Why New Airplane Prices Are So High

Cirrus SR22

The price of new general aviation airplanes has raced far ahead of inflation over the past 30 years. A number of models such as the Beech A36 Bonanza have been in continuous production over the period so it’s possible to see that airplane prices have escalated at two, three or even more times the rate of inflation.

I was at the old Reading Air Show in 1977 when Beech brought its first $100,000 Bonanza to the show. It was a V35B loaded with every option anybody could think of at the time. Old timers shook their heads in disbelief that a Bonanza price had gone up 1,250 percent in the 30 years since the airplane was introduced at $8,000.

I looked at an online inflation calculator that uses the consumer price index and it showed that the $100,000 Bonanza in 1977 would cost about $380,000 today if only inflation is considered. The reality is the A36 now costs about twice the inflated number.

The reason new airplane prices outstripped the rate of inflation is because the more expensive airplanes are what pilots will buy. Manufacturers are not dummies. They build what sells.

Like clockwork airplane manufacturers have offered lower cost versions of their airplanes, but in every case the more expensive model sold better. Often the stripped down, lower cost version had no takers and manufacturers were stuck offering an even deeper discount just to get rid of them.

One of the most extreme cost savings plans was from Mooney years ago when they offered a fixed gear version that could, at least in theory, be converted to a retractable later. It was a sales fiasco.

Cessna, always the master marketer, offered the 120 in 1945. It was a more basic version of the 140. The 120 lacked capability such as an electrical system and starter and rear windows. The more expensive 140 out sold the 120 several times over, and most 120 buyers opted to add the missing capability as options.

Later, when Cessna introduced the turbocharged version of its 210 sales of the turbo skyrocketed leaving the naturally aspirated version way behind despite the increase in price for the turbo.  When Cessna introduced the Skylane it was a more expensive version of the 182 that was still offered. The Skylane with its extensive list of standard equipment buried the 182 in sales. And on and on, so it went from each manufacturer.

As for the first $100,000 V-tail, well, Beech quit building the Model 35 Bonanza a few years later because people were buying the more expensive A36 instead. Beech resurrected the shorter body straight tail F33A Bonanza at a reduced price with no options and sold some, but preference remained with the more expensive A36.

In more recent years Cirrus has again proven that the expensive airplane outsells the lower cost version. Cirrus launched production with the SR20 at an attractive price. Not long later Cirrus rolled out the more powerful and faster SR22. Guess what. The SR22 at well over double the price out sells the SR20 four to one.

If you think about it for a moment, there is no mystery why more expensive new airplanes sell better than a cheaper version. The reason is that you buy a new airplane to get more, more of what you want. As soon as you start shopping price, the used airplane wins.

As we saw when LSA airplanes entered production the minimum price for a new airplane, even one limited to day VFR, is around $100,000–or more. And none of the LSA makers is getting rich at those prices.

For $100,000 there are lots of used airplanes available, many with great capability and performance. The reason you would buy an LSA is because it offers capability a normal used airplane can’t, such as being able to fly it with a driver’s license as medical certificate. Low cost is not the winning edge for an LSA.

Even in kit airplanes higher priced models are doing better. The Vans RV family is far and away the best selling line of airplane kits, they are excellent performers, but nobody would say they are the least expensive. And when you see most RVs it’s obvious the builder didn’t scrimp on the budget when it came to paint, interior and avionics.

Yes, the popular SR22, the best selling piston single over the past several years, costs double what the 1977 $100,000 Bonanza cost when inflation is applied. But the SR22 has a flat glass cockpit, satellite weather, traffic warning system, synthetic vision, certified ice protection, a ballistic parachute and on and on. Those are capabilities none of us dreamed of in 1977.

I’m not defending new airplane prices, they are so high most pilots can never afford one, but the alternate lowest price possible airplane just doesn’t sell. That’s why new ones cost so much.

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44 Responses to Why New Airplane Prices Are So High

  1. Kayak Jack says:

    Higher prices is what the market bears, hmm. Well, as Pogo said, “We have met the enemy, and he is us.”

