Will RA Aircraft get cheaper

[Spriteah]

I and a few others are looking to but a syndicate aircraft. Have been considering a J160 SP or some similar type.

 

Now I can see that more and more are being advertised but not getting purchased and with the release of the new no frills trainer from Jab at $57k factory built im wondering if there will be a influx of ex trainers hit the second hand market which will drop the price of all Jabs (Smaller size ones anyway)?

 

Any oppinions?

 

 

[motzartmerv]

Yea mate..id imagine the prices will come down...some ppl probably won't be real happy about that having just paid big bucks for there jabs..but, with the new j120 i think it will have to drop prices on the the older 160's and especially the LSA's.its only my opinion tho, so don't take it to the bank...

 

 

[Matt]

Aircraft are like any other product - supply and demand drives market prices for new and used. If there's not much supply or demand, prices will be high. If there's plenty of people buying and plenty of aircraft being made, prices will be driven down by quantity. Personally I don't think the Australian market will ever get to the same level of pricing as Europe or the US for recreational / light sport aircraft, we simply don't have the population with the interest and/or disposable income to support it.

 

My thoughts only though.

 

Cheers,

 

Matt.

 

 

[BigPete]

"but, with the new j120 i think it will have to drop prices on the the older 160's and especially the LSA's...."

 

Hmmmmm....

 

I doubt that it will affect the J160 price - big difference:

 

J120

 

1. thinner cockpit,

 

2. fuel behind seats, 65 ltrs

 

3. manual flaps,

 

4. fewer gauges, (no vertical indication, no amps, no turn indicator,

 

5. 4 inch wheels,

 

6. no heater,

 

7. throttle on seat pan,

 

Now I'm not knocking the J120 - it's brilliant value - there are plenty of new pilots out there either just qualified or about to be - most of them will have learnt in a Jabiru.

 

If you buy factory built - you are limited to what you can change. If you buy owner built - there is a lot more freedom for changes (engine, propellor. etc).

 

So you pays your money and you make a choice based on value, condition, accessories, required operation, etc, etc.

 

Too many Jabirues can't be a bad thing. :big_grin::big_grin::big_grin:

 

regards

 

 

[poteroo]

Have owned and operated 9 GA aircraft, and sold 7, over the period 1977 to today - and not one of them for less than purchase price, adjusted for inflation.

 

Whenever there is a high exchange rate against the USD, there's a flood of GA aircraft imported. This happened in 1989, and again 2007/8.

 

Demand for RAA aircraft could be tempered by this GA effect, because of the many dual licensed people becoming older, better off, and searching for their own aircraft. But, there's an increasing demand for new RAA trainers for all the new flying schools, and it's difficult to see any price reductions at the new end of the market. More students ultimately means greater demand for hire aircraft, so it seems unlikely, (to me, anyway), that there'll be even a ripple caused by the J120

 

happy days,

 

 

[Guest Flyer40]

The RAA/LSA sector seems to be experiencing significant growth in terms of demand for new aircraft, and manufacturers are entering the market having foreseen that demand. It's interesting that a similar thing is occurring at the other end of GA in the VLJ segment.

 

I think it's likely that the demand for RAA/LSA will keep their prices high for the foreseeable future. It's natural that the dealers will charge top dollar while ever they can.

 

As a potential buyer, I spend a bit of time researching aircraft prices and thought I'd mention a few things I've observed about aircraft pricing trends. You might recall that about ten years ago the insurance crisis annihilated the value of used twins. With the added fuel crisis, changes in regs and interest in turbo props and VLJ's demand for twins has dried up and their used value will never recover. Cessna will probably never re-enter the piston twin market, and Cirrus stepped straight from piston single to jet. I think that says a lot and it's probably fair to say that piston twins will regress into a small niche market for training airline pilots.

 

Insurance costs have also had a similar effect on the value of used retractable singles. With the exception of Bonanza's, it seems you can't give them away. Not only that, few manufacturers are willing to build retracts these days because the demand isn't there.

