Sport Aviation Expo 2011
It may seem like only yesterday, but the light sport aircraft rule is coming up on its seventh birthday and if everyone or anyone was expecting explosive growth out of this segment, they've had to settle for mere endurance. That's my impression of the mood at the seventh U.S. Sport Aviation Expo in Sebring which closed on Sunday.
Modest though it may be, there are several reasons to like this show. One, it's small. A determined visitor can do the show in a day or two and not just see everything, but see it in detail. Second, would-be buyers can actually fly airplanes right there on the show grounds and the fewer barriers to doing that, the better. Some manufacturers will—and did—connect directly to customers and actually sell airplanes. Third, Bob Woods: He's a tireless organizer and promoter of this show, placing the exhibitor concerns ahead of all else. You don't see that often in trade shows and it deserves a tip of the hat.
Attendance at Sport Expo tends to be thin but potent. "This is a focus show. Everything is LSA. No warbirds, no military, no airshow and no bands at night. It's apples to apples," said Bill Canino, who was showing off his iCub at Sport Expo. Other exhibitors told me the same thing. Contacts and leads they develop at this show payout through the rest of the year.
Last year, we did a couple of stories on market outlook for 2010. While everyone was hoping or predicting some kind of recovery in 2010, it didn't happen. In fact, according to Dan Johnson, overall sales for 2010 were down over 2009, which was itself a dismal year. So this year I didn't bother with market outlook stories. I sense that people don't want to talk about it and, frankly, neither do I.
Still, there are bright spots. American Legend's Darin Hart told me production has picked up a bit for its popular Cubs, to one a month or perhaps a little over. But bear in mind, Legend was doing five to seven a month at its peak. At Kitfox, John McBean told me his LSA production is booked up for the year, with six orders and kits are sold out well into the second quarter of this year. That's good news.
Among many good things about this show is that people who attend aren't just tire kickers and most would-be buyers understand that $120,000 for an LSA is right pricing. Still, you run into a few people living blissfully in the 1950s. When I was shooting a video in the Legend booth, I overheard one observer draw a breath when he heard that the base price on Legend's Cub is $118,000. I'll kept my yap shut, but I sometimes want to sit such people down and explain to them why the sky is blue, why the sun rises in the east and what it costs to build a decent LSA for which the manufacturer earns a slim margin.
Related to that, I might note that would-be buyers in the LSA segment will have to make adult judgments, both in terms of what a decent airplane has to cost and which companies are likely to be able to produce one. Some of the companies themselves will not be capable of such judgments because we continue to see new entrants into a market which is already vastly over supplied, in which even the major companies are struggling and where there will never be large profits. I'm all for competition and feeding the passion for flight, but at some point one can at least hope for a shard of rational thinking by new entrants. Why some of these companies introduce airplanes that have zero chance of selling more than ones and twosies, if that, is baffling. So buyers will have to ruthlessly weed through the choices, ignoring the noise factor of me-too airplanes that just aren't going to succeed. Remember, when you buy an LSA—or any airplane—the airplane is almost secondary. What you're really buying is a company.
And that gets me to Piper. In my view, we are not getting the full story on its decision to exit the LSA segment. In a tersely worded statement a week before the show, Piper said it was terminating its relationship with the Czech supplier of its PiperSport LSA, citing "differences in business philosophies." That phrase is code speak for a significant behind-the-scenes blowup. In my opinion, either Piper concluded the margins on LSAs weren't worth the trouble and it would rather focus on jets or its Czech supplier was doing something it didn't like. Or both.
But here's where things get murky. Piper had a big booth at Expo and a couple of PiperSports on display under Piper flags. This we did not expect to see, given the termination announcement. When we asked why, Piper said it had contractual agreements to promote the airplane for several more months. Fair enough. But wait a sec. As was explained by then Piper CEO Kevin Gould when the airplane was introduced at Expo last year, the whole point of the Piper/Czech Sport Aircraft Works relationship was to be symbiotic. Piper would get a shake-and-bake LSA entrant for potential step-up sales, while Czech would get powerful brand and sales support. A marriage made in heaven, right? Evidently not.
The sticky question: What about those 40-some buyers who bought a PiperSport thinking that Vero Beach would stand behind it? And what about buyers who will purchase from Piper in this twilight period where the company is still selling airplanes for another company it has already divorced? This is not just confusing, it's downright weird. What about Piper support for those orphaned airplanes? Piper says it never promised support from Vero Beach, but that it set up an independent network of dealers and distributors to provide support and since that network still exists, nothing has changed. Huh? The whole idea behind flagging the Sport Cruiser as a Piper product was, to a degree, the credibility afforded by doing this. We now learn that, evidently, this was just a paint job and emblematic of the uncertainty in the entire LSA community.
It's hard to imagine why Piper would trust its brand protection and promotion to dealers not specifically in its own orbit. If those dealers don't do well by support, Piper won't benefit from step-up loyalty, which we assume was the point in the first place. This is why Cessna did its own LSA and why it has sold about 1000 of them.
A mea culpa is due. If I understood this not-so-nuanced dealer thing a year ago, I didn't report it. In the March 2010 issue of Aviation Consumer, we said this: "Although Piper will support the aircraft with parts and supplies, the airplanes won't ship through the company's Vero Beach factory." We then said "Piper" distributors would handle the assembly and support. If Piper didn't clarify this, I must not have asked because this non-Piper dealer network development is a surprise to me. A year later, I can't tell if it just got glossed over in the reporting or if Piper changed its strategy.
Either way, it's something that buyers need to know about before writing the check to the Czechs. We owe it you to ask these questions and it's not clear to me that we—I—did.