Aviation Recession? Blame Wonder Bread
In this blog and others, we have offered various theories to explain why general aviation can't attract more participants. These vary in detail, but there's general agreement that the largest factor is economic: Flying is just too expensive and expressed as a ratio of expense to disposable income, it's getting worse. Why is this? Stand by for the Wonder Bread Theory.
If you grew up in the 1950s, you ate this stuff and we all loved it. Not only could you make bologna sandwiches with it, but you could roll the bread between your fingers and turn it right back into dough, a round bolus of which made a classroom projectile with exceptionally good ballistics.
Little did we know that the idea behind Wonder Bread would, to a degree, prove our undoing. And the idea behind it is productivity. Wonder Bread was conceived to be the industrial version of bread, pumped through pipes and automated ovens at 1000 loaves a minute, it did to the local bakery shop what China is doing to the consumer electronics industry today: Building a far cheaper product and gutting the competition. (Notice I didn't say better, just cheaper.)
Run the playhead forward 50 years and the Wonder Bread effect is writ large throughout the economy. We are in the midst of a jobless recovery and the reason for that is that although GDP is rising, that wealth is being produced by fewer workers whose wages are stagnant if not declining. Productivity again.
I saw a report by Howard University Professor and former census official Roderick Harrison who says his research reveals that the reason for the rising income inequality in the U.S. is that businesses have continued to grow through productivity gains and have funneled the proceeds more to profit, less to higher wages and hardly any at all to new hires. Workers work about the same, they're paid the same or less, but they produce a lot more.
The effect of this is noticeable across the board. In aviation, there was a time when a small contractor, a garage owner or a school teacher could actually own and fly an airplane because the middle class had disposable income and, at least through the 1980s, was closer to par with the upper income brackets. That's not true anymore. This class of owner and buyer is priced out of the market, squeezed from the bottom by stagnant wages and from the top by escalating aircraft costs.
Let's put a number on that. When I got active in flying again in 1975, the local Cessna Pilot Center rented a 172 for $16 an hour, wet. Run that through an inflation calculator and it's the equivalent of $63 today. Now it may be possible to find a 172 somewhere near that rate, but it's more likely to be $135 to $150. Paradoxically, the flightschool or FBO may barely make money even at that rate.
One reason for this is the high cost of new aircraft. In 1975, a Cessna 172M cost about $25,000 or $98,000 in today's dollars. Yet a new Skyhawk costs two and half times that or about $270,000. The LSA market has chopped the high peak price off certified aircraft, but at $130,000 typically, they're hardly cheap. Rental rates are in the $100 range, wet.
It's convenient to blame the aircraft industry for this, but I don't. I've been to plenty of airplane factories and for the life of me, I can't see how they could achieve efficiencies sufficient to lower prices substantially while remaining in business. If anyone does see that, I'd be delighted to hear about it.
So that gets back to the megatrend the country finds itself getting hammered by. As long as diverging income inequality continues, as long as the better paid wage earners find their pay to be stagnant or declining, flying is going to be out of reach except for the most resourceful and determined. That's not the stuff of healthy bottom lines at the local FBO, at Cessna or at Cirrus.
For individuals, I continue to believe the best direct solution is multi-member partnerships. There are four of us in the Cub, for instance, and the costs are trivial. For the industry as a whole, the solution is above my pay grade. The economy is in a major structural realignment and aviation is just along for the ride.