That is simply not true. I think that you don’t get something for nothing. Airplane makers – and I say again that I’m using Textron because they own the most successful brand of all time, and that brand is virtually synonymous with light aircraft – need to invest in the future. I’m using – again, specifically – the Skyhawk because there has never been any aircraft that was produced in more numbers; and because I have the historical price data for it, which I don’t for other makers. In no way am I saying they need to reduce the price of aircraft just because I want them to. I’m saying that unless their target market can afford to buy their products, they will not sell enough of their products to bring down the cost of production.
Both you and Ravenman have said the planes are expensive because there aren’t enough buyers. Why aren’t there enough buyers? I pointed out several factors early on. But there are plenty of people who are buying airplanes. Why are most of them buying 40-year-old airplanes, or buying kits and building them themselves? What factor could there possibly be that prevents them from buying a new aircraft instead of an old one? Could it be… price? If the 172 is correctly priced, then why aren’t they selling a thousand of them a year?
Cars used to be a very expensive luxury item. Then some guy figured out that if he built a bunch of them, then it would cost him less to build each one and more people could buy them. He invested in the future. You guys seem to be saying that airplane makers don’t need to risk any money in order to build sales. Why should they be different from any other business?
I’m not sure how much more clear that this point can be made: if you aren’t selling a whole lot of something, it is going to be much more expensive to build. It’s just a basic fact. I still don’t understand what you expect Cessna to do: just simply cut its price in half and hope a lot of people start investing in flight training so they can buy a new plane in two years? How does a company that is already losing money afford to slash prices on a manufactured product?
The analogy that is coming to me is probably like going back in time several generations when sailboats simply ceased to be a form of transportation and started becoming a tool of leisure. There’s no question at all that sailboats became more expensive when companies started making a few a year rather than dozens (or whatever). Bringing sailboats back to the prices that they were when they were used as transportation doesn’t mean there will be more sailors!
I, too, fully understand your support for GA. But what you’re saying here - that corporate greed is destroying this industry – doesn’t even make the smallest lick of economic sense. I mean, do you think that businesses just go out and build huge numbers of very expensive products hoping that people will start buying them? Like, that companies are just friggin’ clueless about their markets and their sales are dictated by their hopes and dreams that if they plow tens of millions of dollars into building things that are literally going out of style, they will become fashionable again?
I’d like to point out a similar thing has happened in the small sailboat market. You CAN still buy a brand new sailboat in many of the models you’d like but it is ridiculously expensive.
FAA regulations demand upkeep of aircraft, no matter how old it is. This requirement and the hanger fees I think push owners to sell something they aren’t using, which keeps older models on the market that is shrinking for other reasons cited above, which intern diminishes a market for new reasonably priced small craft.
Because the market for new planes simply does not appear to be there.
Your position appears to be that you know more about pricing airplanes than the companies that make airplanes. Your concentration on the Cessna Skyhawk is not just because it’s popular, it’s because it allows you to avoid the very uncomfortable fact that their competitors charge pretty much the same amount for the same products. But that’s a point that is absolutely unavoidable; if Textron/Cessna is making a mistake, why isn’t Piper doing what you suggest and taking the market over?
Gee, I wish I understood that. Otherwise I might have posted it in Post #5. Oh wait, I did.
You don’t seem to understand my question: If people aren’t buying your product, why aren’t they buying your product? If the major factor is the cost of your product, isn’t it incumbent upon you to find out a way to increase sales? Or is it the consumers’ fault?
You have not shown that cost is the major factor, and have failed to address the point that the price of a Cessna Skyhawk is in line with more or less equivalent products from completely different manufacturers - an absolutely crucial point.
Many alternative possibilities as to why people aren’t buying many small airplanes have been presented, all of which you’re handwaving away:
Commercial air travel became much cheaper
Fewer people with piloting experience
Vast inventory of used aircraft, which provide, by your own admission, essentially similar functionality
Increased ancillary costs
Tax implications
Better highways, making driving a more viable option for long range personal travel
More restrictions on GA aircraft and allowable flight paths
I’ve been flying for 30 years, and I’ve seen the prices go crazy. But to me it seems rather clear what happened.
