Sport Pilot Talk

The summary of 2011 LSA U.S. sales is now available, for those who haven't already taken a look.

http://www.bydanjohnson.com/index.cfm?b=1&m=5&i=39

You have to look at the bottom chart to get 2011's sales results. For the sake of soliciting discussion on the current state of LSA sales, here's my take:

Big Cessna & small Cubcrafters both made enough sales to carry on in 2012. Flight Design & Czech Sport have international sales to supplement the USA sales (altho' both sets of sales numbers are underwhelming) and its easy to imagine them carrying on into 2012. Pete Krotje's shop in Shelbyville seems likely to continue because they assemble both the Arion & Jabiru models along with individual build projects brought to them by kit buyers. So...that's five LSA manufacturers that seem validated by the 2011 sales numbers. Each of the other manufacturers (or USA distributors) are building at a rate of less than 10 a/c per year - actually, far less. For those who sell kits into the E-AB market (such as RANS, which only sold 4 S-LSA's in all of 2011), their combined sales might keep them afloat. But one wonders: For each of the builders on that list, how few LSA a/c can they sell in 2012 and remain viable?

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Jack
RAF Florida State Liaison
Please visit www.theraf.org

Hi Jack,

It's nice to be able to see who is doing what and how well. I do know the chart is off in some of its numbers. For example where they list the Flight Design at 341 aircraft here in the US I know it is 360. I know Airtime Aviation in Tulsa (FD distributor) has the next three coming in very shortly already sold and a couple after that on the next order. From talking to a couple of distributors things seem to be picking up slowly. Like you stated to that some may not survive a lot longer. If they don't make enough sales or parts sales they will have to close their doors. What is misleading about Cessna is that it forced many dealers to buy one so it's hard to determine how many are in private hands.

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Roger Lee
Tucson, Az.
Light Sport Repairman - Maint. Rated
Rotax Repair Center - Heavy Maint Rated
(520) 574-1080 (Home) Try Home First.
(520) 349-7056 (Cell)

I'm a little dismayed to see X-Air doing poorly (if at all), especially by comparison with Aerotrek. I know that their Indian backer sells kits worldwide, so perhaps it's not the end of the road, but still, it's disappointing. I tend to look at cheaper airplanes.

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http://zaitcev.mee.nu/

It all depends on what definition you use, Roger. As Dan says:

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The opinions expressed in this post are those of one CFI, and do not necessarily represent the position of the FAA or its lawyers.
Prof. H. Paul Shuch, Ph.D., CFII, LSRM-A/GL/WS
AvSport of Lock Haven
http://AvSport.org fly@AvSport.org

Roger's point...

"What is misleading about Cessna is that it forced many dealers to buy one so it's hard to determine how many are in private hands."

...has been mentioned before when we've discussed LSA sales, since new dealerships (for both newly approved and introduced models and dealerships new to an existing line) must populate their inventory with orders. OTOH over any extended period of time, these 'dealer sales' numbers have been small enough that they fail to mask the ongoing lack of sales of many models. Or at least that's my take when I look at the sales numbers.

Tough, tough business to be in, it seems to me.

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Jack
RAF Florida State Liaison
Please visit www.theraf.org

And not just LSA in particular. Aviation in general.

_________________
The opinions expressed in this post are those of one CFI, and do not necessarily represent the position of the FAA or its lawyers.
Prof. H. Paul Shuch, Ph.D., CFII, LSRM-A/GL/WS
AvSport of Lock Haven
http://AvSport.org fly@AvSport.org

Aviation is an expensive acitvity, always has been, and always will be, no matter in what itterration you participate. Even Part 103 flying is relatively expensive compared to most things filling people's leisure time.

"COMPANIES" in the aviation segment always are slaved to the current economy. Very few aviation companies do much more than "make ends meet," unless they are Defense-related. In times of economic austerity, recreational aviation almost comes to a complete standstill. Survival for these companies is dependent on how quickly they can shrink their operational costs. Being deeply in debt is also a contribution to their failures.

The bright side is ...no economy has "tubed" and stayed there! It always comes back up. It IS a roller-coaster ride though. If I wanted stability and steadiness for myself and my family, I would not choose recreational aviation as my source of income.

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Bryan Cobb
Sport Pilot CFI
Commercial/Instrument Airplane
Commercial Rotorcraft Helicopter
Cartersville, Ga
bryandcobb@att.net

Another issue to consider regarding survivability of a company is whether they are a private company or publiclly traded.

