Niches Within Niches

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If youíve been paying attention to our news columns, youíve noticed that new aircraft sales have rebounded in late 2013 and early 2014, although they remain a far cry from the last spike in volume in 2007. For example, Cirrus was happy to report 276 aircraft sold in 2013, a nice bump from 2012, but just over a third of the 710 airplanes it sold in 2007. Piper and Diamond are also seeing an uptick. Thatís all good news.

But prices of new aircraft remain in the stratosphere, so the universe of buyers who can afford new is vanishingly small. On a planet with 7.2 billion people, the entire GA industry found 933 buyers to write a check for a new piston airplane in 2013. Tall cotton we ainít. Piston GA continues its devolution deeper into being a niche within niche, even if some of us imagine there is some sure-fire thing we need to do to reverse this to return to the salad days of 2007, if not 1978. In my increasingly grim view, demographics and wealth trends define this fantasy as utter futility. Even narrowly potent marketing efforts are shoveling thimbles full of sand against a tsunami of disinterest in spending large portions of ever-more-distressed disposable income on airplanes and flying. Iím not the guy to pretend the romance is still there.

So, as markets always do, GA is beginning to embrace its nichedom in the form of modest refurb projects that offer better value than new airplanes do. I reported on this last fall†and this trend continues to trickleónot torrentóalong, with this weekís announcement of a Cessna 172 diesel project from Premier Aircraft in Fort Lauderdale. Premier can best be described as an all-purpose professional sales and mod house run by people whose sales experience dates to when 172s had straight tails. Iíve known the principals there for years.

Premierís diesel conversion idea is similar to the Redbird Redhawk.†Theyíre converting used 172s (Rs and Ss) to the Continental Centurion 2.0 diesel and offering upgraded avionics packages. The two programs vary in detail and focus, but only by degree. The overarching point is that theyíre refurbing existing airframes and bringing them up to new standards for a price about two thirds of new. Redbird hasnít set a final price yet, but Jerry Gregoire told me it wonít be any more than $249,000. My current guess would be about $230,000. In this news story and accompanying podcast, Premierís Art Spengler predicted a $289,000 fly away price or theyíll convert an ownerís existing 172 to the Centurion diesel for about $95,000. Just in case youíre wondering, in another example of how the industry abuses its customers, thereís currently no way to convert a G1000 Skyhawk to diesel.†

Coincidentally, the evening before Premier made its announcement, I was giving a presentation on dieselnomics to the local airport association. A 172 owner told me he was interested in the diesel conversion and asked what I thought it would cost. When I said around $100,000, he drew a sharp breathóa perfectly understandable response. He could re-engine his Skyhawk with a Lycoming for a quarter the cost. But this is where niche psychology kicks in. Because owning an airplane is an economically irrational act at any level, some owners will go with the diesel anyway for the novelty, for the economy, for curiosity.

There wonít be hundreds of such buyers, but there will be dozens and any business plying this nicheóPremier or anyone elseócan probably make acceptable profits on dozens of sales, not multiple dozens. Redbird envisions larger volume, but the core of its approach is the flight training market, with a tilt toward leasing and power by the hour--yet another niche. Looking at this globally, I think Continental is going to need more than the sum of these niches to make the Centurion truly viable. They need OEM business. But re-engining is a start.

While the Centurion diesel promises lower operating costs, albeit at a higher initial investment, Iím not sure thereís anything magical about its appeal in a refurb market. I see another opportunity in early G1000 Skyhawks which are selling used in the mid-$150,000 range. And there are a lot of them. I can see a niche there in refurbing them with a fresh Lycoming, new upholstery, distinctive paint and an ADS-B unit like Garminís GDL 88 with internal WAAS or perhaps a yet-to-appear ADS-B Out solution. Figuring out a mogas STC for these aircraft wouldnít hurt. (Lycoming already approves the engine for 93 AKI.)

For what itís worth, such an airplane would probably sell in the $225,000 to $250,000 range, which is where the other refurbs are priced. Coincidentally, when Cessna was enjoying the fat part of the Skyhawk market in 2006 and 2007, those airplanes went out the door for between $200,000 and $250,000. That was a different economic era, to be sure, but I wonder if thereís a price/value departure at a quarter of a million? Does the buyer curve drop off sharply at that point? Could be.

Even if thatís true, I donít imagine Cessna will ever reduce Skyhawk prices to under $300,000 if it even could, which I doubt. A loaded 2014 Cirrus SR22 is well into the mid-$600,000 range. In 2007, the typical SR22 cost $371,000. Thereís no chance weíll see that kind of price again, so thereís probably a budding Cirrus refurb opportunity, too, especially on the early SR22s.

As for the 172 archetype, it remains popular as a basic airplane. Is it because itís an easy-to-fly and cheap-to-operate high-wing or because itís a Cessna? Probably a little of both, even if Cessna isnít doing much these days to burnish its brand. There are a couple of test cases out there to challenge the Hawk. The Tecnam P-2010 is a high-wing, four-place airplane thatís faster than the 172 and has a third door to the backseat. But at $365,000 for a G1000 version, itís as expensive as a Skyhawk. Then thereís the Flight Design C4, which is similarly a four-place high-wing, but one that is at least initially priced, with glass, at $250,000, that imaginary magic number. Both of these would-be Skyhawk challengers have traditional gasoline engines; the P-2010 has a Lycoming IO-360-M1A, the C4 a six-cylinder Continental IO-360AF. Significantly, both of these engines are mogas approved which has sales appeal everywhere in the world except, it seems, in the U.S. Here. we like to bitch about high fuel prices without doing much about demanding mogas as a cheaper alternative.

How about the Centurion for these airplanes? Maybe, maybe not. Iíd be surprised if Continental hasnít discussed this with Flight Design. In Europe and Asia, mogas appears to be more of a player than it is in the U.S., at least for now. On a strictly operating-cost basis, mogas competes favorably with diesel, without giving up either payload or speed, both of which the diesel choice may force. On the other hand, in some parts of the world, diesel is more widely available than mogas, both on and off airports.

As interested bystanders, we make great sport in bashing engine and airframe companies for their idiotic marketing decisions. But when you consider the variables, the marketís mile-wide shallowness and the fickle nature of buyers, Iím sometimes surprised the industry sells as much as it does.

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Comments (64)

So, in reading between the black lines, are you saying that the diesel engine conversion market demand is weak and expensive? Perhaps untimely in the US? You brought ADS-B into the discussion, this is an additional expense without deferral after 2020. What is going to take precedence? Refurbishing with a Lyco "for a quarter of the cost" and meeting ADS-B requirements makes sense to me as a user and flight school owner.

Posted by: Rafael Sierra | February 23, 2014 10:47 AM    Report this comment

"In my increasingly grim view, demographics and wealth trends define this fantasy as utter futility. Even narrowly potent marketing efforts are shoveling thimbles full of sand against a tsunami of disinterest in spending large portions of ever-more-distressed disposable income on airplanes and flying. I'm not the guy to pretend the romance is still there."

I've been trying to say something like this but the best I can come out with is that what we need is a larger pot to piss in. Sensible pricing would help renew and enhance the market.

Posted by: Rafael Sierra | February 23, 2014 12:00 PM    Report this comment

Mr. Sierra; Correct me if I'm wrong here; is your premise that of: IF "economies of scale" could work/apply for GA (demand = to OR greater than supply) this would be a major solution to solving GA's low volume woes? And IF "pricing", your accessment, IS the problem, WHAT "price (example) new aircraft, flight training/rental rates, etc (percent) would bring about a higher INCREASE in demand to satisfy your thesis?

Posted by: Rod Beck | February 23, 2014 12:35 PM    Report this comment

When flight training costs are a la par to medium income and when costs of training are subsidized by the industry, government and private donors then we would have an increase in demand, more pilots, more aircraft, more mechanics, more AVweb subscribers, more happy faces. Do not hold your breath.

Posted by: Rafael Sierra | February 23, 2014 12:53 PM    Report this comment

"What is going to take precedence?"

I can't answer this. As for the diesel, I think Redbird will sink or swim on how well the power-by-hour lease works, but I also suspect some flight schools will buy the airplanes and probably do okay with them. Some schools will see it as workable and try it, some won't.

