All you aircraft owners (aircraft financing)
08-07-2010, 09:05 PM
#31
Moderator
Joined APC: May 2006
Position: ATP, CFI etc.
Posts: 6,056
I must keep things somewhat confidential about what I do because APC is a public forum and I intend to keep my job. However, I feel your pain in terms of the steep prices these days for new GA piston aircraft from Cessna and other domestic makes. Bruce Landis and the rest of us are not alone in this regard. A new airplane is a daunting purchase for most of the middle class. Even the upper-middle has trouble with it. As a Wichita engineer I am sorry we have to buy a share of a single engine airplane while hoping the other 2 owners takes care of our shared airplane. It is a humble proposition.
What I know about Wichita manufacturing cost and profit on a new piston aircraft is fairly limited, just what I read in the papers. I will venture the guess that profit on a new Skycatcher is fairly low. The volume of sales is low and I have heard the profit on Cessna props like the Caravan, C172SP, C206H, and C182 is perilously small. Cessna is challenged by labor and supply costs on these models. Cessna has laid off some Independence, KS workers and cut production on all its models. Cessna would only do this if they were not selling as many airplanes as before the recession. As a businessman you know that reduced production means higher costs per unit. They can't make money on low volume.
The best way to make money is through volume sales. None of these airplanes is selling in enough to make a serious profit. All of these models are losing money right now including the business jets. I am certain about that, and I give you that as an insider. The name of the game these days in Wichita is cost-cutting. Many companies are getting radical in this regard. Cessna has Indian and Mexican facilities for engineering and assembly and has laid-off American employees by the thousand since 2009. Just this month another large Wichita small aircraft manufacturer has indicated they wish leave the state altogether if costs cannot be cut drastically. The reality is, we are lucky to have a viable American small aircraft industry at all these days.
What I know about Wichita manufacturing cost and profit on a new piston aircraft is fairly limited, just what I read in the papers. I will venture the guess that profit on a new Skycatcher is fairly low. The volume of sales is low and I have heard the profit on Cessna props like the Caravan, C172SP, C206H, and C182 is perilously small. Cessna is challenged by labor and supply costs on these models. Cessna has laid off some Independence, KS workers and cut production on all its models. Cessna would only do this if they were not selling as many airplanes as before the recession. As a businessman you know that reduced production means higher costs per unit. They can't make money on low volume.
The best way to make money is through volume sales. None of these airplanes is selling in enough to make a serious profit. All of these models are losing money right now including the business jets. I am certain about that, and I give you that as an insider. The name of the game these days in Wichita is cost-cutting. Many companies are getting radical in this regard. Cessna has Indian and Mexican facilities for engineering and assembly and has laid-off American employees by the thousand since 2009. Just this month another large Wichita small aircraft manufacturer has indicated they wish leave the state altogether if costs cannot be cut drastically. The reality is, we are lucky to have a viable American small aircraft industry at all these days.
08-08-2010, 07:02 AM
#32
Line Holder
Joined APC: Apr 2009
Posts: 96
I put my vote toward insurance and lawyers.
The cost of those two are driving the price (and then, cost of ownership) through the roof on just about everything.
(although I have no actual evidence...) I believe if you eliminate those to factors, the price of a new aircraft would be "reasonable."
Anyone have any inside information on the breakdown of manufacturing costs for Cessna?
The cost of those two are driving the price (and then, cost of ownership) through the roof on just about everything.
(although I have no actual evidence...) I believe if you eliminate those to factors, the price of a new aircraft would be "reasonable."
Anyone have any inside information on the breakdown of manufacturing costs for Cessna?
08-08-2010, 07:45 AM
#33
Self Employed.
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Volume
I toured a small local aircraft manufacturer lately. They have something like 98 workers to produce 5 planes a month. It is no wonder they cost over 150K each. Each workers earns their wage plus health care, labor and industries insurance, retirement, ect... Then you have overhead like paying for the cost of the building and liability insurance.
If they could spread all those costs out over 500 planes a month then the price could be cut significantly. GA is fading and the resulting low volumes are finishing the job. Send them all to Mexico or China where costs are low.
