LSA Values Declining?

[IFlyRC]

Is it possible to use your LSA as a tax write-off if you use it to travel 51+% of the time (commuting, not flight instruction, etc) for business? With the 6-year depreciation rate. (Bonus question: can you write off training as well?).

Six years isn't a long time. If you hold onto the aircraft for six years and then sell if after that, anything else is a nice little bonus.

[MovingOn]

.......

[drseti]

Short answer: yes if you're a PP or above with a current medical. With a lapsed medical, one is restricted to exercising SP privileges, so no. If a SP, no way.

[Jack Tyler]

ML:

Regarding your original Q, there has been significant discussion here on the impact on LSA values resulting from the possible FAA change in Class 3 medical requirements. You'll find most of those discussions in the threads which address the AOPA/EAA proposal and from the more recent FAA's announcement that it will issue a NPRM. FWIW I would sum up that ongoing discussion - about the potential reduction in LSA values in the marketplace - as shifting somewhat over the last two years or so. Initially, the operational cost benefits and the 'sophistication' of new'ish LSA models were generally viewed as reasons to believe LSA values will not be affected very much. But as the discussion unfolded, along with the FAA's announcement and the House & Senate's two GA Pilot Protection Acts appeared, my sense is that the discussions I've heard and read trend more to acknowledging that LSA values will probably be impacted negatively while Part 23 a/c sales (tho' perhaps not so much prices) might be buoyed. But as stated above, there's not really any data to base an estimate on how these values will shift, if they do.

An example of this is one of the local flight schools here in the Jacksonville area, based at KCRG. They announced a very competitive rental package for a modern S-LSA Rans S-19 (http://www.rans.com/aircraft/kits/s-19-venterra.html) and flew it down to Jax from the Rans factory in the midwest. But then the FAA's announcement they intended to issue a NPRM re: the Class 3 medical popped out at about the same time, and the owners flew it back to Rans and are now withholding a decision on offering SPL training in an LSA until they see the actual proposal. And even then, they may hold off longer. Their immediate concern was the possibility they would initiate a lease or loan based on an LSA value that would be negatively impacted by the proposal.

One trend that, were I considering setting up a flying club like you are, I would monitor closely is the notion that Part 23 a/c have such low market values that they can now be fully refurbished with zero time engines and placed into training and rental fleets on a lower cost basis. AOPA is now piloting this approach with a small fleet of 152's as Howard mentioned, Redbird is trialing this with a diesel-powered 172 and new panel (among other things), and a major refurb business announced this approach only two weeks ago for a range of a/c models (see AVweb for the details). I have to disagree to some extent with Howard's depiction of these potential business models producing 'less sophisticated' a/c because it depends on on how the a/c is upgraded. And truth be told, there is this glass panel-itis effect that finds both LSA buyers and LSA mfgrs. equating the new digital systems with 'better systems' when, in my view, it depends on the intended use of the a/c and the buyer's wallet. 'Better' could justifiably be defined to include 'affordable'.

In your shoes, I would recommend you review the Flying Club detail now available on the AOPA website, if you haven't already, and consider talking with one of the AOPA folks who is now overseeing this initiative. If you can get to a field where a flying club is operating, speaking with them would also be very helpful. You should find lots of Q's popping up in your research that need addressing and both AOPA & an existing club should be able to help. You can also ask the AOPA tech counselor to refer you to some of the tools available on the AOPA website - e.g. they have a detailed spreadsheet file that will help you identify and estimate all the costs associated with a purchase or lease arrangement, something you'll have to do should you get serious about the Club idea. But IMO if you think you're based at an airport and in an area that would support a flying club, I'd urge you to consider a partnership arrangement as well. You'll need to find far fewer people (perhaps 3 or 4), it's less complicated to set up (for a mix of reasons), and it too is a way to make the cost of flying much more affordable. AOPA has a sample partnership agreement which you can customize to suit your local area, airport, and the operational constraints you want to establish. I did this with a former a/c and it was a great experience as well as being very cost effective.