As for ADS-B, people are getting into an unnecessary lather about this. The make-or-break point is five years out and by the time it arrives, there will be competitive systems that provide basic ADS-B Out. Worst case, the GDL 88 with WAAS is about $6 to $7K installed. I know it's a habit to complain about this but it's coming, so we might as well get used to it. I predict you'll have an affordable ADS-B Out solution in a couple of years. You won't have to choose between that and an engine.

Posted by: Paul Bertorelli | February 23, 2014 1:02 PM    Report this comment

Mr. Sierra; got ya! If that's the GOAL - good luck! Personally, I think it would be rather difficult to sell the non-aviation community, "taxpayer" or general population, on subsidizing one's hobby for the benefit of less that 1 tenth of 1 percent of the population (pilots/aircraft owners ) etc. and at best, a bit of a SSSTTTRRREEETTTCCCHHH.

ONE possibility, however; the family park/airpark concept. In certain non high density areas where the real estate is low-moderate value, say 40-50 miles away, BUT near a rural community of 10-20k, might have some merit.

I'm plan on offering "Paul" the finished model of sorts for possible publication when I have it fine tuned - keep the RPM up!

Posted by: Rod Beck | February 23, 2014 3:36 PM    Report this comment

Instead of cheering for new and costlier technology we should be cheering for more affordable ab-initio flight training programs. No flight schools, no pilots, no GA, no Commercial aviation, no aerospace. We all recognize the need for this and we do NOTHING.

Posted by: Rafael Sierra | February 23, 2014 4:08 PM    Report this comment

Great article, I wish more of the aero-media would take after AVweb and call it like it is instead of romantizing everything almost all the time. The cost of buying new (even used airplanes for that matter) has made them mere blips in the stratosphere to buy, fly, and maintain. This is a major factor in the tsunami of aviation disinterest. Not only airplanes themselves, but other items such as headsets, iPad apps/ wx subscriptions, charts, membership dues, etc. should be included in the "too expensive" category.

It all comes down to the disposable income (or lack of) for most people that will dictate if they can participate in this industry or not. I've grown up at the local airport restoring an airplane, flying airplanes, going to other local airports, and fly-ins/air shows. After some observing, I came to this rather obvious conclusion around the time I was in middle school: The vast majority of flying a light plane for business or fun is done by the 45+ well-off or, retired white male (excluding the hopeful jet drivers that will use ga only as a training tool, a lot of which are from foreign countries). If you don't believe me go to an EAA meeting, your home airport on the weekends, Sun n Fun, or Oshkosh. The old to young ratio tilts towards the old side almost always, except at things like Kidventrue. Why? This is because the 45+ crowd are usually the only ones with enough time and money to spend on an activity that has been for the most part, the same since new MASH episodes were on TV. The lack of any large progression in light plane design (outside of avionics, my we have come a long way there), how pilots are trained, and other things have been stagnant which doesn't help the cause either. Unfortunately what hasn't changed is the cost. Costs have gotten out of control for reasons discussed before. The best thing to do is attempt to remedy this situation we find ourselves in, an industry that is in need of an update and pricing itself out of reach for normal people. If not, as the baby boomer generation continues to age there are less 14-45 year olds that will participate in aviation, and this industry will become more and more niche. I understand flying has never been a cheap thing to do, but it seems like the level of expensive back then and the way it is now does not match up.

I agree that aero diesels and electric engines as well are and up and coming cool technologies that will hopefully begin to replace the 1930's era Lycomings and Continentals. But for right now, the $95k required for a conversion is rather steep for the average owner. Who knows, maybe the coming rewritten certification regs will help bring new technologies into our segment of aviation and costs will begin to cool down. Then again, I remember reading articles as a little kid about how light sport was going to encourage lower costs and more new pilots, both of which have not really come to fruition. I don't like sounding pessimistic about something I've devoted a massive chunk of my life to, but that's how it is.

To sum up, my friends and I are college age; one of them has a genuine interest in flying recently asking me the cost of buying a J-3. I told him anywhere from $30k-$90k, he responded how does a 60 year old 65HP slow two seat kite cost as much a new car? I told him that's the cheap option because a new repliCub is north of $100k, his jaw hit the floor. That is the state we're in nowadays, I hope we can fix it and I can help in some way.

Posted by: Joshua Waters | February 23, 2014 5:21 PM    Report this comment

Joshua; "Wright" on! Like ANY other product or service - it comes down to demographics: 1. Ability (financial) to buy 2."Need" vs want

"Plane and simple"!

Posted by: Rod Beck | February 23, 2014 6:04 PM    Report this comment

I feel like the conventional wisdom has been that aviation has been, is, and will continue to be, a declining industry. The reasons given are myriad, and the data supporting it is certainly coherent. My real question is, do you see any (realistic) circumstances that could turn things around?

I'd start with a few suppositions that would cover 90% of our prospective pilot base in a world where private aviation is a steady, if not growing, industry: 1) Aviation is a pleasure hobby, not a means of transportation. Similar in this regard to owning a boat or maybe even a two-seat sports car. Boats are closer by the utility comparison, that is, basically none. 2) People will have a finite upper limit that they are willing to spend on aviation each year. If the total "experience" they project getting from that budget is less than some minimum value, probably hours-per-year, they will simply not fly at all. I'd propose that a reasonable estimate that covers the general case is $10,000 a year, and somewhere between 50 and 75 hours of personal (non-training) flight. 3) Anyone willing to spend $10,000 a year on a hobby will expect some degree of personal service from those they interact with, and will want to be using hardware that is appreciably younger than they are.

I personally fly around 50 hours a year, in rental Cherokees, which run me about $140 an hour, wet, on the Hobbs, from a busy airport in the northeast. That means plenty of time paying full-rate for time waiting for IFR releases or just waiting for takeoff clearances. To be frank, the value proposition is pretty bleak. I've already taken several long breaks from flying simply because I didn't feel the "experience" value was meeting my personal minimum given the cost (see number 2, above).

I'd really like to fly 100 hours a year. I'd say I have two or three flights a year where I'll make a mistake that I readily recognize would not have happened if I were flying more frequently. Eventually, if costs don't come in line, I will almost certainly stop flying, not because of the value proposition, but because I don't think I'll be able to fly enough hours in a year, on my current budget, to stay safe. I have the disposable income to spend more to fly more, but doing so would be far outside my value expectations. I'd rather spend a few thousand on a really nice home flight simulator setup and buy a subscription to PilotEdge.

So the question for me becomes, in what way could a pilot like me (I don't think I'm that unusual), fly 75 to 100 hours a year on $10,000. If you assume a pilot wants to fly a 4-seater (I think most do), but don't really care that much about having every gadget and bell-and-whistle, that means something like a Cherokee or a Cessna 172. At 10 gallons an hour and $6 a gallon avgas, you're at $60 an hour. If you're trying to eke out 100 hours on $10,000, that leaves $40 an hour for everything else. Certainly not possible given today's parts prices and rental rates for any four seater. Even at 75 hours a year, it gives you at most another $70 an hour for non-fuel hourly costs. Maybe more reasonable, but even then, only enough to cover a Cherokee or Cessna 172, and a relatively run-out one at that. For anyone who wants to fly something plastic, or with a G1000, it seems you've already moved out of reach.

There's some wiggle room here, but not much. Still, if anything, it does show that aviation could just border on affordability given the expectations I laid out above. I don't think my generation is truly that indifferent to real-world thrills and risks that they have no interest in flying real airplanes. I think they just look at the cost-vs.-experience breakdown, and realize they can get a substantial portion of the experience for a tiny fraction of the cost with home simulations, or get a hell of a lot more value from other "exciting" hobbies (boats, skydiving, racing cars, etc.) on the same cost.

Posted by: Joshua Levinson | February 24, 2014 1:24 AM    Report this comment

Mr Levinson; I take exception to your thesis; you state "aviation is a HOBBY". I believe your referring NOT to all of GA, but the RECREATIONAL segment? Frankly, I don't see the business user; crop duster, Medivac or small - large corporate jet operator, swapping their birds for a "Smart "car anytime soon!

And the question becomes for EVERY "weekend pilot"; does the benefit outweigh the cost?

Posted by: Rod Beck | February 24, 2014 6:41 AM    Report this comment

The General Aviation comeback incoherent economic practices fuel a feeding frenzy among businesses looking to corner the market (?). Players; NextGen, Glass Panel and Aerodiesel Technologies, LSA, Avionics OEMs, bias Media.

The aspiring and presently economically challenged pilots (the market) need affordable flying. Let's keep it simple.