First, the way airplanes are maintained means that used airplanes essentially do not degrade. Parts are replaced as they wear, and the planes keep flying. The airframes can go tens of thousands of hours before things really start to go downhill and repair becomes prohibitively expensive - and even then, some airframes just seem to go forever. The DC-3 is almost 80 years old, and it’s still in commercial service. It might still be flying on its hundredth birthday.
So, every aircraft that Cessna, Piper, and Mooney make becomes a future competitor for their new aircraft sales.
Now in the auto industry they get around this by substantially improving and re-designing their vehicles every few years. This keeps up demand for the new models. They also keep costs down by investing billions of dollars in productivity improvement. But they can do that because they sell millions of units of each vehicle and can afford to sink a lot of R&D in them. General aviation manufacturers can’t really do that. In addition, government regulations have frozen the designs - the basic aircraft engines in use today were essentially designed in the 1920’s to the 1950’s. It’s just too expensive to really come up with anything new - ask Porsche, which tried to break into the general aviation market with a new engine design and lost a boatload of money.
So with aircraft designs fairly static, and a growing inventory of nearly-equivalent used aircraft, the new aircraft industry entered an economic death-spiral of declining sales causing higher per-unit costs, which drives sales down even more…
I would love to blame government, product liability lawsuits, and all the rest. And they certainly play a part, but not the major one. The major factor is that after WWII there was a huge boom in general aviation, causing thousands of planes to be manufactured each year. Those planes are still on the market, competing with the new ones.
Another thing: I don’t think you can blame the high cost of new airplanes for the declining interest in General Aviation. After all, used aircraft are still very affordable, and are perfectly good.
For example, Trade-A-Plane shows this Grumman Cheetah for $33,500. This aircraft only has 1900 hours on the airframe, and only 14 hours since the engine had a major overhaul. This is an airplane that will out-perform a brand-new Cessna 172 in pretty much every way. Not only that, the cost of owership is going to be lower than a new mainstream car like a Ford Fusion or a Toyota Camry, because this aircraft will not depreciate. I owned a Grumman AA1 for 10 years - bought it for $9000, sold it for $13,000. The money I made from the sale paid for the insurance and tie-down over that period, so I flew for 10 years for nothing more than the cost of gas an oil and a bit of maintenance.
This can still be done. There are thousands of inexpensive, perfectly serviceable used aircraft on the market. Anyone who wants to get into aviation for the kind of money it took in 1980 can still do so. Forget new aircraft - those are aimed at flight schools, charter outfits, and the independently wealthy. Used aircraft ARE the general aviation market.
I think the decline in interest in General Aviation has more to do with a changing culture, the exit of the WWII generation and the massive bubble of pilots that came out of that war and the boom in aviation that followed the war. After 9/11, the bureaucratic hassles and restrictions added to the decline in interest. An aging population also means more medical issues keeping people from flying.
There are no easy fixes for this. Eventually, the used airplanes out there will age themselves out of the market, and demand will rise for new ones and that will help bring costs back down.
I have not had a good week, and I’ve been a bit touchy. Now I’m exhausted and feel I need to step back from certain things.
So let me step back a little in this thread. Yes, I’m pissed at Textron since it was under their control that Skyhawk prices went on their exponential rise. I am aware that Pipers are also expensive (cheaper than a Skyhawk), but I have not gathered data on them. I’ve always flown Cessnas, and I have a particular interest in the 172. I did recently buy Bill Clarke’s The Piper Indians, but haven’t ‘studied’ it as I did for his book on the 172. I haven’t collated any data for the Cherokee. Lacking data, I won’t debate Piper.
