The death of General Aviation

Great Debates
1

On page 9 of The Great Ongoing General Aviation Thread, I posted this:

It is a graph of the cost of the Cessna 172 from 1956 to the present, and a graph of the U.S. median income from 1967 to 2013. For much of the production of the 172, the price increase is linear. It is above the median income, but not greatly so. After the General Aviation industry crashed in the '80s, Cessna, then a subsidiary of General Dynamics, did not build any piston-engine singles for eleven years. Textron bought Cessna in 1992. When Textron started building Cessna SELs again in 1998, the price skyrocketed. Furthermore, the price curve was no longer linear. It became parabolic. Meanwhile, the U.S. median income continued rising linearly.
The post elicited this response:

Certainly ‘stupid’ jury awards did much damage to the industry. I’ve heard it said that 50% of the cost of a new aircraft was to cover liability. My personal recollection is that the most egregious jury awards occurred in the late-'70s and early-'80s. There is an upward bump in the price of a Skyhawk around that time.

But there are two things to consider: The General Aviation Revitalization Act of 1994 limited liability to 18 years. Liability should have been reduced. Secondly, even if liability still accounted for 50% of the cost of an aircraft, the price increased much more than that and continues to rise in a parabolic arc.

The other common explanation of airplane costs is ‘FAA regulations’. And of course, people always blame lawyers and Congress. New airplanes must be certified under much stricter standards that those that applied in the past. Textron chose to reintroduce some of their piston-singles, and comply with the new certification rules. They didn’t have to. If they wanted to start building 152s and 210s again, they can do it under the original certifications. The 172 came out in 1956. Its start-up costs have been paid for many times over. Did Textron spend money to make it conform to current rules? Yes. Did they spend enough to justify the enormous price increase and the ever-increasing increases? I don’t think so.

I believe that the high prices are due to the airplanes being built by large conglomerates for whom General Aviation is only a small part of the business. They are uninterested in building a customer base for the product line, and are only concerned with dividends for the stockholders. (Incidentally, Beechcraft now belongs to Textron too. And they also own Lycoming.)

So what are the ‘FAA rules’? Certification? That only applies to new designs; not existing certified aircraft (unless a manufacturer decides to voluntarily conform an existing certified aircraft to the new regulations). I keep hearing about NextGen, which will require a new transponder. This will cost about $5,000 to $6,000 per aircraft. Airplane owners are going to get a big bill in a few years. But manufacturers can get volume discounts, and are also saving the cost of buying an older transponder – a luxury current owners don’t have. The FAA has reduced the cost of flying by introducing new pilot’s certificates that require less training and fewer hours than a Private Pilot’s Certificate.

So what are these ‘FAA rules’ that add $100,000 or $200,000 to the price of an entry-level airplane? If it’s ‘Congress’s fault’, what are they doing to add that amount? Lawyers and juries did cause a lot of damage – basically shutting down the industry – 30 years ago. What are they doing now, that the liability premium constitutes 400% of the cost of an airplane?

2

I went to a forum at Oshkosh that had Burt Rutan and a group of aviation manufacturers. In one sentence he congratulated them on their latest designs and ripped them a new asshole. I’ll paraphrase what he said. You can’t sell X if you don’t sell X-$reality. In other words, a quarter million dollar plane is worthless if there isn’t a $50,000 entry plane people can buy and learn to fly in.

I learned to fly in cessna 150’s, 152’s, 172’s and Piper Cherokee 140’s. They have a life span and eventually will be difficult to maintain. I periodically have to throw real money at my airplane above the cost of annuals. It might be $1000, it might be $10,000.

3

Because so few planes are being sold, they lack economies of scale so prices have to be high just to cover the R&D and setup costs.

4

That was always true and explained the high price in the past. But as LA pointed out the cost is not in line with salaries.

5

I agree. Textron wants to build Citations and King Airs for corporate aviation. But where will the pilots to fly them come from when the pilot population has been declining for more than three decades?

In the Golden Age of General Aviation, say, 1950 to 1980, we didn’t have the Internet or smart phones. Video games were something you went to an arcade to play, or plugged a box into the antenna connector of your TV. There was cable, but it was limited compared to what is available today. TVs were much smaller then, too. (You were doing well if you had a 24" screen. Most people I knew had 20" screens.) When the GA industry crashed, personal flying fell off the public’s radar. Thirty years of inactivity and a over a decade of outsourcing, layoffs, bankruptcies, and a generally poor economy have removed flying from many people’s imagination entirely. Pricing new airplanes an order of magnitude above the reach of the target market – while at the same time doing nothing to rebuild the consumer base – is the formula for going out of business; not (re-)building an industry. Of course Rutan said it better and more succinctly than I did.

See Magiver’s answer. I’ll add that the Cessna 172, priced in the chart, was designed in the 1950s. It was nothing more than a 1940s Cessna 170 with a nosewheel and a square tail. (The square tail was going to be on the 170C, but Cessna decided to stop the 170 and move forward with the 172.) Of course there have been many improvements over the past 60 years, but the R&D costs have been paid for several times over.

The economies of scale are real. They don’t build enough airplanes because nobody is buying them because the airplanes are too expensive because they don’t build enough of them.