Posted by: Rafael Sierra | February 24, 2014 7:04 AM    Report this comment

Rod,

Sorry, I have been more clear. If we want to stem the tide, and reverse the declining pilot population, the people that we, that is, the entire aviation industry, will need to attract, will be the hobbyist pilots. Ag is stable, business aviation will always be subject to the normal economic ups and downs. If we want to put a reasonable number of people in the left seat, increase the number of hours flown per year, that's going to come from hobbyists.

Suddenly manufacturing a new crop duster is not going to suddenly make every farmer in the country need to spray their crops twice as often.

Posted by: Joshua Levinson | February 24, 2014 7:50 AM    Report this comment

Although I often can sound like a pessimist, I just suffer from "engineer's disease" - I'm a realist! ;-)

I see a somewhat bright future for light GA. But it's a future that's radically different from what we know. Kerosene-burning autonomous aircraft. Where does that leave the rapidly-diminishing hoard of the rest of us?

1. Medical issues. We're getting older, and the FAA seems Hell-bent to find new reasons (apnea) to disqualify us. Unless the FAA does away with medical certificates for not-for-hire flying, most of us are going to be grounded by 2020.

2. Equipment issues. ADS-B; WAAS-GPS; 406-MHz ELTs. Ding, ding, ding - it all adds up. Unless the FAA completely re-thinks their avionics-certification paradigm, the cost of meeting the existing and rumored requirements by 2020 is going to cause the retirement of more than half of the GA-piston fleet.

3. Fuel issues. The only really compelling attraction of a diesel is this: it doesn't burn leaded aviation gasoline, which probably isn't going to be available after 2020. If the FAA approves a universal replacement fuel that does NOT require any STCs, then there's nothing to worry about, and diesels will remain a relative novelty - at lease here in America. If that fails to happen, then the impracticality of re-engining most personal-use vehicles is going to cause the retirement of more than 90% of the GA-piston fleet.

4. Training issues. Obtaining a useful private certificate has become needlessly complex and proportionately unrewarding. That's unlikely to change. The solution is to create a new generation of GA participants who are NOT pilots. Autonomous aircraft will make that possible. Demographic reality is making that necessary. It will get sold in the name of safety, but in the long run it's the only thing that is going to save this industry.

5. Cost issues. Two are in play: the "value proposition" issue - is flying "worth it?" and the affordability issue - regardless of whether it's worth it to me, can I simply pay the bills? Again, autonomous aircraft are the best hope for addressing both of those issues, by providing a "ZIP-plane" -type solution that amortizes capital costs effectively.

I've lived around airplanes since the 1950s. I can't think of another time when GA has faced such existential issues. This isn't Chicken Little - our government has made this real. 2020 looms large. If the government doesn't ground us, old age will. The future isn't necessarily grim. But it absolutely is going to be fundamentally different.

Posted by: Tom Yarsley | February 24, 2014 8:03 AM    Report this comment

Simple, you want to grow GA, you need to add more pleasure pilots. To do this you need a practical 4 seat airplane that cost around $50,000 NEW!!

You can argue all day long about 'it's not possible' and production rates are 'too low'... In the end, to attract the middle income pleasure pilot you have to compete with that nice new boat, the pair of quad runners, the sailboats, RV's / travel trailers, the new Jeep, etc.

I'm an engineer working in the epitome of middle class in Houston, TX, and it is hard to find the money to fly, it's too expensive. I have asked many of my co-workers if they are interested in flying, almost always the response is along the lines of new airplanes cost too much, wouldn't want to rent it's a pain, and affordable aircraft are so old they scare me. Too often we in GA take the 'suck it up' attitude and tell these people if they REALLY want to fly, then they'll go into partnerships, rent or buy really old aircraft, and then that prospective new pilot walks right out the door to never return. The problem is, the don't want to fly THAT BAD, they don't want the equivalent of a 2nd mortgage. A new Cessna 172 needs to compete with other recreational activities, such as a $50,000 boat or 4-wheel drive truck (both of which are WAY more advanced in design, construction, reliability, and features than a new Cessna). Until we as an industry pull our head out of the sand and fix it to make this price range a reality, GA will continue to die, period.

Posted by: John Rollf | February 24, 2014 9:33 AM    Report this comment

Cost of flying has been and is still is being dismissed as a "petulant and peevish" opinion from the present pilot population that have the courage to express dissatisfaction. The GA product is being regulated, designed and marketed and hammered in as if it were to be in preparation for an intergalactic war. Aerodiesel engines are being promoted under the veil that the Continental US will soon become an African or European economic scenario. The pilot population determines the product demand. As the pilot population decreases so does the demand. Why is this so difficult to understand? It is the cost of flying that prevents growth.

Posted by: Rafael Sierra | February 24, 2014 10:00 AM    Report this comment

"wouldn't want to rent it's a pain, and affordable aircraft are so old they scare me. Too often we in GA take the 'suck it up' attitude and tell these people if they REALLY want to fly, then they'll go into partnerships, rent or buy really old aircraft, and then that prospective new pilot walks right out the door to never return."

The OpenAirplane concept looks like it has feet and will make renting simpler. I doubt it will be quite as simple as renting a car, but it does look like it will dramatically make renting easier. I'm a member of a flying club and even have a 1/4 share in my own plane, but I might still sign up for OpenAirplane so I can rent when I'm away from home (and it was too far to travel to in my own plane).

Beyond renting, partnerships really CAN be the way forward for affordable ownership. For about the cost of a decent mid-size sedan, I now have a 1/4 share in a 1979 Piper Archer II with a great paint job and interior and capable avionics package. Properly leaned, cruise speed is 115kts indicated at 8.5gph (9gph to be conservative). There is one downside to a partnership, though: you have to find the right group of people for it to work out.

Which leaves joining a flying club as the third option. Similar to a partnership, you do have to find the right club that fits your needs for it to work out, but it can definitely make flying less expensive. The best clubs charge by tach time, not hobbs time, and don't charge extra to keep the plane overnight for a day or seven.

The only problem with all of the above options is that it generally means NOT owning one's own, brand-new aircraft. But if one really analyzes how much they use "it" (be it a boat, RV, or plane), they'd discover that it would be sitting unused most of the time if they were the sole owner. The problem then becomes convincing people that a 35-year-old aircraft is not the same as a 35-year-old car. Properly maintained, most of these older aircraft have a nearly-unlimited life time. My '79 Archer could easily be mistaken for a brand-new 2014 Archer, if not for the redesigned cowling and instrument panel. Owning an old, used aircraft doesn't have to mean owning something that LOOKS old and used.

Posted by: Gary Baluha | February 24, 2014 10:31 AM    Report this comment

Joshua Levinson wrote " Eventually, if costs don't come in line, I will almost certainly stop flying, not because of the value proposition, but because I don't think I'll be able to fly enough hours in a year, on my current budget, to stay safe."

You are in good company, Joshua. During the postwar years, General James H. Doolittle was asked why he did not fly regularly anymore. To paraphrase, he said that he felt he could not devote enough hours to flying each year to keep himself and others safe, so he ceded that function to others. It takes maturity and good judgment to recognize that.

Posted by: A Richie | February 24, 2014 11:01 AM    Report this comment

Many years ago, in order to find some post-grad money, I drove across the country for awhile behind a big 'ol Cat, moving America's goods. The engine had 345K miles on it, strong and dependable. Probably still out there humming and banging today.

I've never flown behind a diesel, though, and diesel autos remain a niche in the mass of cars and trucks, though I understand that is changing and growing larger. If costs can get aligned with the average pilot's ability to re-engine with one, will pilots embrace how they fly (if different) and their limitations (if any)? How do pilots feel about diesels?

Just wondering, because, well, look how slow and laborious change is in GA, taking generations to find trust and acceptance on a wide enough basis to allow something more than a niche within a niche.

Posted by: David Miller | February 24, 2014 11:43 AM    Report this comment

This is an interesting and useful discussion. As a casual observer of lightplane history, I think the current situation has occurred in the past. I am not old enough to have participated, but I think the parallel occurred in the Great Depression of the 1930's. Established airplane companies such as Waco, Travelair and Beechcraft were getting by selling a few expensive airplanes (a cheap one was golly, $3500 and a Staggerwing, whoa, maybe $8000). Everyone else that wanted to fly was thrashing around in worn out airplanes or paying by the minute for rental flying time.

