High Cost of Sportplanes

Jim,

I don't think the Rotax is much of a bargain at all. Mattituck will sell you
a brand new uncertified O200 for about $15000, which is about what the Rotax
costs.

There used to be a very good engine bargain in the Polish PZL Franklin, but
they are no longer being made, thanks to the company's acquisition by a
European aerospace concern. Too bad -- these were fully FAA-certified
engines that you could buy brand new for about $8000.

The fact that the company that bought the PZL plant immediately stopped
production tells you a lot about the business model of the aerospace
industry. It is based on low production volume and high profit margin. A lot
of the business comes from government contracts and that's the way the
industry likes it, as the government is the best customer you can have --
never any complaints about price.

So we couldn't well have a cheap, certified airplane engine spoiling the fun
now could we? So close the plant. We can see this to some extent in the
Rolls Royce acquisition of Walter engines in the Czech Republic. You can be
sure we won't be sseing any of the good Walter turbines or LOM piston
engines at cheap prices ever again. That is history.

It tells you a lot that these companies were bought simply to extinghuish
their cheap manufacturing capability. So much for supply and demand and all
of the meaningless crap that's always brought up as an excuse for corporate
greed.

However, when it comes to light plane manufacturing, it is really more of a
cottage industry than a corporate thing. The companies building the LSAs are
small concerns with very little connection to the commercial aerospace
industry -- with the possible exception of Tecnam, which builds components
for regional airliners and such.

Still, the engine is a major cost of the airplane and it's too bad that the
excellent Eastern European manufacturers have been swallowed up and taken
out of comission. Perhaps other options will emerge -- like a rotary or
auto-based engines. These should be doable under the LSA rules.

As far as the cost of materials goes, sheet aluminum is probably the best.
The total cost of metal in a Van's kit is probably no more than a couple of
thousand bucks. Of course that metal needs to be cut and shaped and bent
into shape, and this is in fact where mass production and technologies like
CNC come into play.

And speaking of Van's, they are probably the best value going in the kit
market. You can buy the entire airframe ready to assemble for $15,000 -- and
this leaves the company a good profit margin. If you hired someone at $20 an
hour to build that airplane, that's only $30,000 if you figure 1500 hours
build time. (This is legal in Canada and is spawning something of a
mini-industry as people look for alternatives to the high cost of airplane
ownership).

If you add $20,000 for the cost of an engine and firewall-forward
installation, you will have invested about $65,000 -- this is less than the
cost of new LSAs, but you are getting a heck of a lot more airplane by any
measure.

The idea that the pricing of LSAs realistically reflects cost conditions is
pure nonsense. But leave it to the magazines to try to pull the wool over
our eyes.

Regards,

Gordon.




"Jim Carriere" wrote in message
.. .
Jimbob wrote:
I agree. The thing I am hoping for is economies of scale kick in.
We've increased the number of potential buyers from Europe to USA +
Europe. I don't think relative demand per unit has increased because

snip

plane. # seats, stall and max speed are all fixed. Powerplant size
can only vary so much otherwise you're shooting youself in the foot.

I think the economy of scale kicked in a few years ago for powerplants.
The Rotax 912 nearly dominates this segment. Here is an engine whose
weight and power are ideal for a 2 seat LSA. It is also modern, light
weight, efficient, and about 3/4 the cost of an O-200. The next closest
competitors seem to be a mix of O-200, O-235, Continental C-xx, Subaru (if
you count non cert).

A lot of people think Rotax 2 strokes "saved" the ultralight movement, and
the 912 series is the next logical step in that line of engines.

Hopefully something similar could evolve with airframes, but other than a
few parts like wheels, hardware, paint, instruments, avionics... which are
already mass produced, I doubt it. Airframes and engines are like apples
and oranges.

On Sat, 17 Sep 2005 17:48:57 GMT, Evan Carew
wrote:

On Sat, 17 Sep 2005 11:43:30 GMT, "Dan"

Interesting economic proposal there. I wonder if its time for the
experimental community to consider something along the lines of a few,
open, i.e. GPLd designs, which manufacturers can build standardized
parts and tooling for.

