Do new airplanes cost too much? Yes and no.
YES AND NO. HERE’S WHAT IT MEANS FOR GENERAL AVIATION’S FUTURE.
Why are new light airplanes so expensive? People have been asking this question for, oh, about the past 40 years. Meanwhile, prices for new airplanes keep rising while delivery numbers mostly stagnate.
Experts blame ever-increasing airplane prices on lots of things, from high production costs to the expense of litigating accident lawsuits to the improved avionics and more powerful engines found in new airplanes today. These factors all matter, of course, but they tell only part of the story.
In 1968, median household income was $12,000, a new car cost an average of $3,200 and a Cessna Skyhawk sold for about $16,000. Today, median income is $58,000, the average new car sells for $26,000 and a Cessna Skyhawk can be had for about $370,000. This is easy math. The price of a new car used to represent about three months of income — now it’s closer to six months. The price of a new airplane like a Cessna Skyhawk in 1968 took 16 months to buy, where today it takes six years to purchase.
Clearly, airplane prices have far outstripped general inflation. When we start looking at the underlying reasons why (and what it might mean for aircraft prices in the future) we reach some less than warm and fuzzy conclusions. But are airplanes too expensive? Put another way, should they cost less?
If we compare the prices of airplanes not with dollars but instead using some commodity — say, aluminum, which has been used in the production of a Cessna Skyhawk since the beginning — the resulting historical pricing charts do not show a similar upward trajectory, notes Philip Hersch, a professor of economics at Wichita State University, who explains that rising input prices without offsetting increases in productivity will inevitably result in higher prices — exactly what we’ve seen over a number of decades.
In 1968, the M2 money supply in the United States stood at $486.4 billion. By 2018, it had risen to $13.95 trillion, an increase of 2,768 percent — curiously, that’s very close to the percentage increase for a new light airplane like a Cessna Skyhawk since 1968. All those new dollars flooding into the economy have steadily bid up the cost of aircraft production, which is still based on similar land, material and labor needs as existed then.
The bottom line? Airplanes today cost about what they should. If we want cheaper airplanes we’ll need to dramatically change how we build them by reducing the costs of production, materials and labor. There are no easy answers for how to do that. The Part 23 rewrite of light aircraft certification rules had the goal of putting a lid on prices for new light GA airplanes by dramatically reducing the costs of certification. So far, we’ve seen some indications that prices for avionics are falling, but the market hasn’t miraculously blossomed with the promise of inexpensive new light GA airplanes as we all predicted (OK, hoped) would happen when light-sport aircraft rules took effect several years ago. We know how that turned out.
It’s starting to feel like general aviation is reaching a tipping point. If prices for new light airplanes keep accelerating beyond what even a buyer of above-average means can comfortably afford while the pool of used airplanes built in the 1960s and 1970s continues to age, what will happen to the lightaircraft manufacturing industry a few short years from now when new light airplanes are even more difficult to attain — or simply out of production?