New Planes from old companies

[Dude]

Okay, its getting boring so, here is a new twist on an old subject.

Beech and Cessna have recently seen HUGE increases in demand for aircraft
with the G1000 cockpits. Will this cause them to rethink the introduction
of a new piston design to compete with the new players?

If so, how long till you can buy one and fly it?

GO!

:)

[TaxSrv]

"Dude" wrote:
> Beech and Cessna have recently seen HUGE increases in demand for
aircraft
> with the G1000 cockpits. Will this cause them to rethink the
introduction
> of a new piston design to compete with the new players?
> ...

I wouldn't have a clue true or not, but I'd still like to know if
that's a fact or just press release puffery.

Fred F.

[OtisWinslow]

I'm not sure how these old companies with their long suffering bottom
lines on singles could afford to get a new design thru certification. And
if they did how they'd ever sell enough planes to recoup their investment.


"Dude" > wrote in message
...
> Okay, its getting boring so, here is a new twist on an old subject.
>
> Beech and Cessna have recently seen HUGE increases in demand for aircraft
> with the G1000 cockpits. Will this cause them to rethink the introduction
> of a new piston design to compete with the new players?
>
> If so, how long till you can buy one and fly it?
>
> GO!
>
> :)
>
>
>
>

[C J Campbell]

"OtisWinslow" > wrote in message
...
> I'm not sure how these old companies with their long suffering bottom
> lines on singles could afford to get a new design thru certification. And
> if they did how they'd ever sell enough planes to recoup their investment.
>

None of the new aircraft manufacturers have done it yet.

[C J Campbell]

"Dude" > wrote in message
...
> Okay, its getting boring so, here is a new twist on an old subject.
>
> Beech and Cessna have recently seen HUGE increases in demand for aircraft
> with the G1000 cockpits. Will this cause them to rethink the introduction
> of a new piston design to compete with the new players?
>
> If so, how long till you can buy one and fly it?

Cessna is simply putting the G1000 in their existing airplanes.

Although the model designations remain the same, the current line of piston
airplanes is in fact all new. The Cessna 182 has changed so much that it
barely resembles the Skylanes of old. It looks more like a Cardinal on
steroids.

Next year's 172 will have the G1000 and air bags.

[C Kingsbury]

"Dude" > wrote in message
...
> Okay, its getting boring so, here is a new twist on an old subject.
>
> Beech and Cessna have recently seen HUGE increases in demand for aircraft
> with the G1000 cockpits. Will this cause them to rethink the introduction
> of a new piston design to compete with the new players?

About the only thing I could see might be Cessna bringing back the P-210.
It's not a huge market but it would restore a little luster to the brand. I
wouldn't bet money on it though.

-cwk.

[Dude]

Well, Beech is claiming fifty orders for Bo's, and they seem as suprised as
anyone. I believe them.

Cessna has a big back order for G1000 182's, and I heard interested buyers
who were frustrated at the wait, as well as C Stars who were claiming to be
sold out of inventory for over 6 months.

I believe them too.




"TaxSrv" > wrote in message
...
> "Dude" wrote:
>> Beech and Cessna have recently seen HUGE increases in demand for
> aircraft
>> with the G1000 cockpits. Will this cause them to rethink the
> introduction
>> of a new piston design to compete with the new players?
>> ...
>
> I wouldn't have a clue true or not, but I'd still like to know if
> that's a fact or just press release puffery.
>
> Fred F.
>
>

[Dude]

Couldn't they do it like Cirrus, Diamond, and Lancair have done it?

If these guys can make money, then it would seem that Cessna has a near
guarantee on a 182 replacement.

[Matt Whiting]

Dude wrote:

> Couldn't they do it like Cirrus, Diamond, and Lancair have done it?
>
> If these guys can make money, then it would seem that Cessna has a near
> guarantee on a 182 replacement.
>
>

I don't think Cirrus has come even close to making money yet, on a total
investment basis. I haven't keep track of the total amount of venture
capital they've secured, but I think it was north of $200MM. That will
take a long time to recoup. They may well be profitable at the
operations level, but that isn't the same thing as "making money" overall.

I suspect that Cessna has run the numbers and realizes that the cost of
a "clean sheet" light airplane would simply never be recovered in
today's market.

Matt

[C Kingsbury]

"Dude" > wrote in message
...
> Couldn't they do it like Cirrus, Diamond, and Lancair have done it?
>
> If these guys can make money, then it would seem that Cessna has a near
> guarantee on a 182 replacement.
>

But Cessna doesn't need a 182 replacement. They don't seem to be having any
trouble selling Skylanes and Skyhawks and they are probably making a hefty
profit on each plane that rolls off the line. IIRC a year or two back Cirrus
was still trying to get labor costs down low enough so that they weren't
*losing* money on each plane they sold. I don't know if they've even broken
that barrier yet. Forget about certification costs. Other than Cessna pretty
much every GA manufacturer has been through at least one bankruptcy. Well,
guess what that does? It washes out the cost of certification, and now the
new owner can essentially try to figure out how to manufacture the plane at
a profit.

The market is currently not that large, and the manufacturers are better off
staying out of each others' territory. Cessna is Old Reliable, with Piper
basically mopping up a lot of niches with all sorts of training a/c and
Mooney, well, they've been through bankruptcy more times than Donald Trump.
Cirrus and Lancair are going to duke it out for high-performance. These are
separate market segments just like cars and trucks, and two players does not
make a competitive market. As it is now, prices are high and you've got to
wait in line to get your plane. Perfect situation for manufacturers.

-cwk.

[C J Campbell]

"Dude" > wrote in message
...
> Couldn't they do it like Cirrus, Diamond, and Lancair have done it?
>

They have not done it yet. Cirrus and Diamond have not nearly recouped their
investment. All three manufacturers have had to ask their investors for more
money. Lancair darned near didn't make it.

I think it is an outrage. Right now the biggest impediment to aviation
safety has to be the FAA, followed closely by the insurance companies and
the trial lawyers.

[Dude]

>
> They have not done it yet. Cirrus and Diamond have not nearly recouped
> their
> investment. All three manufacturers have had to ask their investors for
> more
> money. Lancair darned near didn't make it.
>

I believe you are mistaken, where did you hear Diamond asked investors for
more money? Also, I know Cirrus has investors, but I did not hear about any
rounds of fundraising in the last couple years.

[Javier Henderson]

"C J Campbell" > writes:

> "Dude" > wrote in message
> ...
> > Couldn't they do it like Cirrus, Diamond, and Lancair have done it?
> >
>
> They have not done it yet. Cirrus and Diamond have not nearly recouped their
> investment. All three manufacturers have had to ask their investors for more
> money. Lancair darned near didn't make it.
>
> I think it is an outrage. Right now the biggest impediment to aviation
> safety has to be the FAA, followed closely by the insurance companies and
> the trial lawyers.

How are the insurance companies against safety?

-jav

[Dude]

Its not that they are against safety, just that they do not seem to be to
responsive to adjusting their premiums to reward safety improvements. Also,
by their reluctance to cover new planes and engines, they make it harder to
justify the costs of innovation.

I would love them to be more transparent. It would really help everyone,
from the manufacturers to the pilots and owners make better decisions.

I think that most of the people in the insurance companies are good people,
trying to do the right things, but sometimes the nature of the institutions
works against them.

I dunno what CJ meant, but that is my take on it. Overall, the insurers are
likely an advantage to safety, but in a few areas, it seems they hurt us.



"Javier Henderson" > wrote in message
...
> "C J Campbell" > writes:
>
>> "Dude" > wrote in message
>> ...
>> > Couldn't they do it like Cirrus, Diamond, and Lancair have done it?
>> >
>>
>> They have not done it yet. Cirrus and Diamond have not nearly recouped
>> their
>> investment. All three manufacturers have had to ask their investors for
>> more
>> money. Lancair darned near didn't make it.
>>
>> I think it is an outrage. Right now the biggest impediment to aviation
>> safety has to be the FAA, followed closely by the insurance companies and
>> the trial lawyers.
>
> How are the insurance companies against safety?
>
> -jav

[C Kingsbury]

"Dude" > wrote in message
...
> Its not that they are against safety, just that they do not seem to be to
> responsive to adjusting their premiums to reward safety improvements.
Also,
> by their reluctance to cover new planes and engines, they make it harder
to
> justify the costs of innovation.

Cars are safer but car insurance rates keep going up, and that's a much more
competitive market than GA.

The fact is that neither parachutes nor airbags do anything to protect the
airplane, and that is the main thing that is being insured. Neither of these
makes accidents less likely. This is quite different from, say, ABS and
traction control in cars, which actually reduce the odds of metal getting
bent in the first place. Also, the car insurers have tons of data to analyze
to see what's really going on. It will take years before a clear picture
emerges whether airbags actually help reduce, say, liability claims.

