Aircraft market today

[pmccarthy]

The RAA market pages are down to a couple of handfuls of aircraft, from the 40 plus that used to be. The ones advertised there seem either overpriced or low hours but years timex engines. Meanwhile, a couple of relatively new dealers are turning over quite a few at the higher price end. Aussie exchange rate has recovered a bit. How do you see this going over the next 1 -5 years?

[onetrack]

We're in a Recession - officially. I personally believe we were almost into Recession before the COVID-19 virus hit - the virus just accelerated the Recession.

 

In times like this, values of nearly everything are declining, making people unsure of which way to move. Spending is on the back burner, as people seek to bolster their financial position to a more secure spot.

No matter what it is, the value of nearly everything has declined - from property to superannuation, to shares, to "collectables". Some areas have declined more than others.

Many would-be sellers are holding on to the items they would like to sell, fearing they may not get "a decent price" for it. They will eventually have to re-adjust their ideas of a "decent price".

 

People just "sit tight" in recessions, until they can see things starting to improve, economically. I personally believe the whole of 2020 will be a recessionary period, and we will not see signs of economic recovery for at least 12 mths.

After that period, people will regain confidence again to start investing and risking spending. In 2 years time we will probably be back to more normal economic activity.

 

We can only look to previous periods as to events and results. Directly after WW1, there was a major Recession (some called it a Depression), a direct result of the War, and compounded by the Spanish Flu epidemic.

In general, the post WW1 Recession lasted about 2 years, approximately from 1920 to 1922. Interestingly, it affected different major countries for different periods.

This was possibly as a result of the slowness of travel, slowness of communication, and the manufacturing time lag in that period. Britain ended up with 17% unemployment, a major Recession by any measure.

 

By 1923, economic activity had largely recovered satisfactorily, although Britain was still badly affected with economic malaise right through the 1920's. A major reason for this was the U.K.'s poor monetary policy of the time.

In comparison, in America, economic activity boomed through the 1920's, due to easy credit, a major increase in technological innovation and mass-production techniques, largely based around the booming transportation industry (cars and trucks).

 

But the American credit bubble of the 1920's went into the share market, and when that bubble burst in Oct 1929, the whole world was affected, far beyond anyones imagination or economic forecast.

Deflation is the terrible fear of economists and politicians. When deflation is on the rampage, economies shrink, values plummet, unemployment rises, and people refuse to spend.

 

The "top end" of the economic spectrum is relatively unaffected by Recessions or Depressions. When you have enormous wealth, losing a portion of it, doesn't bother you.

Manufacturers still sold numbers of extremely luxurious cars and aeroplanes during the Great Depression, when unemployment reached over 30% in many countries

 

https://en.wikipedia.org/wiki/Post%E2%80%93World_War_I_recession#:~:text=In%20North%20America%2C%20the%20recession,depression%2C%20began%20in%20January%201920.

 

https://www.economicshelp.org/blog/5948/economics/uk-economy-in-the-1920s/

[old man emu]

No doubt you could call the period 1945-1954 a period of economic recession in those European countries impacted by the war. With Europe (including Great Britain) in the doldrums, the USA was the only industrial society that really did not have to do much to switch back from a military economy to a civilian one. It was unfortunate that the USA chose to implement the Marshall Plan for the recovery of the former Axis Powers, yet demanded that its allies pay back their war debts. Great way to gain economic power and political control.

[facthunter]

Yes, the Countries that lost the war experienced boom times (with US help) and those who had to repay their lend lease debt (and bothered to. The Russians didn't) to the US, floundered along with rationing and coupons for ages. Australia had a buy British policy. (aren't we just SO loyal ? ) and US Dollars were virtually unobtainable. Till the Wool price hit a Pound a pound and nearly every Cockey had a Cessna and there were more rollers in Tamworth than Toorak. Nev

[Downunder]

I personally believe we were almost into Recession.....

I think we've been on the verge for a number of years but the govt just dropped money into the economy to stop the figures going over the edge whenever it looked bad....

 

It's probably a "buyers market" at the moment. For aircraft and just about everything else......

$0.70 usd to the dollar is better than the 0.57 it was in March, but for those that purchase overseas the other side of 0.80 would be nice.

[jackc]

I think we've been on the verge for a number of years but the govt just dropped money into the economy to stop the figures going over the edge whenever it looked bad....

 

It's probably a "buyers market" at the moment. For aircraft and just about everything else......

$0.70 usd to the dollar is better than the 0.57 it was in March, but for those that purchase overseas the other side of 0.80 would be nice.