The Aeronca, Taylorcraft and Piper airplane companies were born in this environment and managed to alter the landscape. They offered better, low cost alternatives to the worn out airplanes, greatly reduced rental costs (they also encouraged clubs) and they had real sales organizations that actually went out and sold product.

Can this cycle repeat? I think it can; watch Van's Aircraft and a few other up and comers. Forget Cessna, unless you're in the market for a jet.

Posted by: Stephen Phoenix | February 24, 2014 12:02 PM    Report this comment

Joshua Levinson brings up a great point with the value for the money part.

What do people get when they invest $7-10k in getting a PPL, or what can they realistically do once they have it? The ability to only rent from their home airport (unless they want to go through an expensive checkout process away from home to rent), or buy a very expensive airplane to hanger, insure, maintain themselves. Spend $140 per hour to bore holes in the sky at 100 knots in an airplane from the disco era. Fly to $100 hamburger places on the weekends. Consume hours to plan a trip, plus only able to fly in certain (VMC, x-wind considerations, etc) conditions thus rendering travel in a light plane less of a viable option, you can invest another sum of money for an instrument rating but still light plane travel it still not improved drastically. Then there is the thought of joining an aviation organization, and spending even more money and time involved with the current aviation experience we have today.

When all those things are considered it seems the value is not there, but if people want to do that, go for it I guess.

Posted by: Joshua Waters | February 24, 2014 12:46 PM    Report this comment

Perhaps this may put at little light on some "income potential" to the FBO and GA business community".:

TO Mr. Levinson and other readers; It would take about 40 C-172's flying 50+ hours a year to EQUAL the same potential income to the FBO that's generated by just ONE King Air B-200 - QUALITY not quality?

ps TO Mr. Dave Miller - glad to see you could make today's show! For a minute, you had me worried - some alleged tourist was seem on top of the Empire State Building in a King Kong custom with the words "I'm pilot" on his chest pounding away - great promotional idea for NEW pilots I must say!

Posted by: Rod Beck | February 24, 2014 1:21 PM    Report this comment

About value; you can determine value in terms of money (obviously) or in terms of effort required for a certain outcome. Things like potential new sleep apnea testing or even just retaining a good AP/IA mechanic take a good bit of effort and time just to continue flying your plane, not even mentioning the spectre of ADS-B on the near horizon and who knows what else (TSA, etc) could be coming down the pike unannounced.

Now, for those of us that have been flying a few years and have already been to our share of fly-ins, $50/$100/$200 hamburgers and generally enjoyed the truly magnificent freedom of flight in the US, when a huge step function increase in either the money or effort required to continue flying comes along, it kind of makes you pause...Am I really going to get that much additional enjoyment from what is now going to be $800 hamburgers, or do you say "It was a great time and I enjoyed every minute of it, but I will have to stop sometime anyway due to price increases, age, or whatever, and it might as well be now instead of taking a huge financial bath that I may never recover from." I'm convinced this is why you see so many planes on the market today and so little buyers. I'm also convinced this is completely unnecessary and caused by a combination of the legal system, politics, and bureaucracy that has absolutely NO clue of the general aviation environment or the needs of the flying public. Imagine what it would be like to have these people actually working TOGETHER to HELP us fly instead of their bureaucratic indifference and obstacle creation. Oh what a world that would be!

Posted by: A Richie | February 24, 2014 1:43 PM    Report this comment

Yes, finally, a realistic assessment. While the extremely high costs of private aviation are real ( I've also had my own experiences watching jaws drop when asked about what it would cost to earn a license and own a small plane) and the dramatic shifts in the distribution of income that began in the late 1970s and continues today are critical factors, the importance of a change in culture can't be ignored. Many of us baby boomers grew up listening and watching movies and later t.v. glorifying the aviation exploits of Lindbergh, Howard Hughes, Amelia Earhart, WWII bomber and fighter pilots, etc. Aviation was exciting to us. There's any number of indicators suggesting that the children of the baby boomers aren't the least interested in aviation, in general, except as a means to get from point A to point B with a minimum amount of hassle.

I suspect that the private aviation boom that maxed out in the 1970s was a fortuitous product of a strong post-WII economy, a growing middle class, and the coming of age of the aviation-crazed baby boom generation. None of which exist today.

There will always be corporate executives that want a trophy jet or other well-healed individuals with money to splurge on a Cessna TTx (Columbia 400), but otherwise there will be no renaissance of the halcyon age of private aviation.

Posted by: E.M. BECK | February 24, 2014 1:53 PM    Report this comment

"bureaucratic indifference and obstacle creation." I like that A. Richie. Power to the people man!

Posted by: Rafael Sierra | February 24, 2014 2:01 PM    Report this comment

Umm, I haven't had the news on today, Rod, so am in the dark if there is a monster on the loose. My query just came to mind after reading the blog, so I thought it might be legitimate. Fine if it isn't. Just not interested in bludgeoning that dead horse today about pilot shortages through this blog, that's all. I thought Paul summed it succinctly and accurately in his second paragraph. 'Nuff said.

And though it may appear I'm in your crowded cabin just along for the ride, I'm really piloting my own aircraft, solo. No offense, thanks.

Posted by: David Miller | February 24, 2014 2:27 PM    Report this comment

Dave Miller, I hope to be as great a pilot as you are a visionary.

Posted by: Rafael Sierra | February 24, 2014 3:47 PM    Report this comment

"LIKE NU AIRCRAFT SPECIALS"

1978 N Cessna Skyhawk/172 Lyc O-320 - 160 HP "0" SMOH - new paint (2014) design /scheme - new interior nice updated panel G-496 or? - plus dual coms, txp, etc extensive fresh annual all original logs - NO damage history $79k?

Would a refurbished "bird" like this sell to first time/entry level buyers? commits anyone?

Posted by: Rod Beck | February 24, 2014 6:21 PM    Report this comment

So many logical, practical and legitimate ideas in this thread. A few of them hit the nail squarely on the head. As usual, Paul's analysis touches on the root issues at hand. Thanks for your insightful frankness, Paul.

I'd guess that most of us that have been in this "game" for any period of time (read older) realize that all we're doing -- at this point -- is re-arranging deck chairs on the Titanic. Occasionally, we hear the band playing and think we see a distant rescue liner but ... it's nothing more than hoping that it's all a dream and we'll wake up OK. The party is over unless the FAA wakes up and takes drastic steps to re-invigorate GA in the US. It's not likely to happen. And, even if they did, economics by any other name is, well ... economics.

In the military, it's generally considered a 'safe fight' when you have five fighting soldiers to every one of the enemy. In GA, right now, we only have one active pilot for every five crazy ideas (apnea), ongoing or new requirements, and etc. coming from the folks that are here to "help" us. There's no way we can overcome all of this. At some point, "THEY" are going to wear us all down ... one pilot, aircraft owner or A&P at a time. We are experiencing "Custer's Last Stand" ... aviation style. One by one, for varying reasons, we're hanging up our David Clarks, I'm afraid.

There isn't going to be any $50K C172s, or LSA's for that matter. There'll only be cheap used (up) airplanes with for sale signs on them as folks give it up. Sooner or later, they'll be gone, too. If Cessna couldn't "make it" with the Skycatcher, no one can. The RV-12 might help some but a few dozen airplanes -- as Paul said -- aren't going to put any substantial dent in the situation.

Only one person even touched upon the shortage of airline pilots that is now coming into focus and is grounding some feeder airline flights. The new ATP rules coming are going to finish this segment off, as well. It won't be long before tiny little slanty eye'd pilots will be talking to us from the cockpit of our airliners.

It was great while it lasted. I feel fortunate to have experienced it for nearly half a century. Now then ... where's my soylent green pill (in the modern re-incarnation of that movie, it's made from old Cessnas).

Posted by: Larry Stencel | February 25, 2014 8:18 PM    Report this comment

Larry; Very poetic indeed! And then at about age 8-10, (60+years ago) or so, we discovered Santa was REALLY daddy - (NO more cookies and milk for you!) how terribly disappointing that was too?

And before the sun goes down on GA, as we know it; to those who haven't flown a J-3 Cub which to this day requires "skill", DO IT; you'll then always have fond memories of just how special being a pilot once was!

Thankfully, Benny Goodman, Glenn Miller, Count Basie and Frank Sinatra are still available on CD - "what's a CD, granpop"?