This wasn’t always the case. At its peak, GA built 15,000 airplanes a year. The bad news is that airplanes last for decades and decades, so people don’t need to buy them as often as they did cars. The good news is that they were inexpensive enough that people (especially flight schools) liked to buy new ones. Today the GA market is expanding in China. Charitable groups in poor countries need airplanes to fulfil their missions. If people were buying new airplanes, the used fleet that is not consumed domestically could easily be sold or donated overseas to eager recipients. Airplane makers, Textron in particular, need to rebuild their consumer base. That takes money. Certain segments of society might say, ‘Stop whining! If you want to buy a new airplane, just work hard and generate a seven-figure salary! All you have to do is get rich, ya lazy bum!’ I say that the airplane makers need to invest in themselves. That’s the point of investment: To layout capital so as to secure growth and profits. Instead, they treat their products as cash machines. When the cash runs out (and it will, since there are no customers) they’ll dump it and move onto something else. You can’t maintain a business of all of your profits go to shareholders.

6

All good points in general in this thread.

Points to cover as we go IMO:

Military is the one of the very few ways for a kid to learn to fly if poor or parents do not have enough credit for credit. ←( did that on purpose )

Regular people are now not near as willing to be responsible for self. ( have seen & talked too pilots that don’t carry, can’t use printed charts and say the ‘new nav stuff’ is all that is needed. ) Yeah it is against regs, what is your point?

General Pop is moving to computer controlled transport. Don’t want to mess with learning or fear, or whatever.

Was a time, Comanche with 360 radios & transponder C & I could go to 99% of all the big airports. Then I had to have an additional $50 - 500 - 1000 for each landing.

Number of uncontrolled airports with services where a basic Champ, with no radio can get what is needed for flight coast to coast with less than dry tanks to the next place and no other route possible.

I can get some kind of license to fly very restriced, I can even get regular PVT, COM-INST if you have nuff $$$ but you still need a suitable plane.

If I have a perfect Comanche with free maintenance & hanger but no radios or nav equip of any kind, how much to get legal with tech no older than 4 years, so I do not have to upgrade in the next year?

The number of fearful ones have increased but more importantly, they have found that they can get airports closed even if they do not have a legal stance. The general population does not trust those that they THINK do not have enough government oversight. They are not right about Gen Av but they they think so. "My God, you mean you can go anywhere and not have to get permission in an AIRPLANE !!!

There are still enough military pilots & kids are willing to take on most any debt to get in the airlines and I think that will hold for a while.

I think I got to have the best run, 1956 to 1998 ( when I flew regularly ) and sadly, that has been lost for the average guy. I don’t think we can get anywhere near those times with Gen Av again.

We need to make the new better.
Better urltra-lites, Sport class, home-builts, low powered, no radio required on & two place aircraft even cheaper, safer and aimed at those pilots than we are now.

My personal interactions with The FAA, lawyers, anti-general aviation, big iron aircraft folks, from the Fed level to Company big wigs, Airline Pilots Union, the hanger floor sweepers, the general trend of the average street people fearful of being responsible for themselves, that I don’t think it will never get done.

I am old and my knowledge is not wanted, accepted, or thought relevant by those pilots of today. “It will never happen to me & I do not need to practice for it…” Yes, some insight on flying a Swift, pipeline patrolling, the difference between a C-170 & a C-180 is not useful for those things have been engineered out and can’t hurt us now. Or since, “I don’t do that I will not ever get in that situation.” And they believe it. Enough manage it to make it through the many think that they will also be a blessed.

My health and mental sharpness have declined to ever be PIC again in most anything. Some guys get to 80+ and still going strong. I am not one of them. ( rats )

Oh, and get off my lawn… Bawahahahah

7

I do remember seeing magazine ads for single engine aircraft, IIRC in National Geographic. Although even regarding that time we need to remember that aircraft were still very expensive compared to then-typical salary levels, in terms of how the price compared to, say, a luxury car which might then have sold for five or six thousand, it seems as if general aviation was much more accessible, and therefore financially justifiable for anyone who had a good business reason for owning one.

8

The increased costs of fuel certainly didn’t help general aviation. Nor did the IRS removing may of the tax breaks that were allowed for business travel flying your own private plane.

I live near a town where there is almost no civil aviation. When I see a Cessna or a Beechcraft in the air around me I know that it is coming from elsewhere or that it is the State Police monitoring traffic on the interstate.

9

I lived in San Diego on Sept. 25, 1978 when PSA 182 hit N7711G over North Park. I saw the aftermath of the collision, and even attended some of the public hearings on the incident. The press, of course, screwed up the facts completely (the 172 rear-ended the 727, etc.) and the public went nuts over that incorrect, irresponsible reporting. The outcry demanded all small airplanes go somewhere else to fly, far away from the real airplanes, and leave the flying to the pros.
What followed was a knee-jerk air space grab that ruined pleasure flights over San Diego. Between the public whining, the cost of flying, the FAA’s wanting more airspace than it can ever use and the irresponsible reporting by the press, GA is on life support.

Of course, that’s my opinion, and YMMV.

