What If There's a Glass Tax?

TV is a harsh and impatient mistress. (Just ask Donald Trump.) And so it was when I was blathering on in Friday’s VLOG about refurbs and airplane prices, I had to leave some material in the bit bucket in the service of shortening the video. But I think it’s worth mentioning in a follow-up.

You will have noted in the video that Yingling’s Ascend 172 has a steam-gauge panel. Really? Yeah, really. Isn’t that a step backwards? Virtually everything sold new today has glass; round dials and iron gyros disappeared almost a decade ago. Of the four remanufactured products now on the market, two have glass—the Redbird Redhawk and Premier’s diesel conversion—and two have steam gauges, the Sporty’s 172 Lite and Yingling’s Ascend. So buyers will have a choice and we might find out how price-sensitive they really are. What passes for conventional wisdom in aviation has always shown that when a long list of options are available, that’s what buyers will want. Historically, at least recently, stripped-down basic models of anything—airplanes, GPSs, apps—have not sold well. If buyers are willing to go in at all, they’re more likely to go all in.

But is that part of the problem with high new aircraft prices? Have we, in a sense, cooked our own goose? That’s what occurred to me when I was graphing the sales and price data for the VLOG and noticed something curious. Historically, new aircraft prices have been through cycles of short periods of tracking or only slightly exceeding the CPI, followed by periods of rapidly exceeding it. This is exactly what happened between 1998 and 2006, when sales were booming. But then came steep prices rises for the 172. What caused this? Only Cessna execs know for sure; perhaps a memo came down from Textron ordering better quarterly numbers. That’s actually what I suspect happened, because new aircraft prices, just as with avgas, don’t necessarily reflect the true cost of goods with a margin thrown in. There’s an element of psychological pricing.

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<p>So what may have aided and abetted the psychology in 2006 is the advent of the glass panel—specifically the Garmin G1000. It first appeared in the 2005 production year and was the system of choice shortly thereafter. The cost of the G1000 alone couldn't have accounted entirely for the steep price rise. Although avionics now account for a large percentage of the cost of an airplane, glass isn't that expensive. But perhaps the glass panel lends a panache and uniqueness to the entire package that supports a <em>perceived</em> higher value. If you've ever perused the used aircraft ads, recent model Skyhawks are almost always listed as

Maybe it’s a coincidence, but if I superimpose a shaded area on the graph labeled “the age of glass” it correlates loosely with declining sales. It’s not a perfect fit, of course, but it’s also more than a curiosity and it can’t help but raise this question: Are higher prices and slow sales the result of a glass tax? The GA market is, at best, tender and it’s fair to ask if buyers developed eyes for glass bigger than their checkbooks. I’ve also heard the reverse, that glass panels actually stimulated sales and without these systems, the downturn would have been both sooner and worse. Maybe, but the data doesn’t support this. And I’m talking mainly about trainers and utility aircraft. I haven’t plotted the data for, say Cirrus or Piper personal aircraft.

Not that I’m suggesting we go back to steam gauges. EFIS has proven more reliable, more capable and perhaps safer for some pilots. On situational awareness alone, it far outstrips analog instrumentation. And it’s just more desirable. Butthere is definitely a price to pay for all this technology—both in buying it and, especially, feeding it data. So what Yingling is saying, albeit not in so many words, is that maybe buyers will give glass a pass in favor of a lower price, which at the most basic for the Ascend 172 is $159,000. Schools that buy such airplanes will now have to deal with some kind of differences training to prepare many of their students for the airplanes they might either transition into as professional pilots or buy as the next generation of aircraft owners. Somehow, I don’t think that’s going to prove a deal breaker, especially when measured against airplanes that cost less than half as much as new ones do.

As I said in the VLOG, the next two to three years will be telling. I would deem remanufactured airplanes a success if the lot of them sell 150 airframes during that period. To my mind, that will establish a trend and prove that at least for some buyers, aircraft price really is a driver.

How to Sell? Do This

The other day, out of the blue, I got a call from Mike Ciochetti. You probably don’t know Mike and I just met him at AirVenture last month. He’s CEO for Heaven’s Landing, an airport community in Rabun, in the Georgia mountains northeast of Atlanta. If you saw our Top Ten Reasons You Know You’re At AirVenture video, the girls playing angels were in Mike’s booth.

When we met, we exchanged cards and he invited me up to Rabun to look over the place. I’m frequently up that way on motorcycle tours. I mention this because the follow-up call for sales and promotion has become a lost art. Hell, in aviation sales and promotion, just returning a call is a lost art. This is the way old-school salespeople used to operate. They left no stones unturned, no leads unfollowed, no calls unreturned. And they got results.

Maybe in the crush of the modern world, with tweets, emails and texts flying around at the speed of heat, people just don’t respond the way they once did. Sometimes I can’t help but feel that in aviation, we’re so beat down by bad news and a flat economy, that even people whose job is to return sales calls and do promotion just kind of give up.

Well, don’t. You never know when that call you’re about to blow off actually represents a sale or a contact that will yield something worthwhile, say like a link to a business you own. A call from the press offers an opportunity to have your story told and that’s never a bad thing.

So this month’s Doing it Right mention goes to Mike Ciochetti.Pass it on.