Posted by: Rod Beck | February 25, 2014 8:50 PM    Report this comment

Some 47 years ago I was dodging bullets in South East Asia. Now I am dodging product previously manufactured and owned by American industry. I am not a happy camper seeing the disintegration of the American Aviation industry, WTF lChina is still a military threat and growing.

From AVweb: "People's Daily, the official organ of the Central Committee of the Communist Party of China, reported on Tuesday that state-owned AVIC International Holding Corporation recently completed its acquisition of Mobile, Ala.-based Teledyne Continental Motors and the purchase "will make AVIC International better prepared for the burgeoning general aviation market in the country." It also touts the pending sale of Cirrus Aircraft to China Aviation Industry General Aircraft Company (CAIGA) "will greatly enhance CAIGA's production capacity, and help it meet the surging demand for general aviation aircraft as China looks to further open up its low-altitude airspace.""

Posted by: Rafael Sierra | February 25, 2014 9:11 PM    Report this comment

What we have now is a loss of individual and collective responsibility. A loss of patriotism.

Posted by: Rafael Sierra | February 26, 2014 7:34 AM    Report this comment

Paul,

There is a fundamental problem inhibiting the growth of personal aviation...cost. Cost is driven by the airframer, the FAA, the fuel manufacturer and the legal system. Here's my take. I purchased a new C172R in 1998 for $144,000...which I thought was still expensive considering that a used Skyhawk could be had at the time for less than $50k. At the time, I was told by the Cessna sales rep that over $35k of the purchase price was their "set aside" for future legal costs related to our out of control tort system in the US. And clearly there was a very nice profit in there for Cessna plus a generous commission to the sales agent, so the real mfg'd. cost was probably closer to $75-80k. Now, this is a relatively unsophisticated design (compared to a Cirrus) that had been around for over 40 years with few changes, manufactured in a brand new, non-union plant in Independence, KS (low cost), with all the purchasing power of Cessna's complete product line (think lowest aviation aluminum pricing that anyone can get, besides maybe Boeing) and was a well understood product. A 2014 Skyhawk is listing over $300k, which is outrageous. Costs have not tripled in the last 16 years, whether it be materials, labor or the length of time that it takes to build a 172 and in all likelihood should have stayed flat to decreased due to advancing technology, mfg. efficiencies and stagflation in the materials sector. I would argue that a G1000 panel should cost less to mfg. and install than the old King/steam gauge setup...if you don't factor in Garmin's huge profits and Cessna's markups on top of those. After all, we're talking about commodity computer chips and components with their custom software...which is written once and that development cost is spread over their entire product line. An IO360 has been mfg'd. by Lycoming in one form or another for over 50 years with minor changes. Why should an overhaul cost north of $20k, a factory reman $26k and new close to $30K?

Now, let's look at your diesel argument. Let's say I'm at overhaul time, so subtract $20k from the $95k conversion cost (and remember, the Centurion diesel is a standard, unmodified Mercedes diesel car engine with a proprietary gear reduction system bolted on...an engine cost of less than $5k from the Mercedes factory in small volumes). So, I'll spend $75k net to replace the engine on a an airframe that I'm hard pressed to get $50-60K for today on the used market, which by the way is the same price that a used 172 went for in 1998! And all this to save ~3 gallon/hour of fuel and ~$5-6/hour in cost. The math doesn't work, even in a training environment.

If we're ever going to get out of this situation, we need serious reform on the legal front, conversion to mogas to get fuel prices out of the stratosphere and reduced regulation to allow innovation to drive new product development. 50+ year old engine designs in 50 year old airframe designs with a little bit of new electronic gingerbread cannot be the future of GA.

Posted by: Gary Milosovich | February 26, 2014 7:55 AM    Report this comment

IO-360s certified for mogas? Don't think so. The fuel injection systems are not compatible with mogas. I own several airframe STCs for mogas (R22 and R44, among others) and have been fighting this battle for several years, without luck. Where did you see these approvals? They are certainly not in the FAA's engine specs. The only engines NOT approved are the injected ones. For the record, the only reason mogas STCs are not more widespread is that the engines are generally allergic to ethanol and ethanol-free mogas is nearly impossible to find. When AOPA member numbers decline, you might finally see FAA backing off on their efforts to "harmonize" our regs with the Europeans, but until then, you'll see a continuing slide toward more restrictive regulations here until we are in the same boat as our over-regulated friends across the Atlantic.

Posted by: Howard Fuller | February 26, 2014 8:51 AM    Report this comment

"Where did you see these approvals?"

Howard, I'd refer you to Lycoming SI 1070, table 3, which approves ASTM D4814 and EN288 93 AKI fuels for use in the IO-360 B, E, L and M series engines. As you know, those fuel specs are for automotive fuel. Lycoming does specify a specific vapor pressure range of Class A-4, which overlaps with aviation vapor pressure ranges.

You can read Lycoming CEO Michael Kraft's explanation of this in this series of blogs:

http://www.avweb.com/blogs/insider/AVwebInsider_Lycoming2_205204-1.html

Posted by: Paul Bertorelli | February 26, 2014 9:35 AM    Report this comment

Rafael, while I can rail about high costs with the best of them, I find it somewhat pointless to try to guess at the inside details of either Cessna's or Lycoming's ledger sheets. From what I do know, the margins on the piston side are rather thin and are problematical due to low volume.

Some people think they could summarily reduce their margins by some arbitrary amount and more than make up the loss in increased volume. I haven't seen the internal finances, but based on what can be gleaned from the annual reports, I'd guess this is naive. Keep the argument on the table if you like, but I don't think it's realistic.

Now some fact checking. "Remember, the Centurion diesel is a standard, unmodified Mercedes diesel car engine with a proprietary gear reduction system bolted on." This is is quite incorrect. The engine is substantially modified with a recast block, different electrics and fuel injection and its own FADEC, with associated connectors and hardware. Even the Austro, which retains the cast iron block, trashes the MB turbo, fuel system, airbox, harness and numerous other parts. See this video to gain a sense of what's involved:

http://www.avweb.com/avwebflash/exclusivevids/ExclusiveVideo_AustroEngine_FactoryTour_206683-1.html

Now, on to your analysis. You can cut the cards a lot of ways to evaluate the comparison, but here's a simple one that shows the diesel's potential. Let's compare two almost-like airplanes.

Take the Redbird Redhawk, fresh out of the shop at $225,000 with an Aspen glass system. The price-equivalent gasoline version is a 2009 172 SP with a G1000. A 2014 model would cost close to $380,000. Not a contender for the moment.

Assume avgas at $6, Jet-A at $5.50 and a 1500-hour TBR for the Centurion with 600-hour gearboxes. The diesel operating cost will be $65.58 per hour, the avgas engine $65.50. It's wash. But the diesel climbs and cruises slower and carries 100 pounds less. Advantage Lycoming.

But bump the Centurion TBR to 2000 hours, where it seems likely to get, and the economics shift. The diesel's cost drops to $58.50 for a $7 Delta or $14,000 over the life of the engine. Not chickenfeed. But if you raise the price of avgas where it might eventually go, which I think is $7 for the replacement 100LL, then the operating hour cost difference is $16. If the diesel can make its way to a 2400-hour TBR, the difference is $24 per hour in favor of the diesel or $57,600 over the TBR run. For similar debt load, that's a lot of money to walk away from, don't you think.

It does assume that the 2000 and 2400-hour TBRs can be reached. They haven't yet. But it's not unrealistic to believe they will. That's why diesel economics have to be forward looking and why they are by no means assured.

Posted by: Paul Bertorelli | February 26, 2014 10:21 AM    Report this comment

Also, I should have mentioned in the above that the numbers paint a compelling case for diesel, but buried in the data is an even stronger case for mogas. But in the U.S., its merits just don't break through the noise. They might eventually.

If mogas is plugged in, the operating costs split the difference between diesel and avgas.

Posted by: Paul Bertorelli | February 26, 2014 10:27 AM    Report this comment

Paul, we are pricing ourselves out of the market and in turn we are putting an end to the market.

Posted by: Rafael Sierra | February 26, 2014 10:47 AM    Report this comment

An end to the market? No. The entire point of this blog is that we're transitioning into niche markets. GA is not dying, it's shrinking. There are people and companies who are making bonafide efforts to check costs if not reduce them.