  2. Allen H. says:

    My first jobs out of college in 1971 were with large, tract homebuilders. Just as Mac describes with aircraft, there was a huge transition with homes from the late 1960s through the early 1970s. From very basic homes with no appliances, carpet, tile, wallpaper, central air or heat and a one car open carport to a two car attached garage and all of the amenities listed above PLUS about 500 square feet larger. This occurred in the space of about 3-5 years in the Texas market and nationwide. Prices nearly quadrupled but the product was vastly different and no, you could no longer sell the stripped down models of homes either. Cars and many other products have followed similar paths as well. So when we look at capability, comfort and other issues in all these products, there is quite a difference in the product from decades earlier.

  3. Len A says:

    Well, that’s ONE reason why prices are so high, but not the only one,
    How about economies of scale? Back in the 100k v-tail day, Beech (and Cessna, Piper, et al) built many more units per year, driving down per-unit costs. Today almost any new plane is essentially a custom-built hand-made product. That’s pricy!
    Today’s new cars have MANY more features than those from two generations ago, but inflation-adjusted prices have changed nowhere near as much as with planes.
    Throw in liability and regulatory issues (anyone wanna guess how much certifying a new plane costs these days?) and you have a recipe for high unit costs.
    For the price of the glass in a new Skyhawk’s panel I can buy several used ‘hawks. Amazing.

  4. Hod says:

    The superficiality and lack of meaningful analysis is stunning. Hypoxia, perhaps?

    • btvdan says:

      Agreed. This article is some sort of hypoxic dilution.

    • btvdan says:

      Agreed. This is some sort of hypoxic reasoning. I think there is a very different phenomena at work. If you subtract out the price most every piece of electronics, the “basic airplane” is still profoundly expensive. The electronics itself overpriced… but any querying of the prices on this equipment makes it obvious that it is not the primary cost issue.

      Think about it this way. Audi does not produce tons of R8s. However, one can be had, brand new, starting at 115,000 dollars or so today. I think we an all agree that we would be satisfied with the quality of this low yield vehicle.

      Somehow, airplanes end up costing much more than the some of their parts.

      If a SkyHawk with a 6 pack and dual Garmin 430s cost 120 grand. People would be forming 2 and 3 person partnerships like crazy and buying them.

      Instead, we have a situation where an AC Super D costs 225,000 dollars.

      I wonder if what has happened is that it’s easier to NOT expand at all and simply charge as much as you can possibly get. This possibly happens because so many manufacturers have been bit trying to expand when the economy tanks. So, build what you can and charge what you can get… that way, your safe (or at least quite a bit more safe).

  5. Dale says:

    The article seems to apply an inverted logic to two disconnected concepts. The fact that any particular higher end model sells more than its entry model of the same class isn’t really relevant to the overall cost level of both. That’s only speaking to purchasing tendency givem an option, it’s doesn’t explain the ‘average’ high cost level of the entire model line.

    Nor do increased engine / airframe / avionic capabilities seem to bear out higher costs. Auto, commercial building, medicine, and consumer items have also vastly improved during the same time period referenced here. Indeed, until recently – one might accurately say the opposite – that airplane improvements have dramatically lagged behind almost all other market products.

    Costs are related to market-required levels of return on equity invested, priced across the number of units manufactured, over an applicable time period. It would seem at this point the certification costs for the A36 have been fully amortized and paid.

    The primary reason for high costs is low production levels, which creates the negative spiral.

    The cost disparity would also seem to explain and support Beech’s recently-referenced mfgr total refurbishment program. That’s how significant the cost difference is between new / used, to provied a market in the middle, because each provide very similar functionality.

  6. Cary Alburn says:

    Per Kayak Jack: “Well, as Pogo said, ‘We have met the enemy, and he is us.’”

    It is exactly for this reason that the pilot “data base” is dwindling. The manufacturers bow to the richest who want the “mostest”, price their products accordingly, and we little guys are left to own 50 year old airplanes because we can’t begin to afford new ones–which incidentally aren’t all that much better than ones which are half a century old, just a bit fancier cosmetically, but not faster, not more capable, sometimes not as good, but incredibly more expensive.

    But how do you convince a non-pilot to spend $10,000 to become a fledgling pilot, train him/her in a ratty-looking old airplane (remember, FBOs can’t afford the new ones, either), tell him/her that all he has when the certificate is issued is a license to learn and that it will take thousands more to become better and to stay current, and then expect him/her to keep on flying? Unless that fledgling pilot really gets bitten by the flying bug, which does still happen of course, or has some huge income or trust fund to pay the bills, it’s just a whole lot easier to put those excess funds into something that costs a whole lot less.