Finally, as with any other destination on the Web, I'd encourage you to be wary of some of the comments made here. The more sweeping and absolute the generalizations sound, the more obvious the ignorance of the poster. We each see aviation through our own lens so it's both natural and beneficial to hear divergent views and alternate ways of looking at an issue. The problem with this, of course, is that a poster can speak as tho' with great authority but minimal experience and newer pilots will think it's fact. Just fair the curve of comments here and throw away the outliers, and you'll find value in this forum's content. Good luck on the research!

[MrMorden]

I saw one of the refurb 152s at Oshkosh on display. It looked great, basic instruments but like a brand new 152. But it also cost $60-80k, which is a tough pill to swallow for a 20-30 year old airframe that cruises at 90-100kt.

[Nomore767]

Jack,
I didn't say the refurbished 150/152s were 'less sophisticated' than modern LSAs. What I did say is that they would still not have ALL the technological advances available, even if they were refurbished to 'like new'. That is not intended as a negative, just a comparison with an LSA.

See this link:-
http://www.aopa.org/News-and-Video/All- ... o-aviation

These refurbished airplanes are excellent propositions to flying clubs etc. I would bet, if successful, it might expand to 172s. The airplanes are upgraded with newer avionics, the video shows maybe an AERA GPS installed alongside the standard six-pack instruments.
Modern LSAs come with all EFIS panels…because they don't have vacuum systems to support the older style instruments. Yes, some folks want every EFIS option available, but for sport rules they aren't 'essential'. For a flying club with PPL student prospects, as well as casual flyers (especially if the rule changes) these refurbished airplanes may be just the thing to revitalize GA and do so with really affordable costs. The wealth of parts and service support is a massive plus in my book.

Something really worth looking at.

[CTLSi]

......

[drseti]

most sport pilots are downgraded private, commercial guys that can no longer pass the medicals.

You can't really say that, for two reasons:

(1) A private, commercial, or airline transpoet pilot with a lapsed medical is still a PP, CP, or ATP. That doesn't change when one's medical lapses. They do not become Sport Pilots, though they may choose to operate under SP rules.

(2) You have no way of knowing whether they can or cannot pass medicals, unless you have access to their full medical history, and give each a thorough medical exam. All you can say for certain is that they chose not to renew their medical certificates. There are many folks on this forum who could easily pass a medical (with or without Special Issuance), but choose not to, for a variety of very valid reasons.

Relaxing the 3rd class medical for all of us will be beneficial to all, and will prove no more hazardous than the current SP rule has been. According to NTSB accident statistics, in ten years there have been zero LSA accidents attributed to medical conditions which a 3rd Class medical exam would have uncovered.

[Nomore767]

"The 3rd class med will gut LSA pilot population if it goes thru because most sport pilots are downgraded private, commercial guys that can no longer pass the medicals. So given the bulk of the potential buyers for LSA disappearing, it makes sense LSA sales and certifications will decline drastically."

I disagree that the potential buyers for LSA will disappear. On the contrary. For pilots/customers who are looking at 2 seat airplanes for private, just for fun, recreational use (note: I'm not saying specifically Private/Recreational/Sport licensed pilots here), and the 3rd class medical rule is changed/relaxed, then they can choose old Cherokees, C150/152 or a newer model, better performing/equipped LSA. They could also choose to opt for the AOPA refurbished C150/152 airplanes, which at around $70k provide a nice airplane for less than most if not all LSA. A very real option.
If I compare the RV-12 to the PA28-140 Cherokee that I started flying in, I would say the RV is a better performing & more cost efficient airplane. As you would expect after several decades of manufacturing progress.
A change in the medical rule would allow for a greater range of airplane options, seats and weights, which the pilot could chose to FLY, but presumably they would still be limited by the certification of the model they chose to OWN. e.g.. LSA has different rules from the refurbished C150.
The LSA manufacturers, such as Flight Design, are starting to think about airplanes which would compete in the marketplace against Cessna, Piper and Mooney using the manufacturing advantages gleaned from producing LSA. I'm thinking of the FD C4 design here, which I believe, at a price of $250k+ is still much less than the new Cessnas etc and I would argue a very real alternative to a brand new Skyhawk.

