Has the ADS-B market finally been disrupted with the low-cost (under $3000 installed) box we’ve all been waiting for? It looks like it, more less validating the advice that waiting to purchase this technology was the right thing to do. I’m not sure waiting any longer is of much benefit, but more on that in a moment.
Not that anything about this ADS-B business is certain, simple or parsable by normal humans. This week, two developments stirred the pot and, if nothing else, provided some entertaining confusion. The first was the FAA’s “clarification” earlier in the week with vague language that some thought indicated that certified airplanes could have non-TSO’d ADS-B equipment. Not exactly.
The FAA’s announcement applied to experimental and LSA aircraft. The agency wanted to make it clear that if an owner wants to fly in mandated airspace, the airplanes need TSO-compliant ADS-B, but the boxes don’t have to have the actual TSO. It’s a fine point, but an important one for some.
The second development was even more confusing, but perhaps in an encouraging way. Recall that a year ago we reported that the NextGen Fund, a private company, was planning to arrange government loan guarantees so it could offer affordable loans to owners wishing to upgrade avionics, including ADS-B. The loan guarantees wouldn’t involve actual federal dollars, just backing of commercial capital at rates a point or so better than available from commercial banks. But as with all things related to the government, the loan deal is dragging, requiring as it does congressional and FAA action.
In the meantime, as we reported Thursday, NextGen has come up with what it calls the Jumpstart GA program that will stuff the avionics supply chain with a basic ADS-B Out-only product from L-3 called the NGT-1000 at a suggested dealer price of $1599. The box is a 978 MHz UAT design that has its own position source, so an installed price of $3000-plus or minus-seems realistic. That’s substantially less than products offered by Garmin, Avidyne, FreeFlight and others and appears to offer the market the low-end mandate-ready solution many have been waiting for. It could prove disruptive of what has thus far proven to be a desultory market for ADS-B with the mandate still five years off.
At that price, you’re getting just ADS-B Out, no In. So if you want the carrot at the end of the stick-the free weather and traffic–either buy a portable ADS-B In or opt for a more expensive UAT solution. NextGen’s strategy is to offer a low price, rule-compliant product to prime the ADS-B pump and validate the market for the loans it eventually wants make to owners for avionics upgrades. It’s bullish on the low end, too, promising to load the supply chain with 10,000 NGT-1000s. To put that number in perspective, Ric Peri, of the Aircraft Electronics Association, told me Thursday that AEA estimates about 10,000 ADS-B units have been installed, in a potential universe of 140,000 aircraft. It’s tempting to say NextGen’s play doubles that overnight, but no one knows what the customer uptake will be or how fast L-3 can build and ship products. Nonetheless, it still represents quite a bump up in the market. (By the way, NextGen sought bids from other companies, including Aspen, FreeFlight and NavWorx. It apparently got the best deal from L-3.)
While I think this is a positive development, I can’t for the life of me explain NextGen’s business model for Jumpstart, something I find frustrating. I talked at length with the company’s James Hughey, but he declined to go into details about how exactly the financing is working. NextGen isn’t investing in the L-3 line, nor is it purchasing or taking delivery of the units. It’s also not marketing or promoting the boxes, leaving that for L-3 to do through its normal channels. Nor is it envisioning loans to purchasers of these products. That makes sense. Who would want a $3000 loan?You can place an order either through an avionics shop, through L-3 or through NextGen. Does that mean it has in mind direct, over-the-counter sales to go around avionics shops and have an A&P install the gear? How will shops react to that?
We’ve never seen anything quite like this in the avionics industry. That’s not to say it’s bad or good; just a bit baffling. As I said, NextGen’s overarching strategy is to validate the ADS-B market so it can move into the loan business. I can see how selling a bunch of boxes will give the company a lever to encourage the loan-guarantee process. And anyway, give NextGen credit for innovating new sales and distribution ideas in an industry that desperately needs both. The high-volume stimulation of the market looks like it actually is driving down prices at the low end.
A day after the FAA’s announcement, we got a press release from NavWorxannouncinga special on the ADS600EXP for $699. It’s a UAT In/Out box intended for the experimental and LSA market. It meets the TSO performance requirements, but doesn’t have the TSO. Nice price. Could it be installed in a certified airplane? Ric Peri told me there’s a path to do that through Advisory Circular guidance, but it requires enough one-time engineering validation as to make a TSO’d unit just easier. (NavWorx has a TSO’d unit, too, the ADS600-B for $2399.)
None of this makes me any more enthusiastic about arguing for equipage now. A year ago, some people were saying that, suggesting that we had seen all the price breaks we were going to see on ADS-B. That turned out to be wrong. But have we reached bottom now? I’m not sure anyone can say. This portable ADS-B Out product sells for $2450, but I haven’t explored its legality or practicality. So legal TSO’d gear is in that range.
A $3000 price point will push many owners across the equipage threshold, so I don’t think L-3 will lack for buyers for its 10,000 units. Many others just aren’t going to equip at any price and will avoid the mandated airspace or just hang up their headsets. As I’ve said before, I don’t think there will be droves of them, but I think there will be enough to soften used airplane prices with surpluses of certain low-value models.
And just for the record, I’m not a Luddite or a crank on ADS-B. Long ago I got over whining about how bad the system is and how little value it offers. Look guys, it’s coming. Get used to it. People who have equipped like the tradeoff of free weather and decent traffic services. Arguing against ADS-B is like arguing for lead in avgas.
As for the much-talked-about giant traffic jam of ADS-B panicked owners two years before the mandate, AEA’s Peri doesn’t think it will happen and I think he’s right. Most of the owners who know they have no choice but to equip are doing it now or will within a couple of years. Two thirds of the 10,000 who have equipped have done so in the past 10 months, so the pace is quickening.The rest are elective upgraders and aren’t in any hurry, regardless of the mandate deadline. At least as of this week, they have a new choice and it appears to be an affordable one.
EARLY P.M. ADDITION: L-3 got back to us this morning and confirmed that a control head is required for the NGT-1000, unless the aircraft is equipped with a Garmin GTX327 or 330 transponder. The control head costs $1223. This brings the total hardware cost to about $3600, including antennas. Bottom line: it looks more like a $5000 all-in system.
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