LSA Manufacturers are missing the boat

[Nomore767]

The Glasair Merlin LSA is supposed to make it's first flight any day.

http://en.wikipedia.org/wiki/Glasair_Merlin_LSA

All composite, Rotax Sport injected engine, Dynon Skyview Touch, 24 gals, empty weight of 790lbs. To me it's the 'fixed' Skycatcher. Looks like one and has the 'stoke' flight controls. Interior looks nice.

Base price is about $150k and if you opt for dual Skyview and autopilot you can add another $10k. BRS is also an option.

In light of this thread topic this is an interesting airplane. Remembering that the original Skycatcher was $148k the Merlin is much better designed and configured. With an empty weight of 790, a lot less than the Cessna, plus the Sport engine's lower fuel burn, cross-country weight and balance options give better flexibility.

[rezaf_2000]

And even if they could built quality LSA for significantly lower cost, why would they? The target market is relatively wealthy, older guys who no longer have a medical. Price is not an object for many of them.

I discussed exactly this with an economist friend of mine today. The gist of it is that the lack of medical requirements for sport pilots creates this reversed market pressure model, negating a classic six force market model. The older millionaires who would normally want to buy a new Bonanza, Cirrus, Lancair, Malibu or Mooney are forced to buy LSAs (or not fly at all), and they don't mind the higher prices. Some even prefer the prices to be higher, as they consider their aircraft purchase a luxury token of symbol / power.

It is possible that if/when the medical requirement for private pilots is lifted, this particular market segment would move back to part 23 aircraft where it truly belongs, and lift the reverse price pressure on LSAs, bringing it back to a classic market model.

[SportPilot]

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[Wm.Ince]

Some will, some won't. A lot of older guys who have been flying for years have found LSA meet the current mission and are also a lot of fun. It's a lot like older guys buying sports cars. Personally, I don't expect a change in the 3rd class medical to have much impact on LSA market share or prices. I think a lot of older guys who are currently not flying will jump back in their Cessnas and Pipers and start flying again. These are the guys who can't afford to buy an LSA and can't find one to rent.

I think the same here.
Don't think a whole lot will change, at least, for guys like me. If anything, I may move up to a nicer LSA. I like the simplicity, operator cost and automation. The Rotax 912 engine has proven itself very reliable, when compared to other standard engines.

[MrMorden]

And even if they could built quality LSA for significantly lower cost, why would they? The target market is relatively wealthy, older guys who no longer have a medical. Price is not an object for many of them.

The target market of "1%ers" that can comfortably plunk down the $150k-200k cost of a new LSA for the limited applications it has, is much less broad and deep than the market of aspiring airplane owners that could and would purchase a similar LSA for $40-70k. That alone should provide market incentive and be driving prices down, *if* it were possible.

I think given ASTM standards, FedGov regulation, price inflation, and the realities of what it takes to construct an airplane in skilled labor time plus materials and tooling, the lower cost LSA of similar quality to the big players' offerings (Flight Design, Tecnam, CAW, etc) is simply not a viable possibility.

[SportPilot]

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[MrMorden]

Don't think a whole lot will change, at least, for guys like me. If anything, I may move up to a nicer LSA. I like the simplicity, operator cost and automation. The Rotax 912 engine has proven itself very reliable, when compared to other standard engines.

Agreed, the change in regulation doesn't really affect the utility of my little airplane, nor does it change the type of flying I'm interested in (Day VFR primarily). I might upgrade to a Private certificate so that I could fly after sunset (but would still probably rarely if at all do any real night flight), but that would be about the only change.

And I also totally agree on the Rotax 912. I had my first 20hrs behind an O-200, the rest has been all Rotax. I love the simplicity and reliability of the Rotax...it runs cool, adjusts its own mixture, and has a 2000hr TBO. What's not to love?

[MrMorden]

Agreed. If it was possible, someone would be going after that market segment.

And there are many such planes...they are just "some assembly required" E-AB kits.

[rezaf_2000]

And even if they could built quality LSA for significantly lower cost, why would they? The target market is relatively wealthy, older guys who no longer have a medical. Price is not an object for many of them.

The target market of "1%ers" that can comfortably plunk down the $150k-200k cost of a new LSA for the limited applications it has, is much less broad and deep than the market of aspiring airplane owners that could and would purchase a similar LSA for $40-70k. That alone should provide market incentive and be driving prices down, *if* it were possible.

