Guest Blog: Retrofit Avionics Up 28 Percent

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Some financial analysts predict that the tax reform recently enacted will see corporate earnings grow in the 8 to 12 percent range in 2018. 

As all of us in the general aviation industry know, this projected growth could have a positive trickle-down effect for our market.

In my segment of the industry – avionics manufacturing, distributing and repair – where we are still recovering from the Great Recession of the 2008-2009 era, avionics sales are already trending upward over the last several months, and it appears the increase is partially due to the ADS-B Out mandate for Jan. 1, 2020.

As everyone should be aware by this late date, the Federal Aviation Administration is requiring all aircraft flying in controlled airspace to be equipped with ADS-B technology to modernize the U.S. national airspace system. The FAA predicts this mandate will apply to 120,000 to 160,000 aircraft, of which nearly 100,000 aircraft still need to equip within the next 24 months.

Five years ago, my organization – the Aircraft Electronics Association – created a quarterly avionics sales report to assess the true dollar size of the business and general aviation avionics market. The AEA is an international trade association whose membership roster is compiled of avionics manufacturers and distributors and government-certified repair stations that service, install and maintain the general and business aviation fleet. 

Today, 23 avionics manufacturers submit their quarterly sales to the AEA. The sales report provides valuable information to the industry, as well as promotes the business and general aviation avionics industry to investors and informs elected officials of its global economic value.

The dollar amount reported includes: all business and general aviation aircraft electronic sales – including all component and accessories in cockpit/cabin/software upgrades/portables/certified and noncertified aircraft electronics; all hardware (tip to tail); batteries; and chargeable product upgrades from the participating manufacturers. The amount does not include repairs and overhauls, extended warranty or subscription services.

In the first nine months of 2017, total worldwide business and general aviation avionics sales amounted to more than $1.73 billion as reported by the participating companies. The figure represented a 4.1 percent increase in year-over-year sales compared to the first nine months of 2016 amount of more than $1.66 billion. 

Even better, sales during the third-quarter months of 2017 had a 7.1 percent increase compared to the 2016 third-quarter sales of more than $548 million. 

These are significant increases in a cautious general aviation economy. Interestingly, of the more than $1.73 billion in sales during the first nine months of 2017, 57.7 percent came from the retrofit market, while forward-fit sales amounted to 42.3 percent of sales. 

The third-quarter report indicates that the retrofit market appears to be thriving, as those sales have increased more than 28 percent in the past year. Why the surge in retrofit sales? While the AEA Avionics Market Report should not be considered a predictive indicator of future industry sales activity, the results in the third quarter may be attributed to an increase in ADS-B installations in existing aircraft. 

The retrofit surge also could be partially attributed to the possibility that aircraft owners are choosing to have additional avionics work done while simultaneously coming into ADS-B compliance. Many avionics shops are telling us that aircraft owners are electing to order full-panel avionics upgrades rather than just the ADS-B equipment. 

Whatever the reason, retrofit sales increased more than 32 percent during the third-quarter months alone. This is consistent with what shop owners in the U.S. have been telling me during our AEA Connect Conferences last fall, as many have a backlog of work ranging anywhere from two to six months.

With such a short time span left to comply with the ADS-B Out mandate, aircraft owners and operators may now realize time is getting short, and the supply of authorized avionics shops performing these installations will be in great demand throughout 2018 and 2019. 

Although the mandate was first introduced in 2010, with a 10-year compliance calendar, owners have been slow to react. Suspecting the FAA may extend the mandate beyond 2020, owners procrastinated, and demands for lower equipment prices were heard throughout the industry. The manufacturers responded positively, and today, there are several lower-priced options available, as well as more offerings for the Part 25 market. 

Who knows how long it will take corporate tax cuts to trickle down to our industry segment or what the new year may bring; in the meantime, the avionics industry, as usual, will march on, work hard and do our part in modernizing the nation’s airspace.

ABOUT THE AUTHOR

As president of the Aircraft Electronics Association, Paula Derks presides over the international trade organization that provides regulatory representation, training and member services to nearly 1,300 general aviation electronics entities in 43 countries around the globe. 