It could only work with quickbuild kits. I don't think the non-LSA
experimental sector would do it. There is no cap on performance.
Ker-rist, look at the glasair III. Too much leway. If your going to
build, you go for some type of performance or look. Why build cookie
cutter? It might happen, but I doubt it.

HOWEVER, the ELSA area is ripe for this type of standardization.
Capped performance specs. And no 51% rule.

It might be interesting to see if the Experimental Avionics deisgners
might standardize on a commumicaitons bus for flight displays,
transponders, XM and such. With ADS-B relased into the wild, I see
this as a solid possiblity.



Jim

http://www.unconventional-wisdom.org

About ten years ago, Quicksliver developed a certified version of their
two-seat ultralight. IIRC, its selling price then was about $30,000. I don't
know how much the price has gone up since, but ten years of inflation should
have brought it up a bit. New Cessna prices have gone up quite a bit, since
they returned to the market in the late '90s.

The prices for the Special Light Sport aircraft will go down in either of two
ways: Either demand will be so great that it becomes a very competitive market,
with the need to undercut the competition's price, or there won't BE any demand,
and the companies cut prices out of desperation.

The vast middle ground consists of a long drawn-out struggle between numerous
companies at various proximity to bankruptcy. They *can't* lower prices and
stay in business; the sale of even one airplane keeps them afloat for a while.

We come, then, to the question of market: How much demand *is* there for these
things?

As far as I can tell, an SLSA is perfectly legal for Private Pilot training.
Part of the issue, then, is which is more cost-effective for the typical FBO:
Buying SLSAs, buying new Standard-category trainers like Diamonds, buying used
Cessna 172s or Piper Warriors, or buying new Cessnas or Pipers.

There's no question that the SLSAs will be not only the cheapest to buy of the
*new* aircraft, and the cheapest to operate of *any* of the aircraft. Lower
fuel burn, less complex airplanes (cheaper to maintain).

However, they do have the drawbacks, from the FBO's point of view. First, while
the parts costs will probably be lower than the Cessna or Piper equivalents, an
FBO can be reasonably sure that Piper or Cessna parts will still be available
next year. No way to tell how permanent these LSA companies are.

Second, the used or new Pipers and Cessnas have four seats, not two. They're
more likely to get rented out for personal use.

Third...well, I haven't seen a lot of these production LSAs up close, but the
cockpits *do* look small. Much of the pilot population today is middle-aged or
older, and the "spread" involved will bias renters away from the smaller planes.

Finally, we come to what is probably the largest factor to make FBOs reluctant
to add SLSAs to their rental line: The unknown. If they buy a used or new
Cessna, they have a good idea what it'll cost and how popular it will be to
rent. An SLSA? Who knows? They might put *one* on the line, just as an
experiment, but with only one plane available, it always remains just a
curiosity.

A kicker, though, might be the rising cost of fuel. A 4 GPH rate gets to be a
LOT more attractive than an 8 GPH one, when the fuel prices are nearing
$5/gallon.

The other half of the equation is the SLSAs to be purchased by private
individuals. As of right now, the ownership advantages of SLSA vs. an older
production airplane aren't that pronounced. The SLSA owner can have someone
with a Light Sport Maintenance Repairman Certificate maintain his airplane and
perform the annual inspection, and persons can get the LS-M certificate a lot
easier than an A&P. But it's moot, since I don't believe anyone's offering an
LS-M course, yet (two sessions of LS-I have been held, but they only apply to
Experimentals). So the SLSA owner has to pay the local A&P to work on his
plane, as well.

The reliability of these old production planes is lower, and the parts can
sometimes be harder to find...but then, the $30,000 or so the buyer saves when
he opts for a Luscombe vs. a brand-new LSA buys a lot of parts.

So... how popular are the production LSAs likely to be? There's no real way of
telling, but there is a rather unfortunate hint in recent history.

Earlier, I mentioned how Quicksilver had received certification in their GT-500.
These could have found the same use on the FBO rental lines as the SLSAs of
today.

How did they do? Checking the FAA rolls, I find only ten Quicksilver GT-500s,
none manufactured later than 1996. And four of them are listed as
Amateur-Built.