The one thing which does reduce the likelihood of an accident in an airplane
is training, and the insurance companies are quite responsive in this area.
In many cases you cannot get any insurance without it, and in others there
are programs that can help you reduce your rates.

As for new planes and engines, they're not reluctant, they just charge a lot
of money. Remember when you look at those rates that you are talking about
insuring some $300-400k of machine. If a $50,000 Skyhawk costs $1000/year to
insure we should not be surprised that an SR-22 costs $6000 or more. FWIW I
pay over $1000 to insure a $3500 car in Boston (no collision) so from that
perspective airplane insurance seems like a reasonable deal. And before you
say anything, my record is crystal-clear and no, I can't call Geico, because
they're not allowed to do business in this infernal state.

-cwk.

[Dude]

> Cars are safer but car insurance rates keep going up, and that's a much
> more
> competitive market than GA.
>

Whoa, I didn't complain about the amount, only that the differences in the
rates seem arcane on the customer end. They are happy to explain different
rates for pilot skills, but turn into a black box when it comes to
explaining the difference in planes.

> The fact is that neither parachutes nor airbags do anything to protect the
> airplane, and that is the main thing that is being insured. Neither of
> these
> makes accidents less likely. This is quite different from, say, ABS and
> traction control in cars, which actually reduce the odds of metal getting
> bent in the first place.

So, that explains hull a little, but not the differences between models.
Nor does it say anything about liability. Its a good point, but doesn't
really cover what is a mystery to me.

Also, the car insurers have tons of data to analyze
> to see what's really going on. It will take years before a clear picture
> emerges whether airbags actually help reduce, say, liability claims.
>

Again, a good point. What a want to know is how many years? How many
dollars? What's the correlation? I have heard lots of people saying
premiums equals claims. However, we are never allowed to see claims data.
USAA used to publish a document that gave you a good idea about claims
levels betweens models of cars. They stopped though, and I want it back,
and I want it for planes!

> The one thing which does reduce the likelihood of an accident in an
> airplane
> is training, and the insurance companies are quite responsive in this
> area.
> In many cases you cannot get any insurance without it, and in others there
> are programs that can help you reduce your rates.
>

Agreed.

> As for new planes and engines, they're not reluctant, they just charge a
> lot
> of money. Remember when you look at those rates that you are talking about
> insuring some $300-400k of machine. If a $50,000 Skyhawk costs $1000/year
> to
> insure we should not be surprised that an SR-22 costs $6000 or more.

Not so at all. Many insurers balked at ANY coverage for some of the
composite planes for a good while. Then, they charged enormous rates
without really having any reason other than "lack of claims data". To me,
this fails to hit the mark because the rates they charge now do not seem to
correlate with incidents as it is.

Also, your example is not the best. Let's take a look at a different one.

A new 200k 172 costs about 14k per year for a school. An older model which
costs a quarter of that is about 5k. Repairs on the two models cost nearly
the same. I suspect the new ones have less incidents because they likely
have fewer incidents due to malfunction ON AVERAGE. (please spare me the
new plane problem stories).


FWIW I
> pay over $1000 to insure a $3500 car in Boston (no collision) so from that
> perspective airplane insurance seems like a reasonable deal. And before
> you
> say anything, my record is crystal-clear and no, I can't call Geico,
> because
> they're not allowed to do business in this infernal state.
>

I never said the rates were not reasonable. I am talking about the
information that I believe we should be given to back up the differences in
rates on different models.

As for your car situation, Boston is a historical and lovely place. Too bad
about your government, Komrade.

[G.R. Patterson III]

Dude wrote:
>
> I have heard lots of people saying premiums equals claims.

Those people are wrong. Insurance companies take in premiums, invest the money,
and make or lose money on the investments. If they are losing money on their
investments, premiums may well be increased to provide more income regardless of
the amount of claims in the same time period.

In the long run, most insurance companies will take in less money in premiums
than they pay out in claims. During periods in which investments are performing
poorly, premiums will usually go up.

George Patterson
If a man gets into a fight 3,000 miles away from home, he *had* to have
been looking for it.

[C Kingsbury]

"Dude" > wrote in message
...

> Whoa, I didn't complain about the amount, only that the differences in the
> rates seem arcane on the customer end. They are happy to explain different
> rates for pilot skills, but turn into a black box when it comes to
> explaining the difference in planes.

If you read some of Collins' safety articles in Flying every so often some
very interesting numbers come out. I recall one article where he was
comparing night accident rates across Mooney, Piper, Cessna, and Beech
retracts. IIRC, the accident rates for Mooneys was significantly lower--like
half as much--as the others. I may be wrong on the type but there was
definitely a big difference. Now, why might this be true? Who knows. But
it's hard to ignore, and there are many similar situations where
seemingly-similar planes expose non-trivial differences in accident rates.
Underwriting small fleets with widely-varying operator types under these
circumstances is going to be as much art as science. Since there's very
little transparency as to how they work, I can't really comment on their
methods. Since they stay in business I have to assume they are doing
something right.

> Again, a good point. What a want to know is how many years?

I'd guess ten as a minimum. Just my WAG. Of course a blip of bad accidents
in six months would be all it takes to send things through the roof.

> How many
> dollars? What's the correlation? I have heard lots of people saying
> premiums equals claims. However, we are never allowed to see claims data.
> USAA used to publish a document that gave you a good idea about claims
> levels betweens models of cars. They stopped though, and I want it back,
> and I want it for planes!

These are trade secrets, so I suspect you won't see too much of the
internals. Look around here and you'll see plenty of stories of people
receiving widely-varying quotes from different insurers. This tells me that
there are meaningful differences in how each insurer handicaps the risk.
Again, I suspect they run a bunch of numbers and then apply some fancy
guesswork and prejudice.

> Not so at all. Many insurers balked at ANY coverage for some of the
> composite planes for a good while. Then, they charged enormous rates
> without really having any reason other than "lack of claims data". To me,
> this fails to hit the mark because the rates they charge now do not seem
to
> correlate with incidents as it is.

Again, are we talking about the Cirrus? Because if we are I'm going to say
that I sympathize with the evil insurance companies a little. Here's a plane
that has a lever that you pull. The pilot looks at it and sees a label that
reads, "Save your ass." The insurer looks at it and sees it marked, "total
the airplane." In the past, saving your ass generally meant saving the
airplane too. Now it doesn't. Who knows what is going to happen? So it
doesn't surprise me that it took a few years for the market to work this
problem through.

> Also, your example is not the best. Let's take a look at a different one.
>
> A new 200k 172 costs about 14k per year for a school. An older model
which
> costs a quarter of that is about 5k. Repairs on the two models cost
nearly
> the same. I suspect the new ones have less incidents because they likely
> have fewer incidents due to malfunction ON AVERAGE. (please spare me the
> new plane problem stories).

Uh, not sure what you're trying to prove here. The new plane costs 4x as
much to buy, and 3x as much to insure. If the newer planes do indeed have
fewer incidents for whatever reason then this makes sense.

> As for your car situation, Boston is a historical and lovely place. Too
bad
> about your government, Komrade.

It could be worse--my sister lives in Berkeley. Also a lovely place but it
makes Boston look like Houston by comparison.

-cwk.

[Brian Sponcil]

"Matt Whiting" > wrote in message
...
> I don't think Cirrus has come even close to making money yet, on a total
> investment basis. I haven't keep track of the total amount of venture
> capital they've secured, but I think it was north of $200MM. That will
> take a long time to recoup. They may well be profitable at the operations
> level, but that isn't the same thing as "making money" overall.

I'm sure you're right but a quick look at the numbers makes me wonder how
they AREN'T going to recoup that $$. Cirrus is selling something like 50
planes a month. You'd think their profit margin on a 300k airplane would be
at least 20k. If so, that's roughly 10Mil in profit every year and a 20
year break even on the initial 200Mil investment.

Diamond's numbers are roughly the same. Supposedly the Austrian factory
pumps out 400 planes/year and another 100 come out of Ontario. Unless these
guys are operating on Dell like profit margins it's hard to see how they
won't make their investments back.

> I suspect that Cessna has run the numbers and realizes that the cost of a
> "clean sheet" light airplane would simply never be recovered in today's
> market.

Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
designs in less than 10 years - including a light jet. Why can't Cessna and
Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
european equivalent is)? You also have to wonder how much longer Cessna and
Piper can afford to NOT bring out a new design.