Demand for light aircraft GA will always be there in some form, it just won't be the form we've been used to. At some point, the market will bottom out, flatten out and resume some growth. That may be many years hence, but I believe it will happen.

Meanwhile, the best we can all do is be realistic about the potential, wherever it lies, and deal in accurate facts with regard to the business of GA, not the way we wish things would be.

Posted by: Paul Bertorelli | February 26, 2014 11:51 AM    Report this comment

Paul, it is an end to a viable market. How long will AVweb stay in business at the present demand decline rate? Then, how long will I be able to keep the doors open? The solution is in revitalizing the viable market; that is, increase new starts, entice the inactive pilot population, stay within middle income pricing parametrics, promote national aviation programs with a vigorous effort now and at the same time. Develop affordable retrofitting - aerodiesel are an expensive shot in the dark. Those who want the newer models will buy them, but those of us will stay within our means perhaps deferring purchases.

Posted by: Rafael Sierra | February 26, 2014 2:18 PM    Report this comment

But Rafael, all we're doing is talking about it...saying "we've got to do this, got to do that." But the ideas don't get any traction because they don't work. At some point, the wealth will be there and the interest will return. But the industry will still be small. That's just the way it is.

How long will we stay in business at the current rate of decline? I started in aviation journalism 24 years ago. It has been shrinking during that entire period. Yet Cirrus came along, Cessna restarted production, Avidyne and Garmin invented glass cockpits, diesels came along, so did Diamond Aircraft and so did LSAs and Redbird sims. There are green shoots. You just have to adjust your expectations to the reality until the reality readjusts. You and I might not see it, but the world will.

One thing we can do is stop whining about the intolerable awfulness of it all.

Posted by: Paul Bertorelli | February 26, 2014 3:47 PM    Report this comment

Contributing for a resurgence of American aviation is my goal and I am doing it. Go to facebook.com/cvyaep and you will understand that I am not seating on my couch. I have donated my time and thousands of dollars in free flight instruction to benefit the cause - sparking interest in aviation and increasing the pilot population.

You and others in this wonderful country can help guide the young and the not so young to populate and repopulate our ranks. We need more pilots to increase the demand and in turn save the GA industry. Increasing costs while the interest in flying is decreasing is compounding the dilemma.

Posted by: Rafael Sierra | February 26, 2014 4:26 PM    Report this comment

Rafael, (looked at your facebook page) wow, what commitment and what a great job you all are doing. All those blue shirts may be pilots someday or if not at least "aviation fans". Thank you for your efforts! PS: Anybody that can fly in 120 degree heat has my respect!

Posted by: A Richie | February 26, 2014 5:18 PM    Report this comment

Yea, Rafael, I join A Richie and say you rock, bro! You have big and small, old and young, boys and girls, ethnic diversity, and obviously some dedicated friends all coming together in the spirit of flight. If appearances were reality, I'd say GA is doing just fine, but I know there is major effort and hope behind every smile. Keep up the good fight!

Posted by: David Miller | February 26, 2014 5:51 PM    Report this comment

"I donate my time and thousands of dollars - how honorably noble! Seems to me aviation's reoccurring theme is: "I'll work for FREE - your hired! And NOW, time for a little humor; ' SON: ( flying to Palm Springs with "dad" (son is on summer break) in Jeff's G-5 Say JEFF, (note - NOT Dad) "why aren't they're more smart business folks like yourself in this general aviation thing"?

JEFF: (Dad) "Well, frankly Phil,(son) if they're were , I don't think we would have general aviation! NOTE: Jeff is a 56 year old land developer and partner in 3 Lexus dealerships in CA and AZ

Posted by: Rod Beck | February 26, 2014 6:19 PM    Report this comment

Thank you, thank you very much. Elvis is alive.

Posted by: Rafael Sierra | February 26, 2014 8:53 PM    Report this comment

Paul; They're ALWAYS be someone who will INSIST, that after 622 years, Columbus made a geometric error! Maybe ole "Chris" should have choose the Carnival Line?

Posted by: Rod Beck | February 26, 2014 9:13 PM    Report this comment

Well, actually, it was 522 years ago. But what's a century among friends?

Rafael, kudos to you. I know you're dedicated to growing aviation as we all are. But I don't allow myself to say the industry is dying or that the market isn't viable or will become that way. It may be smaller, but it will always exist. I see signs of that everywhere. If I didn't believe it, I'd knock out the lights and quit now.

Posted by: Paul Bertorelli | February 27, 2014 4:52 AM    Report this comment

Paul, my vocabulary has increased by at least 622 words since I started reading your most informative and opportune articles. I read your column every morning. Thank you my friend, you are good and sincere.

Posted by: Rafael Sierra | February 27, 2014 8:09 AM    Report this comment

I find aviation interesting, and have made a career as a professional pilot, marketing and sales of aircraft, and as an aviation consultant. There are many problems with piston aviation, many involve practical solutions that the industry really needs to take a look at and focus.

Lets face it, the price of labor in a specialized industry as general aviation, whereby everything is hand made is why the airplane is so expensive. With the degree of automation, CNC machinery, and manufacturing processes that produce a higher manufacturing tolerance, I wonder why none of this technology is used in general aviation production. We still build airplanes and engines just as we did 70 years ago, when we need to take a look at methods to lower the price, and increase the reliability as well as lower the operational cost.

As I see the flying car being the answer to general aviation...or at least a great marketing campaign about the benefits of the product, I wonder if the engineering talent should have been used to develop manufacturing techniques to lower the cost of production. Henry Ford took this view, and it made the automobile affordable and changed the world. It can be done, automation and process can be improved to provide airplanes that are stronger, lighter, much more refined, more reliable, and are safer.

That being said, the problem with aviation is the degree of sales and marketing that could be the game changer for the industry. As Rod Beck has mentioned, the economy of scale is really the problem here as piston aviation continues its decline. Most people reading this won't understand what I am talking about, because to many people, this is just "smoke and mirrors" to the problem. Yet...it is the REAL problem! http://www.get-aviation.com

Still not a believer? Lets look at disposable income for the past 50 years. You can Google this for the United States, and discover a huge increase in disposable income since 1985...and yet, general aviation hasn't really taken advantage of this. Why? A fragmented industry with technical people involved that do not see the value proposition to the industry. Specifically the flight training industry. Before you tell me how smart you are, tell me why a 80% + washout rate of student pilots is a good thing? Lets fix that while at the same time, learn how to cater to those people who have the money and want to experience aviation!

Boat sales in 2013? Best ever! Motorcycles such as Harley Davidson with an average out the door cost over $23,000....best ever in 2013! Yet, we cannot figure out how to get the person who is looking at a recreational product, to discover what general aviation is about. No excuses here folks, it is the industry is inept when it comes to capturing the attention of the prospect, and providing the experience the customer is looking for...guess which was we are going? A used Cessna 150 can be had for less than $25,000 and it is cheaper to store and maintain than a high quality boat!@

Posted by: Michael Dempsey | February 27, 2014 9:34 AM    Report this comment

"We still build airplanes and engines just as we did 70 years ago, when we need to take a look at methods to lower the price, and increase the reliability as well as lower the operational cost."

One problem is that many people still think what you said above is true. I can assure that it is not, at least entirely. If you tour either Lycoming or Continental, you will see a major influx of CNC equipment. Continental just invested multiple millions in new CNC machining centers. Lycoming put in an automated piston line.

I see CNC wherever I go. As you'll see in the video I did on Sensenich props, they use CNC to carve wooden props. At the LSA manufacturers, it's common to see all the 4130 tubing cut via CNC. This yields highly accurate and probably stronger joins through better welds. At Vans, they've got a big CNC drill center to do match hole work in flat sheets. At the former Thielert (now Continental) and Rotax, they have rows of CNC. And on and on.

This probably helps contain production costs, but there's still a lot of hand work involved in building airplanes, even at Boeing. Lycoming and Continental have the difficult challenge of low volume/high mix, so CNC equipment gets you only so far. The benefits of more automation can be eaten up in set up and change time.

Every time I visit these factories, however, I find more investment in this technology. But the volume supports only so much ongoing investment. Some people are surprised to see as much investment as they do. But it is happening. These factories aren't dark caves anymore.

Maybe I should do another video.

Posted by: Paul Bertorelli | February 27, 2014 10:03 AM    Report this comment

Paul,

The point of precision manufacturing is that it is not being used to build a new and better product. Last time I looked, the engine cases of a Lycoming or Continental looks like the same sand casting as usual. How about automated process in the assembly?

