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Are new planes more expensive relative to incomes?

Silvaire wrote:

The reason for that is that today (as opposed to the 50s and 60s) there is huge inventory of older planes that will do the job just as well. They never wore out, just accumulated, and it will be a long time before they do. The world only needs so many light planes!

We could all be driving 1950s cars today like on Cuba. They last as long as airplanes, if they get similar care. That argument I don’t really buy. We would actually be driving 1950s cars if the car industry was like the airplane industry and innovation basically stopped. I don’t have to think long in how a 2013 car is better than a 1985 car (taking used market prices into account) but for GA aircraft it’s not so clear.

The main trend is the decline in the pilot population. The peak was in the late 70s and it’s been declining ever since. As an entrepreneur, always follow one golden rule: stay away from stagnant or declining markets, not the right game to be in. Even if you’re good, you won’t get very far.

I’m a consumer of fun in my flying, not an entrepreneur, and I’m not trying to ride any wave unless it happens to come by chance. I have spent my life buying from declining and stagnant markets, enjoying the real world. I’ve bought 15 year old Italian sport bikes when everybody else was buying Japanese, and classic aircraft when everybody else was into new homebuilts. That’s how you have fun for less money, assuming you can make money doing something else. I’ve sure had a lot of fun and saved a lot of money. I’ve even made money on occasion, purely by luck and buying stuff that is out of phase with trends – a motorcycle I paid $5700 for is now worth $30,200 (an identical one sold for that on EBay last week). A friend who similarly collected Alfa Romeos nobody wanted since the early 70s finds himself with $200K of cars in 2015. You can avoid being a trendoid for fun and profit… avoiding being a trendoid is just a small side benefit

PS I have recently had an offer accepted to buy a nice house on a hill for 3.72 years gross salary. I’m feeling OK about it

Last Edited by Silvaire at 09 Aug 15:40

Well, I am still on Windows XP, Photoshop CS3 and ACDSEE 5 (came free on a magazine cover in 2005) so must be doing something right

Re aircraft, I wonder what % of the price inflation is accounted for by the fancy avionics? IOW, has there been a transfer of wealth from owners to (mainly) Garmin? I don’t know the OEM prices for say a G1000 with all the options like SV but it’s certainly 5 digits.

Administrator
Shoreham EGKA, United Kingdom

Not being trendoid works well with cars and bikes as there is a whole support industry subsidised by people who think a car without a choke and a non sync-ed gearbox is actually a good thing. Fighting against trend in airplanes will kill off whatever non-trendoids are left with 100% certainty.

I’m guess I’m just too unintelligent to understand why fighting the market and discouraging people from living in the real world of inexpensive, practical aviation is a good thing I do hope however that’ll I’ll be enjoying the beautiful view from my ‘new’ house and flying my two aircraft, valued at $60K combined, for a while longer until the final apocalypse arrives.

It’s a great time to buy and own an aircraft.

Last Edited by Silvaire at 09 Aug 16:06

Shorrick_Mk2 wrote:

Fighting against trend in airplanes will kill off whatever non-trendoids are left with 100% certainty.

Explains very well why there is only one company left doing certified piston planes in (according to today’s standards) significant numbers: Cirrus. They focused on what is trendy, put in what is considered to be major innovation (chute, G1000).

Silvaire wrote:

It’s a great time to buy and own an aircraft.

Well, your taste is not exactly mainstream and not really the key to success for the industry. BMW don’t operate a financially successful motorbike business because you drive 1960s bikes. This thread had a more macro economical question. If old things last forever and are just as good as new and the demand is shrinking, well then there is no room for any industry at all. No evolution either.

Last Edited by achimha at 09 Aug 16:14

Fighting against trend in airplanes will kill off whatever non-trendoids are left with 100% certainty.

Actually, when I used to rent out my TB20, I found that a fair % of airline pilots flew GA but nearly all of them hated IFR – they flew really basic rag and tube types mostly, and some more sophisticated homebuilts like RVs.