-Brian
Iowa City, IA

[Dude]

"C Kingsbury" > wrote in message
ink.net...
>
> "Dude" > wrote in message
> ...
>
>> Whoa, I didn't complain about the amount, only that the differences in
>> the
>> rates seem arcane on the customer end. They are happy to explain
>> different
>> rates for pilot skills, but turn into a black box when it comes to
>> explaining the difference in planes.
>
> If you read some of Collins' safety articles in Flying every so often some
> very interesting numbers come out. I recall one article where he was
> comparing night accident rates across Mooney, Piper, Cessna, and Beech
> retracts. IIRC, the accident rates for Mooneys was significantly
> lower--like
> half as much--as the others. I may be wrong on the type but there was
> definitely a big difference. Now, why might this be true? Who knows. But
> it's hard to ignore, and there are many similar situations where
> seemingly-similar planes expose non-trivial differences in accident rates.
> Underwriting small fleets with widely-varying operator types under these
> circumstances is going to be as much art as science. Since there's very
> little transparency as to how they work, I can't really comment on their
> methods. Since they stay in business I have to assume they are doing
> something right.
>

Exactly my point. Did the rates for Mooney's become lower to affect the
claims differences or not?

>> Again, a good point. What a want to know is how many years?
>
> I'd guess ten as a minimum. Just my WAG. Of course a blip of bad accidents
> in six months would be all it takes to send things through the roof.
>

If you need ten years data, then no one will innovate. The market will not
bear it.

>> How many
>> dollars? What's the correlation? I have heard lots of people saying
>> premiums equals claims. However, we are never allowed to see claims
>> data.
>> USAA used to publish a document that gave you a good idea about claims
>> levels betweens models of cars. They stopped though, and I want it back,
>> and I want it for planes!
>
> These are trade secrets, so I suspect you won't see too much of the
> internals. Look around here and you'll see plenty of stories of people
> receiving widely-varying quotes from different insurers. This tells me
> that
> there are meaningful differences in how each insurer handicaps the risk.
> Again, I suspect they run a bunch of numbers and then apply some fancy
> guesswork and prejudice.
>

If the insurance companies actually came out and said that its a trade
secret, then we would all say they don't care about safety. Bad PR. It
would seem that one could stay in business more efficiently without spending
too much to figure out the differences. Just treat all the retracts the
same except for the worse offenders. Its easy and its cheap.


>> Not so at all. Many insurers balked at ANY coverage for some of the
>> composite planes for a good while. Then, they charged enormous rates
>> without really having any reason other than "lack of claims data". To
>> me,
>> this fails to hit the mark because the rates they charge now do not seem
> to
>> correlate with incidents as it is.
>
> Again, are we talking about the Cirrus? Because if we are I'm going to say
> that I sympathize with the evil insurance companies a little. Here's a
> plane
> that has a lever that you pull. The pilot looks at it and sees a label
> that
> reads, "Save your ass." The insurer looks at it and sees it marked, "total
> the airplane." In the past, saving your ass generally meant saving the
> airplane too. Now it doesn't. Who knows what is going to happen? So it
> doesn't surprise me that it took a few years for the market to work this
> problem through.
>

Not just the Cirrus, even Diamond. I say "even Diamond" because if you look
at the numbers it is an over the top revolution in safety. They will show
you lots of little things they did to make their planes safer, and it
appears to work. However, lots of people from the other camps are saying
they are just lucky. At some point, it doesn't ring true to keep saying
that. Also, Lancair seems to have taken the note of Diamond's changes and
incorporated many of them, including full crash cage testing on the 400. I
don't blame the insurers on the Cirrus at all. Its not the parachute, its
the claims. The darn things were all crashing into little bits until they
got the training regimen in place, and fixed the chutes. Now they seem to
be doing much better, and for me, another year of Cessna level accident
records will convince me.


>> Also, your example is not the best. Let's take a look at a different
>> one.
>>
>> A new 200k 172 costs about 14k per year for a school. An older model
> which
>> costs a quarter of that is about 5k. Repairs on the two models cost
> nearly
>> the same. I suspect the new ones have less incidents because they likely
>> have fewer incidents due to malfunction ON AVERAGE. (please spare me the
>> new plane problem stories).
>
> Uh, not sure what you're trying to prove here. The new plane costs 4x as
> much to buy, and 3x as much to insure. If the newer planes do indeed have
> fewer incidents for whatever reason then this makes sense.
>

What I am saying is that the repairs cost the same. Unless the plane is
totaled, the claims are lower on the new plane. Too few get totaled to
justify the difference.


>> As for your car situation, Boston is a historical and lovely place. Too
> bad
>> about your government, Komrade.
>
> It could be worse--my sister lives in Berkeley. Also a lovely place but it
> makes Boston look like Houston by comparison.
>
> -cwk.
>

Walked through Berzerkly in my dress greens one time. My cousin was
horrifed, and sure there would be an incident. At least they are patriotic
in Beantown.

[C Kingsbury]

"Dude" > wrote in message
...
>
> Exactly my point. Did the rates for Mooney's become lower to affect the
> claims differences or not?

Who the hell knows. Unlike cars, just about everyone gets a completely
unique insurance quote. Perhaps somebody ought to start a database where
pilots can put in what kind of coverage they have and what they're paying
for it to help everybody shop around.

> >> Again, a good point. What a want to know is how many years?
> >
> > I'd guess ten as a minimum. Just my WAG. Of course a blip of bad
accidents
> > in six months would be all it takes to send things through the roof.
> >
>
> If you need ten years data, then no one will innovate. The market will
not
> bear it.

Bullfeathers. It didn't stop Cirrus or Lancair, and it hasn't stopped
homebuilding, where the picture is often (for good reason) far worse than
anything certified.

Also, my ten-year estimate is to see the effects of something subtle like
airbags. Nobody buys airbags because it cuts their insurance premium. I got
ABS and LoJack on my car because I wanted to avoid accidents and get it back
in case the dirtballs stole it. The fact that these cut my insurance by
about $200/year was icing on the cake.

> If the insurance companies actually came out and said that its a trade
> secret, then we would all say they don't care about safety. Bad PR. It
> would seem that one could stay in business more efficiently without
spending
> too much to figure out the differences. Just treat all the retracts the
> same except for the worse offenders. Its easy and its cheap.

The problem is that there aren't enough underwriters to foster real
competition in the market. Avemco (for example) looks at the situation and
says, "wow, if we covered retracts for 20% less than everyone else, we'd
corner the market." But then they think, "well, if we did that, everyone
else would just match our prices, and all it would mean is less money for
us." Market theory teaches that when it comes to the number of companies in
a market, "four are few, and six are many." IIRC there are three or four
major GA underwriters.

> Not just the Cirrus, even Diamond. I say "even Diamond" because if you
look
> at the numbers it is an over the top revolution in safety. They will show
> you lots of little things they did to make their planes safer, and it
> appears to work. However, lots of people from the other camps are saying
> they are just lucky. At some point, it doesn't ring true to keep saying
> that. Also, Lancair seems to have taken the note of Diamond's changes and
> incorporated many of them, including full crash cage testing on the 400.

Again, protection-of-life features do not necessarily translate into lower
costs for insurers unless they reduce hull losses too. Perhaps these new
glass panels will make IFR easier and thus reduce the number of accidents
due to disorientation. Or maybe they'll just lure more VFR pilots into IMC
with predictable results. Time will tell. Either way, rates will not come
down without a pretty substantial reduction in accident rates and no one is
predicting that for anybody.

> I
> don't blame the insurers on the Cirrus at all. Its not the parachute, its
> the claims. The darn things were all crashing into little bits until they
> got the training regimen in place, and fixed the chutes. Now they seem to
> be doing much better, and for me, another year of Cessna level accident
> records will convince me.

All of which appears to justify the "new equals bad" approach of the
insurers to modern aircraft. Had insurers treated the early Cirri like
Cherokee Sixes (both have 300HP, CS prop, fixed gear, right?) they would
have taken one hell of a bath, and they likely did anyway.

> Too few get totaled to justify the difference.

Hmm... how can you be so sure?

Best,
-cwk.

[C J Campbell]

>
> > I suspect that Cessna has run the numbers and realizes that the cost of
a
> > "clean sheet" light airplane would simply never be recovered in today's
> > market.
>
> Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
> designs in less than 10 years - including a light jet. Why can't Cessna
and
> Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
> european equivalent is)? You also have to wonder how much longer Cessna
and
> Piper can afford to NOT bring out a new design.

Yes, the FAA is that much worse. Look at the trouble Diamond is having
getting the DA-42 certified in the US.

A lot of Cessna dealers are wondering when Cessna will do a new design.
There are rumors, but the fact is Cessna does not really seem to be all that
enthusiastic about manufacturing the airplanes it has.

[Newps]

C J Campbell wrote:

>
>
> Yes, the FAA is that much worse. Look at the trouble Diamond is having
> getting the DA-42 certified in the US.

Can't be that bad, Cessna brings out new jets like their going out of style.

[Dude]

> Who the hell knows. Unlike cars, just about everyone gets a completely
> unique insurance quote. Perhaps somebody ought to start a database where
> pilots can put in what kind of coverage they have and what they're paying
> for it to help everybody shop around.
>
A good idea, but as an individual, you can compare by asking for quotes on
several planes at a time. If you are buying new, you can get the info from
many of the companies without a tail number.