I think some people simply cannot get their head around the current medical rules.

I looked at the Phoenix motor glider. This airplane has the same Rotax 912ULS engine as my SLSA. However, it's a GLIDER, and as such requires NO medical AT ALL to fly it, just like other gliders. Not even a 3rd Class medical.

[Jack Tyler]

"The 3rd class med will gut LSA pilot population...."

Now there's a good example of a sweeping, absolute generalization.

"...most sport pilots are downgraded private, commercial guys that can no longer pass the medicals."

Bingo! That's two for two and even in the same sentence, and while insulting a whole class of people in the process. (Does that make it a Hat Trick?)

Howard, re: your comment about AOPA's '152 project' and, "if successful, it might expand to 172s", you might not know about the Red Hawk 172 program that Redbird Simulators started over a year ago. Here's a short video from last year's Air Venture that gives a nice overview:
https://www.youtube.com/watch?v=CNQI9Zbl2A0

Perhaps you already know that Redbird was founded by Jerry Gregoire. In my book he's an equivalent to a Lindberg, Donald Douglas or Howard Hughes of their day, a very innovative thinker but with a grounded, practical streak a mile wide. If GA had two or three more Jerrys - or just one leading a Piper or Cessna - I wonder what a GA flight line would like today. Jerry also launched an effort to introduce a low cost desktop sim for small flight schools and which "my mother could turn on and use". Paul purchased a Jay Simulator for his flight training program and - hint, hint - mentioned he would give us an update on its effectiveness after he's used it for a while with students. (And maybe he did and I simply missed it due to one of my trips. What say you, Professor?)

I do get the feeling that most of us take turns preaching to the same choir about this possible medical requirement change. But one thing we too often omit (see Paul's comment on '10 years of success with no medical requirement in Sport Aviation' as an example) and which I've been guilty of as well, is ignoring the decades of soaring that has been done by many thousands of pilots who are not required to carry a medical. I think one could make the case that sailplane pilots spend a greater percentage of their time in that portion of a flight where we GA pilots seem to have lots of trouble: the approach and landing. That this group's history has demonstrated no need for a medical exam seems more persuasive to me than Sport Aviation's admirable but much shorter record.

[drseti]

I looked at the Phoenix motor glider. This airplane has the same Rotax 912ULS engine as my SLSA. However, it's a GLIDER, and as such requires NO medical AT ALL to fly it, just like other gliders. Not even a 3rd Class medical.

Not only that, but the Pheonix, Pipistrel, Sonex, TeST, and other motorgliders can be flown even if one's medical certificate has been revoked (providing the pilot self-assesses and self-certifies before flight, as is required for all pilots). And, as Jack points out, glider pilots without medicals have an excellent safety record.

[MrMorden]

IIRC you don't even need a driver's license as a glider pilot, unlike the Sport Pilot medical exemption.

[drseti]

True, Andy. Otherwise, how could 15 year olds solo gliders?

[Nomore767]

I looked at the Phoenix motor glider. This airplane has the same Rotax 912ULS engine as my SLSA. However, it's a GLIDER, and as such requires NO medical AT ALL to fly it, just like other gliders. Not even a 3rd Class medical.

Not only that, but the Pheonix, Pipistrel, Sonex, TeST, and other motorgliders can be flown even if one's medical certificate has been revoked (providing the pilot self-assesses and self-certifies before flight, as is required for all pilots). And, as Jack points out, glider pilots without medicals have an excellent safety record.

Quite right Paul….but…here's the truly AMAZING part….these here motor gliders, which you can fly with the engine running all the time if you want, and it's a Rotax 100hp 912ULS, like the RV and the CTLS etc…and it flies far and fast...aren't dropping out of the skies on a daily basis and these planes are flown by pilots who don't need any kind of medical whatsoever!! Or even a driver's license!!

I mean …HOW CAN THIS BE??

Disclaimer..they still have to self-certify that they're feeling physically and mentally safe to fly.

