People who sell things for a living—airplanes, cars, construction equipment, you name it—know that there’s a fine art to convincing a would-be buyer that a used thing is almost always a better value than a new thing. (Car dealers get this because they typically make more margin on used cars than on new.)
Airplane buyers, one might naturally think, should be an easier touch for buying used/refurbed over new. The logic is that people who operate airplanes are necessarily more sophisticated in understanding how they’re built and thus realize that an airframe with, say, 4000 hours, is almost certain to be as structurally sound as a new one. That assumes no significant damage history and reasonable maintenance, which big-ticket airplanes like turboprops and jets are likely to have had. Moreover, the price Delta between new and used in airplanes is now higher than ever.
Although there are other factors driving the new-versus-used decision—tax write-downs come to mind—it turns out that the new-car smell infects high-dollar airplane buyers, too, and they can be just as resistant to price-value entreaties from the most convincing salesperson. This subject came up the other day when I was visiting Nextant Aerospace in Cleveland. I’m sure you’ve read that Nextant has had great success re-engining Beechjet 400As, refurbing the airframes and selling them for half the price of the nearest competitor. Now they’re turning their attention to the King Air C90 series, which I had come out to see and shoot. One of the things they’re doing is replacing the King Air’s PT-6 with the GE H75, which is more efficient. The reman is called the G90XT.
I had a long talk with Nextant’s marketing VP, Jay Heublein, about the equation that flips a maybe new-airplane buyer into a definite refurbed-airplane buyer. I asked if he thought the lower end of the market—specifically piston singles—would respond to such a remanufacturing and marketing initiative. He thinks that it would and if the corporate internal culture supported it, Cessna would be in a commanding position to do this very thing. It has the resources and the facilities, but that’s the easy part. The bigger challenge is retooling the company’s thinking to include both new airplanes and remanufactured ones. If that opportunity hangs out there long enough, someone will capitalize on it.
And, of course, they already are.We’ve reported on AOPA’s Reimagined 152 project and Yingling’s Ascend 172, which came out of the ground at AirVenture last summer. These are small-scale projects thus far, but they could grow. Redbird’s Redhawk is another example and that prompted Heublein, who’s a sales pro from the old school, to observe that diesel conversions probably have a strong future and might be as convincing a sale as Nextant’s King Air and Beechjet 400 projects.
Well, maybe. But when we were going over the numbers, Heublein noted that the Nextant G90XT sells for half the price of an equivalent new aircraft, goes a little faster and climbs higher, carries a little more and is cheaper to operate by dint of longer overhauls. The 172 diesel conversions, on the other hand, are slower, don’t climb as well as the Lycomings, carry less and cost almost twice as much to overhaul as a gasoline engine. In return, they’re cheaper to operate for a buyer willing to run the full life-cycle arithmetic which, surprisingly, many buyers don’t do. In other words, they are entirely different sales propositions and I think I can guess which one is an easier sell.
And that explains, I think, why the diesel sales curve is so shallow and the G90XT won’t be. Both require buyers sophisticated enough to understand the broader economics, but one also requires the buyer to accept less performance in the name of saving money, while the other delivers the same or more performance while saving money. Obviously, this an apples to watermelons comparison in that people on the market for King Airs aren’t shopping Skyhawks, too. Butthe larger point is that in developing this remanufacture market, hitting the sweet spot means picking an airframe where the potential gains of a refurb are undeniable. If Nextant’s numbers prove true on the G90XT, I suspect they’ve done just that.