I have been told that I’m saying I believe Textron must reduce prices because I want them to. Since I was rather prickly earlier, I took the bait. That’s not exactly what I’m saying. Sam Stone says GA is in a death spiral, and indeed I pointed out the vicious circle early on. Let me try again to explain what I mean. The graph shows that the price of one particular make and model of airplane for which I have data, has been rising at an exponential rate, and wages have been rising at a linear rate. Fewer people can afford to buy a new aircraft today, than could afford to buy one 40 years ago. It has been pointed out by me and others that fewer consumers means lower production, and lower production means higher prices. I don’t buy the assertion that airplanes are appropriately priced, because the cost of production is so high. As a consumer, I measure price by ‘value’ or ‘worth’. That’s a whole 'nother debate. Let my try an analogy. Suppose a brand new car costs $25,000; and the going rate for the same car, a year old and with just a few thousand miles on it, is $20,000. Both have the same utility, both appear new, etc. Why not save some money and buy the depreciated car? Because it’s ‘worth’ it for many or most people to have the satisfaction of owning a new car. But suppose that the price of a new car rose 10% per year. Eventually they would be so expensive that people would stop buying new cars. The new cars are no longer ‘worth’ the price. Or take my GMT Master II. I bought it because I wanted an automatic watch, the cheaper Breitling looked ‘too busy’ to me (the whole point was that I wanted an unhip, stodgy watch), and I like James Bond. It was ‘worth’ it to me at the time to buy a Rolex. But today the price is like four times what I paid for mine in 2001. New ones are just not worth the price. But again, debating ‘worth’ is going off on a tangent and it’s been hard enough to remain focused recently.
I and others have mentioned that the declining pilot population (or as Sam Stone put it, ‘decline in interest’) has much to do with modern diversions. I believe that for those who are interested, cost is the major factor. I think the chart shows why. So what do you need to sell stuff? You need a product, you need consumers of the product, and the product must be attainable to the consumers. If you don’t have consumers, then it doesn’t matter how great your product is. It’s not going to sell.
The problem as I see it is that entry level airplanes are intended for people making median income or slightly above. A Skyhawk isn’t particularly fast, and it won’t carry a lot of payload. But a Skylane is fairly fast, and you can load it up. The 210 was even faster. (Now, Cessna’s fast plane is the Corvallis.) You make an ‘entry level’ airplane so that people will buy your more expensive airplanes. Unless you’re Beechcraft. They abandoned the training and ‘family plane’ market to Cessna and Piper, to concentrate on their luxury line. You have to have customers, and you need to get them in the door. Retail stores often have ‘loss leaders’. They take a loss on a product in order to make a profit on others. Obviously that’s a bit problematic with airplanes. The manufacturers need to do something to build their customer base. This has been simplified in this thread to ‘Johnny says they have to give their planes away free.’ What I’m actually saying is that in order to stay in the SEL market, manufacturers will have to make their airplanes attainable to consumers. Sounds the same, but it’s different.
Corporations don’t get to sit back and let money roll in. They need to invest in their products and in marketing their products. How can they make this investment? Well, they could sell their airplanes for $200,000 instead of $400,000. They’d have more buyers. With more buyers, the cost of production comes down. When the cost of production comes down enough, they’ll make a profit that will stand for the long term. Or they could ramp up production first. The cost per unit comes down, and they will be able to price their planes closer to their intended markets. Or they could get people interested in flying the planes that are already out there. This would induce FBOs to buy new airplanes to attract more customers. Again, production goes up and the cost goes down. So I’m not saying ‘They have to lower their prices bevcause I want them to.’ I’m saying that there are ways for them to invest in their future and keep the market alive. In other words, ‘It takes money to make money.’
As it is now, the model is not sustainable. As has been pointed out, there are lots of used airplanes on the market and most people will opt for anything that flies rather than pay ten or more times the amount for a new plane.
And getting back to the OP: People say that ‘the FAA’ and ‘Congress’ are to blame for high prices. I’d still like to hear specifically how.
Johnny - remember a few years ago when Detroit was teetering on the brink of collapse? What do you think would have happened if GM simply dropped prices on all its underperforming brands by 40%? Do you think Saturn and Pontiac would be healthy companies that would be around today as a result of selling products at a substantial loss?
One other thing with the basic premise of the thread… how many recreational pilots these days are actually interested in owning an airplane? Among the (somewhat) younger folks I know who are into flying, having a plane that’s just going to sit in a hangar most of the time isn’t something they really aspire to. Obviously the initial purchase price affects rental rates, but on a plane that’s getting tons of hours put on it it’s relatively less important versus maintenance costs.
