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The Role of Aircraft Prices in the Decline and


Renewal of General Aviation
Diagnosis and Treatment for Diminishing
Aircraft Sales and Pilot Population
The non-turbine segment of General Aviation (GA) has been wasting away for 30-plus years. The current
symptoms 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, including
repeated attempts to impose onerous user fees, repeated attempts to close airports, and anti-GA media
attacks just to name a few. Thankfully, organizations such as AOPA1, EAA2, NBAA3 GAMA4, LAMA5,
and others are doing the absolutely essential work of treating these symptoms. It is vital that we in the
aviation 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. Political
issues 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 we
are 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 trends
cited, if not the data, apply to the rest of the world and to a lesser extent, turbine aircraft as well. Our
recent conversations with turbine aircraft salespeople lead us to believe that the number of turbine aircraft
sales dependent on finding one or more co-owners is rising, particularly given the current economy.

1. Aircraft Owners and Pilots Association


2. Experimental Aircraft Association
3. National Business Aviation Association
4. General Aviation Manufacturers Association
5. Light Aircraft Manufacturers Association

November 2, 2009 
 

$500,000 18,000
Chart 1 ‐ 1978‐2008 Piston Aircraft Price* and Shipments, 
$450,000 Car/Light Truck Prices 16,000

$400,000 Avg Price New Piston Aircraft ‐ 2008 Constant Dollars


14,000
Avg Price New Car 1970–2006 ‐ 2008 Constant Dollars
$350,000
Total Piston Aircraft Shipped 12,000
$300,000
10,000
$250,000
8,000
$200,000
6,000
$150,000
Sources:  2008 GAMA GA Statistical Databook, US Census Bureau, 
US Department of Energy Vehicle Technologies Program 4,000
$100,000

$50,000 2,000

$0 0
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
---------------------------------------------------------------------------------------------------------------------
$500,000.00 1,000
Chart 2 ‐1978‐2008 ‐ New Piston Aircraft Price*, Student Pilots/MM 
$450,000.00 900
Avg Price New Piston Aircraft ‐ 2008 Constant Dollars
800
$400,000.00 Student Pilots Per Million US Population

700
$350,000.00
600
$300,000.00
500

$250,000.00
400

$200,000.00 300
Sources: 2008 GAMA GA Statistical Databook, CPI Conversion Factors, 
Oregon State University, US Census Bureau, AOPA Newsroom Statistics
$150,000.00 200
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

* Note that from 1978 to the early 90’s, fluctuations in prices of new piston aircraft per unit are primarily attributable to the
rapidly changing composition of piston engine sales; multi-engine piston sales declined sharply while single-engine prices rose
steadily. Unfortunately, separate piston single vs. multi-engine sales volume data after 1990 is unavailable.

The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546


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Diagnosis
Chart 1 demonstrates the price sensitivity of new piston aircraft sales. A normal market recovery from the
steep declines attributable to the late 1970’s inflationary price shocks, frivolous lawsuits, and early 1980’s
curtailed production has been almost entirely suppressed by continual constant dollar price increases. In
contrast to piston aircraft, constant dollar car/light truck prices have remained level from then to now. Per
capita sales of cars and light trucks (not shown) have increased 26% while vehicle-miles have grown at
more than twice the rate of population over the same period.
Two reasonable and intuitively obvious conclusions can be drawn. First, had car/light truck prices
followed the steep upward path of aircraft prices, unit car sales would likely have been dramatically
lowered. To put it into context, a new Toyota Camry would now cost about $60,000 and a Cadillac
Escalade Platinum would be about $200,000—which would, no doubt, mean sales of far fewer Camrys
and Escalades. Second, if constant dollar aircraft prices had remained level, sales would likely have fully
recovered and like car sales, even exceeded previous highs. After 1978, we did not suddenly and
inexplicably 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 pilot
population. We conducted numerous conversations with flight school personnel and instructors in an
effort 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 pilots
We found that, when measured in constant dollars, the cost of obtaining a Private Pilot, Single Engine
Land (PPSEL) certificate has not risen significantly in 30 years. Additionally, Sport Pilot certification has
actually lowered the constant dollar cost of that “first license.” So, why is affordability the reason most
often 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 certification
It 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 third
question. If the only answer they get is that, in their personal context, a 30-50 year old aircraft can easily
cost more than an upscale new car and that a new aircraft costs more than the average house, many will
decide 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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 Step-up aircraft, that is, aircraft that are better-equipped and/or higher performing than those in
which the pilot trained may not be available for rental. In that case, ownership is the only
available step-up option.
The benefits of ownership, when compared to renting, are obvious:
 Much better availability, including long multi-day trips
 Increased visibility and control over how the airplane is flown and maintained
 Equity that can be retained or used for purchasing a step-up aircraft
So, why aren’t more aircraft being purchased? Because, unless the aircraft is flown several hundred hours
per year, the hourly cost of sole ownership is many times the cost per hour of renting.
Table 1 illustrates this point. The raw* hourly operating cost of a new Light Sport Aircraft (LSA)
($135,000), a mid-60’s pre-owned Cessna 172 ($50,000), and a new Cessna 172 G1000 ($300,000) are
shown. Each aircraft is financed for 10 years at 7.5% with 20% down and is fully burdened: insurance,
hangar, fuel and oil, maintenance reserves, and other typical expenses are included. (The spreadsheet used
for these calculations is available upon request.)
Table 1 – Hourly Cost of Sole Ownership
Hours/Year 50 75 100 150 200 300 400 500
New LSA $557 $383 $296 $209 $165 $122 $100 $87
Pre-Owned 172 $361 $259 $207 $156 $130 $105 $92 $84
172 G1000 $931 $639 $492 $346 $273 $200 $163 $141
*Raw costs are not reduced by potential tax savings and recapture of funds due to sale.

