Is The Icon A5 Aviation's iPad?
Last week, when AVweb Editor-in-Chief Russ Niles phoned me about Icon’s breaking announcement of its retrenchment, he happened to mention he had been reading Walter Isaacson’s bio of Steve Jobs and … ”Stop right there,” I said, “I know where you’re going and I already have that blog written." And so I did, displaced by a few days by Icon’s newsier announcement.
The connection here will be obvious; the parallels are unmistakable. In our own little backwater of an industry, Icon’s audacious A5 has much in common, at least on the surface, with the launch of the iPad six years ago. Steve Jobs had a vision few could see and it was to produce this handheld tablet thingie running simple, specialized apps to do things none of us realized needed doing. It wasn’t, by any means, the first tablet computer and maybe not even the best one. Anyone with passing knowledge of tech will recall that Microsoft introduced one in 2000 and who could forget Apple’s own Newton, the Palm Pilot and the HP iPAQ to name a few of what became known as PDAs or personal digital assistants, a term now banished to the etymological scrap heap right next to VLJ. The iPad soared because of a potent combination of a competent, if not revolutionary, product, masterful promotion and perfect timing. It happened to work well, too.
Similarly, the A5 is not a reinvention of the airplane, but a blending of (apparently) uncompromised technical development and relentless promotion centered not just on the airplane nor even on flying, but the “experience” of the machine and the activity in a narrow recreational setting: flying off lakes and rivers and perhaps towing the thing back to your garage or camping on a beach somewhere. Icon shrewdly focused its early promotion on the large-circulation general press, not the potentially critical aviation press. Not that it need have worried, given the favorable reports the A5 has enjoyed.
The iPad comparison frays when you examine Icon’s expectations in the hard light of a few numbers. Icon’s Kirk Hawkins has said the company intends to “democratize” aviation and while I’m not certain I can explain what that means, I think it means—as he has said in other words—that the airplane and the company’s sales efforts will reset GA, stimulating anemic sales and expanding the industry.
It's possible to examine the claim if you make some reasonable assumptions based on what we think we know about how airplane manufacturing works. Icon says it has 1850 A5s in the order book and said last week that despite that, it’s not ready for high-volume serial production. As I mentioned in last week’s blog, Cirrus found itself in the same place around 1999. It took the company four years to reach production of 400 airplanes a year. It eventually reached a peak of 721 in 2006. The A5 is a simpler airplane, so let’s assume it reaches 400 units a year in three years time. By then—say 2020 or 2021—it will have manufactured about 700 airplanes and if some sort of frenzied critical mass is thus reached and the world hungers for light sport amphibians, you can imagine, say, 2500 A5s—or its follow-on variant—by 2025.
Does that qualify as a market reset? Does it reach disruptive levels? That depends on how you define those terms, but applying the iPad metric, I’d say probably not. Three years after its introduction, Apple sold 22 million iPads in a single quarter and it owned more than 60 percent of a market it almost invented. If Icon delivers 300 to 400 airplanes a year into a market that’s currently building about 1000 piston aircraft a year, that’s a 40 percent market expansion, assuming the A5 does indeed bring in new participants and doesn’t cannibalize sales from other channels. I’d call that impressive growth. In fact, if Icon sells just a third of what it’s claiming, I wouldn’t quibble about calling it a reset, but I’d say by any measure, that’s still resounding growth in an industry that’s been flat or declining slightly quarter after quarter. Never say never.
But first, it has to get through the rocky patch it admitted to last week. It has to figure out efficient serial production and convince both buyer/depositors and investors to stay the course while it does this. That’s no mean feat and, as I’ve said before, it puts depositors in the unique position of sharing the risk just for the privilege of owning a cool airplane. Call me crazy, but I’ve never seen the sense of this.
As far as market sustainability, I doubt if anyone really knows this. The A5 is still a $250,000 recreational toy and while there’s real wealth in this country and throughout the world, that price tag is still $70,000 more than the median price of a house in the U.S.
What made the iPad such a profit machine was that it was a device that had improved performance over the competition in a precious, pretty package and Apple was able to charge usurious prices for it because enough people believed it was better enough to justify the price, Android users excepted.
Will the A5 be perceived similarly? Since I haven’t flown it, I can’t comment directly but I phoned a fellow journalist friend whom I trust and who has flown it and asked him directly if it’s really that good. He assured me that it was and there flowed forth a five-minute soliloquy of superlatives that ended with me surrendering that the defense so stipulates. Then I asked if he thought it was enough better than competing airplanes to sustain the kind of market expansion I’ve described above. In other words, even if it’s good, is it potentially disruptively good? Once the glow of initial promotion wears off, will buyers sense in the A5 something they’ve never seen before and lust for it? He had no opinion and, actually, neither do I, immersed as I am in writing the obits of so many failed airplane projects.
Is it possible to cheer for such a project to succeed while still maintaining clear-eyed, non-emotional neutrality? I think it is. It’s in everyone’s interest for Icon to have 2500 new airplanes out there that don’t exist now. You can’t help but admire the cheekiness of the entire enterprise. All we can do is watch and wait to see if it happens.