Makers of small planes trying to regain sales altitude
Bedford, Mass. — There's nothing like your first try at guiding a four-seater piston plane down the runway at full throttle, lifting the nose into the air, and watching the reds and yellows of New England's foliage blend into a massive carpet below. It's enough to make you think seriously about taking flying lessons - maybe even buying your own small plane.
That's just the kind of attitude the Cessna Aircraft Company hopes to stir up with its lump-sum price for private pilot training, with up to a year to become licensed.
''The number of licensed pilots has been dropping and we need to get more pilots out there to buy more planes,'' Cessna spokeswoman Pam Mitchell tells this reporter over the roar of the plane's engine.
Trying to train a pilot who may eventually buy a plane is one of many recession-sparked marketing strategies popping up in the general-aviation industry. For the last three years, overall deliveries have gone nowhere but downhill.
For the first nine months of this year, total deliveries of general-aviation aircraft are off 57.1 percent from the same time last year, says Ronald Swanda of the General Aviation Manufacturers Association. And while larger business planes were holding their own, and even doing well last year, their performance has now caught up, or down rather, to that of single-engine planes.
With the recession dragging them down the longest, manufacturers of single-engine piston planes ''have been compelled to do all sorts of things to get more volume,'' says Wolfgang Demisch, who follows the industry for Morgan Stanley, the investment bankers. But these strategies ''will have marginal impact in terms of expanding the overall market - though they might be a factor in keeping some companies from doing worse than they are,'' he adds.
At Cessna, training more pilots isn't the only strategy. From April until Sept. 30 of this year, Cessna financed loans with zero interest on the first year of payments for any piston plane. It was ''a tremendous success,'' said Brian Barents, Cessna's senior vice-president of marketing.
At Mooney Aircraft Corporation, the Kerrville, Texas-based subsidiary of Republic Steel, they make two kinds of planes. Both are four-seat, single-engine , retractable-landing-gear planes. Thomas Smith, president of the company, calls them ''the equivalent of a BMW or Porsche.'' Last year, Mooney sold 325 planes; this year it expects to sell 200.
Since 1980 the company has added some new twists to its financing of planes. First, it offered RIAP - retail interest assistance program. RIAP subsidizes the interest charges. When the prime was at 20 percent, Mooney was offering 14 to 16 percent. This year, it introduced REAP - rapid equity accumulation plan. The buyer has a fixed payment each month and the length of the loan, or number of payments, is governed by what's happening to interest rates.
''If we had not had these types of programs,'' Mr. Smith says, ''our business would have been much poorer this year.''
To stimulate sales in the twin-engine, turboprop, and turbojet markets, manufacturers have explored leasing, telemarketing, and even free fuel.
In 1981, Gulfstream American Corporation, which manufactures business jets, offered free fuel for a year if the plane was bought by May 30. ''We got 13 sales from the program,'' a Gulfstream spokesman said.
But Larry Ford, Gulfstream's manager of aircraft finance, says the company's emphasis is on ''tailor-made'' deals. ''People that come to us have different needs. Some want very little down, or very low payments.'' Mr. Ford adds that some people have even offered land and yachts in exchange for a plane - ''but we haven't considered that yet.''
Cessna, which sold 3,200 fewer planes in the first nine months of this year than in the same period last year, believes one way to move corporate planes is leasing - a strategy gaining popularity with aircraft makers.
Since Sept. 22, Cessna has offered a five-year contract at fixed rates (ranging from $25,000 to $45,000 a month) on its turbo-powered planes. It includes a new plane, a trained pilot and copilot, hangar at a nearby airport, maintenance, and insurance.
Beech Aircraft Corporation, an arm of the Raytheon Company, has begun offering insurance discounts and special warranties.
Its latest ''pioneering step,'' according to Carl Berg, manager of domestic marketing at Beech, is telemarketing. Beech ran an ad recently in the Wall Street Journal which included its new 800 information and order-placing number. People are more likely to call about a product than write you a letter, Mr. Berg says, adding that telemarketing has reduced the company's response time ''from days to 30 seconds.''
Although Mr. Demisch, the Morgan Stanley analyst, argues that these marketing ploys won't bring the industry back to the good old days, ''at least they will give customers some extra reason to come in and kick a tire.'' But the good old days aren't too far away, either. He forecasts the industry's ''return to health'' in 1984.