Skyhigh
If they could spread all those costs out over 500 planes a month then the price could be cut significantly. GA is fading and the resulting low volumes are finishing the job. Send them all to Mexico or China where costs are low.
Skyhigh
08-10-2010, 07:02 AM
#35
Self Employed.
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Cessna 150
Originally Posted by Cruz5350
So basically GA is on the way out or so it seems. I want to buy 150 to build time because instructing is going to take forever and I need to supplement my time some how.
Skyhigh
08-10-2010, 08:00 AM
#37
Gets Weekends Off
Joined APC: Jan 2009
Position: Airbus 319/320 Captain
Posts: 880
Originally Posted by SkyHigh
I have had great luck owning a cessna 150. Stay cheap and simple. Resist the urge to blow a fortune on fancy radios. Stay away from new paint. Run the engine into dust. Build time.
Skyhigh
Skyhigh
What do you mean when you say "build time"? Are you referring to cheaper insurance rates for the owner or is it in reference to building enough time to obtain a flying job? I think thats a good idea if someone is able to afford an airplane to do either. Building time can only help make a pilot better wheather its for cheaper insurance OR to build experience for a possible aviation career.
08-11-2010, 08:59 AM
#39
Self Employed.
Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Time Building
Originally Posted by brianb
Hey Sky,
What do you mean when you say "build time"? Are you referring to cheaper insurance rates for the owner or is it in reference to building enough time to obtain a flying job? I think thats a good idea if someone is able to afford an airplane to do either. Building time can only help make a pilot better wheather its for cheaper insurance OR to build experience for a possible aviation career.
What do you mean when you say "build time"? Are you referring to cheaper insurance rates for the owner or is it in reference to building enough time to obtain a flying job? I think thats a good idea if someone is able to afford an airplane to do either. Building time can only help make a pilot better wheather its for cheaper insurance OR to build experience for a possible aviation career.
If a new pilot were to skip the CFI, IA and MEI they could afford a Cessna 150 instead. They are really cheap right now.
Skyhigh
09-01-2010, 04:22 PM
#40
Gets Weekends Off
Joined APC: Oct 2009
Posts: 254
Originally Posted by aviatormjc
Aircraft ownership is expensive and not practical in many applications, but how can we dull the pain in ownership?
A long while back I looked into the cost of becoming a certified A&P mechanic and found the cost to be around at the time $18,000 for a 2yr program. How much $ could we save if we were certified to do our own work, repairs, overhauls? And then there would be only the cost of parts...$18,000 for a certification should save a lot of labor costs in a $10,000 engine overhaul.
Secondly an airplane is not a car and we will not use it everyday. Partnership makes a lot of sense to me. You will still have the freedom to use the aircraft most of the time but can divide the cost between a partner. And with YOU being the A&P, you can also factor in the cost of the parts and your labor with your partner which would be much less if the two of you had the work done by someone else.
And finally, I agree with everyone that an aircraft should be paid with cash and not financed.
What does everyone else think about this?
A long while back I looked into the cost of becoming a certified A&P mechanic and found the cost to be around at the time $18,000 for a 2yr program. How much $ could we save if we were certified to do our own work, repairs, overhauls? And then there would be only the cost of parts...$18,000 for a certification should save a lot of labor costs in a $10,000 engine overhaul.
Secondly an airplane is not a car and we will not use it everyday. Partnership makes a lot of sense to me. You will still have the freedom to use the aircraft most of the time but can divide the cost between a partner. And with YOU being the A&P, you can also factor in the cost of the parts and your labor with your partner which would be much less if the two of you had the work done by someone else.
And finally, I agree with everyone that an aircraft should be paid with cash and not financed.
What does everyone else think about this?
Which kind of leads me down another trail. I believe you have to have some time in a complex/HP aircraft to obtain your commercial? What about the CFI, CFII? I guess at that point you would just be shelling out extra money to rent the appropriate aircraft?
Anyway, back to the topic... It seems to me the best thing about owning (for the purpose of adding ratings) is that you get to sell it when you're ready to move on. You should get a large percentage of the investment back, correct? Granted nothing catestrophic happens. And if you're spinning wrenches on it yourself, you should save a boat load as well. The possibility to OH the engine yourself before selling seems crutial.
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