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Thu, May 26, 2005

Fuel Costs Starting To Factor Into GA Sales Decision-Making

ANN stays in touch with the GA world (as well as other aspects of the aero-biz) by maintaining regular contact with persons and companies who comprise the rank and file of this business.

A popular conversation topic, more and more with each succeeding month, revolves around the rising cost of AvGas and the effect it will have on the sustainability of GA's growth spurt.

Recent escalations in the price of AvGas, rumors about its future availability, and the threat of continued price increases is starting to show up in the decisions being made by GA aircraft buyers. Aviation fuel costs have escalated at a rate equal to, or in excess of, what car-drivers are seeing at gas pumps while the unique refining requirements, as well as limited market, for AvGas promise that prices will remain pricey for the foreseeable future.

Concern over these prices is starting to show up in the decisions being voiced by buyers of today's GA products. Fred Ahles, President of Premier Aircraft Sales, one of the most active aircraft sales organization in the GA spectrum, agrees.

"We're hearing it more and more," he notes.

"While it may not be the primary reason people buy any particular aircraft, it is more and more a supporting factor, especially with those aircraft that boast some level of economy over others." Ahles has a thriving Diamond and Mooney dealership network (and is reportedly a top sales agent for both lines), aircraft already known for their efficiency and lower operating costs, so operational economy is likely to be something he hears about a lot.

"One might not think that someone who may be spending as much as $400,000 on a new airplane would be concerned about fuel costs, but when they're comparing one aircraft against another, that may cost as much as another $15-20 per hour, one can see where the costs start to add up over the life of a purchase. Buyers are not unaware of this." When factored into a 200-300 hour yearly utilization, such savings can represent as much as $3000-4500 every year... "which pays for a lot of insurance and other necessities," says Ahles (pictured, right).

Ahles reported that one area in which fuel costs are having a strong and immediate impact on buying decisions, comes from flight schools and aircraft destined for lease-back. "Being able to shave a few dollars an hour off the cost of operating a training or rental aircraft is very important to flight schools. It can mean the difference between profit and loss... and this makes them more competitive with other schools and FBOs. It's a growing concern now, and I think we're going to see it become an even bigger factor down the road."

This is one of the reasons that next-generation aero-diesel engines (offered by Diamond, overseas only, at the moment for their DA40s and soon for the DA42 twin) are getting a lot of attention. "TDI (Thielert diesel) inquiries are way up," Fred confirms, "I think the flight schools are going to adopt diesel in a very big way when they become readily available. I mean, we're talking about half the comparable fuel costs in some cases. The European market is already coming around fast."

A recent ANN test flight showed that the Thielert powered DA40 could fly on as little as 2 GPH of Jet A and rarely consumed more than 5-6 GPH throughout the normal operating ranges of a test flight -- and Jet A is usually cheaper than AvGas, to boot. That's a compelling issue.

As a result, a number of GA manufacturers are looking at alternative powerplants, using either alternative fuels or more efficient power systems (FADEC, liquid-cooling, and the like), to keep the fuel crunch from strangling the future of GA. Major announcements are reportedly less than a year away from a number of GA manufacturers with engine builders Thielert and Bombardier (with their surprisingly efficient, and potentially multi-fuel-able, V6) looking to ride the leading edge of the first real revolution in GA powerplant technology we've seen in quite a while. More info to follow...

FMI: www.premieraircraftsales.com, www.centurion-engines.com, www.vaircraftengine.com (under redevelopment until 07.01.05)

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