azblackbird
Pattern Altitude
Yes... thus the reason for buying AZ kept planes. Good structures and no corrosion. All refurb work will be done in-house. Very little would be farmed out. All parts machined in-house, or purchased wholesale.
Is there any profit in refurbishing aircraft?
- Thread starter azblackbird
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Yes... thus the reason for buying AZ kept planes. Good structures and no corrosion. All refurb work will be done in-house. Very little would be farmed out. All parts machined in-house, or purchased wholesale.
It's not that simple with aircraft as for many things you need parts from the manufacturer or PMA'd replacement. And there is really no 'wholesale' when it comes to buying plane parts. You would definitely need ab A&P or A&P-IA as part of the venture, if you have to pay someone by the hour, you'll never get anywhere.
azblackbird
Pattern Altitude
Most replacement parts would be made in-house. Very few would be sourced. Yes, an A&P/AI would be on staff along with painter, upholster, and avionics guru. Business structure would be partnership with equitable shares. Everybody would have some skin in the game.
What parts do you propose to produce in-house ?
azblackbird
Pattern Altitude
Anything you can whip out on a 3-5 axis CNC, milling machine, lathe, shear/brakes, water jet, and various other tools in a well stocked machine shop.
mtuomi
En-Route
So only a few hundred k's worth of machinery to pay for.
azblackbird
Pattern Altitude
Buy or lease used. There's always a ton of machining equipment on the market on the cheap. Just like my servers. I let all the big boys buy new and then depreciate them out and then buy them for pennies on the dollar. What's funny is most of the servers I buy are brand new and have never been used, or if they have, only for minor testing and then put away as spares.
mtuomi
En-Route
No, that's a few hundred k, used, in equipment.
azblackbird
Pattern Altitude
Easily could be, that's why it will definitely pay to shop around for the best deal wether purchasing or leasing. A lot of it depends on the current economic climate. When Obama shuttled the space and many military programs, there were tons of nice equipment to be had on the cheap. I see prices are now starting to inch their way back up.
Here's a few Mazak CNCs on E-bay. Here's a few Mazak milling machines, here's a few brake/shears. Remember, I'm not building ocean liners here, so I don't need 50' tables.
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There are very few parts that you would need or be able to produce. Besides, the 'owner produced parts' rule doesn't apply to a business that restores aircraft.
azblackbird
Pattern Altitude
Geez dude, you just put me out of business. Very few machined parts on an airplane. No owner produced parts. Guess that's the end of the discussion then.
I did read this, but it probably doesn't apply in my situation since I'd be the owner and the operator of the airplane to be refurbished.
d. Aircraft Owners or Operators. Owners and operators may produce articles for installation on their own product without a PMA. The installation of these articles must comply with applicable airworthiness standards to preserve the regulatory compliance of their products and ensure continued safe operation. If an owner or operator intends to sell an article for installation on another owner’s aircraft, then they need a PMA.
azblackbird
Pattern Altitude
Who said any thing about labor, all that's free. We all pitch in on machinery, workspace, etc. We all buy a ratted out plane, we all help take the airplane apart, after we all do our magic, then we all help put the airplane back together. Anything left over after expenses and selling the plane we split. Maybe it will work, maybe it won't. It doesn't ever hurt to try...
Who said any thing about labor, all that's free. We all pitch in on machinery, workspace, etc. We all buy a ratted out plane, we all help take the airplane apart, after we all do our magic, then we all help put the airplane back together. Anything left over after expenses and selling the plane we split. Maybe it will work, maybe it won't. It doesn't ever hurt to try...
Oh, so this is a hobby then.
Checkout_my_Six
Touchdown! Greaser!
so....how does one eat? 
CMongoose
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I've enjoyed improving my own plane (paint, avionics, glass, interior), over the past few years. Gives me the ability to select what I want to invest time and money in and what I don't care about. My decisions and priorities are likely to be different from another owner and that has been part of the fun.
If I were to buy from someone else doing this, personally I wouldn't buy into one of these planes without a zero time engine, and it sounds like the model here is for a field overhaul.
A large number of owner produced parts in the logbook would probably reduce the price i'm willing to pay too. Even if I was comfortable with the quality of the work at purchase, there is aways the resale price to consider.
If I were to buy from someone else doing this, personally I wouldn't buy into one of these planes without a zero time engine, and it sounds like the model here is for a field overhaul.
A large number of owner produced parts in the logbook would probably reduce the price i'm willing to pay too. Even if I was comfortable with the quality of the work at purchase, there is aways the resale price to consider.
OkieAviator
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Nothing is 'free'. The people helping won't be doing it out of their good will, they will be doing it with a focus on some type of monetary gain through the split post selling. When you get to the money split you will have individuals who feel they contributed more than someone else, therefore they're entitled to more of the split.
