Airplane prices are ridiculous, Pt 3

"Howard L" from
http://answers.yahoo.com/question/in...9185922AAM1kbN

Says this:

"Most people would be quite surprised at how little it costs to build
an individual airplane to what it costs to actually buy one. This cost
known as flyaway cost and consists of the labor and parts to build
that airplane. It is less than 25% of the cost of the airplane,
sometimes less than 10%.

Where does the rest go?

1. Engineering. Tens of thousands of hours go into the design of an
airplane.
2. Tooling. In costs many millions of dollars for the tooling (jigs
and fixtures) before you can build the first one.
3. Facilities (Rent). Visit an airplane factory. They are huge. Some
parts are rented and other are owned but it takes a lot of money to
pay for it and pay the utilities.
4. Certification. It can cost over 1 billion dollars to get a design
certified by the FAA to allow you to sell one.
5. Interest. It can take ten or more years from the start of design
until the first airplane is sold. Most of the money to pay for items
1-4 was borrowed from banks and interest was being paid the entire
time. Interest will be paid for another 10 years or more until enough
airplanes are sold to pay off the loan.
6. Profit. The company and their investors didn't gamble all of this
money for fun. Ten billion dollars or more. They want a fair return on
their investment.
7. Liability insurance. An airplane crash can kill and injure hundreds
of people and the airplane company can be sued even when that airplane
is more than 50 years old when it has an accident. That insurance is
expensive. If they don't buy insurance then some of the price of the
airplane must be set aside in a reserve fund to pay damages."

A couple of links you may find useful if you want more detail.
Source(s):
http://www.forbes.com/2006/10/31/airbus-…
http://ocw.mit.edu/NR/rdonlyres/Aeronaut…

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Certainly compelling information to consider, but one
might ponder...

As we look at the American or even the world economies
there is a distinct and irrefutably disturbing sociological
trend taking place and that is the erradication of middle
class America.

The rich are getting richer, and the poor are getting
poorer.

Because of this polarization there has emerged a
customer base for mansions, yachts and all things
expensive, and this strata of consumers think nothing
about plonking down 100K for a plane. So why should
small plane manufacturers cater to the middle class
man?

Just something to consider.

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Mark