>> >> Again, a good point. What a want to know is how many years?
>> >
>> > I'd guess ten as a minimum. Just my WAG. Of course a blip of bad
> accidents
>> > in six months would be all it takes to send things through the roof.
>> >
>>
>> If you need ten years data, then no one will innovate. The market will
> not
>> bear it.
>
> Bullfeathers. It didn't stop Cirrus or Lancair, and it hasn't stopped
> homebuilding, where the picture is often (for good reason) far worse than
> anything certified.
>

Bullfeathers to you Sir! (I like that expression, its kinda polite)

Their owners got insurance without 10 years data. So your point that it
didn't stop anyone was sort of missing the mark.


> Also, my ten-year estimate is to see the effects of something subtle like
> airbags.

Ahhh, now you tell me :)

Nobody buys airbags because it cuts their insurance premium. I got
> ABS and LoJack on my car because I wanted to avoid accidents and get it
> back
> in case the dirtballs stole it. The fact that these cut my insurance by
> about $200/year was icing on the cake.

Ahhh again, what if it tripled your rates to buy the only car on the market
with the new technology (even if the car were at a similar or better cost,
ala Cirrus vs. Mooney)

>
>> If the insurance companies actually came out and said that its a trade
>> secret, then we would all say they don't care about safety. Bad PR. It
>> would seem that one could stay in business more efficiently without
> spending
>> too much to figure out the differences. Just treat all the retracts the
>> same except for the worse offenders. Its easy and its cheap.
>
> The problem is that there aren't enough underwriters to foster real
> competition in the market. Avemco (for example) looks at the situation and
> says, "wow, if we covered retracts for 20% less than everyone else, we'd
> corner the market." But then they think, "well, if we did that, everyone
> else would just match our prices, and all it would mean is less money for
> us." Market theory teaches that when it comes to the number of companies
> in
> a market, "four are few, and six are many." IIRC there are three or four
> major GA underwriters.

Okay, I hear you. But what if Avemco only discounted the Mooneys, and
charged the same or more for the others (based on Richard Collins data being
proved out in claims)? Would they not then be more profitable than the
competition by attracting more than their fair share of the better retract
business?

Also, what you say brings up an idea. Perhaps one year is not enough data
for claims because each insurer does not have a wide enough pool. Perhaps
they all need to provide their claims data to a third party, and then buy
back the overall fleet results in order to change rates to reflect the total
fleet results.


>> Not just the Cirrus, even Diamond. I say "even Diamond" because if you
> look
>> at the numbers it is an over the top revolution in safety. They will
>> show
>> you lots of little things they did to make their planes safer, and it
>> appears to work. However, lots of people from the other camps are saying
>> they are just lucky. At some point, it doesn't ring true to keep saying
>> that. Also, Lancair seems to have taken the note of Diamond's changes
>> and
>> incorporated many of them, including full crash cage testing on the 400.
>
> Again, protection-of-life features do not necessarily translate into lower
> costs for insurers unless they reduce hull losses too. Perhaps these new
> glass panels will make IFR easier and thus reduce the number of accidents
> due to disorientation. Or maybe they'll just lure more VFR pilots into IMC
> with predictable results. Time will tell. Either way, rates will not come
> down without a pretty substantial reduction in accident rates and no one
> is
> predicting that for anybody.

Hasn't Diamond had a reduced incident as well as fatality rate?

>
>> I
>> don't blame the insurers on the Cirrus at all. Its not the parachute,
>> its
>> the claims. The darn things were all crashing into little bits until
>> they
>> got the training regimen in place, and fixed the chutes. Now they seem
>> to
>> be doing much better, and for me, another year of Cessna level accident
>> records will convince me.
>
> All of which appears to justify the "new equals bad" approach of the
> insurers to modern aircraft. Had insurers treated the early Cirri like
> Cherokee Sixes (both have 300HP, CS prop, fixed gear, right?) they would
> have taken one hell of a bath, and they likely did anyway.
>

Ahhh, but they did treat Diamonds like Cessna's and appear to be making out
like fatcats. Besides, if they really do take that approach, isn't it just
proving my point that they reduce innovation, and are therefore reducing
safety?


>> Too few get totaled to justify the difference.
>
> Hmm... how can you be so sure?
>
Well, you got me, I guess I am not that sure after all. I think I was
basing this on fatality rates, but a plane can get totaled without a
fatality. I reall do not know, so I have to admit, its a guess. Another
reason for publishing claims info.

PS I really appreciate your perspective on this, you are helping me reshape
my opinions and sharpen some of my arguments.

[Matt Whiting]

Brian Sponcil wrote:

> "Matt Whiting" > wrote in message
> ...
>
>>I don't think Cirrus has come even close to making money yet, on a total
>>investment basis. I haven't keep track of the total amount of venture
>>capital they've secured, but I think it was north of $200MM. That will
>>take a long time to recoup. They may well be profitable at the operations
>>level, but that isn't the same thing as "making money" overall.
>
>
> I'm sure you're right but a quick look at the numbers makes me wonder how
> they AREN'T going to recoup that $$. Cirrus is selling something like 50
> planes a month. You'd think their profit margin on a 300k airplane would be
> at least 20k. If so, that's roughly 10Mil in profit every year and a 20
> year break even on the initial 200Mil investment.

Well, most new airplanes have a large initial sales rate and then it
tapers off. I'd be VERY surprised if Cirrus can maintain this rate for
20 years. That would be 12,000 airplanes of one basic model and that is
very rare in the GA world. Add in the need to invest in new designs
over the years, and it can be very hard to make money in GA.


> Diamond's numbers are roughly the same. Supposedly the Austrian factory
> pumps out 400 planes/year and another 100 come out of Ontario. Unless these
> guys are operating on Dell like profit margins it's hard to see how they
> won't make their investments back.

They may well make them back, I just don't know. Obviously, they think
they will or they wouldn't be building airplanes! :-)


>>I suspect that Cessna has run the numbers and realizes that the cost of a
>>"clean sheet" light airplane would simply never be recovered in today's
>>market.
>
>
> Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
> designs in less than 10 years - including a light jet. Why can't Cessna and
> Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
> european equivalent is)? You also have to wonder how much longer Cessna and
> Piper can afford to NOT bring out a new design.

Are all of these designs currently certificated? Cessna brings out new
designs all of the time, it is just that they are all bizjets as that is
where the real money in GA lies currently.


Matt

[C Kingsbury]

"Dude" > wrote in message
...
> > Who the hell knows. Unlike cars, just about everyone gets a completely
> > unique insurance quote. Perhaps somebody ought to start a database where
> > pilots can put in what kind of coverage they have and what they're
paying
> > for it to help everybody shop around.
> >
> A good idea, but as an individual, you can compare by asking for quotes on
> several planes at a time. If you are buying new, you can get the info
from
> many of the companies without a tail number.
>

The power of the database is its depth. Assuming you could get 10% of pilots
or so to use it, it would give us a lot more insight into this market.
Assuming that insurers are indeed milking us, or certain segments of the
market, this would also provide a data set that would help convince a new
company to enter the market.

>
> Nobody buys airbags because it cuts their insurance premium. I got
> > ABS and LoJack on my car because I wanted to avoid accidents and get it
> > back
> > in case the dirtballs stole it. The fact that these cut my insurance by
> > about $200/year was icing on the cake.
>
> Ahhh again, what if it tripled your rates to buy the only car on the
market
> with the new technology (even if the car were at a similar or better cost,
> ala Cirrus vs. Mooney)
>

I doubt it has that much effect. We're talking about toys that cost anywhere
from a quarter to half million dollars, and it is a pretty rarefied group of
people that can afford that. Yes, there are probably a few marginal
customers who just can't justify another $500 per month to own an SR-22
versus a new 182, but I doubt it's significant.

A much more interesting insurance question right now is the Sport Pilot/LSA
segment of the market. This is going to be much more price-sensitive and
potentially a lot larger. It will be interesting to see how this evolves.

> Okay, I hear you. But what if Avemco only discounted the Mooneys, and
> charged the same or more for the others (based on Richard Collins data
being
> proved out in claims)? Would they not then be more profitable than the
> competition by attracting more than their fair share of the better retract
> business?

Well, I suspect this *is* going on, particularly with light twins. If you
read insurance threads here you'll often see cases where one insurer offers
a significantly (>15%) lower rate than the others. The issue is that
information moves much more slowly. Airlines, for instance, change fares
constantly, but they are all published onto the SABRE network in near-real
time so competitors see very quickly what's going on and can respond in kind
if desired. Insurers probably need a minimum of a few months to see these
sorts of trends. Again, this is a case where a master database could help
accelerate things.

