LSAs Just Cost Too Much
Whenever I spout off about the price of airplanes, especially LSAs, I usually hear feedback about it, both in the blog forum and in background e-mail. When I allowed as how most LSAs are right-priced at $120,000 or so, one reader sent me an e-mail calling that attitude arrogant. It may very well be. But it's also reality.
I've done some reporting on why LSAs cost what they cost and I find the argument that they really ought to sell for $60,000 or less to be ludicrous. People who seriously believe this are disconnected from reality. I might wish them to cost so little, but you know the crude joke about wishes in one hand and an unmentionable in another. For this month's Aviation Consumer, we're doing a comparison of the Cub clones—the Legend and Cub Crafters' Sport Cub—with our old, original J-3. I've spent some time interviewing Legend's Darin Hart about this topic. He's well versed in the original production numbers for the J-3 and Legend has a copy of every drawing Piper ever made for this airplane.
First, the price. The first J-3s came out of the factory at $1325, which was most of an annual salary in the late 1930s. C. Gilbert Taylor, who designed the J-3 progenitor, the E-2, and who was William T. Piper Sr.'s early partner, wanted to charge more. But Piper refused, insisting that a lower price would expand the market. (Sound familiar?) He was right. Those who argue that LSAs ought to be cheaper point out that accounting for inflation, the original airplane would now sell for about $20,000. So if these LSA companies are charging more than five times that, they must be making a killing, right?
If only. What this exercise ignores is that the cost of airplanes has vastly outstripped the rate of inflation. Why this is so is not entirely easy to pin down, but that it is so is undeniable. A big reason is that wages during the period have also outstripped inflation and, curiously, airplanes are the same labor intensive products now that they were in 1938. In other words, the man hours necessary to build a car, a radio or a television have shrunk dramatically thanks to automation and robotics. But airplanes are still made with rivet guns, rubber hammers, clecoes and screwdrivers wielded by hourly workers.
One history I read said that Piper's average factory wage in 1938 was 20 cents an hour. I don't know if that's correct or not; it sounds low to me. Other data I've seen on depression-era wages suggests that 50 to 70 cents is closer to the average. Twenty cents an hour in 1938 would be the equivalent of $3 today—that's $2 less than the federal minimum wage. Bump it up to 70 cents and the equivalent is $10 in 2011 dollars. I suppose it's always possible that Piper was really running a sort of airplane sweat shop, but the company was mostly profitable and he was trying to survive in the depression, after all.
Darin Hart told me his research reveals that the original Cub required about 1100 man hours to build. You can't simply multiply that number by the labor rate because that doesn't account for factory overhead, which is likely much higher now than in 1938 because of benefits, workplace safety and so on. Higher productivity per worker offsets that in many industries, but is that true in airplane manufacturing?
For comparison, Hart says his factory overhead is $800 to $1000 an hour and that the labor total for a Legend Cub is about $35,000. Thanks to CNC machining and other efficiencies, he says a Legend Cub typically requires 800 man hours to build. You can see where the equation is going. Legend has found a way to whack off a quarter of the build hours against a labor rate and overhead that's probably quadrupled. There are other factors related to materials costs and insurance, but you get the picture.
Pilots hardover on the escalating prices of airplanes tend not notice that other big ticket purchases cost much more than inflation allowances might suggest. A 1938 Chevrolet sedan retailed for about $700, the equivalent of $10,500 today. The cheapest thing Chevy sells today is the Aveo at about $12,000, but an Impala—the equivalent of the 1938 sedan—sells in the $25,000 range. You can apply the inflation game to all sorts of products. Some are cheaper, some way more expensive and some just deliver a lot more capability or features for the same money. Electronics fall into that category, especially computers.
Back to the Legend and its supposedly lofty price of about $120,000. Is it a better airplane than the 1938 Cub? Yes, it is, by far. Everything about it is better—the engine, the steel frame, the seats, the cabin, the covering. It's also faster and safer. I'm all for nostalgia and such, but if I had the choice of flying the old J-3 or the Legend (or Sport Cub), the new airplanes would win every time.
As a journalist, I can score points with readers by railing against the high price of airplanes and decrying the lack of less expensive models that will expand the market as Bill Piper did in 1938. There's a natural—and understandable—kneejerk reaction to chaff against paying half the cost of your house (or more) for something you use once a week, maybe. But I just can't stomach that sort of pandering because I know it to be unsupportable by the facts, as is the notion that lower prices will expand the market. What was true in 1938, isn't necessarily true in 2011.
If that's arrogant, I'm guilty of it.