C162 Skycatcher not such a good deal any more

Talk about airplanes! At last count, there are 39 (and growing) FAA certificated S-LSA (special light sport aircraft). These are factory-built ready to fly airplanes. If you can't afford a factory-built LSA, consider buying an E-LSA kit (experimental LSA - up to 99% complete).

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RyanShort1
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Post by RyanShort1 »

dstclair wrote:Ryan,

As Jack pointed out, one advantage of the 80 HP Rotax is the ability to use 87 octane MoGas. Not the same as unleaded car gas. There are several airports across the country that stock MoGas. Navzilla has about 200.
I have yet to see that stuff...
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Post by Jack Tyler »

Note the statement attributed to Cessna's spokesperson. This is exactly the GE theme predicted some weeks ago in our discussion.

'Diane White said the price increase was made necessary by Cessna’s commitment to sustain piston airplane production. “The aviation world is a whole different picture than when the Skycatcher was announced and we must sell the airplane at a price that makes the program sustainable."'

This may sound like an obvious position for any 'for profit' business but that isn't always the case. Consider e.g. how some models in each of GM's brands were not able to justify, on their own, their design/production/service/warranty costs. But the models were kept in order for the brand to have a 'full line' to maintain brand loyalty (among brand-loyal customers) and the overall image of the brand. White's making the point that there will be no 'free ride' available to any of Cessna's piston single models.

Very tough times in a very tough market segment, with the results of the promised FAA overall review of Part 23 a/c certification rules too far off to help, it would seem.
Jack
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nelson2005
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Skycatcher price increase

Post by nelson2005 »

Jack Tyler wrote: Re: Cessna, it is true they found a clever way to market the Skycatcher, promising to freeze the price in their marketing spiel (such as posted above). But the actual purchase order signed by the customer will no doubt have much more specific limits on the a/c pricing. Perhaps someone here has such a PO and can reference the actual contract terms?
I have one. It give Cessna the right to change the airplane specifications and price at their discretion. The customer has the right to accept the changes or get their deposit returned.
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Post by AZPilot »

Cessna has had a major fiasco with the Chinese (162) and Mexicn (Columbia 350/400) and needs to make some money. I don't think their new Textron masters were happy about that million plus dollar FAA fine over the bad composite coming out of the Mexico plant.
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Post by FastEddieB »

November 17, 2011 – Cessna sent a letter this week to everyone holding purchase deposits on the 162 Skycatcher informing them that the price for delivery of the LSA would increase to $149,900 in 2012.
Apples to oranges, maybe, but there are a slew of lightly used Cirrus SR20's available for less than that.

Here are just a few...

Image

I have no financial interest in any of them, and no need to point out to me the obvious differences and benefits of Light Sport, but still, that's a WHOLE lot more plane for the money.
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7900
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Post by 7900 »

Exactly my point, thanks for sharing that eddie.
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AvWeb covers the price increase...

Post by Jack Tyler »

Here's the conclusion of Paul Bertorelli's commentary yesterday on the $35K Skycatcher price increase:

"Cessna never seemed to be a proponent of loss leader marketing and it appears as if it still isn't.

Only one thing mystifies me about this decision. Cessna is the only LSA manufacturer well established with manufacturing in China. If a company with Cessna's economy of scale and marketing acumen can't make an LSA more affordable by building it in China, the notion of low-cost aircraft may very well be the myth that many people think it is."

You can find the full blog at: http://www.avweb.com/blogs/insider/AVWe ... 800-1.html

This is just more corroboration that Cessna and Textron expect the Skycatcher to earn its keep in their model line-up, which is very consistent with the presence of former GE senior management who are now running things.

Here's an interesting - perhaps related? - note: Just yesterday I was talking with one of the local flight schools in Jacksonville. There are several very active schools here, including at least two Part 141 programs. The manager of the 141 program at KHEG mentioned that he had placed two Skycatchers on order just a few months ago (with the typical $5K deposit for each), placing him at the bottom of the list. He was advised recently to expect delivery of both birds in March or April, 2012. His attitude is that he will get them when they are flight tested in KS and he's told to come and pick them up, and not before. But does that suggest the order backlog has shrunk considerably? It will be interesting to see as 2012 unfolds.

And BTW, this fellow was courted heavily by Remos, Flight Design and AMD (who have a sales training office right next door). His rationale for choosing the Skycatcher over all the others - and something we should keep in mind when talking about one model vs. another - is that a business can't make an aircraft choice on which it has to depend for multiple years of training revenue when it isn't sure the mfgr. or the U.S. distributor might not be around a year or two from now. And he simply felt that, arguably with the exception of the Flight Design product which he opted against for other reasons, the Skycatcher was the closest to a sure thing. That makes sense for the individual private owner, as well...but sometimes we individually make decisions on less pragmatic grounds.
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Post by deltafox »

Yes, having a trusted manufacture's name on the product was one of the many reasons I bought my LSA, a PiperSport.
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Post by 7900 »

Compare the 162 to what you get in a Renegade Falcon. It's an American made LSA with a state of the art American made ( Lycoming ) engine and a long list of expensive options selling for $ 125,000.

