Have we seen the last clean sheet piston airplane design?
It’s a fair question given the current state of affairs. Faced with nonexistent demand, the high cost of certification and the declining availability of avgas, most airframe manufacturers have made the rational decision to squeeze more out of their existing line rather than invest in all-new models. It’s hard to see this changing anytime soon, either, because the economics simply don’t work. With piston airplane sales in the tank, airframe manufacturers have fewer and fewer units over which to spread the huge costs of certification and liability. Toyota can drop $100 million on a new Camry because it can amortize that investment over 300,000 cars per year; Cessna sells fewer than 500 units per year.
The result is a series of fairly safe, derivative models, like the Piper Matrix or the 5th generation Cirrus. While I would love to own a new Cirrus, it’s not radically different from the SR20 that was first introduced 15 years ago. For comparison, 15 years after introducing the 172, Cessna launched the Citation jet. That’s not meant as a criticism (Cirrus is more innovative than almost any other manufacturer) but it does show how dramatically the market has changed.
While these derivative models make economic sense in the short term, they present some major problems in the long term. Most significantly, used airplanes compete very well against new ones.
Start with the prices, which are simply breathtaking. A new Beech Baron is $1.3 million, a Cirrus SR22 is over $700,000 and even the everyman Cessna 172 pushes $300,000. For pilots of a generation ago–not to mention the glory days of the 1970s–these prices look outrageous. But as any aircraft salesman will tell you, these high prices aren’t leading to big profits. That Baron may cost a lot of money, but Beechcraft only recently emerged from bankruptcy. Likewise, Cessna has cut its staff by over 50% and is a shadow of its former self. Manufacturers are selling airplanes at higher prices than ever, but making less money than ever.
What’s going on here? As you would expect, the law of supply and demand is at work. In the new airplane market, demand drives prices–as buyers for new airplanes have disappeared, prices have gone up. The only good news is that, in the used airplane market, supply has more to do with prices than demand. And right now there is a lot of supply.
That glut of used airplanes has led to some great values. For example, a well-equipped Baron from the 1980s costs under $200,000, a savings of over 80% compared to new. Certainly that new Baron is a beautiful thing, with a G1000 glass cockpit, a gorgeous interior and zero time on the airframe. But the used Baron still carries the same load (if not more), goes just as fast and burns the same amount of fuel. It may not be brand new, but it’s certainly not 80% less airplane. The story is the same for the SR22 (under $250,000 for one with WAAS, air conditioning and a new autopilot) and for the Cessna 172 (good ones around $50,000).
Because these used airplanes are such a good value, you can buy one, completely overhaul it and still save 50% over a new airplane. I was involved with an airplane like this a number of years ago, and it’s one of the finest airplanes I’ve ever flown. By the time we were done, our Cessna 210 had a brand new engine, new paint, new interior, all-new avionics and even a FIKI deice system. It could haul four adults and bags over 600 miles at 160 knots in all kinds of weather–and it cost less than a new 172.
Individual pilots have done these overhaul projects for years, but recently a number of new companies are starting to make big business out of it. Nextant Aerospace has found success with its 400XT, a re-engined Beechjet 400 that competes head-on with Cessna’s brand new line of CJs. Even Beechcraft, the original manufacturer of the Beechjet 400, has launched an overhaul program. It’s the first time I can remember a major aircraft manufacturer closing its new production line but launching a refurbishment program for the same model.
Likewise, former Cessna CEO Jack Pelton has launched the Aviation Alliance, which will offer the Excalibur 421. This features the airframe of a Cessna 421, but adds PT-6 turboprop engines for a 300 knot cruise speed, making it at least 50 knots faster than a new King Air 90 for $1 million less.
It may sound defeatist to some, but I think these remans could be an important path forward for general aviation. While I’d love to see Cessna introduce an all-new cabin class twin turboprop, the likelihood of that happening in 2013 is virtually zero. But with the Excalibur 421, pilots can have both good performance and good value, and they don’t have to wait on a decade-long certification process. That’s real progress, even if it’s not a “new” airplane.
The idea of remanufactured airplanes certainly isn’t new. Companies like O&N Aircraft and JetProp have been doing this for years. What’s different this time is the spread between new and used airplane prices, which is widening every year. That makes these remans a lot more attractive to both the companies that do them and the pilots that fly them. It’s not hard to imagine a similar program for 182s or Saratogas.
Airplanes are ideal candidates for this kind of work, since they can be retrofitted far more easily and extensively than cars or boats. They’re more like houses, which can be updated to look new even 100 years after being built. Nobody considers a 30 year old house to be obsolete, and neither should we consider a 1978 Cessna to be past its prime.
The huge number of airplanes that were delivered in the 1970s and 1980s helps too, offering a large pool of airframes that are candidates for remanufacture. With nearly 2,000 Cessna 421s delivered, the Aviation Alliance could sell 200 Excalibur 421s (surely a home run at that number) and still only use 10% of the fleet. Cessna shipped over 40,000 copies of the 172 over the years–just imagine what could be done with those.
General aviation isn’t dying, it’s just changing, and our view of what a “new airplane” is needs to change too. It’s time to stop looking at used airplanes as fading relics, and start looking at them as a path forward to more affordable airplane ownership.
What do you think? Would you feel as good in a remanufactured, 30-year old airplane as you would in a brand new airplane? What if it were 50% less than the new airplane? Add your comment below.