However, it does have a possible downside in that it diminishes the value of
price-cutting. If an insurer starts offering significantly-reduced rates on,
say, Mooneys, it will take some time before the other insurers notice. In
this time they will scoop up a lot of customers. Then the others will cut
their rates too, at which point the advantage will disappear. So the more
time it takes for your competitors to realize you cut your prices, the
higher the ROI on your price cutting. Now, you also need to consider that
cutting prices will initially cost you money since you're also going to be
offering lower rates to customers you already have. So the key is to catch
enough new customers to make up for lost revenue from existing ones. If your
competitors can respond to price cuts more or less instantly, then it
eliminates the incentive to do so. This, coincidentally, explains why the
"we will not be undersold" guarantees you see in ads are actually ways of
discouraging price competition.

So in the end the key is to have a lot of companies in the market. This way
you always have someone upsetting the cozy equilibrium that favors the
insurers and forcing everyone else to come along. The
four-is-few-six-is-many rule is derived by observation, and there remains a
Nobel to be won by the economist who gives a good crisp mathematical
justification for it.

> Also, what you say brings up an idea. Perhaps one year is not enough data
> for claims because each insurer does not have a wide enough pool. Perhaps
> they all need to provide their claims data to a third party, and then buy
> back the overall fleet results in order to change rates to reflect the
total
> fleet results.

I don't see how this would benefit the insurers. Assuming they are
overcharging, they have no reason to want to stop.

> > with predictable results. Time will tell. Either way, rates will not
come
> > down without a pretty substantial reduction in accident rates and no one
> > is
> > predicting that for anybody.
>
> Hasn't Diamond had a reduced incident as well as fatality rate?

Perhaps, I don't know. Again, the key is to figure out why. Perhaps the
reputation of the Diamond as a "safe" airplane attracts safety-oriented
pilots who are going to be safer no matter what airplane they fly. I am very
open to believing that a plane can be made more crash-worthy, and the
Diamond clearly is. I am less persuaded that there is that much more to be
done to make planes safer to fly in day VFR conditions. Is there that much
that can be done to improve stall-spin characteristics? Can we make planes
that much easier to land in crosswinds? Of course, there is always
something, but most accidents begin with bad judgment.

>
> Ahhh, but they did treat Diamonds like Cessna's and appear to be making
out
> like fatcats. Besides, if they really do take that approach, isn't it
just
> proving my point that they reduce innovation, and are therefore reducing
> safety?
>

Well, this is the way of all flesh. Prices tend to go up quickly, and come
down slowly. Yes, no question insurers do occasionally milk certain market
segments.

>
> PS I really appreciate your perspective on this, you are helping me
reshape
> my opinions and sharpen some of my arguments.
>

IMHO the real problem is not insurers, it's the FAA certification process.
To answer one of my own questions, it would seem that the data stream
available in the G1000 ought to be sufficient to construct a warning device
that could predict many of the potential stall-spin scenarios. For instance,
if you're buzzing around pattern altitude near a field and have the traffic
frequency tuned, you're probably flying the pattern. Now, let's watch the
airspeed trend, and sound an alarm if it starts slowing down rapidly on the
base-final turn. "Speed up, speed up!" would probably prevent a non-trivial
number of such accidents, though surely not all. You could construct similar
routines for plenty of other scenarios. However, getting this approaved by
the FAA and your company's legal department would be a nightmare. Neither of
these have *anything* to do with the insurance companies.

-cwk.

[Mike Rapoport]

"Brian Sponcil" > wrote in message
...
> "Matt Whiting" > wrote in message
> ...
>> I don't think Cirrus has come even close to making money yet, on a total
>> investment basis. I haven't keep track of the total amount of venture
>> capital they've secured, but I think it was north of $200MM. That will
>> take a long time to recoup. They may well be profitable at the
>> operations level, but that isn't the same thing as "making money"
>> overall.
>
> I'm sure you're right but a quick look at the numbers makes me wonder how
> they AREN'T going to recoup that $$. Cirrus is selling something like 50
> planes a month. You'd think their profit margin on a 300k airplane would
> be at least 20k. If so, that's roughly 10Mil in profit every year and a
> 20 year break even on the initial 200Mil investment.

The gross margin on aircraft is much higher than 6.7%, it is more like
35-40%. Of course they have SG&A and R&D to cover but they are making an
incremental $100K+ on every plane.

>
> Diamond's numbers are roughly the same. Supposedly the Austrian factory
> pumps out 400 planes/year and another 100 come out of Ontario. Unless
> these guys are operating on Dell like profit margins it's hard to see how
> they won't make their investments back.

Dell's gross profit margins are much smaller than any aircraft maker

>> I suspect that Cessna has run the numbers and realizes that the cost of a
>> "clean sheet" light airplane would simply never be recovered in today's
>> market.
>
> Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
> designs in less than 10 years - including a light jet. Why can't Cessna
> and Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
> european equivalent is)? You also have to wonder how much longer Cessna
> and Piper can afford to NOT bring out a new design.

Cessna and Piper are tooled up to produce metal airplanes while most
successful new designs are composite. Cessna, Piper and Mooney have the
wrong tooling and their workforce has the wrong skills to produce "modern"
light aircraft.

Mike
MU-2

>
> -Brian
> Iowa City, IA
>

[Mike Rapoport]

"Newps" > wrote in message
...
>
>
> C J Campbell wrote:
>
>>
>>
>> Yes, the FAA is that much worse. Look at the trouble Diamond is having
>> getting the DA-42 certified in the US.
>
> Can't be that bad, Cessna brings out new jets like their going out of
> style.

But they are just mixing and matching different wings, engines and fusilages
with various cabin plugs and wing extensions. Not much new to get
certified.

Mike
MU-2

[Matt Whiting]

Mike Rapoport wrote:

> "Brian Sponcil" > wrote in message
> ...
>
>>"Matt Whiting" > wrote in message
...
>>
>>>I don't think Cirrus has come even close to making money yet, on a total
>>>investment basis. I haven't keep track of the total amount of venture
>>>capital they've secured, but I think it was north of $200MM. That will
>>>take a long time to recoup. They may well be profitable at the
>>>operations level, but that isn't the same thing as "making money"
>>>overall.
>>
>>I'm sure you're right but a quick look at the numbers makes me wonder how
>>they AREN'T going to recoup that $$. Cirrus is selling something like 50
>>planes a month. You'd think their profit margin on a 300k airplane would
>>be at least 20k. If so, that's roughly 10Mil in profit every year and a
>>20 year break even on the initial 200Mil investment.
>
>
> The gross margin on aircraft is much higher than 6.7%, it is more like
> 35-40%. Of course they have SG&A and R&D to cover but they are making an
> incremental $100K+ on every plane.

Where did you find Cirrus' financial statements? Last I knew they were
privately held and I've been unable to find any financial statements,
audited or otherwise.


Matt

[Mike Rapoport]

"Matt Whiting" > wrote in message
...
> Mike Rapoport wrote:
>
>> "Brian Sponcil" > wrote in message
>> ...
>>
>>>"Matt Whiting" > wrote in message
...
>>>
>>>>I don't think Cirrus has come even close to making money yet, on a total
>>>>investment basis. I haven't keep track of the total amount of venture
>>>>capital they've secured, but I think it was north of $200MM. That will
>>>>take a long time to recoup. They may well be profitable at the
>>>>operations level, but that isn't the same thing as "making money"
>>>>overall.
>>>
>>>I'm sure you're right but a quick look at the numbers makes me wonder how
>>>they AREN'T going to recoup that $$. Cirrus is selling something like 50
>>>planes a month. You'd think their profit margin on a 300k airplane would
>>>be at least 20k. If so, that's roughly 10Mil in profit every year and a
>>>20 year break even on the initial 200Mil investment.
>>
>>
>> The gross margin on aircraft is much higher than 6.7%, it is more like
>> 35-40%. Of course they have SG&A and R&D to cover but they are making an
>> incremental $100K+ on every plane.
>
> Where did you find Cirrus' financial statements? Last I knew they were
> privately held and I've been unable to find any financial statements,
> audited or otherwise.
>
>
> Matt
>

Acutally I got it from a different, publicly traded company but you can
probably approximate it from Textron's 10K if you spend long enough at it.
Looking at it another way, I get at least one invitation a month from jet
manufactures to fly their products. I have never taken them up on it but
this portion of their selling cost would eat up the entire gross margin if
that gross margin was 7%. High gross margins are required to recover high
development and certification costs on small volume of airplanes.

I heard a story (from the president of the bank that eventually financed the
airplane) of a prospective buyer being given a two week trip to Europe from
the US by the manufacturer of the airplane and then he bought it for over
15% off the official price. This was in 2001 when the bottom fell out of
the turbine airplane market. Planes have high gross margins. Keep in mind
that the cost of developement is not in the COGS.