I think given ASTM standards, FedGov regulation, price inflation, and the realities of what it takes to construct an airplane in skilled labor time plus materials and tooling, the lower cost LSA of similar quality to the big players' offerings (Flight Design, Tecnam, CAW, etc) is simply not a viable possibility.

One can argue that the lack of medical for sports pilots created a subsidy for LSA manufacturers by pushing the older affluent pilots from part 23 to LSA. But that subsidy mostly works on the higher end of the price spectrum, resulting in today's reverse market.

I can see two possible outcomes from the medical reform, and the subsequent migration of the "1%ers" back to part 23, which might lessen or remove the high-end LSA subsidy. Either the market forces will push the LSA manufacturers to move down in price to what the middle class can afford, or if it is not possible for them due to various necessary costs, get out of the business. Probably we will see both, with some of the smaller one-airplane-at-a-time manufactures going out, and a few larger ones remain and become more competitive.

[SportPilot]

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[rgstubbsjr]

Mark,
Was this the real P92 or the half P92?
Since I'm a hardcore P92 pilot, and the P92 has been taken back by the owner, I'm very interested in finding a more permanent solution.

Glenn

[dstclair]

I can see two possible outcomes from the medical reform, and the subsequent migration of the "1%ers" back to part 23, which might lessen or remove the high-end LSA subsidy. Either the market forces will push the LSA manufacturers to move down in price to what the middle class can afford, or if it is not possible for them due to various necessary costs, get out of the business. Probably we will see both, with some of the smaller one-airplane-at-a-time manufactures going out, and a few larger ones remain and become more competitive.

This argument makes the assumption that the LSA manufacturers have set an high price due to solely to market demand. Unfortunately, that is not the case as the raw materials and equipment to build the planes adds up to a high number which is the main driver for the pricing. Also, you're ignoring the global market which does not have the SP subsidy (as you put it). The LSA's produced by the European manufacturers sell for the same price (assuming same equipment) regardless of the location of the buyer. For some manufacturers, the US is not that major source of sales.

As was noted earlier, you cannot compare the volume manufacturing of automobiles to airplanes. Even in the heyday of aviation, there were only 10 of thousands of piston planes produced per year across all manufacturers. This volume would never support the investment required to gain automotive-type efficiencies.

[Mark Gregor]

Happy to see this has generated discussion!

Brian,
I believe that most potential customers who purchase have either already decided on LSA, they are not intrested in heavy IFR anymore or are sport/private pilots who do not intend to fly IFR. Some are stepping down to fun flying for enjoyment and some are just getting their feet wet as pilots and want an airplane that is modern.

The ustomers who buy are definitely in better financial position than average and are used to nice things. They do not have any interest in a 40 year old cessna with falling down orange or green interior. Most don't have the full $200,000 laying around either. Many take a loan but have money for a good down Pmt.

So really our competition usually is other LSA and not part 23 aircraft. Few can afford a new LSA but when compared to a new part 23 LSAs are a bargain.

Rezaf,

I don't think it is possible for LSA prices to come down. The economies of scale are not there.
I don't believe changing the medical will make a big difference either. People like small LSA aircraft because they are fun to fly, modern and a great value compared to a new part 23. If I could choose to fly any airplane today the P2008 would be my first choice if the weather is not IFR.

Mark

[Mark Gregor]

Flocker,

I think best way to see Tecnam US sales is to look at GAMA reports. I could
give you our sales but someone would Probably argue it. GAMA is a respected source.


I could email the presentation if you want but basically what it said was the savings in fuel (both total gallons used and cost per gallon of car gas vs 100L ) and the savings in maintainance ($1000.00 annuals vs average annual and eventual overhaul cost for a $45,000 cessna) that the cost of ownership was actually less on the Tecnam.
The conclusion was if you only need two seats and had access to capital for the higher initial upfront cost you would be money ahead in the long run with a new airplane! The point being that most underestimate the much higher ownership costs (as Brian said) of legacy aircraft when comparing to new LSA.

I believe the highest gross weight for the P2008 in another country is 750kg.

Mark

[Mark Gregor]

rgstubbsjr,

not quite sure what you mean when you say " 1/2 P92 "?
Do you mean the echo classic light?

Mark