on the big toy. At $250k, well, yeah, there's still a sub-set of the super-rich where that still makes sense, but the number just dwindled, a lot. At $250k, the airplane doesn't make sense for the individual owner. Up in Alaska or Canada, where they actually use seaplanes, it doesn't have enough internal volume or useful load to compete with a less-expensive option like a Bearhawk on floats, amphibious or otherwise. And who cares if the interior is awesome if you're going to fill it with moose parts or someone's backup generator?
I started scratching my head when they began padding out the executive suite with some really high-priced guys. "Where's all the money going to come from?" Not the initial investment - clearly they sold that well - but the money to pay back the investment so that they could actually start making money. I think you're quite right - they simply got so lost in making "the best little seaplane ever" that they lost track of how much it all was costing, compared to what they could reasonably make from selling them. I'm sure the business plan was revised to make it all sound workable but, at some point, that turned from "stretching the truth" to fantasy material.
They're too well funded and too well organized to fail immediately, but I suspect that in about five years or so, we'll hear the company has been purchased by the Chinese, and we'll see another one go the way of Cirrus, Lancair, etc.
Heck, maybe that is the business plan at this point.
According to the article linked by the OP, here's a paragraph from the ICON sales agreement:
Not. On. Your. Life. Ever.
I think they'd be in a lot better shape if it was something you might call a "seaplane." But right from the get-go their concept has always been far more closely aligned with jet skis and similar watersports. It is unabashedly a toy; something of relatively little utility, intended to be played with rather than used. What it delivers is far more experiential than utilitarian.
"... which may include flight and cockpit video data, will be collected by, and may be transmitted directly to, ICON or its designees. Notwithstanding anything to the contrary herein, the flight data recorder and the data collected thereon is and remains after Closing the sole property of ICON. Buyer agrees not to remove or disable the flight data recorder ..."
My support of ICON is over as of the moment I read that. My right to privacy, and my right to be in control of how anything I purchase is used, and my right to limit the use of personal data, location, etc. is not up for debate with the vendor of a product that I'm spending my money on.
I'm the last guy on the planet who would oppose or refuse to support the success of a legitimate aviation company, but I will make an exception here and I wish ICON a quick insolvency and a dearth of customers.
The other thing is that these are 'preliminary' limits until more time is accrued and experience gained.
This 'limited life' thing, to me, is a non-starter as a complaint. I'm much more worried about other aspects of the contract such as the 'extra fee to sue' as opposed to a price break to agree to arbitration instead, which would make much more sense..
And the $5000 fine you have to pay if you can't get a subsequent buyer to agree to every single one of ICON's restrictions. IANAL, but I don't see how that's enforceable at all - they can't coerce you into being their agent by means of a simple sales contract - but just the huevos they have to try and pull that off turns my stomach.
I lost all curiosity about the airplane and the company when, year after year at Oshkosh, they refused to allow perspective customers get a close look at the airplane and had lots of people to answer questions, but no one to answer even the most simple technical question.
There's few startup plane manufacturers save that guy in the garage that actually can.
Time limitations are perfectly normal, so are 3000 hr inspections. But any decent composite shop could perform them.
I don't know how you burn through a 100 million dollars either. A team of 5 guys can engineer, build, perfect and certify an airframe in a year or 5 from the ground up. Throw in another million for outsourced stuff (molds etc) and another million for accommodation, airshows, PR etc and you're at less than 4% of what they burned through.
Similar to what I've seen to some well-funded new aircraft companies though, some of which most of you guys know. Universally it's a non-aerospace engineer (or someone with that experience) heading the company and making the big decisions. Business-guys, successful entrepreneurs and Silicon Valley types are probably the best guarantee of failure for a startup aerospace manufacturer.
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