In coordination with the AEA board of directors, Derks’ position includes long-range planning and budgeting, representing the AEA at industry events, and ensuring the strategic objectives of the association are realized. She is the publisher of Avionics News, the association’s monthly magazine.

 

Comments (29)

What an overwhelming honor. It's so rare to have an industry leader write to us General Aviation folks. I'm speechless. Thank you for joining into a conversation. I hope you will find the time in your busy schedule to respond to us down here at the bottom of the page. Once again I'm taken back that you wrote this blog.

By-the-way, what's the chance that the FAA will back off the GPS certification requirements and allow for better priced IFR GPS units. Maybe the $1,500.00 range or less?

Posted by: Klaus Marx | January 10, 2018 12:37 AM    Report this comment

Confidently present your numbers, create a sense of urgency, close the sale.

Perfectly written Opinion Advertorial and Mr. Marx isn't the only one miffed about it. The general aviation populace (this is just a uneducated hunch) may largely reject the idea of upgrading their avionics, not because they don't like $15.000 dollar blinking screen gadgets in their plane, and certainly not because they don't have the money. There may be minor other reasons for the "difficulty to adapt"...

Recently talked to a A&P mechanic who is in disbelief that a pair of landing gear actuator covers (that's a 1.5 square feet of rubberized canvas stitched together into a cone shape) for a 45 year old Cessna 310 sells for a whopping (discounted) $876.00 each. Meanwhile, the flap hinges (all 8 of them, they look like little flat aluminum scissors) hail in at $1.600 for each set. Requiring 8 of those will put the owner back $12.800. That's what, the price of a Ford Fusion? A new, decked out Jacuzzi you can actually enjoy with your family? That's 6.737 bottles of domestic beer you can drink, all sad about the way things are going.....

In other words, you really have to LOVE this stuff to even consider it for the fun of it and we ought to stop pretending that some soapy tearful "you're exceptional and special, part of our family the 1%ers, dying breed of aviators" (a bit less than 1% of our population can differentiate a plane from a helicopter) slobbing will do a whole lot to keep people engaged. There is only two kinds of people you can sell this to without getting shot, boat owners and airplane owners.

From the people in the trenches (those lowly folks I spend my time with) the problem is that probably 75% of our U.S. private pilot populace is suffering from old age and not thinking of ways to spend their vast amounts of dollars on airplanes. Many wonder if they will be able to sell the plane when they are forced to hang it up, or will have a darn expensive and large flower pot in their driveway. Who are you going to sell this flying box to, when there is barely new blood coming in?

I am pretty certain that the corporate tax rates will benefit all big corporations, but I am a bit hesitant to think that any of it will be reflected in lower pricing for the stupid customer. Forcing people to upgrade anything by government mandate and solid deadline (then graciously extended) isn't going to cure anything, nor is it going to make people jump up and say: YES! Take all my money, I just love it!" These are FORCED SALES. At the clip we're going we are simply killing ourselves. A shame really. Some of us can hear the Chinese galloping over to take a first look at all of these nice airplanes that may soon change owners and continents for a dime a dozen...

Posted by: Jason Baker | January 10, 2018 1:58 AM    Report this comment

Confidently present your numbers, create a sense of urgency, close the sale = Street trade

Klaus, JaBa: All three point shots gentlemen.

Posted by: Rafael Sierra | January 10, 2018 4:54 AM    Report this comment

I could care less if people who charge 12 grand for a GPS are now going to enjoy more profit.

Posted by: Mark Fraser | January 10, 2018 6:59 AM    Report this comment

At this point I have no intention of equipping with ADS-B, does this make me a bad person?

Posted by: Richard Montague | January 10, 2018 7:25 AM    Report this comment

Not attempting to sound cynical here, but I suspect that the implementation of BasicMed has as much or more to do with a (still undocumented in the article) bump in ADS-B installations, as does the approaching deadline. Translation: gonnabee-flowerpots have had their retirement dates extended by BasicMed. That alone will sell quite a few $1,500 nav-light-form-factor ADS-B out units. Unique. Confluence. Of. Events.