The shaded area of Table 1 shows when the costs per hour are competitive with current rental rates. As a
general rule, the newer the aircraft, the more hours must be flown to reach parity with rental rates. The
problem is obvious: most pilots fly about 50-100 hours per year—not anywhere near enough hours to
justify sole ownership. When renting is the only affordable option, many would-be pilots do not start or
finish obtaining a certificate, and certificated pilots either fly much less or stop flying altogether.
Prognosis—if left untreated
Chart 3 projects trends for pilots and student pilots for the next twenty years based on the previous thirty
years. The prognosis is grim. For the last three decades, except for a handful of those who use aircraft for
business and affluent hobbyists, GA has become increasingly out of the financial reach of those who want
to own and fly.
The underlying cause of GA’s looming demise is clear. It is the approximately 250% real price increase
of piston aircraft over the last thirty years (or 400% plus over the last fifty years). In 1978, piston aircraft
unit sales were 76.5 per million of US population. In 2008, sales were 5.9 per million, a demand loss of
92.3%. If prices continue to increase at a rate faster than inflation, as they have for the last three decades,
market forces assure us that the number of non-ATP pilots will continue to decrease, average pilot age
will continue to increase, and the student population will continue to decline.

The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546


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3,500
Chart 3 ‐ 1978‐2008 Actuals ‐ Non‐ATP Pilots and Students Per Million 
US Population with 1978‐2028 Linear Trendlines
3,000

Non‐ATP Pilots Per Million US Population

2,500 Student Pilots Per Million US Population

Linear Trendline ‐ Non‐ATP Per Million US 
Population
2,000 Linear Trendline‐Students Per Million US 
Population

1,500

Sources: US Census Bureau, AOPA Newsroom Statistics
1,000

500

0
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28

What is the effect of even a small dose of lower prices? How price-sensitive are new piston aircraft unit
sales? As shown in Table 2, the introduction of lower-priced LSA (at an average new price of $110,000
each) has provided a real world test of the price sensitivity.
Table 2 – Impact of Lower Priced LSA on Unit Sales
Year 2006 2007 2008
Total Piston Singles Shipped Excluding LSA 2,287 2,174 1,791
Total Piston Singles Shipped Including LSA 2,840 2,739 2,197
Average Price of New Non-LSA Piston Aircraft – 2008 Constant $ 333,718 336,595 466,778
Average Piston Price Including LSA 290,156 289,853 400,847
% Average Per Unit Price Reduction -13% -14% -14%
% Gain Shipped Attributable to Reduced Composite Fleet Pricing 24% 26% 23%
In 2006-2008, by including LSA sales, the average price decreased 13-14% and average unit sales
increased about 24%. Price sensitivity is confirmed. Note the leveraging effect: even modest price
reductions tend to increase unit sales disproportionately. It is reasonable to predict that further price
reductions throughout the range of piston aircraft, not just LSA, would create even more leverage. We
extrapolate that a return to 1978 unit sales levels is not only possible, it is to a certain extent inevitable, if
the average cost of ownership is reduced to 1978 levels or below.
It is reasonable to question: “If acquisition and operating costs are made sufficiently low, will there be
enough people who want to become pilots to support the presumed higher unit sales?” We believe there