Yet...yet...the GT-500 is not a conventional aircraft. Its ultralight
antecedents are obvious. Not a worry to us EAAers, but it likely was too much
for the conservative flight-training industry.

The resolution of the SLSA cost vs. popularity question is likely to be only
obvious in hindsight. About sixty years go, the General Aviation industry
*knew* that all the pilots coming back from WWII would want their own airplanes
to fly. They cranked out of ton of airplanes. So many, in fact, that 60 years
later, there are more planes on the FAA rolls manufactured in 1947 than *any*
other year.

And, of course...it was a bust.

The bust had its advantages to the ordinary pilot, in that all these airplanes
eventually reached the market at fire-sale prices, and were the primary fuel for
the used market for decades.

Will the SLSA world go the same way? Stay tuned....

Ron Wanttaja

On Sat, 17 Sep 2005 13:44:06 -0400, "Gordon Arnaut"
wrote:

Jim,



Yet somehow Cessna manages to give you all this for a cost of only about 50
percent more than the CT2K. Either Cessna is some kind of manufacturing
genius or the LSA is way overpriced. You are literally getting more than
twice the airplane for only half again as much cost.

Regards,



You have a good point. I haven't priced a skyhawk recently. All I
have seen are Ovations and Cirruses (Cirri?) which are ridiculously
priced.

What we could be looking at also is short term economic profit. A new
economic sector opened up and very few competitors are in the market
(in the US). In the short term, these companies make an excess profit.
When other companies figure this out, they enter the market,
competition increases and prices go down.

It will take a year or two to for the market settle if this is the
case. I really have my finger crossed.

In reference to your origional post, these little planes are cool, but
overpriced for you, I and the general market. I'd buy a reasonaly
optioned Tecnam Sierra for about $40-50,000.

However, to a pilot with a potential busted medical, these planes are
cheap. I wouldn't be surprised if this is 99% of the market right
now. When these guys all get theirs, then the sellers might start
having a fire sell.


Jim

http://www.unconventional-wisdom.org

Go look at a new car lot, and then go look at some new airplanes, and
give me ONE reason why an airplane costs ten times as much as a car.



Because there are 1000 cars sold for every airplane. The cost of special
tooling isn't being absorbed by enough volume.

Smitty Two wrote:

If
Henry Ford were alive today, he'd be saying, "man, you're some kind of
sinner."

Don't forget that Ford took a shot at a LSA:

http://www.hfmgv.org/museum/heroes/e...rs/flivver.asp

I have to wonder what it would be like today if the prototypes were more
airworthy and he had carried through the venture.


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Ron Wanttaja wrote:

The resolution of the SLSA cost vs. popularity question is likely to be
only
obvious in hindsight. About sixty years go, the General Aviation industry
knew that all the pilots coming back from WWII would want their own
airplanes
to fly. They cranked out of ton of airplanes. So many, in fact, that 60
years later, there are more planes on the FAA rolls manufactured in 1947
than any other year.

And, of course...it was a bust.

There was the feeling at that time a light aircraft would prove to be a
useful form of everyday transportation, which never happened. I think the
concept of a 'sport' plane is more truthful, something purely recreational
like most watercraft, snowmobiles, hanggliders, and motorcycles. There are
many US$ 15K motorcycles that are essentially lawn decorations, ridden a
few hundred miles a year on nice weekend afternoons. If you had a $15-20K
LSA, it might not be a bust this time around. Just how far the budget for
'sport' items can be pushed is a good question.


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In article uNZWe.123865$084.68527@attbi_s22,
"LCT Paintball" wrote:


Go look at a new car lot, and then go look at some new airplanes, and
give me ONE reason why an airplane costs ten times as much as a car.



Because there are 1000 cars sold for every airplane. The cost of special
tooling isn't being absorbed by enough volume.

Volume, my ass. I'll go back to Henry Ford again. The Model T was priced
at $825 when it was introduced in 1908. He continually cut prices. By
1916, the cars sold for $345. Every time he cut prices, more people
could afford cars, and his volume went up. Every time his profit per car
went down, his total profit went up. It was his pricing policies that
made him the largest carmaker in the world. And his accountants,
investors, competitors, and everyone else thought he was crazy. Yeah,
sure.