Posted by: YARS (Tom Yarsley) | January 10, 2018 8:42 AM    Report this comment

" Confluence. Of. Events"

Post hoc, ergo propter hoc

Posted by: Richard Montague | January 10, 2018 10:43 AM    Report this comment

Yars makes a good point about less obvious issues (i.e. Basic Med) having an infuence on the uptick in sales. Another issue that is driving the incease in avionics upgrades is the expanding availability of lower cost non-certified offerings from Dynon, TruTrak, Trio and even Garmin. However, while those products factor in to installation activity, they are not likely to increase the sales revenue figures since the products are displacing higher cost competitors like Aspen and S-Tec. Good news for the customer and installers, maybe not so much for the big manufacturers. In the end, I predict that the relaxation of some stifiling FAA regulations will have a greater impact than changes in the tax laws.

Posted by: John McNamee | January 10, 2018 12:03 PM    Report this comment

Yars is EXACTLY correct !

How do I know? Because two months after I passed BasicMed and went to Airventure 2017, I bought an ADS-B 'out only' transponder of the "800 pound gorilla" brand. I likely would NOT have done it to replace an operating Mode A/C box but I needed a transponder anyways. 'Promo,' show and dealer discounts plus the FAA Rebate added up to real money and -- in the end -- doing the installation myself as an A&P (certification by others) brought the cost down to ~$2500. Too cheap to pass up. Yeah ... now we view $2500 as cheap !

I don't know what AEA does except to charge exorbitant rates to attend "AEA" (aka The Party) in Las Vegas ($625 to $775) and produce a magazine filled with articles about how installing ADS-B is a very complex task and ya better do it now. Having schooled myself on my own installation, I can tell you that -- in it's most elemental form -- my box needed power, ground and two antennas (encoder is a part of the backplane). That's it ! For several years I WANTED -- and tried -- to buy an 'out' and 'in' box but the gorilla and its dealer network wouldn't sell one to me. One dealer wouldn't even return my emails when they found out I wanted to do a self-install. I had words over several SnF and Airventure shows with them over this but ... unless you use their dealer network, you don't get the combo box. Even me ... as an A&P with substantial avionics experience. SO ... as I see it ... AEA is the umbrella that binds all the manufacturers and distributors together to scheme against users who have been 'boxed in' to ADS-B by an omnipotent FAA.

I can think of NUMEROUS ways that sales figures could be improved and tried to discuss this with them ... but I found they're pretty good at wagging their heads and oral gratification without action. Let's start with pushing for establishment of the 'new' Primary Aircraft airworthiness category contained in the ARC Recommendations for FAA Part 23 rewrite to FAA which never made it into new Regs. GA recreational aircraft ought to be treated just like E-AB and Sport airplanes. Doing so would open new markets and Paula could be writing ever more glowing reports. There should be no need for EAA STC'ed installation of non-TSO'ed equipment in Part 91 airplanes.d

And then there's this. Where before I was either an anonymous IFF target (or invisible primary skin paint when my OEM box broke), now both the FAA and thousands of Flight Aware 'sniffers' are watching my every move and know who I am by tail number. I'm betting that in about 10 years, the 'boys' will mandate entering a pilot number into your transponder so that they know exactly who is flying and what. Let's just see. Caveat Emptor! If you're thinking about ADS-B and want to be anonymous ... ONLY going the UAT method offers 'anonymity depending upon box maker. 1090 boxes have no choice but to report your 'N' number. (Mode S 1090 boxes have the same problem).

Posted by: Larry Stencel | January 10, 2018 1:36 PM    Report this comment

No AD$-B OUT is NOT the end of flying for many. There is no real urgency. Just stay away from flying higher than 10,000 feet MSL, away from Class C and away from Class C overflights and away from the 30nm Class B veil. Save down time, save money. The option remains, do not install and keep flying. On an after January 1, 2020 aircraft will still be able to fly from Palm Springs Ca to Tampa FL and points north without ADS-B. Some Flight schools may decide to retrofit all or some or perhaps none of their trainers. Depends on their terminal airspace.

Posted by: Rafael Sierra | January 10, 2018 3:59 PM    Report this comment

"Just stay away" is an awful hard thing to do for anyone based in a Mode C veil.