Mike
MU-2

Mike
MU-2

[C J Campbell]

"Mike Rapoport" > wrote in message
hlink.net...
>
> Cessna and Piper are tooled up to produce metal airplanes while most
> successful new designs are composite. Cessna, Piper and Mooney have the
> wrong tooling and their workforce has the wrong skills to produce "modern"
> light aircraft.

Since when is a composite aircraft "modern" and a metal one not?

[Matt Whiting]

Mike Rapoport wrote:

> "Matt Whiting" > wrote in message
> ...
>
>>Mike Rapoport wrote:
>>
>>
>>>"Brian Sponcil" > wrote in message
...
>>>
>>>
>>>>"Matt Whiting" > wrote in message
...
>>>>
>>>>
>>>>>I don't think Cirrus has come even close to making money yet, on a total
>>>>>investment basis. I haven't keep track of the total amount of venture
>>>>>capital they've secured, but I think it was north of $200MM. That will
>>>>>take a long time to recoup. They may well be profitable at the
>>>>>operations level, but that isn't the same thing as "making money"
>>>>>overall.
>>>>
>>>>I'm sure you're right but a quick look at the numbers makes me wonder how
>>>>they AREN'T going to recoup that $$. Cirrus is selling something like 50
>>>>planes a month. You'd think their profit margin on a 300k airplane would
>>>>be at least 20k. If so, that's roughly 10Mil in profit every year and a
>>>>20 year break even on the initial 200Mil investment.
>>>
>>>
>>>The gross margin on aircraft is much higher than 6.7%, it is more like
>>>35-40%. Of course they have SG&A and R&D to cover but they are making an
>>>incremental $100K+ on every plane.
>>
>>Where did you find Cirrus' financial statements? Last I knew they were
>>privately held and I've been unable to find any financial statements,
>>audited or otherwise.
>>
>>
>>Matt
>>
>
>
> Acutally I got it from a different, publicly traded company but you can
> probably approximate it from Textron's 10K if you spend long enough at it.
> Looking at it another way, I get at least one invitation a month from jet
> manufactures to fly their products. I have never taken them up on it but
> this portion of their selling cost would eat up the entire gross margin if
> that gross margin was 7%. High gross margins are required to recover high
> development and certification costs on small volume of airplanes.
>
> I heard a story (from the president of the bank that eventually financed the
> airplane) of a prospective buyer being given a two week trip to Europe from
> the US by the manufacturer of the airplane and then he bought it for over
> 15% off the official price. This was in 2001 when the bottom fell out of
> the turbine airplane market. Planes have high gross margins. Keep in mind
> that the cost of developement is not in the COGS.

Yes, but that was precisely my point. You need a lot of gross margin if
the investors are to ever recover their initial cost of development
investment. Most airplane manufacturers over the last 20 years, other
than bizjet makers, haven't been able to sustain such gross margins over
a long enough production run to recoup the initial investment. Maybe
Cirrus and Diamond will be the exceptions, but I'm not holding my breath
and I'm certainly not investing in a new GA manufacturer! :-)

As much as I like aviation, I know enough about business to know that
this is truly speculation. I don't have enough disposable cash yet to
do a lot of speculative investment.


Matt

[Matt Whiting]

C J Campbell wrote:

> "Mike Rapoport" > wrote in message
> hlink.net...
>
>>Cessna and Piper are tooled up to produce metal airplanes while most
>>successful new designs are composite. Cessna, Piper and Mooney have the
>>wrong tooling and their workforce has the wrong skills to produce "modern"
>>light aircraft.
>
>
> Since when is a composite aircraft "modern" and a metal one not?
>
>

Uh, I think that was Mike's point in using quotes around modern. That
is a common conception, but I don't believe Mike was stating that as
reality.


Matt

[Dude]

I heard from a Diamond guy that the owner was more concerned about liability
than profit, and didn't care a bit about market share. Apparently, his main
goal is not to LOSE money. If this is true, he at least has the right
expectations.

It has to cost more to build the SR20 than the Star, but they are closely
priced. It really makes you wonder.



"Matt Whiting" > wrote in message
...
> Mike Rapoport wrote:
>
>> "Matt Whiting" > wrote in message
>> ...
>>
>>>Mike Rapoport wrote:
>>>
>>>
>>>>"Brian Sponcil" > wrote in message
...
>>>>
>>>>
>>>>>"Matt Whiting" > wrote in message
...
>>>>>
>>>>>
>>>>>>I don't think Cirrus has come even close to making money yet, on a
>>>>>>total investment basis. I haven't keep track of the total amount of
>>>>>>venture capital they've secured, but I think it was north of $200MM.
>>>>>>That will take a long time to recoup. They may well be profitable at
>>>>>>the operations level, but that isn't the same thing as "making money"
>>>>>>overall.
>>>>>
>>>>>I'm sure you're right but a quick look at the numbers makes me wonder
>>>>>how they AREN'T going to recoup that $$. Cirrus is selling something
>>>>>like 50 planes a month. You'd think their profit margin on a 300k
>>>>>airplane would be at least 20k. If so, that's roughly 10Mil in profit
>>>>>every year and a 20 year break even on the initial 200Mil investment.
>>>>
>>>>
>>>>The gross margin on aircraft is much higher than 6.7%, it is more like
>>>>35-40%. Of course they have SG&A and R&D to cover but they are making
>>>>an incremental $100K+ on every plane.
>>>
>>>Where did you find Cirrus' financial statements? Last I knew they were
>>>privately held and I've been unable to find any financial statements,
>>>audited or otherwise.
>>>
>>>
>>>Matt
>>>
>>
>>
>> Acutally I got it from a different, publicly traded company but you can
>> probably approximate it from Textron's 10K if you spend long enough at
>> it. Looking at it another way, I get at least one invitation a month from
>> jet manufactures to fly their products. I have never taken them up on it
>> but this portion of their selling cost would eat up the entire gross
>> margin if that gross margin was 7%. High gross margins are required to
>> recover high development and certification costs on small volume of
>> airplanes.
>>
>> I heard a story (from the president of the bank that eventually financed
>> the airplane) of a prospective buyer being given a two week trip to
>> Europe from the US by the manufacturer of the airplane and then he bought
>> it for over 15% off the official price. This was in 2001 when the bottom
>> fell out of the turbine airplane market. Planes have high gross margins.
>> Keep in mind that the cost of developement is not in the COGS.
>
> Yes, but that was precisely my point. You need a lot of gross margin if
> the investors are to ever recover their initial cost of development
> investment. Most airplane manufacturers over the last 20 years, other
> than bizjet makers, haven't been able to sustain such gross margins over a
> long enough production run to recoup the initial investment. Maybe Cirrus
> and Diamond will be the exceptions, but I'm not holding my breath and I'm
> certainly not investing in a new GA manufacturer! :-)
>
> As much as I like aviation, I know enough about business to know that this
> is truly speculation. I don't have enough disposable cash yet to do a lot
> of speculative investment.
>
>
> Matt
>

[Dude]

I would say you took his comments in a way not intended.

I have to wonder about the wisdom of a metal fuselage for a new small piston
plane anymore though. Wings, sure, but not the fuselage. The composites
would seem to have too many advantages. At least until someone can make
more progress in ways to get more curves, and more strength, with less money
than is currently happening in the metal world. Which, someone likely will.

"C J Campbell" > wrote in message
...
>
> "Mike Rapoport" > wrote in message
> hlink.net...
>>
>> Cessna and Piper are tooled up to produce metal airplanes while most
>> successful new designs are composite. Cessna, Piper and Mooney have the
>> wrong tooling and their workforce has the wrong skills to produce
>> "modern"
>> light aircraft.
>
> Since when is a composite aircraft "modern" and a metal one not?
>
>

[Dude]

>>
>
> The power of the database is its depth. Assuming you could get 10% of
> pilots
> or so to use it, it would give us a lot more insight into this market.
> Assuming that insurers are indeed milking us, or certain segments of the
> market, this would also provide a data set that would help convince a new
> company to enter the market.
>
>>

Well, what I am shooting for is for a more responsive insurance market that
provides information on the safety of the planes through pricing. In the
long run, the more dangerous planes would be reduced, while the safer ones
would thrive, and the overall result would be added safety with lower costs
for everyone. The insurers would supposedly benefit from lowered claims
unless you believe in the theory that they LIKE larger claims.


>
> I doubt it has that much effect. We're talking about toys that cost
> anywhere
> from a quarter to half million dollars, and it is a pretty rarefied group
> of
> people that can afford that. Yes, there are probably a few marginal
> customers who just can't justify another $500 per month to own an SR-22
> versus a new 182, but I doubt it's significant.
>

You know, I hate to admit this, but you seem to be absolutely correct.
People ARE buying a new Cirrus despite the price of insurance. However, I
think buyers may be different from the used ones.

This makes me wonder what happens to the resale values. How much is the
free training worth as part of a new Cirrus. If you want a used one, do you
haev to pay for the school to get insured?


