2018 Market Prediction: More Avionics Growth

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if 2018 is anything like 2017, the business and general aviation markets should see a boom in new, lower-cost avionics.

With all the new avionics we reported on here at AVweb and at sister publication Aviation Consumer magazine the past year, some readers have asked for my market predictions for the new year. Will there be more growth? Less expensive new products? Will 2018 be a bust? During my 27 years of work in the industry, I've learned that anything is possible and everything sales related is unpredictable. But before looking into the crystal ball for 2018, it’s worth a look at last year’s performance of the avionics sector for clues. In doing so, I’m cautiously optimistic looking ahead because buyers bought lots of avionics in 2017—$1.73 billion worth during the first nine months. This is according to the Aircraft Electronics Association (AEA), which has tracked sales numbers for the business and general aviation avionics market since 2013 through an independent third-party research firm.

The numbers prove that shops really are as busy as many of them report because 57.7 percent of the sales came from the retrofit market, while forward-fit sales (equipment installed by aircraft manufacturers) was 42.3 percent. This is a 4.1-percent increase compared to the first nine months of 2016. These numbers aren’t based on the list price of equipment, but instead on net sales, and represent certified and non-certified panel-mounted avionics, portable avionics, billable equipment upgrades and also batteries, which seems an odd accessory to include in the tally. To me, batteries are gotta-have items, want them or not. And, the numbers don’t include what consumers spent on repairs/overhauls, navigation data subscriptions and extended warranty plans. If you pay for nav data, you know it’s real money. It’s so substantial that I think data subscriptions alone would boost the overall $1.73 billion figure considerably. According to the companies that separated total sales figures between North America and other international markets, 73.5 percent of sales during the first nine months of 2017 were U.S. and Canada.

The uptick in sales isn’t surprising to me because the majority of avionics shops I’ve spoken to over the past year enthusiastically report a scheduling backlog for major work. A friend who recently bought a Baron needing an ADS-B system told me his shop couldn't begin work on the basic upgrade until March. But many shops attest to struggling through some lean years, and some shops that were mismanaged didn’t survive. Still, with all the talk of a shrinking overall market, why the boom in avionics? For one, there is a lot to buy, including low-cost glass from Dynon, a company that's working on an STC for its experimental SkyView suite for Cessna Skyhawks. There's also a market bursting with well-equipped autopilots for under ten grand (including models from TruTrak, Garmin and Trio), plus way too many choices of ADS-B gear. The 2020 ADS-B mandate is at the two-year mark, but I know plenty of owners who still haven’t upgraded. For more basic, entry-level aircraft, I predict uAvionix will take the lead with its SkyBeacon bolt-on wingtip light ADS-B solution. Plus, 2018 will be the year Garmin starts shipping its new line of retrofit displays—the TXi series. 

I asked Jessica Koss at Garmin for her take and she believes ADS-B upgrades are driving the sales boom because buyers are adding on other equipment during the install for convenience. The low-cost G5 EFIS is one popular add-on, Koss said. Over at Avidyne, CEO Dan Schwinn had similar thoughts, crediting ADS-B compliance for sparking other upgrades while the aircraft is down. Avidyne reports strong demand for its new IFD550 navigator. We’ll have a report coming up. Jessica Power at Power Aviation Strategies, a new marketing firm specializing in avionics shop branding, predicts a strengthening of the shop network, with ADS-B driving other avionics upgrades as it did in 2017. 

"In 2017, a lot of buyers used the ADS-B mandate as an opportunity to include the 'wants' versus the 'needs' such as primary flight displays, autopilots and touchscreen navigators while the aircraft was down for ADS-B work. There were certainly manufacturers that took advantage of the mandate, offering bundled discounts during the EAA AirVenture at Oshkosh," Power told me. 

But forget about products and more good places to have the work done. This latest avionics boom is a trend I’ve witnessed before and I think it reflects a strong stock market. Disposable money, perhaps.  As I write this, the Dow Jones sits at 24,764. On this day in December 2012, it ended at 13,104. From experience, I know a strong market drives avionics and other upgrades. In the past, when stock portfolios were healthy, buyers wrote big checks for avionics and other improvements. And I mean big checks—as in $40K worth of avionics for an old Cherokee or Skyhawk. 

What comes to mind is the era when Garmin’s GNS530/430 radios and S-TEC autopilots were flying off the shelves faster than shops could reorder. At the time, I marveled that owners of aging entry-level piston singles were writing those big checks for the latest and greatest avionics gear simply because they could, even if it meant the airplane would be upside down in value. That bubble eventually burst and a lot of those owners lost big when used aircraft demand tanked. That might happen again, but with luck, lower-priced avionics will lessen the sting.

Larry Anglisano is the Editor in Chief of sister publication Aviation Consumer magazine.