Posted by: Robert Gatlin-Martin | January 10, 2018 6:28 PM    Report this comment

"GA recreational aircraft ought to be treated just like E-AB and Sport airplanes. Doing so would open new markets and Paula could be writing ever more glowing reports. There should be no need for EAA STC'ed installation of non-TSO'ed equipment in Part 91 airplanes."

Amen from a national multitude of voices. If you couldn't twist your mind to laugh at the nonsense that permeates our lives you'd cry yourself to sleep each night.

Imagine if there were some way to force from the "powers" presentation of detailed justification for why it is equally safe for a E-AB aircraft to fly exactly the same mission the certified bird does with a piece of equipment that costs thousands less. Now THAT would be interesting - and very likely most amusing - reading.

Posted by: John Wilson | January 10, 2018 6:33 PM    Report this comment

Robert Gatlin-Martin. R E P O S I T I O N!

Posted by: Rafael Sierra | January 10, 2018 7:47 PM    Report this comment

John ... I brought this up directly to Jack Pelton at the 2017 EAA Membership meeting at Airventure and he, too, agrees since he has several 'certificated' airplanes. They're trying but each of us needs to start yelling bloody murder over this nonsense !! The ARC worked for more than ... FIVE YEARS ... on their recommendations and the Primary airworthiness idea in an Appendix in their document is nowhere to be found in the codified FAR Part 23 rewrite. Yet, the Administrator, et al, are patting themselves on the back for a good job on the rewrite. No one "normal" can afford a new airplane so only older machines -- now >40 years old on average -- are in use. WE need help to update our avionics ... not purchasers of new Cirrus' with 32" TV sets in 'em.

If you can believe this ... in my hangar I have a roll of ... hang on tight now! ... FAA APPROVED TOILET PAPER !!! To be fair, this stuff is for one of those old toilet paper oil filters which run some pressure oil through it and return it to the sump. They're no longer available but ... before I knew I was supposed to use TSO'd paper ... I just used Charmin. No kidding :-) (sigh)

For ya'll ... be advised that IF being anonymous is important to you but you want or need to equip for ADS-B -- per Robert G-M above -- go the UAT method as I already said. Just do your homework because not all boxes offer anonymity. The newly released GDL-82 has a pin which can command the box into anonymous mode HOWEVER ... you cannot be squitting anonymous IF you are requesting ATC services. So this means a switch has to be installed to turn the anonymous mode on and off. THAT is the way I plan to deal with the requirement in my second airplane which has a newer Mode A/C transponder installed. You'll still be squitting ADS-B but no one will see your tail number unless you're talking to ATC when you have to turn your "N" number back on. No one tells you this clearly. I just did. OH ... transponders Squawk in response to ground based interrogations and ADS-B boxes Squit every second as long as their internal software determines everything is working OK. If you have an all-in-one 1090 transponder, it's squawking AND squitting.

Here in NE Florida, I just had a conversation with the airport manager telling him that he better accentuate to airplane owners that unless they equip, they're going to have a hard time getting to south Florida past the Daytona Beach Class C, Cape Canaveral, Orlando Mode C and Tampa Class B airspace after 2020. There are two slivers of airspace where it would be possible but THEN there'll be a lot of transiting machines not squitting position.

Posted by: Larry Stencel | January 10, 2018 8:07 PM    Report this comment

Larry: ".. FAA APPROVED TOILET PAPER !!! :)"

Here's one for you... Parts check Skygeek for this PA-31 Manifold Pressure Gauge inline filter:

Piper Aircraft 460 dash 990 Air Filter

We bought a half dozen of these at aircraft prices because none of the guys would get them locally.

Posted by: Klaus Marx | January 10, 2018 9:08 PM    Report this comment

I kid you not, Klaus. That TP stuff is up north so I can't take a pic or scan it but we can't attach a pic here anyhow ... just trust me. I had never heard of a STC'ed TP oil filter until I bought my Cessna 33 years ago although I HAD heard it for autos. Right there on the front of the chrome housing it says ... STC'ed. SO ... the TP has to be TSO'ed. I put a new engine in that has an oil filter so the old one remains only to plug several larage firewall holes. Ya can't make this stuff up. I'm hauling it to Airventure 2018 and gonna show Jack ... in person. So here's the question I HAVE to ask ... is there someone within the FAA who's job it is to test this stuff ?? :-)))))))))

I did your check ... likewise HILLARIOUS but -- simultaneously -- sad. Is that for real? At least it's not TSO'ed. :-) Then again ... maybe we better report that to the FAA?