    Those of us who fly because we love to fly will find a way. But otherwise, these over-priced new airplanes and hideous costs to maintain them and to remain current will discourage anyone who is just nibbling at flying. I’ve gotten pretty accustomed to hearing, “You gotta be kidding!” whenever I answer others’ questions about how much it costs to learn, how much maintenance is, how much my 50 year old airplane cost to buy, how much its new engine cost, how much bits and pieces and parts cost, and especially how much a new airplane costs, etc. $300K for an airplane that is smaller than a Honda Civic? That goes less than twice as fast? That will only carry 3 people and baggage? That costs (according to Cessna) $120 an hour, not counting hangar and insurance?

    As long as people respond with “You gotta be kidding”, they’re not going to spend their money very readily. General aviation as we once knew it will continue to die a long, painful, but inevitable death–partly due to government intervention, but largely due to outrageous cost.

    Cary

    • Jeff says:

      I’ve been studying the written test to add on additional CFI privileges and I’m struck by how complicated flying really is. We are supposed to know about angle of attack, weather minimums, how long a medical certificate is good for and what speed we should be flying to make sure turbulence doesn’t tear us apart. Has anyone ever thought about how different this is from driving a car?

      When movies show the future with flying cars, they show vehicles that drive in pre-defined lanes, can fly through all weather, and can be used by normal, everyday people. That is VERY different from teaching someone to start and operate an aircraft engine that has a throttle, rpm and mixture control levers and that requires different starting conditions for hot and cold weather. How do most of us learn to drive? With a parent in a mall parking lot in 2 or 3 afternoons and then we get a learners permit and we can competently drive around town before being able to drive on freeway at “fast” speeds.

      If you want to make flying more popular, we’ll have to use technology to make it radically more simple – GPS freeways in the sky, cars that can basically takeoff and land with very little input from the pilot, planes that won’t let you stall them, planes that fly in almost ANY weather, and planes that are easy enough to operate that you don’t have to do an in-depth preflight or weight and balance problem just to load up the kids and go.

      When cars are toys, such as Ferraris and the first 3-wheeled Mercedes-Benz, then they are just the toys of the rich. When cars are tools that can get you from where you are (your house) to where you want to go (work or someone else’s house) then they are useful to everyone.

      For personal aviation to get REALLY big again, we’ll need it to get more like drive, which means it will be a lot more boring: you fly in your lane, at the posted speed limit, the vehicle does most of the work, but then again it won’t kill you either. That’s the kind of “plane” that Ford or Toyota could mass produce at $40,000 per vehicle.

    • Mike Urban says:

      Kudos! I agree….

  7. NM says:

    When the first automobile was available for purchase, only the rich bought it. Not until prices came down did the working class people buy it. I wonder if this same could be said about new airplane prices? Would the cheaper models sell more than the deluxe versions if more people could reach a comfortable price range?

    • Thomas Boyle says:

      I think this is probably the issue. It’s as if someone used the fact that no-one buys a base model Ferrari, to argue that there must not be any market for the Hyundai Accent.

      The issue, in flying, is that there IS no equivalent of the Accent: an airplane that looks and flies like a “real airplane”, at a cost sensibly comparable to the car, i.e., maybe twice as much as the car (so, $30-40k). The nearest thing is LSA – but many of those are more comparable in price to the Ferrari.

  8. Warren says:

    In an article years ago (I do not remember when) I read that Cessna discontinued production of the 152 because of production costs. It takes nearly as many rivets, nearly as much labor time and nearly as much raw material to build a 152 as a 172, but guess what? The 172 sold for more money because it had four seats, not two (more capability for the same private pilot). They were not worried about losing the trainer market, or selling to new pilots, or any of those marketing reasons to build a 152. It was all about th cost to build vs. sales price. No discussion of units sold; sell less quantity of 172, but at a higher profit per unit. The old addage “it’s easier to make a fast nickel than a slow dime” does not apply to these ‘Citation’ sized or type of aircraft manufacturers. It is not evil, it is just business, that is all. If they tried to appease the low end market, they might not still be here today. It takes about 10 man-hours to build an automobile, but hundreds of man-hours to build an airplane.
    Until mass manufacturing with low labor costs comes to GA, we are stuck.

