Piper Exits the LSA Market
From out of the blue came this week's announcement that Piper will discontinue selling the PiperSport LSA, an airplane it conveniently nameplated from the Czech Aircraft Works Sport Cruiser. If the timing of this is a little surprising, the decision itself isn't, at least to me. Piper announced the airplane at last year's Sport Aviation Expo in Sebring. According to Dan Johnson's sales tracking, Piper led LSA sales trends in 2010, with 43 airplanes registered. (That's not necessarily the same as 43 sold.) Not bad. So why drop it?
For the same reason that Teledyne is selling Continental Motors. It just doesn't fit with the company's vision of what it wants to be doing, the oft-quoted "core competency" cliché. Piper has been through two management shakeups in three years and its offshore investors are probably interested in that segment of the market where the profits are: Jets. Not for nothing did we see the PiperJet retooled into the Altaire and rolled out with great fanfare at the NBAA show in Atlanta. With limited capital in a down market, why fool around with low-margin LSAs when you really need to be certifying a jet? The little airplanes are just a distraction.
The traditional wisdom had it that in order to sustain sales of all of its models, an airplane company needed something for everyone—from a trainer all the way up to turboprops and jets. Get 'em in the door and a logical line of step-ups would engender brand loyalty. Cessna has followed this strategy successfully for more than 80 years and it continues it to this day, with a line running from the Skycatcher to the Citations. Given the continuing weakness in single-engine sales, does the formula still work? Good question. That's why were watching Cessna carefully.
We've also been watching the LSA market for the inevitable shakeout, but I doubt that Piper's decision represents the leading edge of it. I think it's just a minor reshuffling. I think the LSA market will remain curiously oversupplied, undersold and stalled, with little movement toward the lower prices some would-be buyers want, but which manufacturers simply aren't going to achieve.
Piper's press release contained a curious turn of phrase. The company said it had "a difference in business philosophies," evidently with its Czech Republic suppliers. I'm not sure if that refers to the aforementioned jet focus or with difficulties in doing business with Eastern European companies. Or both. When Piper announced the airplane last year, we immediately heard from American investors involved in the original development of the SportCruiser who noted that business deals in Eastern Europe are often not what they appear to be. That's another way of saying commercial standards and contracts aren't as black and white as they are in the west. I've heard this from others importing from the former Eastern Bloc. Anyone doing business there needs to be on their toes.
What this does to sales of the airplane is unknowable. The PiperSport/SportCruiser is just another LSA among many. It's nice enough, but not exceptional in any way. Piper's involvement seems to have ginned up sales. Its abandonment won't help, I'm sure.