Posted by: Larry Stencel | January 10, 2018 9:39 PM    Report this comment

Paula seems to be somewhat inaccurate. She incorrectly stated that the "Federal Aviation Administration is requiring all aircraft flying in controlled airspace to be equipped with ADS-B technology ... ". Whereas much of the U.S. controlled airspace is not under the ADS-B equipment requirement. Like Class E below 10,000 ft MSL and Class D and Class E surface areas outside of the 30nm Class B Veil. Certain aircraft are also exempt. As I stated before, there is no urgency to equip or spend money in a hurry. My guess is that about 80,000 aircraft would continue to operate unaffected well after 2020. Read 91.225 "Automatic Dependent Surveillance-Broadcast (ADS-B) Out equipment and use."

Jason Baker nailed it!

Posted by: Rafael Sierra | January 11, 2018 12:41 AM    Report this comment

You're 110% correct, technically, Raf. But ...

I just rechecked the charts and if the restricted airspace around the Cape is hot, there's only a small ~10mi wide piece of airspace around Lakeland-Winter Haven where a non-equipped airplane could transit between the TPA and MCO Mode C veils to go N-S over land. You can bet that traffic through there will become intense. The equivalent by you would be trying to funnel ALL E-W traffic through the sliver of airspace between the March Field and Ontario Class C airspace around Riverside. Many folks are in the "fix" described by Robert G-M. And we haven't even addressed the intense student traffic around here.

Posted by: Larry Stencel | January 11, 2018 8:20 AM    Report this comment

Larry, I understand the restrictions to non ADSB traffic after 2020. The point is that there will be plenty airspace to roam, not all aircraft ops will be grounded and that not many are aware of the alternative. But, here's my concern. I smell the threat coming from some enthusiastic lobbyists pushing to expand the regulation to no adsb airspace exemption. I would think that Paula and her organization would be perfect for the job.

Posted by: Rafael Sierra | January 11, 2018 9:12 AM    Report this comment

I'm familiar with the TP filters. We used one in the shop to clean the used oil before recycling it for our $500 cars.

The Piper Aircraft 460 dash 990 Air Filter (tampons) each come with an 8130 form.

This is once again very disappointing, we have expressed our concerns and the blogger won't participate in the conversation they started.

Is it really that hard to engage in conversation? The lack of participation 'is' the "Aviation Collapse". If these alphabet group's leaders really want to help Aviation ................ "!!PARTICIPATE!!"

Don't do 'hit and run pieces', it's hurting the entire industry. We are losing confidence in your intentions. The Titanic is sinking and our Aviation Organizations are giving us the statistics of our demise. I guess 'Statistics' are the modern day fiddle.

Posted by: Klaus Marx | January 11, 2018 2:37 PM    Report this comment

Klaus, what gives you the idea that the OP actually started a conversation?
There are three things which matter in most associations. Power & Money & more Money.

Nothing beats a nice exclusive club of corporations which watch the same sad movie we are watching, but are comitted to take the most money possible, before the bubble goes poof.

Engaging critics isn't a strong suit in association political games.
What can the off the street pilot ever say that remotely matters to a none profit corporation/ association? The only people benefitting from this discussion are the marketing agencies who now have to figure out how to make all this unspent money change owners, after all.

Thats where the focus and funds will go.
Maybe throwing more money at it will suck these guys in?

Lets up the boring $1000.00 and see if they will fold if we double down on the "rebate"?

Brainstorming is commencing.

Posted by: Jason Baker | January 11, 2018 5:34 PM    Report this comment

JaBa, Klaus, Raf, Yars, JW, Robert G-M, John M, et al ... let's all get together at Airventure, suck up some beers and solve ALL the problems of GA in one fell swoop! We're ALL right. As I go back and re-read the blog, who the hell here cares if AEA reports forward fit or retrofit avionics sales go up to 33% next year? Makes no difference to us. What WE all dearly would like to see is GA come roaring back strong, regional airlines no longer begging for pilots, the price of new airplanes come back to something like it was ... corrected for inflation. THAT is why I -- personally -- spend so much time on this blog and others for ... hoping to maybe wake some meathead up? Maybe THIS time, we have. We can only hope.