I wonder why they can build an automotive engine that lasts 200,000 miles with the first service due at 100,000? This is what I am talking about...thinking about true advancement, not just the application in a few process areas.

Understanding that the manufacturing tolerances can be closer, but I still find most piston engines in the high performance area seldom make TBO and/or have multiple cylinder replacements at mid-time. Don't believe me? Look at Trade-A-Plane, Controller magazine, etc. and that is the evidence. Myself, with approximately 3,500 hours + piston high performance time have found even treating an engine like it is made out of glass, and flying 50 hours per month, still meant time in the shop to work on cylinders. This = MONEY that takes the fun away.

My point is we assemble the engines like we did 70 years ago, and if you want to really dig into the development of an air cooled engine, look at what Harley Davidson did in 1983. They went to Japan (industrial espionage) and brought back the talent to build the engines that went from leaking oil, poor assembly, etc. to the Evo engine that can easily go 100,000 miles without any problem.

Posted by: Michael Dempsey | February 27, 2014 10:27 AM    Report this comment

Same old argument about the industry being stuck on old designs, Michael.

Let me give you some examples that will show the fallacy of this argument. Example one is Rotax. The Gunskirchen, Austria factory where this engine is made is highly automated. They make mainly motorcycle engines, but aircraft engines in the hundreds. The 912 series engines and the follow-on 912 iS are as modern and sophisticated as any motorcycle engine because...it's designed and made by a motorcycle engine company.

On the motorcycle line, they have a robotic center that chills the valve seats for heads and places them in the cylinder boss. All automatic. On the aviation side, they do it by hand. Why? Volume. The low volume doesn't justify the investment.

Second, consider that Rotax 10 years ago developed a highly sophisticated V-6 gasoline engine that was as state-of-the-art as any automotive engine. After $10M in investment, it failed to launch. Several reasons, but a big one was lack of strong OEM commitment and apparent breadth of market. Also, the engine's fuel specifics weren't that great.

Third, the Mercedes Benz OMB 640 is as sophisticated a powerplant as can be found in the automotive world. It is the technological base for the Centurion and Austro engines. While those engines have found some traction, they haven't taken the world by storm for various reasons, one of which is market acceptance.

Fourth, Continental a full 20 years ago developed a FADEC for its relatively efficient six-cylinder engines. No market uptake, but they're still pitching it two decades later. Again, it relates to lack of OEM industry interest and buyers who don't see the value. I could go on...

People who insist the industry could thrive if someone would just make a modern airplane using modern automotive production methods often lack any sense of the investment involved--especially on the engine side--compared to the potential return. It's pretty grim. It helps to clearly understand that airplane engines aren't like automotive engines. They have different duty cycles.

The best recent success story is probably Cirrus and Diamond. But they're not automotive paradigms by any means. Lots of hand work in those airplanes and Cirrus is incremental. Still uses a traditional engine. Diamond is more cutting edge, with the diesels in the DA42. But Christian Dries would school you in cert costs and RIO if you took him to task for his lack of vision.

Point is, it's probably technically feasible to build a new-age airplane with automotive methods and quality. But it won't cost $100,000 or even $200,000, so the magic price fixer of volume will be elusive. Profits may be, too, if not survival of a company that attempts such a thing. Ultimately, comparisons to motorcycles, boats and RVs are futile because airplane aren't any of those things.

Posted by: Paul Bertorelli | February 27, 2014 11:23 AM    Report this comment

No they are not but Mr. Dempsey brings up a point that the former owner (and promoter) of the flight school where I learned to fly once told me. When an individual decides to spend the disposable income and has no prior flight knowledge how do you compare RV'ing, boating ,or motorcyling to aviation? With all of the FAA (government) requirements to stay current, then check out what is needed to operate a boat or ride a motorcycle, aviation can be a real tough sell. No medical, no biennial review, no annual inspection, much less classroom work. About the only thing aviation has working for here it is the emotional value only.

Posted by: matthew wagner | February 27, 2014 11:53 AM    Report this comment

Paul, this needs a poll or a "Question of the week" survey. Include choice of airframe, engine, avionics and maximum costs.

Posted by: Rafael Sierra | February 27, 2014 2:45 PM    Report this comment

Paul,

I am familiar with the Cirrus argument of hand layups, and knew a prominent engineer that went into the factory as a paid consultant to try and streamline the process...and he didn't have any answers for them. Obviously, the more labor required the more the airplane is going to cost to manufacture and there are no simple answers.

But taking your reply into consideration, it reminds me of the same challenges Henry Ford had when he thought about it enough to make the automobile affordable is a very similar "outside the box" look that general aviation has. If you back up to look ahead, this is what Henry Ford had as the same type of challenges, and yet he knew if he could build a vehicle as an assembly line format, the cost per unit was now lower, and the demand curve had a serious shift to the right. I am not saying ANYTHING about his process as it relates to aviation, I AM SAYING that the process needs to be looked at, because innovation has taken place in many manufacturing sectors, but aviation is a slow to adapt industry.

You are right on the reply, and that is LIMITED DEMAND for the product, which keeps the large investors out of the equation. At one time, aviation was the forefront of technical development and was what attracted the money into airplane manufacturing. Wichita was founded on oil money when investors wanted to be a part of the most technical market and development in that era. Now, technology is electronics and ROI that makes sense. Out of all the stock I own, I can guarantee you that I don't buy aviation stocks! :)

One example that would be a reflection on your point of automotive Vs. airplane, is the PFM or Porsche engine on the Mooney airframe. A lot of money spent on development cost, the engine actually had much simpler operation, modern technology, and had the market for piston singles not been on a serious downward spiral, the engine had some merit to the application. The gearbox had some teething problems, as well as the added weight of the redundancy systems, but had it been continued in production, Porsche had petitioned for a 3,000 hour TBO.

My point is with all the engineering talent, spending time figuring out a flying car with all the technical aspects of a very low demand, wouldn't it be better to have the capital being spent on manufacturing techniques to solve the Rubick's cube by building a $10,000 engine that could make TBO?

Posted by: Michael Dempsey | February 27, 2014 3:41 PM    Report this comment

Matthew,

Which way do we want it, money or technical? Aviation has always been expensive AND it is MUCH easier to fly today with the airspace then it was "back in the day".

Here is why. First, the written exam was a tough one to pass! The King weekend groundschool had not been invented, and you had to really study to pass the exam. Now, you can learn what is necessary to pass the written, and it works!

Second, we didn't have the weather reporting stations as we once did, and also the access to live radar, satellite pictures, etc. Included in this, was very limited radar coverage with airspace around terminal areas and it was complex at the same time.

I flew many trips in twin Cessna's that had a VOR as the primary nav system, and Loran wasn't even in the mix at that time. DME only worked when you were going direct TO or direct FROM the station, which meant no groundspeed readout, no time to destination, etc. Throw in the fact a simple GPS has the moving map depicting airspace, and I am telling you, the challenge isn't learning regs and technical parts of flying. So, I don't buy the hold back on flying as people aren't smart enough to learn how to fly, as it really is much easier to learn the regs and the rest of the action than it was in the past.

The problem is - we don't know how to sell the product! :) Seriously, aviation is a business whether anyone wants to admit it or not. We can't rely on the "romance of aviation" as the only carrot to draw future consumers, we need to make sense of what aviation is. Marketing to people with disposable income? Forget it! Not on the local level for sure. We need to understand that aviation has a large recreational audience...and they have alternatives and these people are spending money on alternatives...it is a simple economics 101 story.

Lets get factual real quick, that way we don't have any unnecessary passion that is throwing us off. Disposable income is HUGE...especially compared to the time that piston aviation was HUGE, and yet the industry can't explain it???? Look at the 1970's when general aviation piston airplanes were the rage...disposable income wasn't anything close to what it was today, yet it provided value for the money, and the client was sold. Considering population growth, GDP, and disposable income, general aviation piston aircraft should be selling at the same growth percentage as every other expensive recreational sector...and it is sadly not even close :(

My point with the recreational ownership of motorcycles and boats, is the argument that people have the money to spend on something they want and enjoy. Yes, we live in an instant gratification society, but the decision is always based on what priorities we have with this money. For many people, they have no interest in aviation. Similar to me having no interest in golf, you could give me a 1/2 price membership, and I am not interested at half price.