That's the real world. You can't wait for increased volume to decrease
prices. You have to work it the other way around. People here are saying
Skyhawks are a bargain at $150,000? What percentage of Americans can buy
a toy of that magnitude? Price them as though you were going to sell a
million a year, and by god, you will.

Try selling a product to Home Depot, as I've done. They RETAIL stuff for
less than their competition can buy it for. Why? Volume. You don't tell
them what your product costs, they tell you what they'll pay. Go to
Continental and Lycoming and tell them you want to buy a million
airplane engines per year, but you need the price to be $6500. Ask them
which one of them wants the contract. They'll probably both come back
begging to undercut that target.

Jeez, I've gotten myself all worked up again. I guess I better get a
small glass of wine and go back out to the shop and squeeze a few rivets
on the RV.

"Smitty Two" wrote in message
news
In article uNZWe.123865$084.68527@attbi_s22,
"LCT Paintball" wrote:


Go look at a new car lot, and then go look at some new airplanes, and
give me ONE reason why an airplane costs ten times as much as a car.



Because there are 1000 cars sold for every airplane. The cost of special
tooling isn't being absorbed by enough volume.

Volume, my ass. I'll go back to Henry Ford again. The Model T was priced
at $825 when it was introduced in 1908. He continually cut prices. By
1916, the cars sold for $345. Every time he cut prices, more people
could afford cars, and his volume went up. Every time his profit per car
went down, his total profit went up. It was his pricing policies that
made him the largest carmaker in the world. And his accountants,
investors, competitors, and everyone else thought he was crazy. Yeah,
sure.

Your analogy is off-base. The Model T offered more practical transportation
than the horse and buggy, and transportation is a must have. A LSA,
regardless of price, is a toy, not practical transportation. You won't sell
a million, and I think 5,000 a year will be a stretch if the cost is $50k.


That's the real world. You can't wait for increased volume to decrease
prices. You have to work it the other way around. People here are saying
Skyhawks are a bargain at $150,000? What percentage of Americans can buy
a toy of that magnitude? Price them as though you were going to sell a
million a year, and by god, you will.

Don't think so. You could give 'em away and there are not enough people
interested in aviation to take 'em all.


Try selling a product to Home Depot, as I've done. They RETAIL stuff for
less than their competition can buy it for. Why? Volume. You don't tell
them what your product costs, they tell you what they'll pay. Go to
Continental and Lycoming and tell them you want to buy a million
airplane engines per year, but you need the price to be $6500. Ask them
which one of them wants the contract. They'll probably both come back
begging to undercut that target.

Jeez, I've gotten myself all worked up again. I guess I better get a
small glass of wine and go back out to the shop and squeeze a few rivets
on the RV.

Enjoy the RV. Great airplanes. And you have a point about volume making
aircraft more reasonable. That's why Van's is able to offer competitive
prices on their kits, engines, etc. Still, even though they offer a heck of
a high performance airplane for $50k plus labor, there are only 4,000
flying...

KB

Volume, my ass. I'll go back to Henry Ford again. The Model T was priced
at $825 when it was introduced in 1908. He continually cut prices. By
1916, the cars sold for $345. Every time he cut prices, more people
could afford cars, and his volume went up. Every time his profit per car
went down, his total profit went up. It was his pricing policies that
made him the largest carmaker in the world. And his accountants,
investors, competitors, and everyone else thought he was crazy. Yeah,
sure.

That's the real world. You can't wait for increased volume to decrease
prices. You have to work it the other way around. People here are saying
Skyhawks are a bargain at $150,000? What percentage of Americans can buy
a toy of that magnitude? Price them as though you were going to sell a
million a year, and by god, you will.


You have an interesting theory. Why haven't you tried it?
Do you have any idea what it costs to tool up and build something like an
airplane at an affordable price?

I build plastic injection molds for a living. Although prices vary
considerably with the complexity of the part, figure $40,000 as an average
price for an injection mold. Multiply that times the number of parts in an
airplane. Don't forget that the right side is different than the left side
of the plane. Now, figure around $250,000 for each piece of metal working
equipment to build the metal parts. Now, you've just about gotten started
making the individual parts of the plane. I guess you can figure out what it
will cost to build the assembly line now.