Thanks for YOUR participation.

Posted by: Larry Stencel | January 11, 2018 9:27 PM    Report this comment

Always wanted to solve all the problems of GA. I am game. See you at Airventing 2018.

Posted by: Rafael Sierra | January 12, 2018 12:30 AM    Report this comment

Captain Stencel: You vastly overestimate my financial capabilities and abilities to jet around this globe and join you and your exclusive club of affectionate "General Aviation Warriors" for beers and small talk. May I dispatch a surrogate? I am attending AERO in Friedrichshafen and ILA in Berlin (as fake news media, and to further promote my meaningless online publication among Europeans and people who can locate Europe on a map) plus there are some weak chances to attend the 45th International Seaplane Fly In in Greenville, Maine, much later this year.

These are tough times for the little people, you know?

Posted by: Jason Baker | January 12, 2018 1:39 AM    Report this comment

Larry Stencel, Jason Baker, Rafael Sierra, et al ...
I sincerely hope you will extend your AirVenture invitation to have a beer and talk about the challenges of general aviation to me as well. I would love the opportunity to sit face-to-face and discuss the current and future challenges of this great industry of ours with all of you. I much prefer a face-to-face conversation than sitting behind a keyboard typing comments. Let's have a real conversation in person. You might be surprised to find that I do care; that I don't throw parties disguised as conventions in Vegas, and that I am as concerned as you about the future pilot population, the need for lower cost airplanes and avionics, the cost of the mandate for GA pilots, and streamlining FAA regulations. If we--together--can solve those issues it keeps ALL OF US working in this industry and flying in the future.
Heck, I'll even buy the first round.
Paula Derks
(The AEA exhibits at AirVenture; please stop by and introduce yourselves to me at booth 2035.)

Posted by: Paula Derks | January 12, 2018 8:57 AM    Report this comment

Thanks for the invitation, Paula. See you there.

Posted by: John McNamee | January 12, 2018 11:40 AM    Report this comment

Paula. Formal attire?

Posted by: Rafael Sierra | January 12, 2018 4:28 PM    Report this comment

Well, Paula, if you're buying the first round at our GA Beer Summit 2018 in Wisconsin ... you'll know I'm there when I walk up wearing a T-shirt that says, "Will Fly for Beer!" I didn't think you'd take my 'bait' or the invites of others here but ... you did. Great! We got your attention. We're the root end of your 28% growth revenue source streams don't ya know. Raf will be wearing his customary brown Franciscan monk outfit but casual is OK.

Airventure 2017 was my 35th Airventure in the last 40 years and I know exactly where your little hidden corner of the hangar is. You're by those big piles of black and yellow books near the guy that sells ladders ... right? I spend much of my time in those hangars during the show and your corner is where I found out I was invisible ... again. I stood there for five minutes like a cigar store Indian listening to private conversation around your tall round table without even being acknowledged. But -- maybe -- I had walked through an electromagnetic time warp and entered the 'afterlife?' Next year I'll try wearing a blue Garmin knit shirt and khaki pants and maybe that'll make a difference? Oh ... wait ... I'm gonna wear my beer shirt so you know me. Never mind.

I have a lot I'd like to bend your ear about. If you truly represent 1,300+ companies, what I have to say ought to be of great interest to you. If your job is to provide sales statistics to your constituents, I'll be wasting your time, and you mine. But ... if you want to proactively hear of ways to increase the revenues of your constituents, I'm your dude. ... or is it Captain?

Write my name down ... you'll be seeing me in six months in Wisconsin. I'll try to be easy on ya. That said, I'm retired military and I don't take many prisoners ... unless, of course, they have beer. BTW ... Raf likes ginger ale.

Posted by: Larry Stencel | January 12, 2018 9:31 PM    Report this comment

It's Root Beer Larry. No brown robe or cinture but I will bring pets to Sister Paula for the AEA blessing.

Posted by: Rafael Sierra | January 12, 2018 10:07 PM    Report this comment

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