The New Economics Of Flying

I'd been flying late-model Cirrus SR22s that I've been leasing for several years now, and I loved the plane. So several of my friends have wondered why I'd go the route of buying a Cessna 182, an airplane that's not as fast as the SR22, to state the obvious, and not as technologically advanced, either. To state something just as obvious, a 50-year-old Skylane is a lot less expensive than any SR22, the least expensive of which on the used market still run $150,000 with older avionics and an engine in most cases that's looking at an overhaul soon.

My decision to buy an older Skylane was in part because it's a great airplane, one that I'll fly a lot.

But it was also to prove a point.

For years, I've heard from pilots who feel as though aviation has priced them out of the market, that with entry-level Part 23 planes starting at $250,000 and most LSAs at around $150,000, they felt as though there was no way they'd be able to afford a new plane.

But many of them also felt as though they couldn't afford a used plane either, that the purchase price, maintenance, insurance, tie-down and fuel costs were just too high.

I've always had the feeling that if I looked carefully enough, I'd find that this wasn't exactly true. But try as I might, I had a hard time showing that a great used plane could measure up against new models.

Those of us who lived through the 15 years from around 1965 to 1980 saw the coming of age of the men and women who were still just kids when we went through World War II. By the middle of the 1960s, many of them were in the market for station wagons, ranch homes and four-seat general aviation airplanes. The confluence of events was a perfect storm for creating economic tailwinds for aviation.

With hundreds of thousands of potential pilots making their way into their prime earning years, with American manufacturing at its height and the middle class a thriving social segment, general aviation took off in a big way. Between 1965, the first year of the modern era that GA manufacturers built more than 10,000 planes, and 1980, the last year they did so, U.S. aircraft manufacturers produced and delivered around 215,000 piston planes, for an average of more than 14,000 per year. To get a feel for the contrast between then and now, general aviation manufacturers these days have been averaging around 750 piston planes produced per year between 2008 and 2016.

In terms of how much it costs to own an airplane, suffice it to say that even using real dollars, new airplanes are more expensive to buy today than they were in, say, 1972, though not by as much as you might imagine. Some costs, such as insurance, hangar rent, a quart of oil or an hour of instruction, are close to the same cost or even less than they were 45 years ago, again, in real dollars. A hangar, for instance, which could be had for between $50 and $75 a month back in the early 1970s goes for around $250 a month in most areas, about half of what it should cost had the increase in hangar rent gone up in tandem with inflation.

And used planes themselves are a good deal, too. The 1964 Skylane went for around $18,000 new. In today's dollars, that same new airplane would be worth about $140,000. So, even given a worn-out engine or the need for new carpet, a $50,000 182 in the year 2017 is a great deal.

And the even better news is that there are still a lot of good used planes out there, maybe not 215,000 of them, but many thousands of them, to be sure.

And you don't need to come up with $50,000 to buy one. There are banks out there ready to loan the money on a good plane at good rates with not a lot of money down. You can even get a longer term on a plane than you can with a car, in part because in five or 10 years the used plane will almost certainly be worth more than its purchase price today.

In order to prove the point, we started with arguably the prototypical GA plane, the Cessna 182 Skylane, which was introduced in the mid-1950s and which is still available as a new plane today.

It seemed the perfect model to illustrate the fact that you can take a great used plane and add some key features to make it if not new, then within earshot of it.

Not surprisingly, the 182 is the most searched plane on Trade-A-Plane, the general aviation marketplace that's been around longer than most of us have been alive. And it's not by mistake. The Skylane is roomy, safe, economical, and it carries a great load. It's a good IFR platform, there are dozens of aftermarket mods for the plane, and Skylanes hold their value tenaciously, so if you ever need to or want to sell it (the latter being less likely), there's always a ready market for these great planes.

So, the idea is to turn a used Skylane into an approximation of a new one at a decent price. Can it be done?

When I started looking for my Skylane, I searched a number of used plane sites, including Trade-A-Plane, ASO.com, Controller.com and Barnstormers. I was looking for a 182 for around $50,000 with either an engine that needed an overhaul and nice avionics or a good engine and prop and the need for a panel. I could have looked for both, but only if I'd bumped my desired purchase price by $25,000 or so.

