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Affordable airplanes taking off

Marketplace Staff Jul 31, 2006

KAI RYSSDAL: United Airlines has turned a profit for the first time in almost six years. United’s parent company UAL said today it’s back in the black. The announcement caps what’s been a remarkable earnings season for big US airlines. But down on the other end of the aviation scale, business is still tricky. Small planemakers have been having a rough ride. Sales have slowed mostly because of sky-high price tags. Now the industry’s coming out with what could be aviation’s answer to the Model T. Jason Paur reports.

JASON PAUR: At the world’s largest air show in Oshkosh, Wis., there were thousands and thousands of airplanes of all kinds for aviation fans to admire. One of the big attractions was a new class of small planes. For many years, the small, recreational aircraft industry has been on unstable footing as the number of new pilots in the country has declined. But after decades of stagnation, the small airplane business is starting to turn around.

TOM PEGHINY: I’ve been in the business for over 35 years and this is the first non-marginal aviation business I’ve ever been associated with.

That’s Tom Peghiny, he’s the president of Flight Design USA, a company that makes a small, two-seat airplane. It’s part of a new sector of the aviation industry known as light-sport aircraft. The new sector is aimed at reducing the cost and simplifying the process of getting a pilot’s license, while maintaining safety. Peghiny says new regulations are responsible for the booming new industry.

PEGHINY: Right now we’re seeing the confluence of the demographics of the baby boomer pilots, new technology coming in with the electronic revolution in aviation. And then the new regulation that’s allowing these new aircraft, it is a fantastic time to be in the business.

The new rules are a result of more than 10 years of work by the aviation industry, pilot groups and the Federal Aviation Administration. They’ve come up with a pilot’s license that’s aimed at people who only want to fly simpler aircraft in less congested airspace. Sort of the equivalent of a Sunday afternoon drive in the country.

Getting that license is about a third the price of a normal pilot’s license. And the new airplanes cost about as much as a high-end sports car, rather than a new house. Ron Wagner is with the Experimental Aviation Association. He says a major goal of light-sport aircraft is to attract people who may have taken their money elsewhere.

RON WAGNER: We believe that through the sport pilot initiative, flying as a recreational activity is now on a much more level playing field with other sort of high-end recreational activities such as boating, sailing, snowmobiling, Harley Davidson motorcycles.

In just the first year since the new regulations have been in existence, more than 500 light-sport aircraft have been sold, and thousands of student pilot licenses have been issued. While these may be small numbers compared to something like motorcycling, it’s been enough to attract nearly 40 airplane makers, many of them new. And it’s also attracted some of the industry’s giants.

Cessna is a name almost synonymous with small aircraft. In recent years much of its focus has been on corporate jets, but at Oshkosh the company unveiled its model into the light-sport aircraft market. Chairman and CEO Jack Pelton says the company hasn’t committed yet, but they see it as a very viable sector of their business.

JACK PELTON: Right now we’re very optimistic that with the new technologies of engines and avionics and the new standards that were created for this airplane, we can not only make money with it, but also deliver high volumes.

One of the potential customers looking at light-sport aircraft at the Oshkosh air show was Raj Upadhya. He’s been a pilot for more than 10 years, but with new aircraft costing hundreds of thousands of dollars, he’s resorted to renting older planes. Upadhya says light-sport aircraft brings him closer to his dream of owning a plane.

RAJ UPADHYA: There’s people that have, obviously, much more disposable income than me that are buying the half-million-dollar planes, but something like that is something reasonable that . . . it’s a luxury, but I think it’s an achievable luxury.

The idea of “achievable luxury” is just what the aviation community had in mind when it proposed the new idea. Now it’s hoping the little planes will carry the industry to great new heights.

In Oshkosh, Wis., I’m Jason Paur for Marketplace.

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