It comes with a Lycoming IO-233 engine, a 10" Dynon SkyView, full Garmin stack and dual electronic ignition, a ballistic chute, ostrich skin seats ( yes you read that right ), and a Catto 3-blade nickel-edge composite prop.

If a little company like Renegade in Lees Summit, MO ( who doesn't have the purchasing power or economies of scale that a large behemoth like Cessa has ) can offer this much ac for ALOT less than the new price of a Skycatcher ( $ 149,900 ) AND still make a profit - then why can't Cessna ?

Cause Cessna is just greedy that's why.

http://www.bydanjohnson.com/Sidebar.cfm?Article_ID=1504
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Post by zaitcev »

I'm definitely not buying an LSA with a lump of iron in the nose like that. In a certificated airplane, sure, since there's no alternative. But in an LSA - only Rotax. I just don't see the point of giving up the range and payload for an "American" badge. And engine that's good enough for American Predator drones is good enough for me.
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Post by Jack Tyler »

If only it was as easy to establish a profitable, sustained business as it was to design a clever new product...

"Compare the 162 to what you get in a Renegade Falcon...."

Agreed: The Renegade is an appealing a/c at an appealing introductory price. However, we can't separate the product from the business that produces it. We know nothing about the depth of the (new) company's financing, the profit margins (if any) at its introductory pricing, nothing yet about the inevitable airframe and engine quibbles that infect any new a/c, the marketing/sales/parts distribution costs & details that every buyer will wonder about, and - perhaps most important, given what other LSA failures in the marketplace tell us - we don't know the sales volume they are dependent on to sustain their business. I'm reminded of Jim Bede and the similarities between his multiple clever designs, full of exceptional performance numbers & construction innovations, and his inability to translate that into a viable aviation manufacturing business, all at a time when personal aircraft sales were booming. How many BD a/c do we see flying today. We simply don't know much about the Renegade yet, in a fuller sense than its performance envelope, and therein lies the challenge every LSA product that a fledgling company has wanted to introduce.

For perspective, let's look at the newly announced Pipistrel LSA trainer, soon to be introduced at ~$85K - delivered - in the U.S. The Renegade and the Alpha Trainer may seem like very different a/c but, in some important respects, they are similar: Very competitively priced, both new designs with innovative features, and both dependent on finding a home in their respective LSA niches: high-end performance LSA and low-cost LSA trainer, respectively. Now compare the two companies announcing their introductions: an unknown business entity with no previous track record vs. an established, profitable, long-term business with multiple award-winning designs. This doesn't mean the Renegade can't be or won't be a success in the marketplace...but it does illustrate how different are the businesses that attempt to introduce new LSA a/c into the marketplace...so far with 50-50 success at best.

"If a little company like Renegade in Lees Summit, MO ( who doesn't have the purchasing power or economies of scale that a large behemoth like Cessa has ) can offer this much ac for ALOT less than the new price of a Skycatcher ( $ 149,900 ) AND still make a profit - then why can't Cessna ?"

The inverse is the actual question. How does a large company, with a substantial overhead in factory, competitively-paid, salaried employees with benefit packages, and so a very large costing rate manage to compete on price with a start-up where the principals are about the only people working on the project and who are probably taking no salary yet. As for 'economies of scale', I suspect they are very small. How much less can the Skycatcher's proprietary MFD, uniquely manufactured by Garmin in a lot of several hundred per year, cost when compared to a similar Dynon Skyview panel, sold by a company at a much lower price to many LSA builders? In reality, the Skyview panel is probably more costly but in exchange for being just what Cessna wanted for their a/c. There is probably no commonality of parts between the Skycatcher and anything else Cessna makes, but there are a host of unique-to-Cessna costs incurred due to their overseas manufacturing. The Skycatcher is not a model for cost efficiencies.

It's always easy for a start-up to position a product at a low price along with competitive performance, all wrapped in a supposedly sustainable business model. Quite another thing to build a product along with building a business, and have both succeed.
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Post by FastEddieB »

7900 wrote: Cause Cessna is just greedy that's why.
That's not fair.

Cessna can only continue to exist as a company if they make a profit.

The amount of profit will depend on the price they charge. But that amount of profit will be "plottable" in the form of a curve - charge too little and profits will be impossible (obviously). But charging too much will have the same effect on profits when sales numbers come in too low.

I thought my Sky Arrow was "fairly priced" at $75.5k. But they later raised the price to about $96k, probably because they were losing money at the lower price, and possibly also because of the dollar/euro exchange rate.