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will be more than enough because interest in flying is not the problem and never has been. There was a
superabundance of interest in flying even prior to the Wright brothers; interest was so high that numerous
private prizes and government programs designed to promote heavier-than-air flight existed prior to 1903.
As of today, nearly 106 years after the first powered flight at Kittyhawk, 2009 airshow attendance readily
makes the case that interest remains high. Interest is not the issue, demand is. It is interest plus
affordability that generates demand.
The Treatment—Reduce the cost of Aircraft Ownership
We cannot reduce the price of aircraft, but we can reduce the cost of ownership by at least 50%, 66%,
75%, or more. OEM’s cannot drastically cut prices. Margins are already thin due to a variety of external
factors including, but not limited to, oppressive liability insurance costs for every part, vendor, and
manufacturer who is connected with the finished aircraft. This adds tens of thousands of dollars to the
acquisition price of an aircraft. OEMs, in order to stay afloat, have been working at cost reduction for
three decades. Therefore, the prices of individual aircraft are not subject to radical reduction, but the cost
of ownership is—by splitting it among two or more owners.
Table 3 illustrates that shared ownership costs per hour can be competitive (shaded area) with rental rates
for pilots flying the typical (50-100) numbers of hours per year. They can be significantly less expensive
than renting for those flying more than the average number of hours. Note that these are the same aircraft
and raw costs that were used in Table 1. Significant cost reductions from tax benefits, plus the recapture
of equity from the sale of the aircraft, would also reduce the required number of hours to be competitive
with rental rates.
Table 3 – Impact of Shared Ownership on Cost per Hour
LSA Pre-Owned 172 172 G1000
# of Owners # of Owners # of Owners
Hours/Year 1 2 3 4 1 2 3 4 1 2 3 4
50 $555 $300 $212 $168 $360 $212 $159 $133 $930 $497 $349 $275
75 $382 $212 $153 $124 $258 $159 $124 $106 $638 $349 $251 $201
100 $295 $168 $123 $101 $207 $133 $106 $93 $492 $275 $201 $164
150 $208 $123 $94 $79 $156 $106 $89 $80 $346 $201 $152 $127
200 $165 $101 $79 $68 $130 $93 $80 $73 $273 $164 $127 $109
300 $122 $79 $64 $57 $105 $80 $71 $67 $200 $127 $103 $90
400 $100 $68 $57 $52 $92 $73 $67 $63 $163 $109 $90 $81
500 $87 $62 $53 $48 $84 $69 $64 $61 $141 $98 $83 $76

We conclude the following:


 Shared aircraft ownership is the only readily available means to reduce the cost of ownership to
the degree necessary to reverse the decline in piston aircraft sales and student population.
 Sales gains derived from shared ownership increase the pilot population disproportionately
because the ratio of pilots-to-planes is higher.
 Successful promotion of shared aircraft ownership must become a strategic component of sales
and marketing programs for new and pre-owned aircraft and for flight instruction.
 Programs designed to promote interest in GA should include shared ownership prices in order to
dispel the myth that aviation is only affordable for businesses and the wealthy.
 Aviation sales and marketing programs primarily designed to gain market share within a
shrinking market rather than targeting the non-flying population cannot, in and of themselves,
increase overall aircraft sales and pilot population.

The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546


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Market Segments. There are two distinct market segments:


