Sales Are Up, Planemakers Are Happy

By nearly all accounts, 2006 will go down as a banner year for general aviation. Sales of GA planes remain healthy, with a varied selection of capable aircraft. You likely won't find many new plane owners complaining they couldn't find just what they were looking for. (Whether it was available at the price they were looking for is a different matter.)

Even in the face of ever-climbing fuel prices, buyers don't seem to be put off too much by sticker shock, if GAMA's year-to-date numbers for 2006 are an indication. People are buying, planes have little chance to collect dust on dealer lots... manufacturers are happy.

Not all is well, though. Several issues are just over the horizon that could tank -- I'll say it again, TANK -- the latest GA boom.

Most visible is the impending FAA funding battle... but there are very real concerns also about attracting new pilots to the fold, and insuring they are properly trained. As the baby boomer generation has aged, so has the pilot community... and we're not bringing in new bodies anywhere quickly enough. Yet.

The issue of pilot safety also looms large. The GA community was hit this year with several high-profile accidents... and now more than ever, the "general" media is paying VERY close attention to any and all aviation-related incidents and mishaps. All one needs to do is set up a news alert for "plane crash"... your inbox will be flooded with reports. All day. Every day.

There is also the question of new technologies. The dawning of the 21st century brought with it a plethora of new and innovative products for the general aviation pilot. Glass cockpits, GPS, TAWS, TCAS, ballistic parachutes... the list goes on. Perhaps it is to be expected that 2006 saw relatively little true innovation in the GA segment, after such a flood of new technology.

If there's one thing history shows us, though, it's that if the GA market doesn't innovate... it WILL stagnate, and sales will plummet as a result.

Over the next several days, Aero-News will consider key issues that impacted general aviation in 2006. We will also examine how GA is working to bring new pilots into the fold... and whether those efforts are having an impact.

Today, we'll look at the multitude of factors influencing sales of general aviation aircraft for 2006... and how those issues will affect the future.

Sales

Ponder this number for a moment: 2,842.

That is number of new aircraft sold and delivered through the first nine months of 2006, according to the General Aviation Manufacturers Association. If deliveries over the last three months track proportionally -- GAMA's annual numbers typically come out in February -- we will see a 3,700-plus-sales year. That would be around 200 planes greater than last year.

Anyway you slice it, that's good news. GREAT news, even. To paraphrase Monty Python,  a cause for much rejoicing. (Yay...)

The potential for future trouble, however, begins with one question: who are the pilots that are buying and flying these planes?

By a significant majority, they're existing pilots, who are upgrading to newer and/or more capable aircraft. While there is evidence more and more newly-minted pilots are springing for new airplanes, too... by most accounts they're still a relatively small percentage of the market.

The fact is, is that there are still far more older pilots than new ones coming into the fold... so it stands to reason that as those pilots age, there will be fewer buyers for new aircraft available. That should be setting off alarm bells all over the industry.

That's not to say the training segment hasn't contributed to the robust sales totals, however. Sales of training-segment aircraft -- Cessna 172s, Piper Arrows, and to a lesser extent, Cirrus SR20s -- have experienced a surge in sales, as pilot schools and training programs move to upgrade their fleets to technologically advanced aircraft, or TAA's. After those new fleets of glass-cockpit aircraft are in place, though, it's unlikely we'll see such large numbers in that segment for many years to come. Yes, those programs will still need to replace high-time aircraft... unless demand tapers off, forcing schools to retain higher-time planes.

Case in point: the late-70s-vintage Skyhawk I soloed in a few years ago had well over 8,000 hours on the Hobbs. It was a remnant from the last real GA buying boom. The fact it was still around in 2003 wasn't just a statement to the robustness of the C712; it was a matter of economic necessity. My flight school just didn't have enough students to warrant the purchase of a newer plane. 

Even as most flight schools report a healthy influx of new students (alas, only a small percentage of those students complete their training) it would still be naive to think the training segment won't experience some kind of fallout in the near future. It's simply the cyclical nature of the game.

Another factor that has influenced GA sales is the increase in fractional ownership programs. As ANN's Special Report on fractionals shows, more and more private pilots are opting for that route -- purchasing a small stake in a fleet of similar aircraft, versus sole ownership of one plane. The potential benefits of these programs are obvious: it allows a pilot to amortize many of the high costs of aircraft ownership, such as maintenance and insurance. It also allows pilots to fly newer, more advanced planes.

Similar to the impact the training segment has had on GA sales, fractional ownership programs such as AirShares Elite, OurPlane and iFly have invested heavily in new aircraft in the past several years. When that particular market levels off, though (and there are signs we're nearing, or may even be past, the saturation point for frax programs), those sales will inevitably decline.

Unless there continues to be sufficient reason for fractional providers to upgrade their aircraft -- think of the high-time/high-demand issue from above -- will those companies continue to buy new planes as voraciously as they have in the past three years? It is doubtful... unless, that is, general aviation manufacturers are able to continually improve their offerings, to keep interest high.

Coming Wednesday: Innovation, And Lack Thereof, In GA Aircraft For 2006

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