Advice on possible business startup

Advice on possible business startup

Hello everyone -  I'm brand new to this forum, but not to flying.  I earned my commercial single engine instrument aand commercial multi-engine tickets in the mid mid to late 90's.  I also had the pleasure and privilege of receiving some outstanding aerobatic training in a Super Decathlon in that same time period. Once raising kids took the lead, flying unfortunately went to the back burner for the most part.  So,...long story short,...I want to know if partnering up with a trusted friend to buy, update and sell light general aviation aircraft is something that would work in the down economy.  Our plans DO NOT include anything that would even remotely emulate what unscrupulous real estate brokers did to their customers.  We want to acquire light gen. aviation aircraft (172, 177, 182, etc) at or near TBO and update the paint, panel and engine for the sole purpose of making the aircraft available at a modest price to those who have a dream to own and fly an affordable aircraft.  We really want to focus on doing things right, without going over the top with gizzmos and unnecessary "gee whiz" expenses so that average people can buy a reliable aircraft without financial ruin.  Can someone guide me in the discovery process regarding the feasibility of such a venture and where to turn for more advice.  We are both contracted firemen working in Kuwait and are both pilots.  We have the captial and possibly a third friend who is interested.  We simply love airplanes, flying and being able to share it with others,...hopefully in the form of well, but modestly outfitted, affordable aircraft.  Any help is appreciated,...and thisis my FIRST posting, this subject.  Consider the ball as "rolling".  Thanks in advance !!

PS.  Feel free to contact me privately at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Edited By: mustfly
2011-11-17 20:13:13

mustfly
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Re: Advice on possible business startup

Hi Mustfly,  I attempted to reach a customer of mine who has been essntially doing the same thing that you are considering but I did not hear back from him.  Frankly, the last time I talked to him was six months ago and he was struggling to sell an airplane.  First of all, I have been in the avionics business as a salesman for one of the largest avionics companies for 15 years and have owned six aircraft myself since 1971.  I have not owned an aircraft in the last 18 years but I have watched the market carefully with trepidation.  What I have seen happen to aircraft values in the last 15 years and what is happening now has me concerned that a venture like you are suggesting is ill-timed at best!
Why?  Aircraft values increased at a rediculous level from 1988 to 2008.  My best example is my own experience.  I bought a 1969 Cherokee Six in 1986 for $22000 with 400 hours since major (260 HP) and a brand new paintjob that I got to pick out.  The avionics were older but functional, autopilot worked fine and the interior needed updating which I did myself.  $22,000!   That same 1969 Cherokee Six in similar condition was selling for $95,000 in 2008.  The same year, make and model.  No wonder I haven't owned an aircraft in 18 years!  By the way, I sold it in 1988 for $33,000 and made
$11,000 profit.  In fact, every aircraft I owned and sold during 1972-1988, I made money, I just cleaned them up and presented them well.  Since 2008, we are seeing some "substantial" reductions in aircraft values, especially in the legacy models, 70's and 80's Cherokees and 172/182's. It is very hard to know what a 172 will be worth in 2 years vs. today. In addition, what you are proposing, buying essentially "cores' and rebuilding the aircraft is not going to result in an "affordable" aircraft.  A 172 with fresh paint, engine and interior (not to mention some avionics upgrades)will be a premium aircraft that will appeal to the customer willing to pay a little more for the best.  That's exactly what my customer was doing with the Piper product. You would have to buy the run-outs very cheap to be competitive and find vendors for paint,interior, engines and avionics who will work cheap and sorry, but that concept is suspect also.  Of course, the other issue is financing.  It's getting harder to get financed for an aircraft these days, especially the more expensive ones.  In short, there's a lot of challenges in General Aviation today and it breaks my heart!  There are some real deals out there for people buying right now, although I'm told that a lot of sellers haven't accepted what has happened to the equity in their airplanes.  It's a tough time to be selling, whether your trying to sell your own aircraft, as a broker and ... as an avionics salesman!  Sorry for the cold water in the face!  If I hear from my guy (frankly, if he's still in business), I'll try to put you in touch with him.  I think anyone who loves aviation as I have all these years would love to try to make a living in just the way you propose but the fact is ... Aviation more often than not ends up being a "hobby".  It's a tough way to make a living!  Thanks for listening!  Bob Hart APG-Eastern Avionics

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Re: Advice on possible business startup

Will be taking an early retirement out of a big pharmaceutical company at the end of the year, and thought that would be a good way to spend more time at the airport doing something I enjoy. However, I had much the same experiences with previously owned aircraft as Bob and came to the conclusion that it would be a difficult way to make any money, especially if you have to pay and A&P and IA for much of the work, an avionics shop for radio work, etc.  One other consideration is the cost of parts for Cessna aircraft.  Parts are 10 times what they used to cost from Cessna, and there is no other source for new parts.  The parts I used to buy for $5 dollars in the '80s are $50 dollars now.  Any project aircraft will require a significant investment in replace parts.  Also, because of that serviceable used parts have also gone up significantly in price.  I recently got a quote of $590 for a salvage McCauley wheel brake cylinder.  Makes me think that it might be more profitable in the end to part out my 182RG than try to sell it as a flyable aircraft when I am ready to move on.  The landing gear components alone would probably fetch more that half what I could sell the whole airplane for.

Jon

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