Tuesday, June 7, 2011
Today’s GA Market
A dynamic market has created an ideal opportunity for buyers and sellers
|Time To Buy An LSA?
By James Lawrence
|Tongues wag, rumors fly, the commentariat comments, and in the end, it's the numbers that carry water. The lifeblood of any industry, LSA included, is sales. Fortunately, the buckets are filling up: Numbers for the first four months of 2011 show we're in an upturn.
This seven-year-old kid called Light Sport Aviation remains a phenomenon in progress. Behind the 83 manufacturers and 115 ASTM-approved S-LSA designs to date, brilliant designers and razor-sharp business minds work hard to ride the tsunami outflow of the Great Recession, hoping for LSA to see its teenage years.
Dan Johnson, President of the Light Aircraft Manufacturing Association (LAMA) and Delphic oracle of all things LSA, throws the bones. "We may see 400 deliveries this year...double 2010...with Cessna accounting for half of that with the Skycatcher. The non-U.S. market for LSA has already experienced some revitalization, especially helping the big players."
Johnson also points out AOPA's recent acquisition of David Kruger's Aircraft Partnership Association (APA) which, along with Let's Fly, offers shared aircraft ownership. With the price of many imported LSA topping $125,000, thanks in part to the euro-dollar exchange rate, the classic American one vehicle/one owner scenario needs a shift in the old thought paradigm.
Used LSA also are becoming more numerous. "They often come out of leasebacks...buyers could find better deals there." And LAMA Europe has just opened its hangar doors. Its primary goal: bring the ASTM self-certification concept to Europe. That could boost U.S. makers hoping to sell overseas.
Around The LSA Horn
Tecnam North America's CEO Phil Solomon sees it this way: "We are very positive about the next six months...more people seem to be making their mind up to do something. The biggest obstacle to any significant growth is the lack of support from the traditional sources of finance for any type of commercially linked loan...I expect the top five to 10 players will take more and more market share compared with the others. Costs are going up, so buying now will yield better deals than six months from now." Tecnam offers leasebacks for qualified flight schools and $80/hour discounts off demo aircraft. Senior pilots can also benefit from Tecnam's program to reduce cost brokerage and offer a guaranteed buyback.
Remos President Earle Boyter also is optimistic. "We've seen a definite increase in LSA market activity over the past few months, and believe sales numbers will continue to climb. Used prices of conventional aircraft have solidified to the point owners can sell and get a reasonable price for GA aircraft, and can then enter the LSA market. With fuel over $7 a gallon, it is nice to only be using about 3.5 gallons per hour." Remos sells demonstrators. Lead time from order to delivery is currently 90 days.
Robert Stangarone of Cessna Aircraft, who predicts the company will deliver 150 or more Skycatchers this year, chimes in on the GA side: "Our accelerated depreciation plan is leading to many retail sales. Leaseback activity is improving as the economy is showing signs of life. Our retail sales for all piston-engine aircraft were up 40% in the first quarter, compared to the same period in 2010. I expect this trend will continue for the rest of the year with more demand than supply of aircraft."
American Legend Aircraft's Dave Graham works closely with current owners. "It's better than a year ago, but we're looking for more ways to move sales. Our typical buyer writes us a check rather than finances. We broker for owners wishing to sell their current Legend aircraft. We do a full annual inspection and provide a 90-day warranty with the plane in exchange for a 7% commission. We have a very long list of used Legends. When we receive an aircraft to broker, we circulate the information to this list. Usually, we'll get back an offer within a month, and very close to the asking price."
Randy Lervold, head of CubCrafters, says, "We are having an excellent year so far, and see tangible evidence of consumer confidence rebounding, and the GA market strengthening. We are optimistic about the remainder of the year as well."
Arion Lightning's Nick Otterback also sees improvement. "We delivered nine S-LSAs and a few E-LSAs last year. This year, we have delivered three S-LSAs and two E-LSAs. We offer some avionics deals or option specials at the air shows. And we try to keep our price as low as possible, at a $98,000 base."
Longtime aviation leader Tom Peghiny, president of Flight Design USA, wraps it up. "We are up 50% for the year to date. Some banks are lending more money, such as Bank of America and AirFleet.
He also notes the euro-dollar imbalance hurts imports and helps U.S. producers. But he believes it's a good time to buy. "The economy has proven the American dream is still available, if you are lucky enough to be employed and will stay that way into the future. With low-cost credit and 15-20 year loans, the dream of owning your airplane is still attainable."
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