    • Mac says:

      Airframe manufacturing labor costs are actually surprisingly low, in the area of 10 percent of total cost, or even less. So reducing labor cost at the airplane manufacturer will not do much to the final cost of an airplane.
      Of course, there is a labor cost in every component the airframe maker buys, but that cost is beyond the airplane maker’s control. Higher production rates would help, but would not lower the cost of a new airplane to that of a car, for example.
      Mac Mc

      • Thomas Boyle says:

        Mac,

        Do you have a breakdown of the production cost of new airplanes? I’ve been trying to find anyone who can do that, but failing.

        I’m skeptical about your number, though. Take the RV-12 LSA. Kit cost is $63,700 including $27,300 for the powerplant, so it’s $36,400 for everything else. Build time is an estimated 800 hours, but assume that final assembly by an experienced team in a well-equipped shop would take only 600 hours. Those experienced builders would cost $60/hour at least, so that’s $36,000 just for final assembly costs (mostly labor). Add that $36k to the kit cost and you have a $100,000 aircraft, with labor for final assembly alone contributing 36% of the total price. And remember, the airframe kit ($36,400) includes labor too – figure about another $7k or so. That means the labor content of a factory-built RV-12 would be about $42,000, excluding the labor content of the engine and avionics.

        Now, maybe I should assume less than 600 hours, but no matter how you skin it, that’s a long way from 10%.

        • Robert says:

          I’ve looked at those numbers in the past, from the other way around. Back of the napkin quotes for having a 3rd party build me an RV-12 have been ~$20k. Those were with experienced builders, retired from their “real” job.

          That number sounds low to me but, someone that already has a shop and tools at hand might could have a go at it. I was kinda surprised when Vans indicated their production -12 would be at or over $100K.

          I believe, as someone said above:

          “The primary reason for high costs is low production levels, which creates the negative spiral”

          Is there actually $100K worth of material in a $100K+ LSA?

          • Thomas Boyle says:

            Once you go to production, you have a substantial increase in product liability cost. If I understand correctly, Vans has design liability, but not product liability for the RV-12 kits (it is not the builder). If it factory-completes the kit, it incurs real additional costs ($20k?) for product liability. Again, as I understand it, in theory, the buyers could waive the company’s potential liability and save the money; in practice, courts won’t let us.

  9. Harold Bickford says:

    A look back in time is helpful. That $100K Bonanza was a function of inflation at the time and then large subsequent increases in insurance liability costs for manufacturers. That came about due to vastly increased settlements in lawsuits involving aircraft. By 1979/80 that was estimated to add about $100,000 to each aircraft sold. Naturally the immediate impact was far fewer aircraft sold (from around 18,000 in 1978 to less than 1,000 in the mid eighties) and higher unit cost. What had been marginally affordable to a significant market was now less than affordable. The few who could or would pay the higher price would naturally as Mac suggests want the most they could get.

    The answer at an individual level tends in three directions. Either put yourself at the earnings level that supports a new aircraft, buy used at an affordable level or build an aircraft that fits the bill. As I recall much of what EAA is about encompasses that third route.

  10. Jason Burke says:

    If you look at the GAMA data, it’s quite telling that the major manufacturers have seen a major shift from pistons to turbines in the last 20 years. We’ve seen them go from 10:1 in favor of pistons to about 1:1 – but with an overwhelming balance of power coming from turbine sales. Almost 96% of revenue (about $8 BILLION) comes from turbines. One must wonder why they even bother with pistons at all these days.

    The next question is: has anyone articulated a coherent argument as to why it’s a bad thing that the pilot population is declining? I have my own ideas, but many pilots seem to have a solution to a problem that hasn’t been clearly defined as of yet.

    If you want some pretty charts to go along with this, see here:
    http://bit.ly/UOMaxh

    • Douglas Bush says:

      Jason, declining pilot population is a bad thing because low volume results in high prices for the remaining pilots and closure of airports and FBOs, which reduces the utility of a pilot certificate.

  11. lou CHurchville says:

    In the 70s personal injury lawyers won a huge lawsuit against Cessna–a win for them but a loss for us resulting in all us piston OEM ceasing production of piston aircraft for several (7 I believe) years. Product Liability Insurance was unobtainable for these manufacturers until the Congress (it worked better -apparently-in the mid 80′s) put limits on how long after production the OEM was liable for the product due to “faulty design” The concept of wear and tear apparently was born.
    Nonetheless as I recall, after production of new aircraft restarted the prices were astronomical–to wit, fully half the price of a new Cessna 150 was its share of the Premium for the manfacturer’s Product Liability Insurance. The impact of low unit production rates compared to the automobile industry, surely played a role in this as well. Maybe ‘ol Billy was right–shoot all the lawyers…..