Labor is never free. Generally speaking, labor is the most underestimated cost of doing business.
Even in the simplest business structure I can think of, gross profit is what's left over after variable costs and fixed expenses are paid. Labor is a variable cost.
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kyleb
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Drake the Outlaw
Well then... I guess I'd just have to keep raising my prices until the market would support the model. I'm guessing the concept of "in-house" went way over your head. Your $28k engine rebuild is mid retail. I don't do retail, never have never will. Just watch and see what the future beholds for the GA market. You just might be in for a surprise.
Labor ain't free, nor is overhead. Look around. Who's getting rich in general aviation? Nobody. There's your answer. An efficient market makes it financially infeasible to turn beater aircraft into jewels at a profit. The same rules apply to realists and trolls...
Well then... I guess I'd just have to keep raising my prices until the market would support the model....Just watch and see what the future beholds for the GA market. You just might be in for a surprise.
Assumption: the market you are targeting will support the price you need to operate.
Direct question: how much time have you spent conducting primary research on this 'future' state of the GA market?
I do some work in technology commercialization. We see this type of 'venture' pretty often looking for capital to get started/expand. Hint: investors need 10x returns because 90% of all startups fail. 80% of startups with VC backing fail.
To sort the wheat from the chaff, we need to understand segment, target, position. You're segment is Pilots. Your target is GA pilots that want to buy a used airplane. Your position is that your product is a refurbished day/night VFR 4-place GA aircraft.
How big is the target population?
What features does the target population say they want in your product?
How much is the target population willing to pay for your product?
How much does it cost to produce your product?
Who is the direct competition?
How are you/your product different?
What's your advantage?
Answer those questions. You'll find out very quick, with high certainty, whether or not your assumptions are correct.
jbDC9
Pre-takeoff checklist
Oh please little baby jesus, let this be the end of this thread.... it just keeps going on and on and on and on; the horse is dead, stop beating it. Move on to another troll topic.
paflyer
Final Approach
Not true; I'm "middle class" (I have to get up to go to work every day to support my lifestyle) and own a nice airplane, though modest in the scheme of things. I have 10 year+ old cars and a small mortgage (but health insurance premium is now more than my monthly housing costs.)
You can do it if you make sacrifices in other areas, and joint ownership is a big cost reducer.
Stewartb
Final Approach
Start an airplane refurb business on the side. You'll be rich in no time!
paflyer
Final Approach
paflyer
Final Approach
Dude, I applaud your entrepreneurial spirit. But do the math and keep in mind that skilled "volunteers" always have something more immediately profitable to work on, so your schedule should allow for multi-month delays.Who said any thing about labor, all that's free. We all pitch in on machinery, workspace, etc. We all buy a ratted out plane, we all help take the airplane apart, after we all do our magic, then we all help put the airplane back together. Anything left over after expenses and selling the plane we split. Maybe it will work, maybe it won't. It doesn't ever hurt to try...
As others have pointed out, aircraft aren't hot rods and there are regulations that are designed to impede activities like this. Stick to very simple aircraft with a broad appeal. Good luck!
azblackbird
Pattern Altitude
I've always kinda watched the markets. If I would have had any forethought and a huge hanger, I'd have went on a buying spree after the market crashed and nice planes were going for pennies on the dollar. Now that things are beginning to pick up (and hopefully will stay that way) and people feel that they may have some discretionary income to play with, I see the future for refurbished aircraft as a potential growth market.
My market would be the Barrett-Jackson crowd (business owners/C-level Execs, etc.) Instead of those wanting to purchase their first hot rod or classic car, there's a foreseeable market for those buyers in those income brackets to purchase their first plane. They can't quite afford a new one, but yet they don't want a plane that is sub-par and will nickel and dime them to death over the years. They want a plane that is good looking, modernized, and is ready to hop in and fly (without any unnecessary BS) and would be willing to pay for it.
As an example... I'll eventually be in the market for a T210 to use in my business. Right now there are several on the market that are in the $80-100k+ price range in "somewhat decent" condition. With that said, I've only found one out 50+ that I would deem acceptable to purchase and would be a good fit for what I'm looking for. Using this plane as an example, I'd have no problem paying $160k+ if the panel was a little more modernized, engine had less time, and if it had a fresh (with updated graphics) paint job. However, somebody, somewhere will be getting a smoking deal just the way it sits.
Ventucky Red
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Just looking to fill a niche, that by my observations is not being readily filled. Every business I've ever had I filled a niche somewhere, and have made a good living in doing so.
Then don't sit here a type about... go get-er done!
For point A: How many people have you talked to that share that vision and why do they feel that way? Are they willing to put their money where their mouth is and put down a deposit? Better yet, would they provide you with airframe so you can just do the work for them.
