High Cost of Sportplanes

Gordon Arnaut wrote:
Jim,

That's a good point about the tiny cost of LSA certification. It adds almost
nothing to the cost of the plane.

In fact LSA "certification" bears no resemblance to the conventional
certification we are all familiar with. As I understand it, it simply
involves building a prototype and then filling out a bunch of paperwork
stating that your plane and manufacturing setup complies with the standards.
There is no flight testing, structural testing, or testing of any kind, that
I'm aware. Even the responsibility for devising and administering the
certification standards themselves has been outsourced to a private-sector
entity, the ASTM. It's like the FAA isn't even involved at all.

Someone mentioned liability insurance and that's probably an expense that is
incurred by the manufacturers, although I doubt that this adds up to a whole
lot either.

Others have mentioned the high cost of labor and this too is valid.

However, Cessna has all of these costs -- and more --and is still able to
price a brand new Skyhawk at $155,000. This is a tremendous value when
compared to one of these new LSAs that cost close to $100,000.

Let's look at the CT2K for example. This composite plane carries a list
price of $85,000 and with even a few panel options that most of us would
consider essential, you are close to $100,000. this plane has an empty
weight of under 600 pounds and a gross weight of just over 1200lbs., which
is less than half of the Skyhawk.

The Skyhawk seats four in a well-appointed cabin with 20g seats, full gyro
panel, a decent radio stack and a robust Lycoming powerplant. It has had the
benefit of a rigorous FAR 23 certification process that is comparable to the
standards that business jets have to meet. It is a very substantial, real
traveling airplane -- the CT2K comes off rather toylike by comparison.

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,

Gordon.
[snip]

Gordon,

Some time ago, a friend of mine graphed the cost of increasingly large
hard drives for computers. As luck would have it, the graph was a
straight line. My friend then went on to explaine that if you extended
the low end of the line until it crossed the x axis, this was the base
cost of producing & delivering any hard drive. I wonder if such an
analysis makes any sense in the light plane market? Given the nature of
todays technologies for assembling composite/legacy structures, labor,
realestate, profit, etc. Is there a cost associated with this class of
ariplane (LSA or not) below which a commercial plane can't be delivered
without structural changes to how we assemble airplanes?

Evan

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

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

However, Cessna has all of these costs -- and more --and is still able to
price a brand new Skyhawk at $155,000. This is a tremendous value when
compared to one of these new LSAs that cost close to $100,000.

Without considering whether of not I disagree on the overpricing of
the modern crop of (LSA legal) craft in general, one question that
comes to mind is how much it costs to make it lighter. Yes, the 172
has 4 seats, but it is 1600+ lbs empty. A new (2 place) Katana is
about $135k in basic form and weighs about 1150 empty. The Symphony
160, another 2 place, is 1450 empty. The Liberty XL2 is about 1050
empty; this is a unit convreted to certified from an experimental
design.

If any of these were rolling in the dough, they would, it seems,
lighten them up and get LSA compliant; one ASSUMES they could meet the
standards.

Maybe making something sturdy and light takes either money or time?
Maybe it takes both?

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.

What does Cessna/Piper/Diamond/Symphony/Liberty get to leave off to
save money? I intuitively feel that if they could make it lighter
they would, because weight is the enemy. The only disadvantage that
comes to mind is lower wing loading would make it less smooth in
flight.

All are handmade, a real issue. The ones who have done more to cut
costs are the Cirrus folks, and they are no cheaper.

While I have no source of even guesses to back this up, look at "18
wheeler" tractors ... MUCH higher volume, and still lots of $$$. I
bet the commonly used engines number in the same range as that of
Continentals and Lycomings, and that they build MANY more ... how much
$? The only creature comforts are in the seat; beyond that, there is
little beauty. How about off-road equipment ... that is not
inexpensive, either.

I _DO_ believe that Toyota (or Ford/GM/Chrysler/VW/Honda/whoever)
could build 50,000 a year of a similar model (one production line) at
a much lower price. They need to "know" that this market would
continue to buy for 5+ years to justify the tooling / plant / design.
Recall that automakers kinda look at 50,000 as the minimum number of a
product to be profitable. I found one statistic that 48,000,000 per
year are built.

We (collectively) probably average keeping a new automobile 4 years
(I'm guessing) and sell it for 30% of what we bought it for.

When we even APPROACH that kind of saturation, costs will fall. Wrecks
will go up, repairs will go up, the economy will grow sarcastic mode
was on.

I think that the prices being charged are fair at this stage of the
market cycle. They are probably making FAR less on investment than
Intel, or Merck, or Pierre Cardin.

I cannot afford one. If I could, I would use it as a toy, not a tool.
When some large number of the world's driving population needs one as
a tool, the price will drop. I predict that won't happen. I WISH IT
WOULD.