  12. Jay says:

    I applaud the first sentence and another one tucked in the middle, which put in print what has been politically incorrect:

    “The price of new general aviation airplanes has raced far ahead of inflation over the past 30 years.”
    “Low cost is not the winning edge for an LSA.” (despite the supposed hype)

    I am desparately looking for a reasonable cost (eg. $40K) new or slightly used LSA. It does not need to have glass or anything fancy; just the equivalent of the capability of a C-152. (Note: A C-152 would fit my mission fine, except that it is over the arbitrary weight limit… oh wait, its not arbitrary, it was set there to keep the pilot population low. Sigh.

  13. NM says:

    IF the FAA allowed C150s/2s to be part of the sport pilot rule, would it fix the problem?

  14. Jay says:

    YES IT WOULD! Thanks for asking. I am watching the EAA/AOPA Medical Certification Exemption Request with great interest, and hoping the FAA will approve it. In my mind, this Request is the litmus test as to whether the government supports or discourages GA.

    With the stoke of a pen the government can make available more planes to more pilots. We will see…

    Tailwinds!

    • NM says:

      But, will that cause prices of these older C150/152s to be unworthy of purchase? Right now you can get them for about what…15k? If they were eligible to be part of the standard category of a/c under the sport pilot rule like the J3 Cubs, would we be seeing pricing in the 30-40k range? At that point might as well go up another 10k for a decent kit plane.

    • Robert says:

      Fraid not. Take a look at the post above:

      “I am desperately looking for a reasonable cost (eg. $40K) new or slightly used LSA. It does not need to have glass or anything fancy; just the equivalent of the capability of a C-152.”

      If the FAA does away with the 3rd class medical, that’s more folks going after the same $40k 152. Conversely, the price of a LSA should drop accordingly. Why would I purchase a used $100K+ LSA when I could purchase a used 172? Yes, that 172 would have increased in price, but at some price point the LSA/Certified aircraft would reach some equilibrium.

      The AOPA/EAA/Et al, really shot themselves in the foot with the LSA. They got the cart before the horse.

  15. Peter Steeger says:

    Mac, I would expect better researched articles from you. Marketing is a very complicated subject and when addressing a very special issue “why are airplanes expensive” like you did in this article, you get some curious results – without any meaning whatsoever. E.g. one example or the many issues involved: the cost to produce an aircraft from scratch i.e. to make a design, release it, the labor involved to produce it, the liability cost etc. etc. add up quickly and you arrive at a base cost/price of an airplane which is less dependent on features and size than from all these other factors. As a result you get a much better plane for only an incremental amount of money, etc. etc. ….., so my request, please refrain to write eye catching articles like the one above!! It is just inferior journalism.

  16. Norman says:

    I’m not surprised that you Mac would side with the industry. Since they finance your drivel. Also, like AOPA, you and EAA are in the FAA and industry pockets.

    Aircraft are expensive due to the oligopoly’s (aircraft industry) failure to modernize and a government agency that makes arbitraryand burdensome rules and regulations.

    I have pretty much abandoned aviation. I leave it to the wealthy among us. It’s all yours. I hope you are satisfied kicking the “great unwashed” out of your elitist hobby

  17. Robert says:

    Over the next month on your drive to work, count the number of Lamborghinis you see on the road.

    Over a week, count how many Hondas you see on the road.

    Mac, you’re telling me that the folks that can afford a used 172, are foregoing the Cirrus SR20 and upgrading to the SR22?

  18. leonard nolden says:

    So whats the big deal? The payments just last a little longer to have the best!

  19. SkyGuy says:

    - A Cessna 172 (same spreed as today) cost $17K …in 1969.
    - Today the same Cessna 172 (same speed) cost …$370K.

    And Pelton got fired (rertired) from Cessna cuz he wasen’t sell enough of them at that price.
    Now he is your boss at EAA.

    PEOPLE (PILOTS) CAN NOT AFFORD $370 FOR A GO-SLOW CESSNA 172.

    I reember when Cessna re-started production of the Cessna 172.
    The aviation community was expecting a $72K Cessna 172.
    What the Community got was an “introductry” prices….low powered airplaned for $124K.