1. The underserved “current market” is comprised of those who desire ownership but cannot or will
not purchase an aircraft by themselves due to price. About 75-80% of APA members do not own
aircraft. The great majority of them have never owned an aircraft; they are renters desiring to fly
when they want, fly a step-up aircraft without incurring sole ownership costs, build equity, and
enjoy tax benefits. Reaching the current market requires supporting and promoting co-ownership.
Examples include: conspicuous promotion of shared ownership on websites, development of
shared-ownership-specific sales literature, training salespeople on multi-owner sales, and
promotion by aviation associations. A small number of shared-ownership-enabled sales are
currently being made. Focused promotion, training, and support will result in many more.
2. The “broad market” is the larger market comprised of those who mistakenly believe they cannot
afford to fly—but who actually can. This market is 60-100 times larger than the current aircraft
sales market. Reaching this broad market entails advertising in new venues and holding sales and
marketing events in non-aviation venues: shopping malls and, boat, RV, and other powersports
shows, etc. Sales and marketing to these markets will be price-led, that is, the primary
information to get across is “you can afford it!” Shared new and pre-owned aircraft can be highly
competitive in the powersports market. See our previous whitepaper, “Opportunity and
Challenge: Selling Personal Aircraft to the Traditional Powersports Market” for more information
on sales to the broad market. The whitepaper is available on the APA website or by request.
APA’s Participation. The decision to form the APA was undertaken after an extensive market analysis.
We started with a key question: Shared aircraft ownership has been around as long as airplanes (Wilbur
and Orville). If shared ownership could fix the problem, why hasn’t it? The answer is twofold. First,
putting partnerships together en masse requires a “universal pool” where any individual can easily find
existing partnerships, (i.e., private partnerships, equity flying clubs, cooperatives, and fractionals) to buy
into or to find other like-minded individuals with whom to form a new partnership.
Second, the level of effort on the part of aircraft salespersons to put partnerships together has been far too
high. For example, a four-way partnership takes more than four times the sales effort to put together. The
salesperson must sell the aircraft four times and then aid in putting the partnership together—even more
work. The selection of partners or formation of a partnership by the sales organization creates liability
from which they rightly shy away. Sales organizations need to be able to place prospect information
(while keeping their prospect’s contact information confidential) into that same “universal pool” to enable
potential partners to find and vet each other and select the type of partnership they wish to form or join.
The majority of the effort to find partners and form partnerships is taken on by the buyers, not the seller.
The sales organization can then remain at arm’s length from partner selection and partnership formation
while simultaneously promoting shared ownership.
The APA’s web-based Virtual Pilot Lounge™ is the universal pool created to address these two needs. In
its first year of operation, thousands have joined and many have bought into existing partnerships, formed
new partnerships, and purchased aircraft.
Industry’s Participation
Aircraft sales organizations (new and pre-owned) and fractional operators can post details of available
shares of an aircraft in APA’s Virtual Pilot Lounge™ and can search for APA members to buy them.
Companies that support the sales process, that is, providers of financing, insurance, tax, and legal advice
also have a vested interest in promoting co-ownership on their websites and in their literature. They also
have a vested interest in streamlining the process of providing their products and services to shared
ownerships.

The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546


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The opportunity for the pre-owned aircraft sales organization comes with developing the means to profit
from selling shares of an aircraft. Many of those wishing to sell shares of an aircraft face the same
expertise and time constraints as those wishing to sell a whole aircraft—in both cases they need a broker.
Note that if the overall strategy proposed in this whitepaper succeeds, the dollar volume and number of
share sales transacted will eventually exceed those of whole aircraft sales, as will sales commissions.
Flight schools and instructors should educate prospects and new students on shared ownership in order to
increase the number of student starts and to increase retention through certification. Pilots already
certificated need to be educated as well; those whom shared ownership enables to own step-up aircraft
will likely need additional training.
Associations and type clubs should regularly promote the benefits of shared ownership to their members.
The more a shared ownership strategy succeeds, the more members and political muscle gained.
Charting Progress
In addition to tracking sales and pilot population, a new metric is needed to track the effectiveness of a
shared ownership strategy: Reduction of Average Cost of Ownership (RACO). The formula is:
Average Revenue - Average Cost of Ownership
RACO =
Average Revenue
Example RACO Calculation
Revenue # of Owners
$100,000 1
$102,500 2
$105,000 3
$107,500 4
$110,000 1
Totals: $525,000 11
Total Revenue / # of Aircraft Sold = Average Revenue = $105,000
Total Revenue / Total # of Owners = Average Cost of Ownership = $47,727
$105,000 - $47,727
= 55% RACO
$105,000
The sales category measured could be a specific make and model or a class such as LSA, single-engine
piston, or very light jet, or other categorization as needed. Sales and trade associations should adopt this
metric and start tracking. For sales organizations in particular, sales and marketing budgets related to
shared aircraft ownership programs can be managed with a fairly high degree of precision by comparing
RACO metrics to unit sales and sales revenue over time.
Prognosis—if treated
The shared aircraft ownership strategy the APA was established to support is by no means a panacea. The
patient has been sick for a long time. Recovery will require planning and perseverance. Political battles
will still need to be fought and competition within GA for market share will still be fierce. Shared
ownership-based sales and marketing initiatives directed toward the current and broad markets must be
designed and implemented. Both will take time, effort, and money. However, fundamentally, high prices
got us into this predicament—and low prices can lead us out.

The Aircraft Partnership Association | www.TheAPA.com | TEL: +1.972.334.0403 | FAX: +1.972.346.6546


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