Anyway, they sold few if any at the higher price, and are now out of business. Hopefully temporarily.

$100k+ LSA's end up competing with certified planes with more utility and much longer track records. Such as:

Image

Base price: $119,900.

To paraphrase "A League Of Their Own":
"Selling planes is hard. Of course its hard. That's the whole point. If it was easy, anybody could do it!"
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Post by 7900 »

Cessna is saving alot of money on labor manufacturing the 162 in China. Plus their material costs are most likely alot lower due to savings on bulk purchases. Their total cost is alot lower than for a smaller operation like Renegade. Yet Renegade delivers MORE plane for alot LESS money and is still made in the US.

The size of their price increase, $ 35,000, makes Cessna's initial price look suspiciously too low or their were outright greedy.

I'll take the latter - they are just excessively greedy.
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Post by Jack Tyler »

It can be frustrating when facts get in the way of one's fiurmly held beliefs. I notice Congresswoman Bachman has been having this problem, as well.

Just to touch on a few of many...
-- Piper did not design nor build an LSA. They only purchased USA distribution & marketing rights. Cheese and chalk may look alike but there's somewhat of a difference between them. Having a Piper logo on an LSA didn't make them a manufacturer.
-- Being dependent on overseas manufacturing, as I've been, is very instructive in learning just how much 'cost savings' actually occurs vs. what a spreadsheet shows before the reality sets in. Two of many examples: China does not permit GA flight where the Skycatcher is built nor is it ready to be flown, so the plane - after assembly and then disassembly - must be reassembled once more at Cessna. It's only then that a full QA check can be done and all manufacturing defects ID'd & corrected. When the assembly area is adjacent to the test area, the jigs, materials and skills are immediately at hand. When they are in China, you end up duplicating events, equipment, manhours and their costs. Second, a contract mfgr. may have zero experience (China would be an excellent example) in the field in which they begin assembling product, so it takes a sustained presence at the offshore company's facility not just to train assemblers but to get the right machinery in place, test it to tolerances, create the right work flow layout, get the documentation processes up and running (especially important for later QA trouble shooting, let alone FAA review), and so forth. That presence continues today, as QA issues never stop surfacing (employee turnover being one cause), as does some amount of international travel, all the shipping/crating/importer fees and on it goes. And what does the mfgr do when, as happened to Vans Aircraft, when a major assembly process has been corrupted in some fashion (in their case, their quick-build wings are assembled in the Philippines) and the problem must be solved in the U.S. Offshore manufacturing can reduce costs, but you really have to know what you are doing (Cessna's had to climb a steep learning curve...) and, even then, some products better fit the offshore model than others.

I could go on...but then I'd be (even more) long-winded. Just like a nose, everyone gets to have an opinion. Altho' all one needs for the nose is a handkerchief...
Jack
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Post by HAmike »

7900,
I agree it is to be possible to produce a "Real Airplane" type LSAs in the $115,000 - $120,000 price range and keep doing it in the long term. FK lightplanes has been doing it for over a decade. They are neither a startup nor a large legacy manufacturer. FK does produce a modern C-150 ish LSA called the FK9. This aircraft out performs the Skycatcher in every category except one. That would be the ability to carry ping pong balls or styrofoam peanuts :wink:

FK is European with HQ in Germany and factory in Poland. German tax burdens are no better than US and Polish labor is at least as expensive as China. That suggests to me that a US manufacturer with an already established dealer/support network and brand loyalty and is willing to build airframes offshore should be able to sell a basic LSA for somewhat less than $150,000 and make money at it. How much or how little profit they are willing to make is a matter for each individual company.

Of course, you have to consider US liability exposure too!!! Liability cost does play a role in aircraft costs. Large legacy manufacturers seem to have more exposure because they have perceived deeper pockets. My opinion. (I know some European aircraft parts dealers who are very reluctant to sell products directly to US customers because they fear US courts).

I'm not an econ or business major, just someone who has been involved with the LSA industry for over a decade and that is just my opinion.

I'm not sure how that fits into either yours or the previous poster's economic theories.

Just somethings to consider.

However, I need to point out a small error in your assumptions regarding the Cirrus LSA's absesnce from the market place in the US. The Cirrus LSA was going to be the FK14. The FK14 is still produced and is still sold worldwide. It just can't be sold in the US because of FK's marketing agreement with Cirrus. Media reports and industry hearsay tell me that Cirrus shelved the the LSA project for many reasons. Two of the primary reasons were the jet project and the declining economy.
I don't think that really fits with your lumping the Cirrus project with the Piper Sport. Again, just my opinion.

I would looove to be able to sell the fk14 here. We inquiries daily about it through the factory website. It would be a hot seller here for about $130k fairly equipped. If only..... :cry:
Mike is chief hangar sweeper at Hansen Air Group, dealers for Sky Arrow, FK, and Peregrine LSAs.
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