Sat, Mar 20, 2010
Expects Sales To Pick Up Mid-Year, LSA's May Lag
After three years of plummeting deliveries, the piston-powered
fixed-wing segment is now well poised to outpace other categories
for the next several years, according to one avaiation analyst.
"This is great news for what many thought was general aviation's
most downtrodden category," says aviation market advisor Brian
Foley (pictured). "Worldwide piston deliveries had dropped 65% over
3 years, falling to 965 units in 2009. To put that into
perspective, that's fewer units than Cessna alone delivered in 2006
if you include the former Columbia line."
Foley contends that piston and turbine delivery trends respond
to different market factors and can actually be
counter-cyclic. In the wake of 9/11, for example, piston
deliveries for 2002 fell by only 4% vs. 34% for turboprops and 14%
for jets. In 2003, piston deliveries regained 10% while the turbine
segment continued to contract dramatically. This relative picture
began to change in 2007 as turbines kept growing and pistons
shrank. "The piston segment tends to be more price-elastic," Foley
explained. "When avgas hit $6 a gallon, buyers felt it in their own
wallets. Then the stock and credit markets collapsed, compromising
buyers' personal portfolios and credit lines and making the
purchase of, say, a $250,000 aircraft even harder." By 2008
piston deliveries had fallen off another 21% while turboprops and
jets continued their ascent, climbing another 16% into positive
territory. Pistons plunged another 55% in 2009.
While acknowledging that piston sales haven't properly resumed
quite yet, Foley expects they will pick up around mid-year as a
combination of pent-up demand, improved personal balance sheets and
increased credit availability will combine to energize the
marketplace. Turboprops and jets will continue languishing,
but piston deliveries could possibly see a double-digit percentage
jump, albeit from depressed 2009 levels. Moreover, this
growth should last at least a couple of years. This is good
news for a segment that had literally nowhere else to go but up,
and will benefit general aviation as a whole. However, while the
piston fixed-wing segment averages some 60% of all general aviation
unit deliveries, its share by value is just 25%.
Foley is less sanguine for the subcategory of Light Sport
Aircraft (LSA). "These businesses must rely on volume to provide
expected margins," Foley noted. "But for the moment their necessary
sales in this unproven category will be hard to come by, especially
with so many competing players."
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