 

Well, at my age why stop spending? Having money won’t get me any benefits in the grave? Reckon I have about 10-12 years left? At the rate I am going there will some left over for the family to brawl over and pay my funeral?

[Downunder]

I like your style and I'm with you..... but so many seem to hoard it for?.....Who knows what.....

[Flightrite]

The Govt had instilled a lot of fear into the people of late, the economy is in a bad way, there's rebellion & fighting in the streets, it's anarchy out there which in turn effects people's confidence and hope! Aviation always gets hit hard whenever the country is under duress, 'toys' aren't a necessity.

The AFAP jobs site has plummeted!

[facthunter]

TOO many flying to overseas birthday parties and not enough flying for enjoyment. Nev

[Student Pilot]

They keep crying out for cheaper airfares, sure some people go to Bali for birthdays or crissy hollydays but seems to me it was an ever decreasing spiral to oblivion with airlines. When some order a $60 fare (olden days pre virus) then get bumped to another flight complain loudly about poor service, there is usually small print on the cheap ticket to cover the airlines change of schedule. Cheap carriers, you get what you pay for. Although last time I flew Qantas the crew were tired and fatigued, the aircraft was dirty inside and there were delays. I'll fly others now unless I don't have a choice. Qantas general operating meanness and decision to employ folks on contract from other countries (Jetstar) doesn't help either, pilots employed from NZ living in Australia were on a lot cheaper rate just to get the "Dream job".

Australia does need competion, if that competion gets together and fixes prices then you might as well just have one. Easy to see the likes of Alice Springs and regional's like Armidale and Tamworth, when there is no competition they charge what they like.How can it cost 4X more to travel from Sydney to Armidale in a Dash 8 (Used to be, no idea what it is now) than from Melbourne to Sydney on a 737?

[Downunder]

Whether it's regulated or unregulated or somewhere in between, there always seems to be some company rorting it somehow. ...

 

'Share the burden': Pilbara pleads with airlines for fairer fares

http://www.abc.net.au/news/2020-06-04/calls-to-cut-regional-airfares-to-pilbara/12318242

[facthunter]

Seat cost$/Km is way up on feeder types compared to longer Jet routes on bigger more modern Jets. You will NEVER get them comparable. People don't want to understand that. Anything like remote area will need a subsidy. ALL things cost more in the bush, except road kill, old stumps and rusting car bodies. Nev

[Flightrite]

It's called competition, less = more!

[NT5224]

Hi Folks

 

back to the OP. Great question! Who doesn't keep an eye on the classifieds? Or Aviation Trader, my Sunday morning read.

 

Obviously the market value of (recreational) aircraft fluctuates along with everything else. I recall a period about four or five years ago when prices plummeted for second hand aircraft, especially older designs. I wonder whether the influx of new LSAs and new aircraft designs had any influence on this? People trading up, and saturating the market for older models? The Aussie dollar was pretty strong then.

 

Actually, i don't really recall prices every recovering after that, but perhaps somebody with greater knowledge can set me straight on that.

 

As for the post COVID future, I agree flying may become an expensive hobby for many, and we may see some people divesting themselves of their birds. The other aspect of this is what i believe to be changing generational preferences.

 

Has anybody noted that some young urban Aussies don't get driving licences? Back in the day it was a necessary right of passage for everybody, and out in the bush it was critical. But with increasing urbanization, changing public transport and new types of transport like push bikes and personal electric vehicles, some young people are opting out of driving altogether. Obviously the costs involved are part of that considered choice. Many could waiting for autonomous controlled vehicles to arrive on our streets.

 

But I wonder whether a similar thing will happen with aviation? Fewer people choosing to go through flight training (unless for a career path). As on the roads, autonomously operating aerial vehicles are probably on the way soon, so choosing not to invest thousands of dollars in flight training might be the rational choice. How will that affect the market for light, privately operated aircraft? I can't see demand rising much as older generations of aviators hang up their wings and sell off their aircraft.

 

Cheers

 

Alan

[old man emu]

Fewer people choosing to go through flight training

 

A possible reason is that the young people of today don't have the flying heroes that we oldies did. What Boomers didn't have the likes of Bader and the rest of the Battle of Britain pilots as heroes. Who of those didn't glue together an Airfix Spitfire and immediately shoot down any 109 that dared cross our coastline? The same for the motoring fans. Many wanted to be Jack Brabham. So it was out in the garage to make a $100 rust bucket the fastest thing around.

