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November 2, 2009
The Role of Aircraft Prices in the Decline andRenewal of General AviationDiagnosis and Treatment for DiminishingAircraft Sales and Pilot Population
The non-turbine segment of General Aviation (GA) has been wasting away for 30-plus years. The currentsymptoms of GA in the US are diverse and evident: declining new aircraft sales, the shrinking/aging of the pilot population, declining fleet hours flown, and the onslaught of various political attacks, includingrepeated attempts to impose onerous user fees, repeated attempts to close airports, and anti-GA mediaattacks just to name a few. Thankfully, organizations such as AOPA
1
, EAA
2
, NBAA
3
GAMA
4
, LAMA
5
,and others are doing the absolutely essential work of treating these symptoms. It is vital that we in theaviation community continue to support them and their efforts.However, the Aircraft Partnership Association (APA) asserts that
the untreated underlying cause of GA’s problems is the price of aircraft
. Progressively fewer and fewer citizens can afford to fly. Politicalissues arising from the diminished pilot population are analogous to a compromised immune system;pilots are like white blood cells and antibodies—the fewer of them per unit of population, the less able weare to defend ourselves from various political pathogens.In this whitepaper, we focus on piston fixed-wing aircraft in the US market. However, note that the trendscited, if not the data, apply to the rest of the world and to a lesser extent, turbine aircraft as well. Ourrecent conversations with turbine aircraft salespeople lead us to believe that the number of turbine aircraftsales dependent on finding one or more co-owners is rising, particularly given the current economy.
1.
Aircraft Owners and Pilots Association2.
Experimental Aircraft Association3.
National Business Aviation Association4.
General Aviation Manufacturers Association5.
Light Aircraft Manufacturers Association
The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546Page 2
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* Note that from 1978 to the early 90’s, fluctuations in prices of new piston aircraft per unit are primarily attributable to therapidly changing composition of piston engine sales; multi-engine piston sales declined sharply while single-engine prices rosesteadily. Unfortunately, separate piston single vs. multi-engine sales volume data after 1990 is unavailable.
02,0004,0006,0008,00010,00012,00014,00016,00018,000$0$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,00078 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Avg
Price
New
Piston
Aircraft
‐
2008
Constant
DollarsAvg
Price
New
Car
1970–2006
‐
2008
Constant
DollarsTotal
Piston
Aircraft
Shipped
Sources:
2008
GAMA
GA
Statistical
Databook,
US
Census
Bureau,
US
Department
of
Energy
Vehicle
Technologies
Program
Chart
1
‐
1978
‐
2008
Piston
Aircraft
Price*
and
Shipments,
Car/Light
Truck
Prices
2003004005006007008009001,000$150,000.00$200,000.00$250,000.00$300,000.00$350,000.00$400,000.00$450,000.00$500,000.0078 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Avg
Price
New
Piston
Aircraft
‐
2008
Constant
DollarsStudent
Pilots
Per
Million
US
Population
Sources:
2008
GAMA
GA
Statistical
Databook,
CPI
Conversion
Factors,
Oregon
State
University,
US
Census
Bureau,
AOPA
Newsroom
Statistics
Chart
2
‐
1978
‐
2008
‐
New
Piston
Aircraft
Price*,
Student
Pilots/MM
The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546Page 3
Diagnosis
Chart 1 demonstrates the price sensitivity of new piston aircraft sales. A normal market recovery from thesteep declines attributable to the late 1970’s inflationary price shocks, frivolous lawsuits, and early 1980’scurtailed production has been almost entirely suppressed by continual constant dollar price increases. Incontrast to piston aircraft, constant dollar car/light truck prices have remained level from then to now. Percapita sales of cars and light trucks (not shown) have increased 26% while vehicle-miles have grown atmore than twice the rate of population over the same period.Two reasonable and intuitively obvious conclusions can be drawn. First, had car/light truck pricesfollowed the steep upward path of aircraft prices, unit car sales would likely have been dramaticallylowered. To put it into context, a new Toyota Camry would now cost about $60,000 and a CadillacEscalade Platinum would be about $200,000—which would, no doubt, mean sales of far fewer Camrysand Escalades. Second, if constant dollar aircraft prices had remained level, sales would likely have fullyrecovered and like car sales, even exceeded previous highs. After 1978, we did not suddenly andinexplicably lose our love of flying and desire to own aircraft;
we started losing our ability to afford them
.Chart 2 shows an inverse correlation between new piston aircraft prices and the declining student pilotpopulation. We conducted numerous conversations with flight school personnel and instructors in aneffort to understand:
The role that rising piston single prices have played in the decline of the student pilot population
How current aircraft prices affect those newly interested in becoming pilotsWe found that, when measured in constant dollars, the cost of obtaining a Private Pilot, Single EngineLand (PPSEL) certificate has not risen significantly in 30 years. Additionally, Sport Pilot certification hasactually lowered the constant dollar cost of that “first license.” So, why is affordability the reason mostoften given for the following?
Flight instruction not being undertaken after a discovery flight
Instruction, once started, not continuing to certification
Pilots not continuing their training after obtaining a PPSEL or Sport Pilot certificationIt turns out that affordability of
training
is not the primary issue, affordability of
ownership
is.People with a new interest “check it out” in order to answer a series of questions for themselves:1.
Is this something I want to do?2.
Am I able to do it?3.
Can I afford to do it?A discovery flight which answers the first two questions positively will normally lead to the thirdquestion. If the
only
answer they get is that,
in their personal context
, a 30-50 year old aircraft can easilycost more than an upscale new car and that a new aircraft costs more than the average house, many willdecide that they cannot afford it. GA loses a potential new student.The issue of renting versus buying inevitably arises for just about every student and certificated pilot.Most do not want to rent forever, particularly if the aircraft available to them is part of a training fleet,because:
Availability is often limited; the renter cannot reliably schedule the aircraft for when they want it.Longer multi-day rentals may not be permitted, or if available, may be prohibitively expensive.
Renters have little visibility or control over how the airplane is flown and maintained.
Renters are not building equity for themselves; they are building it for somebody else.
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