 

The reason I mention all this is that these events changed some industry conventions that many thought were set in stone.

 

Recently I have noticed a similar trend emerging in the value of used piston singles. Prices are dropping, not because of insurance costs but because owners are moving into new LSA's, which is creating an over supply of used GA singles. I get the feeling that this trend will grow and last for a few years yet.

 

Bad news for GA owners, good news for buyers.

 

 

[Guest airsick]

I think Matt had the best point - supply and demand. At the moment supply seems to be ramping up. New models like the Skycatcher, Millenium, etc. are coming out and they are increasingly more advanced in their design. On the other side of the equation though is demand.

 

If demand is increasing at the same rate (or faster) as supply then prices are not necessarily going to get any lower. Todays market seems to have a lot of people interested in the RA type market from both newcomers and GA trained people like myself looking for a cheaper alternative. This is somewhat reflected in the comments by Flyer40 above who mentions GA is getting cheaper as pilots move towards LSA.

 

The other thing that needs to be considered is the substitutability between the different licences/aircraft. I can't fly an RA registered aircraft at night, in IFR conditions, etc.* If I am a pilot with these requirements then I will not consider one of these aircraft. This may preserve a bit of the GA market in future.

 

Also, as mentioned above, the GA market will still provide an avenue for entry into commercial operations. Ab initio type stuff can be done in an RA aircraft but more complex stuff still requires the use of GA aircraft.

 

Back to the original question of the new Jab depressing prices for existing ones. I suspect it will have an impact but I think it will be limited given the differences between the new and old types.

 

* Generally most RA pilots wouldn't want to any way so I think this restriction is sensible. Who would want to fly into bad weather in a <500kg aircraft if they didn't have to!

 

 

[Spriteah]

USA Prices are dropping due to economy

 

http://www.barnstormers.com/eFLYER/2008/007-eFLYER.html

 

Looking at the above web site I will watch with interest as to what the prices do here in Aust and the interest rate sneaks up.

 

I personally think that lots of potential rec flyers will be cautious of purchasing at the min until we know how hard the morgage chrisis in the states will transfer onto Australia. No one is sure how much our banks will get caught in it. The commonwealth is very exposed it is reported.

 

Jim

 

 

[Guest airsick]

The article raises some interesting points, most notably the one that you repeat - the sub prime problems. But there are many forces at work in the economy at the moment, both in the US and Australia. Let's look at the US first as it is where a lot of our aircraft come from.

 

In the US they have a bit of a credit crunch (perhaps an understatement). The details can be boring for those not interested but the basics are this. A lot of lenders were overexposed to what is called the sub prime mortgage market. This is the market in which the borrowers are risky propositions and the loans that are made are sizeable in terms of the value of the underlying asset. This exposure to risk has bitten many lenders in the proverbial and they have incurred large losses. Now, to recover these losses, lenders have made it more expensive to borrow funds by increasing interest rates.

 

At the same time the US Federal Reserve (the equivalent to our RBA) is lowering rates. The US economy is slowing and this, together with the sub prime problems, is making the Fed nervous. They do not want to go into recession so they lower interest rates which makes money less expensive and encourages spending. Problem is, this also encourages borrowing. Bit of a dilemma!

 

So for aircraft this means that borrowing may or may not be an attractive option. Prices are cheap but, despite the Feds efforts, borrowing is not. The overall price of an aircraft remains high. (Low purchase price but high interest obligations.)

 

Now, to Aust. Our interest rates are on the rise. The RBA is likely to raise the cash rate and financial institutions have already priced in some of the impacts of the sub prime effects. This means that the Aust dollar will appreciate against the US dollar so the aircraft we import at already falling prices will look even more attractive to us. Again, the problem is - low price, high interest obligations.

 

Like the article says, if you are cash rich, it could be a time to buy. It might even be worth holding off a while. If the US economy tanks and demand for aircraft falls you might see some good fire sales happening. Rising interest rates in Aust may also suppress demand a bit and further depress prices (or at least halt any increases). Not needing to borrow means this is good for a purchaser.