 

What heroes do our young people have now? Spiderman, Thor, The Hulk and Ironman. Transformers and Autobots. Violent and amoral characters who do nothing to improve society.

[Flightrite]

Social media and computer games with all the violence have killed off a generation of starry eyed kids with their noses pressed hard against a fence and gazing skyward watching planes, RIP aviation as we knew it ?

[ClintonB]

If only they knew the satisfaction it brings.

[Jerry_Atrick]

You beat me to it, @Flightrite. Also, increased urbanisation, public transport and ebikes are not the reasons urban kids are abandoning getting their car licence - computer games and interactive technology where kids can real-time communicate with others across the globe are a big part of it.. Unlike the games of my generation - those with enough money to have a colecovision, a Commodore64 or whatever could be geeky, but they still had to emerge from the BO-smelling rooms to interact with people. While some are happy never to interact with another soul, most need interaction. Today's technology, where you can multi-play games over the internet and at the same time talk to your team playing the same game and orchestrating against another team - and aspire to become an e-sports team member where they earn much more that AFL footy players - well, it's a lose lose and I genuinely worry about the next couple of generations. This is having the biggest effect on car licences.. games and tech are far more important.. In fact, I can comfortably tick off the list some countries I was going to visit because of the quality of tourguide webcasts and youtube videos.

 

For private flying, the biggest issue is that satisfaciton of the senses for everything these days has to be gratuitous and immediate. How long and what sort of perseverence do you need to get a RAA ticket? A PPL here is now 9 exams (though the content hasn't changed) with all sorts of whacky rules if you don't pass one in a number of sittings (which is not what you think). Then you have to do all the training, etc. For a much lower price, you can get a VR simulator and enjoy it without the risk of crashing - no exams, learn as you go, etc. Though, I think flying is less impacted than driving. As a kid, I had no flying heros - I just loved aeroplanes and being in the air. I can't recall stories of any great flying heroes being regailed at any air league camps I went to . So, kids with an innate interest in aviation will take to the skies (finances providing) in the same way kids with an innate desire to drive will take to the roads (or, if they have a need). Also, in the old days, those Sandmans were decked out to attract another form of entertainement and I could never believe how successful they were (nor impressionable the willing participants were). They don't seem to hold the same allure these days.

 

With respect to the market, I can only speak to the CoA aircraftover here.. It seems at the moment to be holding steady. In fact, I have noticed the asking prices of TB10s have been increasing steeply. Yesterday I sold my TB20 share more than I paid for it, but it had a bare metal respray.. in real terms I got my capital back as we contributed the difference to the resprary. However, I wasn't actively selling... since I am now out of London and the TB20 is based near London and the buyer was enthusiastic, it was a good time. He paid as much for my 1/8th share as a shabby but perfectly useable C150. Private (well, any) flying is a discretionary expense. In recessions, those whose spending power is most at risk will tighten their belts first. Which means, the bottom feeder aircraft prices will suffer as the people who can barely afford those will fall away. The higher end will probably hold steady or may take a slight hit. Think of the GFC - Sirrus and Diamon twins weres still doing well, thank you very much. Piper Malibus were still doing well, Archer DXs, not so.. The second hand and old twin market dies a horrid death - the latter never to recover; the former recovered slightly.

 

In the UK, this could be a boom time for LAAs and BMAAs.. Except for the top end Vans, et al, which command pretty heft prices for what are two seat plastic fantastics, which will probably hold their value more or less anyway as they are top-end machines, bottom feeder CofA private flyers may well throw it in for the cheaper and moer grass roots LAA and BMAA flying. One can get decent one or two-up performance that competes with the 80 - 100kt range of bottom feeder GA planes for a fraction of the money...

 

For example, my income has dried up with COVID.. COVID just brought it forward, it was a declining area I was working in; the problems was I was working on the next career transition (about the third) but it put paid to that. So, I am now contemplating what my next aviaiton move is.. There is a C172 non equity share (private rental agreement) at Exeter not too far away with a pretty good hourly rate compared to a school. There is a microlight school at Dunkeswell I am thinking of speaking too as well (problem is - dual instruction not allowed). I may well make the transition which will add 1 to the LAA membership.

[Student Pilot]

The same for the motoring fans. Many wanted to be Jack Brabham. So it was out in the garage to make a $100 rust bucket the fastest thing around.

Jack was a pretty handy pilot as well. He flew up to Bundarra in the late 70's to look at an ultralight with the possibility of going into production and Jack being involved financially. He went for a fly in the machine, he hopped back into the 310 and was never seen again in those parts. He went up to see Gordon Bedson and the aircraft was the Resurgum. Gordon was killed when his 2 seat design lost a wing on a test flight.