For point B: I know someone in that crowd. Owns a very successful business that's at SEMA every year. Goes to Barrett-Jackson, even bought a Nova there once about 10 years ago. Chris had a business-use Cessna 310. The business could afford to keep it, but the cost to keep it wasn't supported by the revenue it generated. Sold the 310 and has never replaced it. His business travel needs are met much cheaper flying the airlines. How many of these people have you talked to about your plan? Really, the target you are looking for is business owners that are pilots who would buy a used plane.
For point C: That's one data point, yours. How many other data points do you have? What would they be willing to pay? What features/benefits would the plane need for them to pay $160K+? Can you deliver you product.
azblackbird
Pattern Altitude
@TCABM ... I'm not sure if you know what psychographical profiling is, but that's pretty much the mainstay of my current business. Basically I'm a data miner. In the sector I'm in, my team has written algorithms that can profile what a person will purchase, or might potentially purchase given their current lifestyles, income, hobbies, etc.
A crude (but somewhat effective) example is all the ads that follow you around from web site to web site or on your FB pages. We take that one step further and pinpoint our targets with a very high degree of accuracy, and market to potential candidates with the use of various mediums. The internet makes it very easy, as many people are ignorant enough to tell their life stories, or brag about the new home, car, motorcycle, or piece of furniture they just purchased to anyone who will listen.
If I was to pursue this aircraft refurbishing venture in a serious manner, we'd be using the same type of algos and mining techniques, but would tweak them towards the GA marketplace, and would start pulling massive data for analyzation to really see if this could be a worthwhile venture to pursue. As it stands now, I'm just seeing something that might have some future potential down the road. I won't know until I start doing some serious data crunching.
@azblackbird. I get paid to help validate ideas like this for profitability. I see all sorts of data analytics all the time and then talk to the actual people in the actual market (both sellers and buyers) to see if it's realistic or not.
azblackbird
Pattern Altitude
@TCABM Only one problem... most people don't know they're a buyer until the idea has been solidly planted (through repetitive messaging) into their minds, and they can clearly see the value and benefits of how that specific product or service would be applicable to their current or future situation. I get paid to predict (with extreme accuracy in many cases) on identifying those who would have the propensity to purchase those specific products or services based on their psychographic profiles. Case in point, we currently have algos that can tell with decent accuracy when somebody is about ready to buy or sell a home all based on the various data points we collect. Who do you think our clients are?
Just wondering... do you work with VC's?
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yakdriver
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yellow peril
The only way to make any money refurbishing airplanes is to find a niche market. I build/rebuild high end Supercubs. I charge time and materials and make a nice living doing what I enjoy. A friend has a high end Warbird restoration shop and makes a VERY good living. You won't make any money trying to fix up and sell the average GA airplane. Don
citizen5000
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In other words it's not a remanufacturing business. It's paid hobby and niche restoration service. Here is a list of existing suppliers and restorers. http://www.aviatorshotline.com/aviation-services/aircraft-restoration
azblackbird
Pattern Altitude
@yakdriver Would your friend be Bob Hannah?
I'm in total agreement with you, a guy definitely has to find that niche. Congrats on your business.
N747JB
Final Approach
I know a guy that buys and sells 414A's, he will sometimes paint and interior them, sometimes it's RAM engines, sometimes it's a little avionics, but never all the above on one airplane. He's been doing it along time and seems to do OK with it, but I don't think he's getting rich. He bought and sold both of my previous 414A's, not from me, but the subsequent owners. I don't think you can buy common airplanes cheap enough to do a full blown restoration and get anywhere close to breaking even in most cases.
Bobanna
Pre-takeoff checklist
If refurbishing airplanes is anything like cars (I think the "buyers" have similar characteristics), you are dealing with a savvy bunch of tire-kickers.
I entered into an endeavor with a circle of friends and family restoring Yugos. We each contributed our special skills (I was great at checking tire pressures), but we lost our ass (literally; the donkey we used to move Yugos around the shop got away!).
It's ironic that this donkey had mining experience (mostly coal...don't know about data, but maybe). Any ideas on how to recover this ass?
I entered into an endeavor with a circle of friends and family restoring Yugos. We each contributed our special skills (I was great at checking tire pressures), but we lost our ass (literally; the donkey we used to move Yugos around the shop got away!).
It's ironic that this donkey had mining experience (mostly coal...don't know about data, but maybe). Any ideas on how to recover this ass?
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azblackbird
Pattern Altitude
Probably just be sticking with 182, 210 series Cessnas and concentrate on that market to keep everything congruent. Buyers would be mid-west business owners, farmers/ranchers, etc. who have expanded their territories and would have a need for a no-nonsense step-up/complex plane to tend to their business needs. I'm starting to half-assed compile the data as we speak on who my future targets might be.
OkieAviator
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OkieAviator