"John A. Weeks III" <john@[EMAIL PROTECTED]
> wrote:
> The airplane market is even worse. In order to sell a private
> airplane, it has to be type certified. It costs millions to get
> certification. It is very unlikely that anyone could sell enough
> units to pay back the cost.
The above example is simply no longer valid because:
1) It is no longer necessary for manufacturers to go through standard FAA
type certification for aircraft meeting "Light S****t Aircraft" (LSA)
performance criteria.[1] The LSA manufacturers must follow ASTM consensus
standards but otherwise basically self-certify. The result has been a
flood of new aircraft into the two-seat single engine aircraft market.
Typical prices range from US$70,000 to $130,000.(A couple examples: [2]
[3])
2) Even before LSA rules were adopted, the "General Aviation
Revitalization Act" (GARA) of 1994 placed an 18 year statute of
limitations on liability claims against aircraft makers, addressing one
of the alleged reasons Cessna, Piper, and Beech had sold so few planes
(or in the case of Piper, gone bankrupt till restarted under the "New
Piper" brand) when sales collapsed starting around 1978 when, according
to reference [4], sales peaked:
1978: ~18,000 small general aviation aircraft sales
1981: ~9,000
1982: ~4,200
1983: ~2,600
early 1990's: ~1000/year
(The number of active U.S. pilots peaked at 825,000 in 1980.)
3) In 1986 Cirrus aircraft was incor****ated (in the midst of the the
sales decline) by the Klapmeier brothers. According to Fallows[4] the
founders were convinced that while lawsuits and indefinite liability was
a problem, small aircraft makers were actually to blame for their own
woes since they'd stopped innovating decades earlier. Cirrus, which 'came
out of no where' has since that time managed to acquire full
certification on several models and by 2002 became the best selling
certified single engine airplane - besting even Cessna.
4) The Fallows' book (which I recommend - it's a good mix of solid
aviation content, business decision making and insights into innovation)
contains many interesting comments, such as this sampling:
"So as Cessna, which had made more GA propeller planes than any other
company, moved out of that market altogether in the mid-eighties, it had
tort liability as the public excuse for what was basically a ****ft in
business judgment." [Basically a move towards Citation business jet
sales. And Fallows quotes one of the founders of Cirrus:]
"Pilots, with their ego, couldn't believe that no one was paying
attention to them and their single-engines planes," Alan Klapmeier says.
"So it was easier to tell them, We didn't want to abandon you, but those
nasty tort laws just made it impossible for us."
Ironically the ****ft to jet sales did allegedly then make the liability
issue a genuine factor. Liability rates appear to be based on the number
of planes already sold and still in service, not current sales, so thanks
to a huge buildup in fleet size over the decades but suddenly reduced
sales (due to a deliberate ****ft in business emphasis) the $10
million/year insurance bill stays roughly same no matter how many planes
are sold in any given year (unless they have a spectaular year of
course!) so if they sell 5000 planes a year, the amortized insurance cost
is $2000/plane, but if they sell only 500 planes, the amortized insurance
cost is $20,000/plane. (Numbers lifted straight from Fallows' book.)
[1] http://en.wikipedia.org/wiki/Light-s****t_aircraft
[2] http://www.flightdesignusa.com/
[3] http://www.tampabayaeros****t.com/ApolloFox.html
[4] "Free Flight" by James Fallows, 2001. ISBN 1-58648-040-5
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