10

Emphasis mine.

Airplanes certainly have always been expensive. But they were affordable to the middle-class wage earner – especially those above the middle of the middle class. Here are some numbers from the table used to make the chart (it’s formatted into columns on my browser):



Year     Skyhawk price    Median income   % cost vs. income
1967	    $13,300.00	      $6,054.00     219.7%
1968        $12,750.00	      $6,583.00	    193.7%
1970	    $13,995.00	      $7,559.00	    185.1%
1972	    $14,995.00	      $8,424.00	    178.0%
1976	    $17,890.00	     $11,172.00	    160.1%
1978	    $29,950.00	     $14,896.00	    201.1%
1982	    $33,950.00	     $18,801.00	    180.6%
1985	    $44,000.00	     $21,821.00	    201.6%
1987	    $49,600.00	     $24,187.00	    205.1%

So basically, for 20 years (I don’t have data for the 10 years prior to 1967) a new Skyhawk cost about twice the nominal median income. Expensive, but consistent.

Now take a look at what happened when Textron brought them off hiatus:



Year     Skyhawk price    Median income   % cost vs. income
1998	   $124,500.00	     $37,635.00	    330.8%
2005	   $229,750.00	     $44,951.00	    511.1%
2008	   $297,000.00	     $48,762.00	    609.1%
2009	   $297,000.00	     $48,276.00	    615.2%
2010	   $297,000.00	     $47,793.00	    621.4%
2011	   $307,500.00	     $48,545.00	    633.4%
2014	   $369,000.00	     $51,939.00	    710.4%

Instead of staying around twice the median income over the interval, the price of a Skyhawk went to 3.3 times, 5.1 times, 6.1 times, to over 7 times more than the median income.

So yes, General Aviation was much more accessible before Textron took over, and financially justifiable for anyone who wanted an airplane. Also, the availability of new aircraft made used ones more accessible.

11

Where is the foreign competition?

12

China is gearing up to do just that. They already have a 2 seat electric plane. It’s just a matter of time before they break into small aviation on a larger scale.

13

Diamond is based in Austria, and their DA-20 is a popular trainer nowadays. (I think it’s used by the USAF.) A new one will set you back about $240,000. The DA40 costs about $340,000, making it only slightly cheaper than a Skyhawk ($370,000).

I can’t think of any foreign manufacturers currently building factory-built airplanes in the Cessna 172/Cessna 152/Piper PA-28 class. Cessna had its 162 manufactured in China, but it was discontinued this year.

14

Data from the 1940s would be interesting. Middle class professionals flying airplanes to resorts in the Boundary Waters Canoe Area was becoming so much of a problem that they passed a law banning it in 1949. Also, I understand the thrill of flying, but I wonder if deregulation and the coming of Southwest and similar caries has discouraged it, making it even more expensive relative to flying commercial.

15

They sure have been. The prices you give, and their rise, are comparable to a new Ferrari in the same year, and an airplane is a far less practical purchase than even a Ferrari, which you can drive to get a bottle of milk if you want to. Long distance travel in a Ferrari means you start from your home and end at your destination, and while there you can tool around and go on little side trips. With a C-152 you first have to drive to your home airfield, file a flightplan, fly to an airfield near your destination, and rent a Chevy to drive around in. Additional levels of complexity few people want to mess with on their days off. You not only need to be financially rich, but also rich in time to fly. And then there’s the whole matter of breakdowns, where survivability of an engine failure is not an issue on the ground.

Also, WWII gave us tens of thousands of trained pilots; the modern military produces far fewer.

16

Does anyone know how many SEL type planes were sold each year in bygone days compared to recently?

I, too, think that the insanely low price of commercial tickets today, compared to the sometimes insanely high prices of pre-deregution, must have something to do with it. I’m also wondering if the urbanization of the South and the West over the last half century may have a role: I just don’t think city dwellers want to drive 45 minutes to an airport in order to rent a plane to have a $150 hamburger.

17

Data point. In 1970 a Ferrari 365 GTB/4 was $27,000 about twice what is quoted for the aircraft.

18

A Dino was about $14K, IIRC. I didn’t say it was the top of the line, like the 172 Skyhawk wasn’t the top of Cessna’s line.

19

I think basically every airplane gets sold. A figure I’ve heard was 15,000 planes were produced one year in the late-'70s. I’ve just done a google search and found a figure of 14,398 in 1978 source: GAMA). It also mentions that in 1985 only 444 aircraft were produced. In 2013, the figure is 2,256, of which only 933 were pistons. I don’t know how many of those were SELs.

20

In addition to whatever factors are specific to general aviation, there’s simply been a general decline in interest in expensive, time-consuming and occasionally dangerous hobbies. Motorcycles, boats and campers all saw basically the same trend as general aviation, peaking as the baby boomers reached early middle-age in the 70’s and 80’s and steadily declining in the following decades. The same basic complaint is also there that the manufacturers now only build expensive high end bikes/boats/RV’s and are therefore killing the hobby not offering cheaper entry level ones, but (at least IMHO) the evidence points more towards the manufacturers responding to the shrinking and aging market than being a cause of it.