Do new air­planes cost too much? Yes and no.


Flying - - CONTENTS - By Stephen Pope

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?

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