It seems to me that in terms of getting more people flying, the rental rates (and instruction rates) are way more important than the actual purchase price of a new airplane. Does anyone collect statistics on what those have been doing? My outsider impression is that over the past couple decades they’ve obviously gone up, but not exponentially like the price of the planes themselves.
I’ve always wanted to learn to fly but could never afford it. And even if I could scrape together the money to get my license I certainly could never afford to own/rent a plane.
So in the U.S. what type of income does one need to have so that they can get licensed and fly a couple times a week?
Sorry about your bad week. You should get out and fly - it will make you feel better. (-:
All light aircraft have gone up in price by a similar amount. A base Piper Archer is now $338,000. Tiger Aircraft bought the type certificates and the tooling to make Grumman AA-5 aircraft again. Despite the huge discount in R&D and proiduction start-up costs they saved by buying an existing type and tooling, they still had to sell the AG-5B Tiger for $239,000 in 2005 - and they went out of business because they couldn’t make a profit.
This is not Cessna’s fault.
I’ve flown pretty much all the light aircraft under discussion - Pipers, Grummans, Mooneys, Cessnas, and a few others. The Cessna is unique in terms of utility - easiest to get in and out of, best downward visibility due to the high wing, great short field performance with those huge flaps and low wing loading, easy to load and unload, etc. But they’re slow and not as manoeverable as the competition. They’re the pickup trucks of the light aviation world.
Not quite. I think the manufacture of NEW aircraft is definitely problematic, since they have to compete with so many perfectly good used planes. But that’s cyclical - eventually those used planes will be retired from service, and that will drive up the cost of the ones that remain. Eventually, that cost will get high enough that there will be demand for new planes again in higher quantities, and that will revitalize new manufacture to some extent. This process will take decades, not years, because used aircraft last a long, long time.
That’s pretty much irrelevant. All it tells you is that the price is being set by something other than the market’s ability to pay - hence the overall decline in the market. If the real costs of building an aircraft today are in the hundreds of thousands of dollars, then income of potential buyers has nothing to do with it since you can lower the cost of the aircraft by wishing it so.
Why not? What evidence do you have that this is not the case? Or do you just choose not to believe it because you don’t want to?
In any production, you have fixed costs and variable costs. Savings due to quantities of scale only apply to fixed costs - the more things you make, the lower the percentage of fixed costs per unit. But variable costs stay the same or can even increase with quantity (due to scarce resources, need to hire more people at higher salaries to fill demand for workers, etc).
Why do you think a Bugatti Veyron costs $1.5 million dollars? Due you think the materials in the vehicle cost 1000 x more than the materials in a Ford Focus? No. The reason the Veyron and other supercars cost so much money is largely because they cost tens of millions of dollars to develop, and only sell in quantities similar to light aircraft - hundreds or maybe low thousands at best. That means all the R&D, tooling, salaries, warehouses, sales depots, and other sunk costs must be amortized over a small number of units, which drives the per-unit cost through the roof.
I don’t get your point at all. Of course if the price of something rises above what the market will bear, sales will drop. That’s non-controversial. The question is, why are prices rising, and is there anything the aviation industry can do about it? Or are you suggesting that they sell their aircraft at a loss, and make up for that in volume? (-:
Just think how many watches Brietling could sell if they were $500, which is what I could afford. I’m guessing that Brietling could probablyu sell ten times as many watches at $500 than at the current price. So why don’t they reduce their price to $500? Or $50?
[qujote]I and others have mentioned that the declining pilot population (or as Sam Stone put it, ‘decline in interest’) has much to do with modern diversions. I believe that for those who are interested, cost is the major factor. I think the chart shows why. So what do you need to sell stuff? You need a product, you need consumers of the product, and the product must be attainable to the consumers. If you don’t have consumers, then it doesn’t matter how great your product is. It’s not going to sell.
[/quote]
That’s right - which is why there are many, many things the average consumer can’t buy. The argument that prices should be lowered to make the product more ‘attainable’ only makes sense if you can prove that prices are unreasonably - and irrationally - high to begin with.