> A much more interesting insurance question right now is the Sport
> Pilot/LSA
> segment of the market. This is going to be much more price-sensitive and
> potentially a lot larger. It will be interesting to see how this evolves.
>

I can't figure out how it will get very large unless Sport pilots are
allowed under the class B umbrella. I know they are not allowed in the
Bravo, but can they go under? Can the LSA's go into B with a PP as PIC? Is
that all decided?


>> Okay, I hear you. But what if Avemco only discounted the Mooneys, and
>> charged the same or more for the others (based on Richard Collins data
> being
>> proved out in claims)? Would they not then be more profitable than the
>> competition by attracting more than their fair share of the better
>> retract
>> business?
>
> Well, I suspect this *is* going on, particularly with light twins. If you
> read insurance threads here you'll often see cases where one insurer
> offers
> a significantly (>15%) lower rate than the others. The issue is that
> information moves much more slowly. Airlines, for instance, change fares
> constantly, but they are all published onto the SABRE network in near-real
> time so competitors see very quickly what's going on and can respond in
> kind
> if desired. Insurers probably need a minimum of a few months to see these
> sorts of trends. Again, this is a case where a master database could help
> accelerate things.
>
> However, it does have a possible downside in that it diminishes the value
> of
> price-cutting. If an insurer starts offering significantly-reduced rates
> on,
> say, Mooneys, it will take some time before the other insurers notice. In
> this time they will scoop up a lot of customers. Then the others will cut
> their rates too, at which point the advantage will disappear. So the more
> time it takes for your competitors to realize you cut your prices, the
> higher the ROI on your price cutting. Now, you also need to consider that
> cutting prices will initially cost you money since you're also going to be
> offering lower rates to customers you already have. So the key is to catch
> enough new customers to make up for lost revenue from existing ones. If
> your
> competitors can respond to price cuts more or less instantly, then it
> eliminates the incentive to do so. This, coincidentally, explains why the
> "we will not be undersold" guarantees you see in ads are actually ways of
> discouraging price competition.
>
> So in the end the key is to have a lot of companies in the market. This
> way
> you always have someone upsetting the cozy equilibrium that favors the
> insurers and forcing everyone else to come along. The
> four-is-few-six-is-many rule is derived by observation, and there remains
> a
> Nobel to be won by the economist who gives a good crisp mathematical
> justification for it.
>

That's all good stuff, but it seems to me that if you lower the price on the
"good eggs" then you might have to raise it on the "bad eggs" to make up for
that. If you can successfully drive the more claims ridden planes to your
competitor you can really stick it to him, and he may never catch up. Even
if he does, you will have a stack of cash for your next move that he will
not have.


>> Also, what you say brings up an idea. Perhaps one year is not enough
>> data
>> for claims because each insurer does not have a wide enough pool.
>> Perhaps
>> they all need to provide their claims data to a third party, and then buy
>> back the overall fleet results in order to change rates to reflect the
> total
>> fleet results.
>
> I don't see how this would benefit the insurers. Assuming they are
> overcharging, they have no reason to want to stop.
>

They are not overcharging, they are not being discriminating enough. This
has too affects. One, it raises claims because it does not discourage the
use of poorly designed planes. Two, it reduces overall safety by the same
mechanism.


>> > with predictable results. Time will tell. Either way, rates will not
> come
>> > down without a pretty substantial reduction in accident rates and no
>> > one
>> > is
>> > predicting that for anybody.
>>
>> Hasn't Diamond had a reduced incident as well as fatality rate?
>
> Perhaps, I don't know. Again, the key is to figure out why. Perhaps the
> reputation of the Diamond as a "safe" airplane attracts safety-oriented
> pilots who are going to be safer no matter what airplane they fly. I am
> very
> open to believing that a plane can be made more crash-worthy, and the
> Diamond clearly is. I am less persuaded that there is that much more to be
> done to make planes safer to fly in day VFR conditions. Is there that much
> that can be done to improve stall-spin characteristics? Can we make planes
> that much easier to land in crosswinds? Of course, there is always
> something, but most accidents begin with bad judgment.
>

I have to say that Volvo does not make the safest cars by crash statistics,
yet I believe they do benefit from exactly this phenomenon. There is sense
in the safer population theory, but I think its so marginal as to be almost
a non factor. After all, did Cirrus NOT attract safe minded individuals
with the parachute and all their marketing?

>>
>> Ahhh, but they did treat Diamonds like Cessna's and appear to be making
> out
>> like fatcats. Besides, if they really do take that approach, isn't it
> just
>> proving my point that they reduce innovation, and are therefore reducing
>> safety?
>>
>
> Well, this is the way of all flesh. Prices tend to go up quickly, and come
> down slowly. Yes, no question insurers do occasionally milk certain market
> segments.
>
>>
>> PS I really appreciate your perspective on this, you are helping me
> reshape
>> my opinions and sharpen some of my arguments.
>>
>
> IMHO the real problem is not insurers, it's the FAA certification process.
> To answer one of my own questions, it would seem that the data stream
> available in the G1000 ought to be sufficient to construct a warning
> device
> that could predict many of the potential stall-spin scenarios. For
> instance,
> if you're buzzing around pattern altitude near a field and have the
> traffic
> frequency tuned, you're probably flying the pattern. Now, let's watch the
> airspeed trend, and sound an alarm if it starts slowing down rapidly on
> the
> base-final turn. "Speed up, speed up!" would probably prevent a
> non-trivial
> number of such accidents, though surely not all. You could construct
> similar
> routines for plenty of other scenarios. However, getting this approaved by
> the FAA and your company's legal department would be a nightmare. Neither
> of
> these have *anything* to do with the insurance companies.
>
> -cwk.
>

I here you there.

[Mike Rapoport]

Since most of the new airplanes and all of the new high performance single
engine designs are composite. Metal is a great material for airplanes but
it is difficult to produce perfect shapes with in the thin sheets used in
light aircraft. If you want to get more performance from your new design it
is going to need ripple free compound curves over the entire fusilage and
this is really hard to achieve with .025 sheetmetal. In other catagories,
like utility aircraft, it doesn't seem (to me anyway) that a new design is
going to offer much more than current planes like the 182 or 206.

Mike
MU-2


"C J Campbell" > wrote in message
...
>
> "Mike Rapoport" > wrote in message
> hlink.net...
>>
>> Cessna and Piper are tooled up to produce metal airplanes while most
>> successful new designs are composite. Cessna, Piper and Mooney have the
>> wrong tooling and their workforce has the wrong skills to produce
>> "modern"
>> light aircraft.
>
> Since when is a composite aircraft "modern" and a metal one not?
>
>

[G.R. Patterson III]

Mike Rapoport wrote:
>
> The gross margin on aircraft is much higher than 6.7%, it is more like
> 35-40%.

Or more. Back in the mid-90s, aircraft sales stalled. Cessna had announced they
were restarting production of the 172, but they refused to even estimate what
they would charge for it. Most light aircraft buyers sat on the fence during the
two years it took Cessna to set a price -- nobody wanted to lay out $50,000 for
a "cherry" but old 172 and then find out they could've bought a brand new one
for $60,000.

Prior to this, Maule was selling the MX-7-160 for $83,000. They cut the price to
$45,000 to keep the factory running. I was told that they were barely making
costs at that price.

George Patterson
If a man gets into a fight 3,000 miles away from home, he *had* to have
been looking for it.

[Matt Whiting]

Dude wrote:

> I heard from a Diamond guy that the owner was more concerned about liability
> than profit, and didn't care a bit about market share. Apparently, his main
> goal is not to LOSE money. If this is true, he at least has the right
> expectations.

This is a great expectation for a hobby, but not for a business! :-)


Matt

[Matt Whiting]

Dude wrote:

> I would say you took his comments in a way not intended.
>
> I have to wonder about the wisdom of a metal fuselage for a new small piston
> plane anymore though. Wings, sure, but not the fuselage. The composites
> would seem to have too many advantages. At least until someone can make
> more progress in ways to get more curves, and more strength, with less money
> than is currently happening in the metal world. Which, someone likely will.

Actually, technology exists to hydroform metal into large and compound
curved shapes. It would be easy to eliminate almost all of the rivets
in both the fuselage and wings with modern metal forming technology. I
can't imagine a new design that would use the rib and skin methods
developed more than 60 years ago. A truly modern metal airplane could
look just as smooth as a composite and probably be even cheaper to
produce given sufficient volume to justify the tooling costs.


Matt

[Matt Whiting]

Mike Rapoport wrote:

> Since most of the new airplanes and all of the new high performance single
> engine designs are composite. Metal is a great material for airplanes but
> it is difficult to produce perfect shapes with in the thin sheets used in
> light aircraft. If you want to get more performance from your new design it
> is going to need ripple free compound curves over the entire fusilage and
> this is really hard to achieve with .025 sheetmetal. In other catagories,
> like utility aircraft, it doesn't seem (to me anyway) that a new design is
> going to offer much more than current planes like the 182 or 206.

