My friend Dan Johnson, head of LAMA U.S. (Light Aircraft Manufacturer's Association), the man behind the Oshkosh/Sun 'n Fun LSA Mall (the Mall celebrates its fifth year in 2012), purveyor of www.bydanjohnson.com, a light-aircraft site that I also contribute to, is the guy I go to first to take the pulse of the light-sport industry.
A chat with Dan is like having an encyclopedia plugged into your ear, so "hear" we go. "In our heyday right after LSA became official in 2004," says Dan, "we had nearly 600 aircraft sales in one year, and that was before Cessna got involved. Then the economy tanked, continues to do so, and I still see that as the main challenge, and for all of aviation. Uncertainty is still a watchword. Until that improves, I don't see some companies moving ahead."
Dan characterizes the Big Picture this way: The market has spoken. LSA are here to stay. Eighty-plus airframe manufacturers here and abroad have produced 124 ASTM-certified models, with more in the pipeline. Those numbers alone epitomize the staggering proliferation and diversity of LSA.
"That number has no equal in aviation history worldwide," says Dan. "It's a remarkable fact: All those airplanes or new versions of existing models were developed in such a short amount of time—about seven years! There's never been anything like that."
He recounts FAA's recent 20-year general aviation industry forecast that sees only two growth areas: business jets and light-sport aircraft.
"Whether you accept or not that this is the new entry point for aviation, it's not going away. LSA are the lowest cost, require the easiest license to get, are the cheapest to operate, and those things won't change," Dan adds.
Now factor in the recent EAA/AOPA initiative to remove the third class medical requirement for light, single-engine general aviation aircraft. "It's going to force the industry to find its other strengths," Dan believes. "But I think we've already matured a lot as an industry. Of the 80-some producers, around half aren't doing much business. They're not out of business necessarily, plus a lot of them, like the new owners of the Sky Arrow design (Italy's Magnaghi Group), have a thriving aerospace business already. So it's no big deal making a few LSA alongside that. So we can have companies that make 20-30 units a year and can survive.
"Look at Maule Air, a family-owned business of FAA-certified models since 1956," Dan points out. "They sell 40-50 planes in a great year, less than a dozen in a slow year, and they're still at it! So of course it can be done with LSA. And the category has lesser requirements for certification. The market has also spoken by selecting the winners so far. It's not FAA, nor trial lawyers, insurance or financing that's making it tough. The market has said, 'We like that one and this one and those few others.' There's not enough perceived difference among the rest to make them more compelling, or they don't have big marketing budgets to attract attention even if they do build a better mousetrap."
Dan has said consistently that he expects the middle range of LSA producers to take the brunt of the long-anticipated shakeout of producers.
"Perhaps a dozen big players will continue at the top. A couple might be overtaken by an Icon [trendsetting amphibious S-LSA still in development]. But 10 to 12 significant players could sell more than 50 units a year. That's a decent game plan. Most could make it on that. Again, I cite Maule.
"So is LSA in a decline? No, not an accurate term. It's in a slump...along with all aviation," Dan continues. "Will it go over the cliff? Will we lose these things? Absolutely not. It's the new entry level, the exciting new kid on the block. Familiar names like Flight Design, Tecnam, SportCruiser, Legend Cub and Cub Crafters are in for the longer haul.
"Some up-and-comers like Pipistrel could easily move up. They've got interesting things happening," Dan explains. "And this is not an American, but global phenomenon. The Brazilian Super Petrel, a production amphibious biplane for 20 years, will debut soon here. These kinds of energies will continue.
"Brazil has fully accepted ASTM compliance standards," Dan says. "So have Colombia, Australia, South Africa, the European Union, China and India probably will, too. All have their own variations, but that means this is a global thing.
"Still, FAA's prediction, though optimistic, is for slow growth. I call it 'spreadsheet-based palm reading.' How do you take a seven-year history and forecast 20 years ahead? My goodness, so much is going to change in that time! So take it all with a grain of salt," Dan concludes.
Reflecting on successes like Legend, Cub Crafters, Flight Design, Cessna and Arion, why haven't their less robust counterparts succeeded, though they also make excellent aircraft? "It's like the car industry," Dan speculates. "Some models click and are around forever; some get ignored. Look at the Chevy Volt! Tecnam is a classic LSA case. Here's a whole stable of nice airplanes from a company that formed in 1951, but their aircraft haven't quite clicked yet. Maybe distribution changes they made along the way broke the public perception of continuity. People don't like too much change."
Dan cites the difficulty of financing as another "sluggish sales" factor, just as housing and other markets have suffered from tight money. "That really hurts flight schools, which need aircraft. And for some buyers, LSA aren't even on their radar yet. I bet if you walked around here at Sun 'n Fun and polled every existing pilot, they're all aware of LSA—five years ago that wasn't true—but most I bet would not yet have really looked at one, or they just aren't interested. They want more than two seats, they want to go faster than 120 knots, they want more useful load.
"But I believe the majority of people not buying aircraft fall into two main areas: those nervous about acting in uncertain economic times and those not yet convinced the LSA industry has proven itself," Dan adds.
Events like the FAA rattling sabers by threatening to audit manufacturers for ASTM compliance creates the false impression that LSA as a whole has a major problem. People go, "Hmmm, maybe these things aren't as good as I had thought."
At Sun 'n Fun, Dan announced an agreement between LAMA and Embry- Riddle Aeronautical University to provide ASTM audits to manufacturers for $15,000—a bargain compared to the conventional audits. That should help keep the regulatory wolf away from the door.
But, wait: There's more! Sorry folks, we'll have to continue our chat with Dan Johnson next month