As it turned out, I found not one but three Skylanes in short succession. The first, being sold by an owner just west of Pittsburgh, Pennsylvania, was a good prospect but had too many issues, including some corrosion and some damage history that looked a little concerning. The second, a slightly newer 182 in South Texas, was promising. It had a like-new interior and some good radios, but the engine needed work, or would soon, and the seller wasn't particularly responsive, so I was almost happy to hear that it already had a buyer coming to look at it.

The third time was the charm. My 1964 Skylane was owned by a gentleman in South Carolina, who had taken really good care of it. An inventor, engineer, competitive sailplane pilot, classic airplane restorer and very high-time pilot, he kept the airplane in a hangar for the last many years, and it was in very nice condition. The engine was low time (around 350 hours since major, at which point it got a new Hartzell two-blade metal prop), the paint looked brand new, and while the interior needed a little love, the seats were still good, and the glass was. too. It needed radios, though a VFR-only pilot could make do quite nicely with the current setup and, say, a Garmin aera 660 on the yoke.

In this case, it took me about a month to find it, but I did, and I'm confident I could find a steady stream of Skylanes for around that price that with a few thousand more dollars invested could do good service. But the bigger story today---and this wasn't true even two years ago---is that there's a lot more I'll be able to do with it for just a little more money.

It's hard for used planes to measure up with new models these days, largely because today's planes come out of the factory with panels that make even the most expensive business jets of 25 years ago look positively antique. Also, with these panels, new planes offer a number of terrific safety features, some of them optional, some of them part of the package. We get digital, full-function autopilots---and, yes, I'm mostly talking about Garmin G1000 avionics here---traffic alerting, terrain awareness, moving maps, WAAS approaches that rival the best of the traditional instrument approaches that predate area navigation, and we get powerful flight management systems, most of the newest ones featuring vertical navigation capability. In some, you even get envelope protection, which helps us keep from getting into situations where loss of control is possible. In the Cirrus, you even get a whole-airplane recovery parachute system.

For those of us who fly IFR to get places, perhaps the biggest advance has been in the form of solid-state heading and attitude systems that drive digital displays. These systems have relegated mechanical instruments that rely on vacuum power to the dustbin of avionics history. Digital rules.

All this technological advancement sounds like a lot for an airplane built 40 or 50 years ago to compete against, and it is. In order for my 53-year-old Skylane to measure up, it would need a staggering amount of technology inserted into it, and that would cost so much, at least in the old world, that it would double or triple the sales price of the used plane that we started with. In the case of my 182, a $50,000 airplane could quickly become a $100,000 airplane, and if you tried a little, a $150,000 airplane.

So wouldn't it be great if we could take that technology and somehow get it into the many thousands of high-quality used planes out there on the used market but at a cost that still makes sense?

That's what this experiment is all about.

Besides the high price of new airplanes, which we're specifically attempting to circumvent here, the other cost that aviation consumers most often complain about is avgas. As I write this, the average cost of a gallon of 100LL is about $4.50, according to 100LL.com, but that's only after a steep decline in the average price of avgas over the past 18 months, a decline that hasn't matched that of auto fuel, which in many places is half the price it cost two years ago.

With American fuel oil reserves at an all-time high and with new, promising (if controversial) sources of energy heating up, the prospects for continued affordable, if not cheap, avgas remain promising, though there are built-in barriers to 100LL prices going down, including refining and transportation costs that are unique to this fuel type. One question that remains is just how the introduction of a new, yet to be selected, unleaded aviation fuel affects prices at the pump. Our best, slightly optimistic guess is that fuel prices will increase marginally, with the continued lower price of fuel oil helping to moderate what might have been steeper increases.

Over the next seven to 10 years, it's likely that many pilots who fly for transportation will continue to be affected by fuel prices much as they are today. For many of us, this means the consideration won't be whether we own a plane or not but how much we fly the plane we own. For owners of very high-value piston or turbine aircraft, the cost equation is different. The cost of owning and maintaining a turbine aircraft is typically high enough that fuel becomes a lesser factor, and by not flying as much they would be leaving much of the value of their high-priced transportation asset on the table.

One could make the argument that any aircraft owner should view operating costs the same way, with the price of fuel for the number of hours you operate being part of the overall price proposition of ownership. With fuel prices fluctuating wildly these past couple of decades, however, that approach is often easier said than done. So while there's not much we can do about fuel prices---even those planes, like my Skylane, that have an autofuel STC---are usually forced to put much more expensive 100LL in the tank for lack of available auto gas at the airport.