There is some of the chicken egg syndrome, but I don't think that if a
Cessna (172/182/206) could be sold for (40k/50k/70k), that there would
be a combined market of 100,000 per year, EVERY YEAR. That's what it
would take.

Just my 2 cents worth ... well, not worth that.

On 2005-09-17 13:44:06 -0400, "Gordon Arnaut" said:

However, Cessna has all of these costs -- and more --and is still able
to price a brand new Skyhawk at $155,000. This is a tremendous value
when compared to one of these new LSAs that cost close to $100,000.

I think you would be very hard pressed to find a new Skyhawk for that
price. Most of them sell with NAVII or NAVIII and some are now selling
with Garmin glass. $$$$$$

Most of the cost of a new Cessna, or Cirrus, for that matter, is
bought-in assemblies and material. Cessna manages to duck some of it
because it buys engines from a corporate partner, but not much.


Let's look at the CT2K for example. This composite plane carries a list
price of $85,000 and with even a few panel options that most of us
would consider essential, you are close to $100,000. this plane has an
empty weight of under 600 pounds and a gross weight of just over
1200lbs., which is less than half of the Skyhawk.

The CT's dimensions and weights are constrained by the European
ultralight category. If the designers could work to the larger US
sportplane

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.

The manufacturing cost for the Cessna is probably actually lower, and
most of the design engineering has been amortized. The 172 is a much
more profitable product for both manufacturer and dealer than the CT.

cheers

-=K=-

Rule #1: Don't hit anything big.

Earlier, john smith wrote:

.... Frank though that he could certify the aircraft quickly for
x-something
dollars because of its similarity to the Super Cub. The FAA, however,
took a totally different approach, and made him certify the Husky as as
a new aircraft design.
This added significantly to the certification costs which were then
added to the original projected costs to come up with the final selling
price...

That's not the way Alfred Scott tells it:

http://www.seqair.com/Other/LiteEng/LiteEng.html

Quote:

: ...Even as he wrote the original proposal, Christensen was adamant
: that certification costs had almost nothing to do with the
: cost of airplanes. The entire concept, he insists, is based on
: a false premise. The Husky, for example, was designed by 4 men
: over 16 months, and cost about $180,000. Much of that work was
: simply engineering work they would have to do in any case,
: certificated or not. So if you take the entire cost of design,
: testing and certification of the Christen Husky and amortise
: it over 500 airplanes, it comes to about $400...

Gordon, There was similar response from Norm Goyer in Private Pilot
magazine, he defended the high cost of sport planes.

What he doesn't seem to realize, is that the local FBO won't buy the
sport planes either if they are so expensive. Then where are people
going to get sport pilot training? not everyone is coming over from the
private pilot level.

the 60-80 grand I saw the average sport plane going for at Oshkosh would
buy a really decent 172, with more capabilities.

So the way I see it, its a catch-22. the FBO won't invest in a sport
plane if there is no intrest, and the public won't learn LSA if there
are no sport planes.

Yeah, there are some certified planes out there that meet LSA, but
realisticaly, trikes are rare (and getting expensive), and taildraggers
aren't very insurable for student solo.

John

John T wrote:

What he doesn't seem to realize, is that the local FBO won't buy the
sport planes either if they are so expensive. Then where are people
going to get sport pilot training? not everyone is coming over from the
private pilot level.

I had worked towards PP certification about 20 years ago and had lost
interest. This summer, I'd flown in a light plane for the first time since
then, and found I still enjoyed it. Hitting the internet, I quickly found a
reference to the sport pilot certification, read the limitations, and
found, for me, they were not limitations but a description of exactly the
sort of flying I would want to do.

Unfortunately, this is the exact problem I ran into. It would require a leap
of faith for a small FBO in this area to purchase a new LSA when they are
barely making it giving PP instruction in elderly, paid off aircraft that
do not qualify as LSA.

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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

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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I'm going to hang my nuts out here for you guys to stomp on, because I
don't have any first hand knowledge of the cost of airplane
manufacturing. But I do have 30 years experience in manufacturing, and
I've seen the inefficiencies with which many organizations operate. You
buy a brand new building in an upscale town and fill it with 20
engineers, 10 office personnel, 6 salesman, two janitors, a couple of
maintenance people, four or five managers, three purchasing agents, four
warehouse workers, five quality control technicians, a roomful of PR
people, and six people actually building the airplanes, then you're
going to have an expensive product. Put me in charge, and you'd have one
pencil pusher for every five assembly workers, absolute max.

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. If
Henry Ford were alive today, he'd be saying, "man, you're some kind of
sinner." He once fired the entire third floor, the accounting
department. Damn pencil pushers were getting in the way of building cars.

China, hell. Give the Cessna plant to Toyota, and we'll be buying 172s
for $40k.