 

 

RAA has mostly become a rich mans sport, the same as private flying in GA used to be, with aircraft costing upwards of 100K and training $300 an hour, Joe Ordinary on wages (wages have been reduced in real terms in the last 20 years or so) can't afford that. There seems to be a lot less and less Drifters/Thrusters/Phantom types flying now. Basic is best if you want a proper flying experience.

[Flightrite]

Jack was a pretty handy pilot as well. He flew up to Bundarra in the late 70's to look at an ultralight with the possibility of going into production and Jack being involved financially. He went for a fly in the machine, he hopped back into the 310 and was never seen again in those parts. He went up to see Gordon Bedson and the aircraft was the Resurgum. Gordon was killed when his 2 seat design lost a wing on a test flight.

 

 

RAA has mostly become a rich mans sport, the same as private flying in GA used to be, with aircraft costing upwards of 100K and training $300 an hour, Joe Ordinary on wages (wages have been reduced in real terms in the last 20 years or so) can't afford that. There seems to be a lot less and less Drifters/Thrusters/Phantom types flying now. Basic is best if you want a proper flying experience.

 

Trouble is many years ago GA drivers where sick of the expense of hiring/buying spam cans so when some started to build basic flying machines flying them out of remote paddocks to get the flying thrill cheap along came the AUF to control it. Move the hands of time along some years and the whole concept of basic "affordable" flying is long lost/gone, RAA is the new tag and it's getting more and more expensive with people wanting more and more, enter the flash expensive machines, opposite of the original reason/idea, pretty much gone full circle!

[Jerry_Atrick]

LSAs are basically lower-regulatged GA machines these days... They give the GA pilot a great alternative to full GA. Over here, a suitably equipped LSA can be approved for instrument flying under what is now known as an Instrument Rating (Restricted); oddly enough, only available in the UK from all European countries.. Thrusters, Ikarus, et al are the domain of the British Microlight Aircraft Assocation. There was an attempt to merge with the Ligh Aircraft Association (LSAs), buit it failed because, apart from the peronality issues, they seek two different types of flying.

 

Microlight flying is more expeinsive than ever, and I can't understand why. An Ikarus C42 has been around for a long time and is a basic aircraft, yet the cost for dual intruction at the local school is £148/hr. The GA school scharges £180/hr dual for a C150 - much more expensive to run and insure. I have to be honest, at a $32/hr difference when the price would be less than half to run even though they have to be slightly more regulated than non-school machines would move most people to the GA side. A C152 is still grass roots flying; A PA28 or C172 is really also.. The cost difference between them would be about £1500 all up... but give me much more flexibility and onluy a check out for the microlight.. apparently.

[pmccarthy]

None of my five children has shown an interest. They are much better than I was at family things, bicycle riding or hiking with their children, playing computer games with them. No interest in special cars or aviation. But in America, if I believe the EAA, there are hundreds of cross-generation teams building RVs or restoring rag and tubes together.

[APenNameAndThatA]

I think that people who would have flown Thrusters/Drifters now fly weight shift. I too looked at the cost of weight shift training, and it was very high.

[Flightrite]

None of my five children has shown an interest. They are much better than I was at family things, bicycle riding or hiking with their children, playing computer games with them. No interest in special cars or aviation. But in America, if I believe the EAA, there are hundreds of cross-generation teams building RVs or restoring rag and tubes together.

 

I was lucky that non of my offspring showed a scrap of interest in aviation, well as a career anyway, phew lucky me!??

[old man emu]

But in America, if I believe the EAA, there are hundreds of cross-generation teams building RVs or restoring rag and tubes together.

 

"hundreds" in a population of 330 million. The thing is that the US has been very air-minded since 1919, and their State and Federal governments have supported and fostered aviation at all levels. In Australia, during the first 2/3rds of the Century, the Australian State and Federal governments strongly defended their monopolies on rail transport and maintained a an attitude of colonial subservience to Britain in relation to aircraft. Then the Federal Government brought in the "Two Airline" policy to stifle air transport in rural areas.

 

Australian aviation enthusiasts were buying magazines like Popular Mechanics and Flying Manual between the wars and using the plans in them to build small aircraft. But there was no governmental interest in developing an aviation industry until the outbreak of WWll. Unfortunately, before the ink was dried on surrender documents, the governmental support for aviation disappeared.