The GA Market

Discussion in 'Hangar Flying' started by Wanttaja, Sep 29, 2019.

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  1. Oct 1, 2019 #61

    Dan Thomas

    Dan Thomas

    Dan Thomas

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    Numbers from the US are different than for here in Canada. I pumped gas for 45 cents an imperial gallon in 1970. Now it's around $1.25/litre, or $5.63/gallon. (That's around C$4.70 USG, or US$3.50). Way more than ten times here. Minimum wage was $1.25, now it's $15 in most places; 12 times more. Houses here in Canada are fearsomely expensive in the cities; a $204,000 house would be a real bargain. Or a dump. The 172 I learned most of my flying in was $19/hour in 1973; now that exact same airplane would go for $175 and a six-year-old one, which is what that airplane was when I flew it, would cost closer to $200. The instructor was $5/hour in 1973, and now he's $55 or more.

    Taxes hurt. Income and sales taxes are higher than they were 50 years ago, leaving less for stuff like flying. Even so, the flood of imported goods mean we can own a lot of stuff that we couldn't afford back then. A lot of homebuilders then were using hand tools to build an airplane; now they can own considerable machinery, and nice stuff at that. Some of the wood suppliers back then offered cutting services, ripping spruce to widths and thicknesses required by the buyer. A tablesaw was a luxury for some, see?
     
  2. Oct 1, 2019 #62

    ScaleBirdsScott

    ScaleBirdsScott

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    A Caterham is basically a glorified go-kart (not to diminish how awesome it is) and so doesn't need a lot of stuff to it; engine, frame, basic drivetrain, a few other doo-dads. And all of that piggybacks off of the value savings from using automotive components, from just the ability to use off the shelf parts that are cheap, to being familiar tech for mechanics, to not needing huge man-hours in custom fabrication the likes of which an aluminum aircraft skin requires.

    Additionally, the price is somewhat determined by the market. Other opportunities on the market probably offer roughly comparable performance per dollar, so they can't go charging $100,000 for something if a guy can go get something close for half that from a competitor.

    An Aeromomentum or similar type of automotive engine conversion process does take advantage of this, and as a result is 1/3-1/4 the cost of a certified-type proper aircraft engine for the same class of weight/performance, and often with more advanced tech. Despite there only being a small number of AM engines built up and sold per year, because it piggybacks off of the orders of magnitude greater exposure and experience plus cheap parts coming from the automotive industry, the resulting price (while expensive compared to a pure auto engine on its own) is quite reasonable in context.

    So that's another factor: hundreds of thousands or millions of people familiar with throwing together a car, and probably billions of potential customers who could drive said car. If they run into volume issues, Caterham simply needs is to expend as much money on marketing as is required to get enough drivers willing to pay for their car versus some other prospective fun car, in order to reach a volume where their per-car costs keep the lights on. Aviation doesn't have that luxury. There are not enough potential, willing, customers out there where a company can even propose a "build it cheap and they will come" mentality, where all they need is some fancy marketing and a whole bunch of new customers will come out of the woodwork.

    Most older pilots now, already have their airplane. And if they want a new airplane they're either going to build it, or they clearly have the money to just pay the $150k+ for something factory made. Younger prospective pilots are largely outside of the market, for reasons already beaten to death in this thread and in countless others. And companies don't have any incentive to appeal to that market since there isn't a clear trend of new young pilots beating their drums demanding a cheap aircraft. So the companies will simply maximize their revenue and have no reason to spend a lot of time and effort to cut their costs in half and reduce their profits by large margins in the hopes that eventually they'll triple their sales.

    Now don't get me wrong, if Cessna came out at Oshkosh next year and said "hey we're gonna make a Cessna 152 2020 LSA edition with all these bells and whistles, full glass cockpit, plenty of power, ballistic chute option, runs on Ethanol-laden auto-fuel just fine, and we're going to charge $55k for it; oh and flight schools will get a discount on them if they get 4 or more, and we're going to also introduce big plans to put these aircraft all over the place in public with programs to get subsidized primary flight training so that you can take a few weekends and get your full license with plenty of support. And we offer tons of factory financing and insurance options all turn-key so you just need money down and decent credit and you're flying in no-time"

    If they did that, I can assume they would indeed sell hundreds of those a year. They might break 1,000 sales a year. Even if it was $65k they'd probably do well. And their market would mostly be younger people, guys who want a starter plane and are willing to get the "Corolla" of aircraft just to get up there.

    Or say some smaller upstart brand tries to do it if Cessna won't. They could be hitting up all kinds of people looking for money to fund a harebrained scheme to exploit the hell out of YouTube as marketing and introduce turn-key financing for a factory-built little plane, very cheap, with primary training and first year of insurance as a pilot and for the airframe bundled in the agreement, as long as you have a job and decent credit and can put like 10% down. Also, maybe at certain airports agreements for new hangers with priority to these new buyers, skipping all of the waiting lists and so-on. Maybe they buy large communal type hangers that owners can pay a monthly rent in and get to hang out in the cool kid's club, with free airport parking and access to the lounges at any of the other ones around the world.

    All of that certainly would streamline the process, address social desires, and give younger and newer pilots few enough excuses, that some will show up and take the deal having never seriously considered being a pilot before. And a few hundred the first year might turn into a thousand in due course, and eventually that program might be getting a few thousand new pilots globally added to the roster. It would probably end up making money if none of it screws up. For a while at least.