Aviation is very diverse.

To establish price trends one has to compare type for type and that isn’t easy because today’s new IFR tourers are packed with stuff which wasn’t there in say 1975, and which must cost a fair bit of money. There wasn’t a $800k SR22 back then. There were other types but even say a top Mooney model, while looking very close to their latest models 40 years later, didn’t have the eye candy which it would have today.

If old things last forever and are just as good as new and the demand is shrinking

Well, only the last one is true.

Old things definitely don’t last for ever, except at a very basic level and only in Arizona. Elsewhere, airframe corrosion will eventually ensure it is scrapped. That’s probably why the C150/152 fleet is shrinking, despite its popularity in the school business. I have seen quite a number so corroded they were not worth repairing yet again. The engine will go for ever…

As good as new… probably fine for a % of users. As I say, the community is very diverse.

Administrator
Shoreham EGKA, United Kingdom

Aviation certainly is a diverse thing, and that’s great. What is so often true about those who advocate ‘progress’ is that they want to eliminate that diversity, and kill off the underpinning of the activity as it actually exists in the real world market that is wiser than they are.

Achimha, my motorcycles are from 1974-2001 production, but if I saw a new one I liked I’d buy it. The latest MV Agusta Turismo Veloce is interesting – which accounted for my stop at Schiranna in June… That stop didn’t work out the way I’d hoped (the factory was closed) but at least I had a look at the airfield there (Calcinate del Pesce), and the place where Macchi once operated. I have friends who work for BMW, both in Munich and in the U.S., but nothing they make today interests me.

Peter, all that corrosion can be and is fixed, on aircraft that are interesting and simple enough to make it worthwhile. Tube and rag also has its benefits in that regard – the prosaic Tripacer and its cousins will doubtless live forever, rebuilt as they are when needed. The problem for GA in Europe is Europe, mainly oppressive rules and lack of hangars. But OTOH it’s the best place in the world to ride a motorcycle.

Last Edited by Silvaire at 09 Aug 17:00

Activity “as it exists in the world market” is the way it is because the lack of progress. Did the cat exhaust kill the car industry? No – in spite of what american manufacturers would have had you believe.

Progress, if anything, brings more diversity, not less. Ask that Darwin dude. Or that Moore dude.

Old houses (second hand, third hand, whatever) varies all over the scale, the price being almost exclusively a result of geographic location. New houses on the other hand are more independent of location. They cost the same, and only varies with the cost of land (which varies a lot though). For a family to build a new (family) house today is impossible without two incomes and 30 years payment. 40 years ago it was done with one income, and payed within 20 years. The standard is better today, but so are also the standard of mobile phones, TVs, PCs The demand will always be there though, people need homes.

For GA I don’t buy the demand arguments – at all. When the price doubles or triples (in relative terms), of course the demand goes down the drain. Maybe a chicken and egg problem, but the solution is simple and obvious. Why doesn’t anyone solve this chicken and egg problem? Why doesn’t anyone show the slightest interest in solving it? We all know the reason, to that. Just about any and all investments are better than investing in light GA. It is a capital based problem, investing there is like throwing money out the window. There just isn’t enough people around anymore with enough money to spend, to make GA a lucrative business for capital interests. That is the reason.

What has happened is a more or less underground movement has grown up. Experimental in the US and microlight/experimentals in Europe. A perfectly good microlight, for instance the Aeropract A22 is in high demand all over Europe despite the lack of utility. It doesn’t cost €300k, but €50k. The reason for the price is of course it is made in Ukraine and not in the “old” western part of Europe, together with much relaxed certification (practically none at most places) so it can be fabricated cheaply. Also, people have time to fiddle with these things in their spare time, building and maintaining their own airplanes. A whole new industry of small companies has popped up, producing all kinds of aircraft related parts, equipment and services.

The elephant is the circulation
ENVA ENOP ENMO, Norway
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