In the RV / Motorhome industry several large companies went out of business during the recession (stockholders to satisfy), while some smaller privately owned companies could keep their losses private, sell land, or do whatever they had to do to "bite the bullet" and keep their company going during hard times.

Key question... big company or small... How strong is the manufacturer's commitment to LSA during a tough economy? Are they able to keep the product alive during hard times?

Cirrus & Piper were not willing (or able) to take the hit in being committed to LSA in this economy. Some smaller companies could not survive. Others are sticking it out. Maybe a few are actually making a profit and/or building something for the future... but it takes a lot of commitment to stay with it in this economy, for sure!

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Richard, Student Sport Pilot
Magazine Quality Photography and Imaging
http://www.agreatimage.com

We all know about the dealers who had to buy the 162. Check online and you will a lot of them up for sale!

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Marcus - WA2DCI
PP ASEL IA

Daidalos Greek: Δαίδαλος
Remember don't fly too close to the Sun.

GAMA just released the 2011 GA sales which showed a grand total of 668 piston aircraft manufactured in the US (860 globally). 121 of the piston aircraft were twins. There isn't a report for where delivery was taken so, for the sake of argument, we can assume the US pistons stayed domestic and that twins were proportionate to the worldwide population so ~100 probably are domestic. This leaves 558 new Part 23 singles delivered in the US as compared to 280 S-LSAs. In other words, LSA constitutes 1/3 of the US single market in units sold.

Looking deeper into the numbers shows GA revenue is actually flat to growing but the market that is driving the growth are the higher profit turbines and jets. Given these are for-profit companies, it is unlikely investments are going to grow in the low profit products.

Interesting possibility is that over time, LSA may become the predominate new single on the market. It may actually be a benefit that many LSA manufacturers are small and/or not publicly traded which allows them more liberty in their profit goals.

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dave

Dave, thanks for the heads up on 2011 data. It would be helpful if you added a link since GAMA's numbers may (I'm guessing here...) be incomplete. E.g.:
-- Were these 'GA Sales' solely domestic? Or total sales, foreign & domestic (sometimes referred to as 'Registrations & Shipments'). I'm betting GAMA's piston singe & twin numbers come off the FAA registration docket, which would preclude foreign sales. This would mean GAMA's numbers might be more indicative of U.S. GA's health than a/c manufacturer's health.
-- I'm also assuming GAMA's numbers are for FAA Certified a/c and don't reflect new registrations of Experimentals. As I recall, new Experimental registrations exceeded new Certified sales in 2010 with the trend being that this gap is widening. As we know, almost all Experimentals are piston singles. Complicating this, of course, is the fact a builder can seek a registration number before the build is complete, so the better measure is number of Airworthiness Certificates issued to Experimentals. It gets hard to count apples with other apples.

I think you mentioned your other point before: That publicly owned, for profit aviation manufacturers may have less latitude in continuing to build currently unprofitable piston singles while some LSA manufacturers are funded with private equity and may have more flexibility. I have to say I disagree with this as a general premise. (We can leave out the 'for profit' qualifier since publicly traded and private owned a/c manufacturers are all 'for profit' enterprises). What you say may be true in the case where a Piper is financially supported by the equivalent of a large equity investor (Govt. of Brunei as I recall), at least so long as that investment pleases the Sultans' financial advisors. But I don't think it's necessarily true for a diversified company like Textron and its a/c manufacturer, Cessna, which can benefit from workforce flexibility, shared overhead costs, a stronger credit rating and lower financing costs, and other economies of scale. In such cases, it's reasonable to represent a barely profitable product (like the Skycatcher) as having value beyond the bottom line, e.g. in supporting a nation-wide dealer network that may value a broad product inventory due to diverse training needs. OTOH many small, privately owned LSA manufacturers are not diversified and solely dependent on the health & size of the LSA market and also on their ability of their product to compete successfully for sales. These small manufacturers are wholly dependent on private equity's view of their ongoing profit potential, and this may be only one or a few investors. I see that circumstance being the less certain one.

It may be most accurate to say that, in an industry that's had weak sales (outside the high-end turbine market) for many years, the survivability of each manufacturer is dependent on a number of critical variables and no generalization fits neatly.

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Jack
RAF Florida State Liaison
Please visit www.theraf.org

Exactly All generalizations are untrue. Absolutely!