    But I doubt at the end of it all, the people running it would be significantly better off than if they'd just made a kit or stuck with a $130k LSA like we have today. They'd have spent tremendous energy, expanded the company far beyond being a project any passionate individual can manage, become indebted or interdependent on dozens if not hundreds of different companies, dealt with regulations, regulators, and local boards, negotiated with all sorts of insurance and financing people, screwed over people and been screwed over in the course of all of this. At the end of it they may have had to sell significant amounts of the business' equity; It would be a massive gamble for all involved and it might completely flop; and all for what, to encourage people who are otherwise content with the other stuff that fills the brief moments of excitement they allow themselves, to become pilots? To give the younger generation of pilots something new to buy vs being a reliable place for older pilots to dump their aging primary trainers in some kind of aluminum pyramid scheme?

    It certainly seems like a noble cause but I feel you'd have to find a company for which that end goal is intrinsically in their DNA, part of their sole purpose of existing, and who has smart, driven engineers and fabricators and business people and marketers, all of whom are driven to just build cheap stuff for the masses, and not go after the draw of doing a fraction of the work to make considerably more money.

    (Also regulations and the FAA and volatile landscape right now have some role in all of this, too. :D)
     
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  3. Oct 1, 2019 #63

    Dan Thomas

    Dan Thomas

    Dan Thomas

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    One learns by watching the struggles of others. Icon. Lancair (Columbia). Cessna's 162 Skycatcher (and they also bought the Columbia and have stopped producing it). There are many examples of startups that just don't make it.

    One could maybe find a country that has little or no regulation regarding aircraft manufacturing, and build something cheap. But would you want to fly it? How much risk are you willing to take? The FAA would never allow its importation.

    Members of our society have become risk-averse. Perhaps that's from the helicopter-parenting and bubble-wrap generation. Kids aren't allowed to climb trees or go camping or swim in the river or play in the street or go outside in the dark. Some of them grow up fearing the great outdoors and anything that presents a risk. So unless they can buy a crash-proof airplane that flies itself and needs little or no training, they're not interested.

    It doesn't help that the media play up and exaggerate any aircraft incident or accident, while ignoring the many times more car accidents that result in far worse carnage. People are essentially taught to fear small airplanes.
     
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  4. Oct 1, 2019 #64

    BoKu

    BoKu

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    That would be about the same revenue as selling two Model 700 Citation Longitudes.
     
  5. Oct 1, 2019 #65

    BJC

    BJC

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    And there would be much less liability with the two Citations.


    BJC
     
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  6. Oct 2, 2019 #66

    crusty old aviator

    crusty old aviator

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    Your points are well put, Ron, but they don’t really apply here in New England: by road, you can’t get there from here, but by air, you can...especially in winter when flying off skis!
     
  7. Oct 2, 2019 #67

    gtae07

    gtae07

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    But certification costs area big part of it, even for older designs. All of your changes have to be certified, for one (I'm simplifying a bit here but they all need some form of approval). Dan Thomas elaborated on it a bit with putting the C172 back in production. Keep your airplane in production long enough and you start having to make changes, if for no other reason than parts and supplies go obsolete and aren't available any more. (Don't even get me started on the parts problems with airplanes that are no longer in production...)

    But another major issue is producing aircraft under a Production Certificate. That's expensive too, and it generates truly obscene amounts of paperwork--and as time goes on, the amount of paperwork (digital or dead-tree) for each unit of production seems to grow, regardless of whether there are any design changes or not. Even more so than with the certification standards, the rules here are "one size fits all"; the increased demand by the FAA for traceability, quality control (which done the FAA way all too often seems more concerned with making sure the paperwork is right rather than whether the work was done well and correctly), and standardization of every material, process, part, or ingredient used to make an airplane, is mainly driven by the need for high safety levels in transport-category aircraft (airliners, large business jets, etc). But again, the rules are one-size-fits-all and your C150 has to be made under the same rigid FAA control.

    Also note that any changes in how you make the parts, even if the design of the end part isn't affected, need to be approved somehow. The FAA wants to be notified in writing if you make any changes to your production process, even (depending on the Fed who's interpreting the rule that day) just moving work tables and fixtures around on the shop floor.

    A lot of this stuff generates massive fixed costs--that is, things that cost about the same per unit time whether you're making one thing or a million. As demand (and therefore sales) dropped, these fixed costs remained, so you had to amortize them across fewer units (which increased the price). It costs a lot to keep an airplane factory open.




    I've spent my entire career so far at an aircraft manufacturer, and in the last few years I've started to have to deal with certification stuff doing in-service support. It is truly, stunningly mind-blowing how much paperwork, labor, and overall frustration is expended on dealing with the bureaucracy of the FAA and its myriad rules. There are days I'm surprised my desk doesn't have permanent forehead-sized dents struggling to find a way around some obnoxious regulation that is keeping us from doing or making something that is demonstrably fine. The paperwork generated on a single heavy maintenance visit of a large aircraft is literally staggering--I'd have a lot of trouble trying to carry it just by weight alone. The last five years have made me incredibly grateful I grew up immersed in homebuilding and have the means, opportunity, and ability to pursue that. I've also sworn to myself that I'll never own a certified airplane unless something like the Primary Non-Commercial proposal is enacted.
     
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  8. Oct 3, 2019 #68

    pwood66889

    pwood66889

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    Gtae has it right. "Fixed costs will eat you alive" is one of my quips from when I first got into non-Air Force aviation in the mid-1970's.
     

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