And while diesel engines are more fuel efficient, they're available only in new planes or as an extremely expensive retrofit on existing planes. There are a few promising Jet-A piston engines in development, but for now diesel isn't an economical alternative for retrofitting a good used plane. Electrics are even less relevant to this conversation, at least today. At some point, if battery life can make spectacular gains in efficiency, electrics will probably take over all of the GA fleet. But that's a big if, so for now we'll keep our eyes open for change and live with the state of gas piston affairs as they are, which is far from ideal, with engine maintenance and overhaul representing the largest potential cost, by far, for aircraft in this class.

Still, for engines that are designed to last as long as 2,000 hours of flight time and that routinely go 1,500 hours without major overhauls required, there's a lot of life left in even a mid-time engine, though the prospects of a mid-life overhaul leave light GA plane owners nervous, and understandably so, as the potential $25,000 bill is one that's hard to justify when the airplane it powers is worth only twice that. This is why owners create an engine and prop reserve, so that even if the cost isn't completely covered, at least the sting is a little less nasty.

Even if we can't do anything about fuel prices or engine/propeller costs, there has been one big change in the value of used planes: the prospect of high-tech avionics coming to market at rock-bottom prices.

Even a year ago, the idea of turning a 50-plus-year-old Skylane into a like-new machine for a reasonable price was pure fantasy. But then something amazing happened. Dynon, in concert with the FAA, got its D10A solid-state primary reference attitude indicator approved by the FAA. The instrument, one that was already a generation behind Dynon's remarkable touch-screen flat-panel displays, nevertheless caused a stir because, before the FAA gave it its blessing, it was purely for Experimentals and LSAs.

Moreover, the D10A was migrated from the Experimental to the certificated world using an odd reading of a rule that allows commercial parts onto existing airplanes, which allowed Lear to put coffee makers in its jets. The FAA is unlikely to use that same rule again, but luckily it has started approving new avionics and even flight control systems using an approval process that looks at the level of risk of the system being installed. The lower the calculated level of risk, the better the chance for approval.

How much could this new FAA attitude toward new avionics approvals change things? Imagine, if you will, a primary flight display and HSI combination that will run you around $5,000 combined installed. That's the deal with Garmin's new G5 instruments, both of which were developed from instruments designed for the Experimental market and which the FAA approved for use in Part 23-certificated airplanes, like my Skylane, into which a pair of G5s will soon be going.

Unlike the Dynon D10A, the Garmin G5's certification, and likely just about every subsequent certification of formerly non-certificated avionics (and maybe more?) into a Part 23 airplane will go the route of a "low-risk" approval. We're not exactly sure how the level of risk is determined, but if I had to bet my life on the reliability of a Garmin G5 over a 40-year-old spinning iron gyro attitude instrument! I think you know the answer to this one. The risk is orders of magnitude lower for these new instruments, and if you start adding instruments you get redundancy and a great standby, though for now you'll need to leave the old instruments in the panel, which seems silly to us, too, but baby steps, right?

And this is just the beginning. Shortly before Sun ’n Fun, TruTrak, a maker of flight control systems for amateur-built planes, announced that its Vizion autopilot had earned approval for installation in Cessna 172s Skyhawks and Cessna Cardinals. Total cost of the autopilot in these airplanes, including installation, will be around $7,000, an unheard-of figure for an autopilot. TruTrak is unlikely to have the market to itself for long. Rumors are flying that other manufacturers are at work on similar, competing products.

This movement to bring affordable new avionics to old airplanes is a big deal. The cost and complexity of earning FAA certification for a new avionics component is prohibitive. Consider that a certified retrofit flat-panel avionics system with navigation and communications capabilities will cost the owner upwards of $50,000, while a substantially similar panel in an Experimental plane will go for about a quarter of that price with more functions and features.

Are we going to see integrated flat-panel avionics systems for used light planes, like a G1000-like panel from Garmin or some other manufacturer, for $25,000 installed? Sounds impossible, but that's the direction in which we're headed. And, if it comes to pass, or if we come even close to such a future, the used airplane market will be completely transformed and lots of pilots who have had to suffer with aging hardware with failure-prone mechanical instruments will be flying some still great airframes with panels that previously they couldn't hope to find in a plane that cost less than $250,000.

We're ready for this future and look forward to sharing our adventures with you as we remake a 1964 Skylane into a whole new airplane that rivals in many ways a factory-new model.