The auto companies seem to have found ways to do this, and Audi even
does this with aluminum. Yes, you need some internal structure to
provide stiffness, but these structures can be easily stamped or
hydroformed as well as the skin. Just look inside a car that has had
the interior stripped, or look under your hood or trunk lid. This
technology is readily available, it has just never made its way into
light aircraft.


Matt

[Mike Rapoport]

It is hard to do with real thin sheets. Cars are closer to Boeings than
Cessna's. There is a method used by Piaggio where the skin is sucked into a
mold and the structure is rivited on, but this process is fairly expensive
and, of course, the Piaggio has much thicker skins anyway.

Mike
MU-2


"Matt Whiting" > wrote in message
...
> Mike Rapoport wrote:
>
>> Since most of the new airplanes and all of the new high performance
>> single engine designs are composite. Metal is a great material for
>> airplanes but it is difficult to produce perfect shapes with in the thin
>> sheets used in light aircraft. If you want to get more performance from
>> your new design it is going to need ripple free compound curves over the
>> entire fusilage and this is really hard to achieve with .025 sheetmetal.
>> In other catagories, like utility aircraft, it doesn't seem (to me
>> anyway) that a new design is going to offer much more than current planes
>> like the 182 or 206.
>
> The auto companies seem to have found ways to do this, and Audi even does
> this with aluminum. Yes, you need some internal structure to provide
> stiffness, but these structures can be easily stamped or hydroformed as
> well as the skin. Just look inside a car that has had the interior
> stripped, or look under your hood or trunk lid. This technology is
> readily available, it has just never made its way into light aircraft.
>
>
> Matt
>

[Matt Whiting]

Mike Rapoport wrote:
> It is hard to do with real thin sheets. Cars are closer to Boeings than
> Cessna's. There is a method used by Piaggio where the skin is sucked into a
> mold and the structure is rivited on, but this process is fairly expensive
> and, of course, the Piaggio has much thicker skins anyway.

It is harder with thin sheet, but I don't know I would say it is hard in
an absolute sense. I believe that the Venture kit plane had its wing
skins stretch formed and they are aircraft thickness. The reality
remains that the sheet metal techniques and technology being used today
in aircraft production is essentially unchanged from about 60 years ago.
Other industries have moved on to more modern methods, but aircraft
manufacturers have not. They may have good reasons for this,
certification costs, insurance, initial capital costs, etc., but the
fact remains.

Composite construction is great for low volume items as the tooling is
very inexpensive compared to large metal stamping dies. However, for
high volume production, composites actually aren't superior to metals in
general. Once you have the tooling in place, you can product finely
shaped metal parts at rates that composite makers can only dream of.
And you don't have to deal with the environmental hazards that
composites pose.

I'd love to see an all metal airplane designed and built by one of the
big auto makers. It would be nothing like a Cessna or Piper and likely
would be indistinguishable from a Lancair.


Matt

[Dude]

Ahh yes, sufficient volume.


"Matt Whiting" > wrote in message
...
> Dude wrote:
>
>> I would say you took his comments in a way not intended.
>>
>> I have to wonder about the wisdom of a metal fuselage for a new small
>> piston plane anymore though. Wings, sure, but not the fuselage. The
>> composites would seem to have too many advantages. At least until
>> someone can make more progress in ways to get more curves, and more
>> strength, with less money than is currently happening in the metal world.
>> Which, someone likely will.
>
> Actually, technology exists to hydroform metal into large and compound
> curved shapes. It would be easy to eliminate almost all of the rivets in
> both the fuselage and wings with modern metal forming technology. I can't
> imagine a new design that would use the rib and skin methods developed
> more than 60 years ago. A truly modern metal airplane could look just as
> smooth as a composite and probably be even cheaper to produce given
> sufficient volume to justify the tooling costs.
>
>
> Matt
>

[Carl J. Hixon]

"> This is a great expectation for a hobby, but not for a business! :-)

Yes, and when you reach a certain point in life, isn't it great that you can
make a business your hobby?

Carl

[C Kingsbury]

"Dude" > wrote in message
...
> >>
> I can't figure out how it will get very large unless Sport pilots are
> allowed under the class B umbrella. I know they are not allowed in the
> Bravo, but can they go under? Can the LSA's go into B with a PP as PIC?
Is
> that all decided?

Sport pilots *can* fly into all classes of controlled airspace with just a
logbook endorsement. See http://www.sportpilot.org/becoming/ for full
details.

>
> They are not overcharging, they are not being discriminating enough. This
> has too affects. One, it raises claims because it does not discourage the
> use of poorly designed planes. Two, it reduces overall safety by the same
> mechanism.
>

I think you may be grossly overestimating the variability of safety here.
While one can find interesting point cases of disparity (such as night IFR
in Mooneys vs. other makes) overall I suspect the deltas just aren't that
significant. Likewise it may be that accidents are distributed pretty evenly
throughout the pilot community. Other than an obvious period in the first
couple of hundred hours and when transitioning to a new type, it may be that
accident pilots-to-be look just like the rest of us most of the time. It's a
sobering conclusion. Every time we read about an accident we want to find
something that we can say "well I wouldn't have done THAT," when it's more
like "there but for the grace of God..."

Best,
-cwk.

[Mike Rapoport]

"Matt Whiting" > wrote in message
...
> Mike Rapoport wrote:
>> It is hard to do with real thin sheets. Cars are closer to Boeings than
>> Cessna's. There is a method used by Piaggio where the skin is sucked
>> into a mold and the structure is rivited on, but this process is fairly
>> expensive and, of course, the Piaggio has much thicker skins anyway.
>
> It is harder with thin sheet, but I don't know I would say it is hard in
> an absolute sense. I believe that the Venture kit plane had its wing
> skins stretch formed and they are aircraft thickness. The reality remains
> that the sheet metal techniques and technology being used today in
> aircraft production is essentially unchanged from about 60 years ago.
> Other industries have moved on to more modern methods, but aircraft
> manufacturers have not. They may have good reasons for this,
> certification costs, insurance, initial capital costs, etc., but the fact
> remains.
>
> Composite construction is great for low volume items as the tooling is
> very inexpensive compared to large metal stamping dies. However, for high
> volume production, composites actually aren't superior to metals in
> general. Once you have the tooling in place, you can product finely
> shaped metal parts at rates that composite makers can only dream of. And
> you don't have to deal with the environmental hazards that composites
> pose.
>
> I'd love to see an all metal airplane designed and built by one of the big
> auto makers. It would be nothing like a Cessna or Piper and likely would
> be indistinguishable from a Lancair.
>
>
> Matt
>

I agree with your above statements except for the implied notion that there
is a high volume market for any airplane.

Mike
MU-2

[Matt Whiting]

Mike Rapoport wrote:

> "Matt Whiting" > wrote in message
> ...
>
>>Mike Rapoport wrote:
>>
>>>It is hard to do with real thin sheets. Cars are closer to Boeings than
>>>Cessna's. There is a method used by Piaggio where the skin is sucked
>>>into a mold and the structure is rivited on, but this process is fairly
>>>expensive and, of course, the Piaggio has much thicker skins anyway.
>>
>>It is harder with thin sheet, but I don't know I would say it is hard in
>>an absolute sense. I believe that the Venture kit plane had its wing
>>skins stretch formed and they are aircraft thickness. The reality remains
>>that the sheet metal techniques and technology being used today in
>>aircraft production is essentially unchanged from about 60 years ago.
>>Other industries have moved on to more modern methods, but aircraft
>>manufacturers have not. They may have good reasons for this,
>>certification costs, insurance, initial capital costs, etc., but the fact
>>remains.
>>
>>Composite construction is great for low volume items as the tooling is
>>very inexpensive compared to large metal stamping dies. However, for high
>>volume production, composites actually aren't superior to metals in
>>general. Once you have the tooling in place, you can product finely
>>shaped metal parts at rates that composite makers can only dream of. And
>>you don't have to deal with the environmental hazards that composites
>>pose.
>>
>>I'd love to see an all metal airplane designed and built by one of the big
>>auto makers. It would be nothing like a Cessna or Piper and likely would
>>be indistinguishable from a Lancair.
>>
>>
>>Matt
>>
>
>
> I agree with your above statements except for the implied notion that there
> is a high volume market for any airplane.

I made no such implication. My comment about "initial capital costs"
was actually in recognition that the volume available may not be
sufficient to warrant the tooling costs for stamping dies. However,
given that tooling costs have dropped a lot with the advent of CAD and
CNC, I do wonder if it might be possible even with Cirrus-like volume.
I don't know, but I do wonder. :-)


Matt