[MrLupin]

ML:

Regarding your original Q, there has been significant discussion here on the impact on LSA values resulting from the possible FAA change in Class 3 medical requirements. You'll find most of those discussions in the threads which address the AOPA/EAA proposal and from the more recent FAA's announcement that it will issue a NPRM. FWIW I would sum up that ongoing discussion - about the potential reduction in LSA values in the marketplace - as shifting somewhat over the last two years or so. Initially, the operational cost benefits and the 'sophistication' of new'ish LSA models were generally viewed as reasons to believe LSA values will not be affected very much. But as the discussion unfolded, along with the FAA's announcement and the House & Senate's two GA Pilot Protection Acts appeared, my sense is that the discussions I've heard and read trend more to acknowledging that LSA values will probably be impacted negatively while Part 23 a/c sales (tho' perhaps not so much prices) might be buoyed. But as stated above, there's not really any data to base an estimate on how these values will shift, if they do.

An example of this is one of the local flight schools here in the Jacksonville area, based at KCRG. They announced a very competitive rental package for a modern S-LSA Rans S-19 (http://www.rans.com/aircraft/kits/s-19-venterra.html) and flew it down to Jax from the Rans factory in the midwest. But then the FAA's announcement they intended to issue a NPRM re: the Class 3 medical popped out at about the same time, and the owners flew it back to Rans and are now withholding a decision on offering SPL training in an LSA until they see the actual proposal. And even then, they may hold off longer. Their immediate concern was the possibility they would initiate a lease or loan based on an LSA value that would be negatively impacted by the proposal.

One trend that, were I considering setting up a flying club like you are, I would monitor closely is the notion that Part 23 a/c have such low market values that they can now be fully refurbished with zero time engines and placed into training and rental fleets on a lower cost basis. AOPA is now piloting this approach with a small fleet of 152's as Howard mentioned, Redbird is trialing this with a diesel-powered 172 and new panel (among other things), and a major refurb business announced this approach only two weeks ago for a range of a/c models (see AVweb for the details). I have to disagree to some extent with Howard's depiction of these potential business models producing 'less sophisticated' a/c because it depends on on how the a/c is upgraded. And truth be told, there is this glass panel-itis effect that finds both LSA buyers and LSA mfgrs. equating the new digital systems with 'better systems' when, in my view, it depends on the intended use of the a/c and the buyer's wallet. 'Better' could justifiably be defined to include 'affordable'.

In your shoes, I would recommend you review the Flying Club detail now available on the AOPA website, if you haven't already, and consider talking with one of the AOPA folks who is now overseeing this initiative. If you can get to a field where a flying club is operating, speaking with them would also be very helpful. You should find lots of Q's popping up in your research that need addressing and both AOPA & an existing club should be able to help. You can also ask the AOPA tech counselor to refer you to some of the tools available on the AOPA website - e.g. they have a detailed spreadsheet file that will help you identify and estimate all the costs associated with a purchase or lease arrangement, something you'll have to do should you get serious about the Club idea. But IMO if you think you're based at an airport and in an area that would support a flying club, I'd urge you to consider a partnership arrangement as well. You'll need to find far fewer people (perhaps 3 or 4), it's less complicated to set up (for a mix of reasons), and it too is a way to make the cost of flying much more affordable. AOPA has a sample partnership agreement which you can customize to suit your local area, airport, and the operational constraints you want to establish. I did this with a former a/c and it was a great experience as well as being very cost effective.

Finally, as with any other destination on the Web, I'd encourage you to be wary of some of the comments made here. The more sweeping and absolute the generalizations sound, the more obvious the ignorance of the poster. We each see aviation through our own lens so it's both natural and beneficial to hear divergent views and alternate ways of looking at an issue. The problem with this, of course, is that a poster can speak as tho' with great authority but minimal experience and newer pilots will think it's fact. Just fair the curve of comments here and throw away the outliers, and you'll find value in this forum's content. Good luck on the research!

Jack, thank you very much for your detailed and insightful response. You've given me a lot to work with. I have used some of the AOPA resources but obviously need to use them more and do more research.