_________________
The opinions expressed in this post are those of one CFI, and do not necessarily represent the position of the FAA or its lawyers.
Prof. H. Paul Shuch, Ph.D., CFII, LSRM-A/GL/WS
AvSport of Lock Haven
http://AvSport.org fly@AvSport.org

Jack,

The GAMA numbers are indeed shipments so I agree the number is more indicative of the manufacturer than the market. I did an educated approximation on the destination market by looking at the US exports/Global Shipments/US Shipments.

The link is: http://www.gama.aero/files/GAMA_DATABOOK_2011_web_0.pdf.

There are all sorts of aviation data from shipments, to aviation safety to pilots to forecasts. Mark Twain would have a field day....

I did not include EAB in my prior post although EAB and LSA are included in some of the stats. An interesting table (chapter 5) show the total US piston singles, Experimental and LSA (E and S) with forecasts for the next twenty years. GA singles are forecast to stay flat at around 145K total active planes. Experimental is forecasted to grow 1.5% from 25K to 33K while LSA has growth of 3% from 7K to 14K. Basically, shows the number of active singles will grow marginally with the mix of EAB/LSA increasing slightly faster than market growth.

Two other interesting data points. Jets are the forecast to be the fastest growing sector and the GA active singles actually decrease over the next dozen years or so then start slowly growing. This dip corresponds with the forecast of decreasing pilot population for the next decade or so.

We'll have to agree to disagree on Textron The flat market forseen for singles, lower total profit and, most likely, lower profitability does not typically bode well for large corporations to stay in that market especially when other markets they already serve are more profitable and are growing. I can't see that Cessna continuing to crank out 172/182's will do anything to increase the sales of Mustangs. I see this as a fairly high opportunity cost. But that's just me and I don't think Scott Donnelly is going to ask my advice

I do wonder how much Flight Design's C4 will eat into the ~175/annual Cessna 172/182 sales going forward. If The C4 comes in at it's target prices and performance numbers, it will be 30% less than a 172, faster than 182 (non-Turbo), same payload as a 182 and burn less than 10 gph.

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dave

I am surprised that nobody picked up on the fact that the Cessna 162 was the largest selling, by unit volume, aircraft in 2011, a total of 168 units.

However, with the recently announced price increase, will the sales volumes hold in 2012. My suspicion is not.

I understand that all members of GAMA report their shipments to GAMA, these are worldwide shipments and I believe them to be accurate.

Actual numbers by aircraft type below:

http://gama.aero/files/documents/2011ShipmentReport_2.pdf

In the interest of full disclousure, I cancelled my C162 that was on order and accepted a refund from Cessna of my $5,000 deposit + 2% interest from the date they received my check in July 2007.

I have bought into a 2007 DA40 XL and am very happy with my decision.

Dave, thanks for that follow-up and the link. Lots and lots of data to massage there, even if the crystal ball it produces is IMC.

"We'll have to agree to disagree on Textron..."
Oh, I too am not sure Textron will allow Cessna to sustain the low end of its piston single product line. I was just attempting to point out that a) publicly owned manufacturing companies usually draw on broader sources of equity and enjoy economies of scale that small, private-equity fund companies lack, and so b) using the existence of publicly owned stock as an predictor of continuing production of a/c products isn't a reliable indicator. What Textron does will be what makes sense, in Textron's eyes, to Textron's critical issues.

"I do wonder how much Flight Design's C4 will eat into the ~175/annual Cessna 172/182 sales going forward. If The C4 comes in at it's target prices and performance numbers, it will be 30% less than a 172, faster than 182 (non-Turbo), same payload as a 182 and burn less than 10 gph."
I think we can assume it will impact Cessna's 172/182 sales. Seems like that's what happens almost every time over the last two decades when a new certified production a/c is introduced into the marketplace. The new product incorporates newer design and production technologies (which Cessna can't employ for their legacy a/c), it can be selectively targeted to an intentional slice of the marketplace (perhaps certain performance parameters like speed, range or mpg...or a certain price point), and that new product enjoys the splashy identity of being "New". And so another portion of the existing market is peeled off the legacy product's potential market by the new entry. It's a fundamental flaw in Cessna's marketing strategy - which they are now wedded to given the small and stagnant marketplace for piston singles - to commit to competing with legacy designs. In fairness to Cessna, their decision had its own rationale at the time: offering a widely recognized and acceptably strong, safe product to a pilot population many of whom were already familiar with it. But over time, as the demographics change and production technologies emerge, it must be like enduring a thousand paper cuts.

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Jack
RAF Florida State Liaison
Please visit www.theraf.org