Why the soaring cost of new aircraft?

[Guest Rocko]

Hey all

 

Here's a question for the forum.

 

Why have so many new aircraft suddenly ballooned in cost in the past year or two? The AU to US dollar ratio is at record highs, and our currency to the Euro really has done squat in a few years, hovering around the 0.60 Euro. Yet, certain aircraft manufacturers and suppliers are raising their prices enormously.

 

I'm not going to go into specific examples, because I'm sure the suppliers involved will crap kittens. But it's easy enough to see the trend....get some older copies of the RAA mag and Pacific Flyer, and compare the pricing to the current aircraft. Some remain unchanged (I happened to have spoken with the local Savannah rep last week, and I see their aircraft remained exactly the same price as that from Jan 2006, so congrats there), but some have skyrocketed. This especially seems to be anyone involved with LSA, even when the aircraft in question isn't a LSA. One particular all-alloy aircraft, which I won't name, which I looked at a few years ago has jumped $20 grand in the past 2 1/2 years, now nearly hitting $100K!! :yuk:

 

So whats happening? There are more aircraft choices than ever, so competition should be fierce. The dollar is as good as it gets. Instruments have dropped like mad (Take the Garmin GPSMAP 296 as an example, which is nearly $600 cheaper than it was 2 years ago!!) The market is now flooded with used aircraft, so they devalue faster. And yet, the aircraft prices go up and up? Anyone have any answers?

 

If Jabiru can now bring out a fully factory built budget aircraft (J120), capable of 120 kts, for less than $60K flying, then pricing can obviously be controlled without substantially sacrificing quality, even in a "budget" package. Koudos to them! I hope they sell hundreds!!

 

For all the rest who's prices have skyrocketed, whats their excuse?

 

Scotty

 

 

[ahlocks]

Rocko,

 

Commodity prices for metals and thus alloys have skyrocketed in the last eighteen months. How the US dollar is valued against the Euro is also significant as a lot of transactions are made converting Euro to USD then to Aus Dollar.

 

And of course there's also profit taking...

 

 

[Guest David C]

Aircraft costs, like petrol , grog , food , in fact all most anything you want to purchase is driven by the supply and demand equation ... If there is a demand , then the prices will reflect that , irrespective of how much it has cost to produce the commodity .

 

Dave C

 

 

[Yenn]

Australians are well off financially. Don't believe all you hear and read about how hard up we are, just look at the new mansions being built. How many people only have 1 car per family or 1 TV set. Just think back 20 years and compare the lifestyle, or better still go back 50 years.

 

We can afford it so the suppliers are going to charge it. Remember they also want the high life.

 

 

[Guest Macnoz]

Right.

 

I had to get up in the morning at ten o'clock at night, half an hour before I went to bed, eat a lump of cold poison, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad would kill us, and dance about on our graves singing "Hallelujah."

 

But you try and tell the young people today that... and they won't believe ya'.

 

Nope, nope..

 

 

[Guest airsick]

I don't have a mansion, my wife and I only have 1 car between us and we only own 1 TV. What am I doing wrong???

 

 

[Galpin]

Living within your means!

 

 

[Guest airsick]

Someone once said to me that you have to give credit to those who live beyond their means.

 

 

[facthunter]

Cost of aircraft.

 

Sometimes I can't see the value in RAAus type aircraft myself, but I noticed an advert for a Gazelle (new) somewhere and it was about 75K. Since that was a long time ago, it's dearer than the Eurofox (in real terms) which is( I would suggest), a much better plane. There is (on the face of it ) a lot of competition, and increasingly so. That must be a positive factor.

 

..... I reckon that generally, second-hand U/L aircraft are overpriced, in australia, compared to new ones, as often repairs required push the real cost far above the value. so they may not be the bargains that they seem. You also have to take into account the engine life used up, other wear & tear (like U/V damage) and how much the model has become obsolete ( low AUW etc)..... I would suggest that the aircraft are getting better all the time, so perhaps we are comparing apples with something better than apples. If you make a comparison with GA. then it must be against a NEW one. That can be a real Eye-opener. I have to agree, they are seriously expensive. Nev....

 

 

[BigPete]

Just a minor point Rocko - I think you will find the J120 will max out at around 112 knots and cruise around 100 knots. :big_grin:

 

Doesn't make it any less the bargain it is.

 

regards

 

 

[ab0767]

The problem is that the US dollar is invariably used in international deals. It is now worth diddly squat and the euro is $1.57 against it, so by the time you convert Euro to us dollars and then to Auzzie dollars we loose big time. If the importers did the deal in Euros then the plane would be much cheaper. If we did this we would then be a terrorist organisation plotting the downfall of Uncle Sam. Its the same senario of banks having to increase interest rates above the reserve bank rate because their borrowing costs have increased, when in act the interest rates in the US are at record lows ( which is where we are borrowing the money from)

 

 

[Guest Redair]

The answer is simple... AIRCRAFT. Anything that flies, fits into, onto or is used by something that flies means that the manufacturers can charge what the hell they like! And before anyone tries to argue the point, then I suggest you look at boats. I know they don't fly, but you can buy a basic tinnie or fibreglass in Australia for around 20 - 30 thousand. Take that same money and buy something American and you get a whiz-bang super-dooper whistles and bells 190Hp fully furnished, with 6 speaker stereo, cup-holders, outside toilet and a garage, (ok well maybe not the garage) but there is the bang for your buck ratio that way exceeds anything that flies. And I know that higher spec manufacturing can be given part of the blame, but that still doesn't stop some companies from grabbing every cent that they can.

 

Just my thoughts.

 

Redair.

 

 

[Guest Rocko]

Just a minor point Rocko - I think you will find the J120 will max out at around 112 knots and cruise around 100 knots. :big_grin:Doesn't make it any less the bargain it is.

 

regards

Yeah, well, umm....they do say 120kts S&L on their home page.

 

Optimism is a marvelous thing.

 

Besides, as we all know, it's the things you "tweak" that make them faster.

 

Cut a bit off the wings, trim the fuselage a bit...mount a turbocharger...paint it red, with racing stripes, mag wheels, fuzzy dice....

 

Umm, it'd probably crash. Spectacularly!

 

But I bet it'd be doing 120kts while plummeting out of the sky! ;)

 

Scotty

 

 

[BigPete]

I have spoken to a few owners who tell me that an extra 7 to 8 knots is possible if you tidy up all the stickyout bits. Probably need to run a 44 inch prop or higher.

 

regards

 

 

[Guest ozzie]

Anyone want to take a guess at what percentage of the manufacturers price is for the product liability insurance? 30%.??

 

 

[poteroo]

PLI is probably more like 15-20%, I think.

 

I hear that quite a few more VANS RV's are being imported from the USA, and they are cheaper than local prices - with lots more avionics too. For the same price as a new LSA, you can get something which flies 40-50 kts faster....but if you look at the fuel efficiency angle, then the 80-100HP RAA/LSA types offer better economy.

 

 

[jcamp]

Its the same senario of banks having to increase interest rates above the reserve bank rate because their borrowing costs have increased, when in act the interest rates in the US are at record lows ( which is where we are borrowing the money from)

The Fed rate is only for the US banks in an attempt to disguise their insolvency. The real rates if you borrowing are much higher - IF any money is available eg NY Port Authority paying 20% after no one bid at a loan auction.