    And that shot the price of used Cessna’s way up overnight.

  20. Thomas Boyle says:

    Mac’s blog, and several other commenters, refer to inflation-adjusted prices. Inflation is a tricky thing. The key point to remember is that inflation is an average: the prices of some things go up faster than inflation, and others go up slower.

    If there are no improvements in the way something is done/made, i.e., productivity increases, its cost will go up faster than inflation – because many things DO see productivity increases, and inflation is an average (i.e., it includes the things that got cheaper to make).

    Because of productivity improvements, the prices of mass-produced goods and high-tech goods have gone up much slower than inflation – but the price of services (healthcare, education, big band orchestras) and cottage-industrial goods (hand-made clothing, wooden boats, airplanes) has gone up faster than inflation.

    It’s a fairly big difference, 2% a year or so. Over 50 years, 1.5% per year doubles the price; 2.5% per year raises to to nearly 3.5 times.

    Product liability, which has often been blamed, isn’t the whole explanation – but it adds to the problem.

    Affordable airplanes means that productivity has to catch up – which means we need huge productivity jumps if prices are to return to historical levels, adjusted for inflation. Frankly, a return to historical inflation-adjusted prices is unlikely, but it should be very possible to get part-way there. We should bear in mind that the airplanes that deliver dramatically lower costs are not likely to look like the airplanes we’re used to – whatever that means!

    • Lee Devlin says:

      Thomas has hit the nail on the head. It’s the fact that inflation is a *composite* index that makes it confusing and causes people to blame many other factors for the disparity in the way things get more expensive over time compared to its average. In the 36 year period from 1977 to today, the average inflation rate suggests things should have gone up by 4 times (using the rule of 72, this corresponds to a doubling every 18 years, or 4% inflation). However, many costs exceed this 4% per year average (education and healthcare being two obvious cases).

      If an industry’s inflation rate causes it to go up at 6%, it will double in cost every 12 years, and that is would be enough to account for a 8x cost increase in 36 years. And that is what we see in both health care and education and, evidently, new airplanes.

      The Information Technology industry, thanks to Moores law, has had negative inflation over the same period to the point where equivalent IT capability costs 12% of what it did in 1977. This ‘negative’ inflation gets added into the total to help produce that average rate of 4%.

      Similarly, goods from low labor cost countries like China help to further reduce the average inflation rate in other sectors, like the cost of clothing and home furnishings.

      Aviation doesn’t benefit much from either Moore’s law, although it theoretically could with lower cost avionics if there were no improvements, because it has been converted into extra capability in the form of glass panels. And very few aviation components benefit from Chinese labor because the market is too small to for them to participate in it.

      As people always choosing the highest end version of some product, that doesn’t hold true in thriving markets where people are cost sensitive and there is always the good, better, and best model. In a declining industry where the only customers left to participate are those who have little or no cost sensitivity, they are looking for the top of the line model. I think that’s where the new plane industry is operating today.

  21. Kenneth P. Katz says:

    As for why new airplanes cost so much, there are many reasons.

    What seems to me to be uncontroversial is that the effect of high prices is that even the affluent upper middle class can’t possibly afford to purchase a new airplane, which means that manufacturers are able to appeal to only a small fraction of a small market. I can’t see that ending well for manufacturers.

  22. To whom it may concern says:

    The fact that aircraft cost so much has little to do with inflation but more to do with societies need to sue when something goes wrong. Each and every part of an aircraft carries insurance right down to the rivets. This is not only why aircraft cost so much to purchase but is also why they are so expensive to own. If you where to go to your local hardware store in search of bolt for your aircraft, you could probably find one that fit for under $2. Flip through and aircraft parts catalog and that same bolt would be around $15. That extra $13 is so the manufacturer can carry extra insurance for when a crash victims family sues. If you read through case law, many of the time, the fault lies clearly on the pilot and you would probably be wondering why they tried to fly upside down through a barn. Despite this families have sued aircraft manufacturer for instances like the prior example and won.

    • Thomas Boyle says:

      There are two questions here: one is “why are airplanes so expensive” and the other is “why are airplanes so much more expensive than they were 30 years ago, adjusting for inflation?”

      You are right, the cost of product liability and certification make parts for airplanes much more expensive than parts for, say, tractors.

      The other question, though, is why the cost of airplanes has risen so much in the last 30 years, relative to tractors. That’s about inflation, and productivity.