My friends with motorcycles ask what an airplane cost, and new...they give me a look like "how crazy is that!" However, when I tell them they can buy a used Cessna 150 for under $20,000...they are surprised by how cheap it is. The acquisition cost is not the expensive part of owning an airplane, but when my buddy invites me to go boating on his 34 foot Bayliner, I find that airplanes really are a lot cheaper than owning a boat. I ran the numbers in comparison to a Beechcraft A36 for ownership on a fixed cost basis...and the airplane was cheaper to own! BUT...you can't drink beer while operating one of them, so I guess spending more on the boat is the reason to own a boat!

Getting back to the real issue, and that is if my friend who owns the boat NEEDED to get to Minneapolis for business, or owned a nice home out in the Black Hills...guess what? He would be a huge aviation consumer! So who in aviation is spending time looking for this type of person? Very few and far between! That is the point. Want to sell more fuel, flight instruction, maintenance, used/new airplanes...here is the TYPE we need to get after!

Posted by: Michael Dempsey | February 27, 2014 5:03 PM    Report this comment

'The problem is - we don't know how to sell the product! :) Seriously, aviation is a business whether anyone wants to admit it or not.'

Wanting to admit something or not presumes an absolute definition, and also presumes a similar viewpoint.

To say that aviation, in and of itself, is dependent upon how it is presented as a 'product', and that we can blame its failure to sell its 'product' on people like yourself who 'have made a career as a professional pilot, marketing and sales of aircraft, and as an aviation consultant' is just silly, whether it can be admitted or not. It's no more your fault as it is mine, a flight instructors, an aviation writers, an airport operators, or a FBO owner's fault. Nuanced to always ride the crest of the wave in profit, creativity and community involvement, sure, we all should be open to improvement.

No one said people are not smart, it's more the choices they are making today that tend to overlook changes in lifestyle like personal flying, all for the solid reasons we have been arguing for months, maybe years. But as I said earlier, Paul nailed it in this blog and probably 37 other blogs, too. Personal flying is not a product, it is a lifestyle, and is entirely unlike boating, camping or golf. Successful business follows demand and interest, not precedes it. Admit it or not.

Posted by: David Miller | February 27, 2014 6:01 PM    Report this comment

Dave,

I agree that success in business follows demand and interest in the product, not proceeds it is very accurate. But what are we talking about here? That's right, the recreational aviator and disposable income...where is the money going? Aviation has to compete for this business, just like any other alternative to this recreational product, it has to be presented for the value of the product or service.

The problem for most people looking at general aviation, is that you are assuming the flight school has a business approach. From your comments, I think you are in that category and is where you most likely need to at least do some market sampling. Ask 99% of the flight schools what the advertising and marketing budget it, and the answer will be ZERO!

So, if this is a business, why do we have zero as the total sum of communicating a product or service? Seems it would be elementary, and is one of the top reasons why general aviation growth is non-existent.

Think you are smarter than this? Start looking into the LSA segment. Not a popular option, yet is a solution that the flight school, aviation industry, and manufacturers could capitalize on...yet it isn't going anywhere fast.

Statistics don't lie, and if you neglect the most important aspect of what makes a business work, then we can realize what aviation has an abundance of, and what it has a lack of. Aviation brings the very intelligent engineering and technical people to the table, but the sales and marketing are an afterthought. This would include the business development people who know how to put it all together by IDENTIFYING who is the buyer and how best to bring the prospect and make them into a customer.

NetJets is a perfect example of marketing and sales, and if you sneeze at these guys, you haven't seen how Berkshire Hathaway evaluates a business for their portfolio investments. NetJets identified a niche and used marketing to show the practical aspects of shared ownership. Not the cheapest solution to business travel and personal travel, yet is the choice for many. Charter would be less expensive, but NetJets has the "lifestyle" of jet travel people are excited enough to part with the money to experience.

Which is what all this aviation talk is about anyway. Justifying the experience for the money you have to part with. Personally I haven't rented an airplane in over 10 years, it is because for me, the value of going up and flying around isn't worth the money to me. Many years ago, I would take my paycheck and blow it all on aircraft rental, and I was never happier than flying around the skies day or night, flying to Florida with friends, etc. The memories of my trips are forever in my heart and in my mind, and they were worth every dime to me with no regrets!

Posted by: Michael Dempsey | February 27, 2014 8:12 PM    Report this comment

Hi Dave; Is it product - I believe an aircraft IS a product; and flight training IS a service - and BOTH can be "sold", correct?

Yes, I too would, to a degree. AGREE that "personal (recreational) aviation" Is a lifestyle of sorts. That said, however, does that preclude the owners/principals from operating an FBO/flight school with the primary objective of a profit motivated venture first and foremost?. If that's the case, wouldn't this be labeled more of "life style business" rather than just a lifestyle ? OR, from your own personal experiences, would you conclude ANY and all financial considerations, including "losses", are a much lower priority than the "social" atmosphere offered by the provider?

Would appreciate your feedback/comment on this!

Posted by: Rod Beck | February 27, 2014 8:20 PM    Report this comment

Despite too much Benedryl today, let me try one example that comes to mind. According to several sources I'm in contact with, and being one myself, there are approximately 300,000 amateur astronomers in the U.S. today. Slightly larger niche than all recreational private pilots. Like an aircraft to a pilot, one needs a telescope to truly practice the interest/devotion/lifestyle - whatever identifier.

I have never found the interest in astronomy to be predicated by the need to own a telescope, yet a telescope is a necessary 'product' for most of us. However, some borrow others', some have none, some are still wishing upon a star to get one, some just hang around others to share that excitement. The telescope is astronomy's product, one might say.

But the interest in the night sky - the universe, astronomy, is what drives all the businesses selling scopes, lenses, all the extra stuff every enthusiast enjoys about their hobby. An ad or marketing campaign did nothing to lure me to buy a telescope - the night sky did. (And it didn't hurt to live in the SW, too.) Very easy for disposable income to cover any and all necessary stuff - except maybe that cherished trip Down Under for the view of the southern night skies.

Flying, flight, pilots, etc., are almost as ubiquitous as that night sky is, and that's where I believe it all has to start. Everyone is aware of flight today, maybe not specifics and details, but each soul knows whether they want to learn to fly or not as they move through their day.

Costs, however, will dominate and damp down any intrinsic excitement for most people, sadly. It's been covered ad nauseam.

It's the skill, expansion of view, camaraderie, stretching one's trust in oneself - (the most critical requirement that fewer people are willing to explore nowadays, IMO) - to pilot an aircraft, alone, that has to be there, and we are seeing sea-changes in so many areas of society today that we will just have to wait it out and see how GA looks on the other side.

We have different views on this, no problem, it's all good. Cheers.

Posted by: David Miller | February 27, 2014 10:08 PM    Report this comment

Cheers

Posted by: Rafael Sierra | February 27, 2014 10:17 PM    Report this comment

And YES, thank God, (pun intended) and religion! Cheers, too!

Posted by: Rod Beck | February 27, 2014 11:22 PM    Report this comment

"My point is with all the engineering talent, spending time figuring out a flying car with all the technical aspects of a very low demand, wouldn't it be better to have the capital being spent on manufacturing techniques to solve the Rubick's cube by building a $10,000 engine that could make TBO?"

Let me give you some numbers. The Austro engine project, which was somewhat of a crash program following the impending demise of Thielert, required an investment on the order of $60 million, from nothing, all the way through cert to a completed factory. As I mentioned, the Austro is based on the MB OMB 640, of which MB builds a half million a year, at least. Economies of scale don't get much better than that.

Yet the airplane that these engines are installed in, which sells, at best, in the multiple dozens per year, still costs north of $700,000. It's not enough to say "wouldn't it be better to build a $10,000 engine" without saying just how you'd do that. I know it's a great frustration for many in the industry--both buyers and builders--that such a thing just isn't happening. But if you'd do the reporting on this that I have, walk the factory floors and crunch the numbers, you'd understand how difficult the challenge is.

The light sport industry can't even figure out how to make a substantial airplane for under $100,000 and I know of at least two companies that have tried. If you have the solution for them, I'm sure they'd be receptive. Just saying "we've got to do this" and actually doing it are two different things.

I wish I had a solution for this. I simply don't.

Posted by: Paul Bertorelli | February 28, 2014 4:37 AM    Report this comment

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