The World According to Mac: Why New Airplanes Prices Are So High.

[Kyle Boatright]

It all comes down to economies of scale. Lycoming probably ships a couple of hundred new 0-320's a year. More O-360's, because of Van's, and probably a couple of hundred new 0-540's. In total, maybe 1,000 new engines a year. Even if you go crazy and assume 5x that, the volume is tiny compared to the number of each of its engines Honda builds. That matters. A lot.

Radios, GPS's, etc. Same thing.

We get killed on economies of scale.

[steveinindy]

Wes, I like your "EAA is a big tent"idea. That's mostly what I feel at Oshkosh, but sometimes on this forum it feels awfully separated into fractions.

I am glad to know that I am not the only one who feels like that. To each and to their own as long as they do their thing in a safe way that improves or at least maintains GA's reputation.

[cluttonfred]

While I understand the logic of Mac's point, I wonder if there might still be a role for a lower-cost option. Seriously, when is the last time any general aviation manufacturer actually tried to build and market a true entry-level aircraft? Cessna markets that Skycatcher at well over $100k! I am not necessarily saying that there are millions upon millions of dollars to be made being the Volkswagen Beetle of aircraft, but there does seems to be a niche that needs filling. But I just don't see any company with Volkswagen aspirations, everybody wants to be Porche.

[redbarron55]

To observe the markst since the 1970's you find that Cessna and the others realized the market for new airplanes was limited, but the used aircraft market was more robust. So how to manufacture used airplanes? The answer was dealer operated flight schools, lease back etc. The dealers operated the new airplanes purchased at cost, depreciated and earned income as rental and then sold used.
The flight training drove the manufacture of used aircraft through rental from the fbos.
This training activity at that level no longer exists and the rental market is not the same either.
The main market has always been for used and business aircraft. No difference there, only the level of activity has changed so the economies of scale have changed.
This was changing in the late 70's when the manufacturers overproduced light aircraft and the market has not consumed them yet! Fileds were covered with unsold light Cessnas awaiting owners.
Fortunately for us these aircraft are still operational if properly maintained.
The ready availability of these planes along with the declining utility and market have kept the demand for new aircraft relatively low and prices high further inhibiting growth.
I wonder what the average age of pilots might be? If the average age gets one year older each year we are in trouble!
Flying does not seem to be attracting young people like it did since the romance and glamor has been dulled over the years.
Recreational dollars can be more easily spent in other activities that are advertized on TV and internet while aviation goes begging. The young eagles not withstanding there is little promotion to attract the young upwardly mobile who could possibly afford to fly.
Reduced utility and the interstate highway and better more comfortable cars have displaced the small airplane as a mode of transportation at the 100-300 mile trip that is the probable mission.
Better cars, less utilization, higher cost, lower interest, equals less demand and higher costs.

[WLIU]

So engine manufacturers seem to make money selling factory reman engines, but Cessna/Piper/Mooney never tried that.

Car dealers seem to make money selling "Certified Pre-Owned".

I can buy a second hand RV-x for less than the cost of a new LSA.

I saw some hint on the internet that some big flight training operation is selling off their Cessna Skycatchers in favor of older C-150's due to the economics.

There has to be a viable business model in aviation somewhere that attracts and holds new pilots. I hope that the new EAA Eagle program helps. Anyone participated?

Best of luck,

Wes
N78PS

[Floatsflyer]

The 2012 annual report for S-LSA sales is out as compiled by Dan Johnson. There were a total of 259 shipments for the year. The top 5: Skycatcher(94); Cubcrafters(48); Aerotrek(13); Flight Design CTS and American Legend tied with 11 each.

By comparison, GA piston shipments for '12 were 881(down by 2% over last year).

An interesting telling stat, though I'm not at all surprised, is in the E-LSA category where the leader was Vans RV12 with a total of 203 registered in 2012. One can only think that Vans should become the S-LSA leader for this year as they and a partner are now producing factory built ready to fly RV12s ($105-115K).