  23. Thomas Boyle says:

    I propose to beat the productivity drum a little longer.

    Productivity jumps, such as aviation needs, don’t necessarily come from “doing the same thing, more efficiently”.

    Avionics provide a good example. 20 years ago, we used steam gauges, with maybe a Loran or a VOR in the panel, which was pricey kit. 5 years ago we had glass panels, which cost $80k if certificated and $10k if not (“to whom it may concern” has made the point that airplane parts are much more expensive). Today we have iPads with bluetooth-coupled AHRS and GPS receivers, for under $1k.

    What do we learn from this trajectory? Well, Moore’s Law is part of it, but set that aside for a moment. First, we learn that certification and product liability are VERY expensive and offer little benefit we can’t get from brand reputation and good engineering. I’d fly an uncertificated airplane built by Vans, or Rans, or Cessna, or Piper, or Tecnam, or Flight Design (etc.) without product liability coverage, without hesitation. So, we learn that dramatic reform of certification and product liability would yield big, one-time cost benefits.

    Second, we learn that, to the extent that we can customize products being mass-produced for other purposes, it yields big cost benefits AND ongoing productivity gains! Until recently, this gave us good aluminum costs, but that was about it. The use of automotive parts for brakes, hydraulics, etc., is a good angle. The use of consumer electronics as avionics has given us incredible capability at shockingly low cost. To make airplane costs follow inflation costs (or better) over time, we need to try to eliminate or minimize the custom, cottage-industry parts of the airplane, from parts sourcing to assembly. Of course, the attraction of automotive engines has been there for years, but never bore fruit. There have been suggestions that marine engines might work well, and indeed the Viking engine is based on an automotive/marine engine. My own pet angle is UAV engines, like the AE80 rotary from Diamond. There are going to be a lot of UAVs – we may be able to “free ride” on their volumes.

    But, it would also help if airplanes themselves were more “mass-produced”, i.e., if there were more of them being made. That would happen if they were more useful, and here we see how we can apply Moore’s Law to airplanes! Jeff (January 10 2013, 20:16, above) has already explained how, and I have no doubt that he’s right. I have met more than a few affluent people who’d like to use small planes for transportation, but who do not have the time – or interest – to learn all of the arcane knowledge required to operate a flying machine. They shouldn’t have to, any more than I need programming skills to make this blog post. More utility, more buyers, more production, lower costs.

    And finally, radically different manufacturing might help. I have toyed with ideas from standardized wiring harnesses, to standardized airframe subassemblies, to molded plastic parts, to 3D printing, but nothing has really “rung the bell” yet. Some radical thinking is needed here: riveted metal, fabric covering, and hand-laid-up composites are all too costly, by far.

    But, even without this (for a while, at least) there’s a lot we could do with changes to regulation, enforceable product liability waivers, and aggressive “free-riding” on mass-produced parts and systems.

  24. jim says:

    the logic doesnt make sense to me either. when you take away the desirable features to make a low cost offering, of course it wont sell. trying leaving off the fancy trim, extra expensive avionics, high-priced paint schemes, etc to reduce the price. i am so fed up with new plane and LSA prices, its almost enough to make me want to just go back to ultralights. but they too have gone through the ceiling in thier price range.

    jim

  25. Bill Barker says:

    WHY AIRCRAFT COST SO MUCH

    I was watching a DVD of early episodes of “Wings Over Canada”, when the host, John Lovelace, explained why airplanes cost so much.
    According to him, a Cessna accountant is responsible.
    Before 1980, all airplane manufacturers looked at how much their annual liability insurance premiums totaled and how many planes they expected to sell. The total premium cost was divided by the total number of planes and that was about $3,000 per plane.
    The accountant sold management on the idea that the sale of each plane should carry the full premium costs over the life of the aircraft. As this useful life was expected to be 40 years, the insurance cost added to each airplane sold jumped to $120,000.
    As Paul Harvey used to say, “Now you know the rest of the story”.

  26. Gene fMelton says:

    You missed one of the real major costs: product liability insurance. Add up all the liability insurance in the supply chain and you could reduce the sales cost over 50%. We know who is responsible for this.

  27. E. Evans says:

    The Dictator says you cannot have any airplanes.
    The Communist may build them, but it’s the People’s, and you can’t have them.
    The Socialists built this many, for this much, and we’ll make the others pay for it.
    The Capitalists say we’ll build it, how many do you want, when do you want it, and
    this is what it’ll cost you.