Let me ask you - if Cessna is over-pricing their products, what’s to stop Piper, Diamond, Mooney, or any of the other general aviation manufacturers from dropping their prices by 50% and stealing Cessna’s market? Do you think they are all in collusion to restrict their own markets and contribute to their own death spiral?
It’s not different at all, if ‘making their aircraft attainable to consumers’ is impossible while still making some kind of profit. Given that General Aviation manufacturers go bankrupt every second Sunday, I don’t think there’s a huge amount of profit to be trimmed out of the light aircraft industry.
Your argument is like saying that Yacht manufacturers could make a lot more money if they just sold their ‘entry level’ yachts for $20,000. That would bring a lot of people into the sport, and grow their market. Some of those people would eventually get rich and buy the more expensive luxury yachts.
The problem with that argument (and yours) is that it begs the question: Is it even possible to sell a yacht or a light aircraft at ‘attainable’ prices? If not, it really doesn’t matter, does it?
Do you think the people who run these companies are idiots? Do you really believe that if there was an easy path towards revitalizing their market and growing their customer base they would not have already taken it?
Yeah? How much does the cost come down? Do you have any idea? What are the fixed vs variable costs in a light aircraft? What will doubling the market due to the per-unit cost of a plane? Unless you know the answers to this, you’re just hand-waving and making up arguments with no facts to back them up.
I’m guessing the managers at Cessna, Piper, Beechcraft, and the others know exactly how much the planes would cost at different production levels. And they’re not doing what you suggest. Why do you think that is?
And that will be true even if a new plane only costs five times as much. Or two times as much. At what point do you think the used market will die?
The cost for getting a type certificate and a production certificate is very high. That’s why existing designs sell for so much money to new manufacturers. Incremental improvement as in the auto industry is very difficult when every change requires an STC or a new type certificate.
Hell, the FAA has even acknowledged this by supporting the recreational aircraft program.
By the way, if you think a Cessna can now be made for anything close to the cost of a used one, I suggest you look at the costs in the homebuilt aircraft industry. A Van’s RV-14 is equivalent to a Piper Archer, and the kit is $90,000. That aircraft didn’t require certification, uses basic off-the-shelf parts and techniques, etc. Van’s doesn’t need to have a delivery network, a manufacturing certificate, a manufacturing test program, etc. A certified version of that would probably be pushing $200,000. And that’s one of the more inexpensive homebuilts in the performance category.
Vans also makes a fully assembled light sport aircraft, called the RV-12. It uses a cheaper Rotax engine, has very basic instruments, almost no upholstery, etc. And it’s $120,000. If it had to go through the full type certificate program, it would cost a hell of a lot more.
It is more about disposable income than percentage. On a $5,000/mo income around here it is easy enough to live on $2500-$3K. That leaves at least $2K/mo of disposable income so to spend a good portion of that on something one enjoys is not unusual.
Well yeah I get that. But if a guy was spending 27% of his income a month on model trains people might think he’s a little loopy. Lol. But don’t let me derail- I know it’s a real passion for some and they’d gladly give up dinners out for it.
Many who are that into planes seek opportunities to earn income from it, of course. As long as you’re flying a lot, why not offer tours, lessons, etc.?
Just found this thread last Thursday when Asterion told me about it during our last Doper Poker session.
I am in the earliest of stages of inquiring about getting a Private Pilot’s License, and I have visited my local Muni Airport (only 3 miles from my house!) out in the SoCal Mojave Desert, and I met the instructor last Saturday and got the rundown on the requirements and costs…roughly about $7k which includes everything. Ground school starts in February (or maybe in March if the instructor has anticipated knee surgery at the beginning of the year). I asked what can I do in the meantime, and she steered me towards this book… “The Complete Private Pilot” by Bob Gardner (http://www.sportys.com/PilotShop/product/9909/?utm_medium=cpc&utm_campaign=Brand&adpos=1o1&creative=53001792262&device=c&matchtype=&network=g&gclid=CIHott_WgsICFcaCfgoduJIASA).
Any other things I should be looking at or doing before ground school? I will take an introductory flight with the instructor before and spend an hour or two discussing and answering questions.