  28. Pingback: C’est vendredi, on fait le tour! (5) « comiquaze

  29. Gordon says:

    Well…I’m coming to this discussion a little late unfortunately…but this is just a bizarre blog from Mac that shows he does not care one whit about this very important issue…

    To say that airplanes are expensive because buyers want them fully equipped…well that is just plain goofy…

    The fact of the matter is that no one can afford to buy a brand new airplane for personal use anymore…unless it is for some kind of business use…that is a huge change from a generation ago when thousands of people were purchasing light aircraft for personal use each and every year…

    I have mentioned in this space previously that looking at GAMA figures it is painfully clear what has happened over the last 20 years…Today the general aviation industry sells about $20 billion worth of airplanes a year…fully 98 percent of that money is spent on bizjets and turbine aircraft…piston aircraft (including twins) account for just 2 percent of total GA industry sales…

    Now lots of people here are old enough to remember when ordinary people could go to the Cessna store and buy a brand new airplane…I remember when my dad (a pharmacist) bought a new Skywagon in the 1970s…as a FAMILY AIRPLANE…

    He wasn’t the only one…about 15,000 other ordinary people bought a brand new Cessna FAMILY AIRPLANE that year…and the year before that…and the year before that…

    Yes at some point in the 1980s the market turned sour…probably due to the fact that a lot of the people who buy airplanes had already bought a new airplane fairly recently…for whatever reason…new and younger airplane owners were not coming up quickly enough…

    At the same time…airplane prices were starting to rise at a pace faster than other major purchases…like homes and cars…fuel prices made a major jump and that probably had a large effect too…

    Now these are challenges in the marketplace that every kind of manufacturer has to face at one time or another…and there were two ways that Cessna and others could respond…

    One way would have been to realize that hey we’ve got to bring out a cheaper product so that people can afford airplanes and start buying them again…preferably more fuel efficient too…

    The other way is to just give up on the entire market of personal airplane ownership and downsize production to meet only the small demand for business use…flight schools etc…

    Well it is perfectly clear which way Cessna chose to go…and I am focusing here on Cessna because they were the leader…and the others followed right in their footsteps…

    Now for Cessna this was a no-brainer…they already had a line of business jets and turboprop aircraft and this was clearly the future of light aviation…business with a capital b…

    Why should they bother with the little airplanes on which they made a paltry little profit…when the bizjet sector was rocketing skyward and each of those airplanes made as much profit as a dozen or more Skyhawks…?…not to mention the headaches of private pilots killing themselves and the widows suing…

    So let’s be clear-headed here…the real reason the personal airplane is now extinct…is because the manufacturers decided to close the book…yes they still make a few dozen copies each year to sell to flight schools…small business people…and the odd crazy fool who will pay half a million dollars for a family airplane…

    They have priced them so that they can make a tidy little profit on each one…and that’s that…

    The fact of the matter is that it does not have to be this way…a personal family airplane is in fact more within reach today than it ever was…due to advances in manufacturing technology…materials…design…and even the regulatory framework…where a 4-place airplane of up to 2700 pounds could be certified in the Primary Category with hardly more effort than the self-certification used for LSAs…

    If we look in fact at most major items on the marketplace we see that we are getting more for our money than ever before…I paid the same amount of money for a garden tractor last year as I paid 20 years ago for the last one I bought…only today I get twice the number of cylinders…nearly twice the power…and more capability all around…

    The car you buy today lasts twice as long as the one you bought 30 years ago for the same inflation adjusted money…The first bought a laptop computer I bought 20 years ago cost thousands of dollars and had a black and white screen…today I can buy a marvel of technology for three hundred bucks…

    The fact of the matter is that a manufacturer who wanted to build a family airplane today under the Primary Category could certainly price it at the level that family airplanes cost when my father was buying them…that is well under $100,000 in today’s dollars…

    but don’t hold your breath for Cessna to do it…they long ago took the decision that they were going to make piston planes as “luxury” goods…ie make a small number at a high unit cost to cater exclusively to the small…but nevertheless real…market that exists for high ends products…

    So that is the REAL reason why airplanes cost so much…it was a decision taken by industry leader Cessna…and others following suit…that the family airplane market was no longer something they were interested in…

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