How s the Avionics Retrofit Business Holding Up?
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- Rudolf McKenzie
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1 industry fit Round Table o r t e R How s the Avionics Retrofit Business Holding Up? b y F ew things outside the movie industry receive as much hype and pre-play as the much-anticipated arrival of glass-panel retrofit packages. Aviation magazines have been filled with stories of seemingly limitless new capabilities and opportunities for pilots and aircraft owners. But the onslaught of business has yet to materialize. Why? It s not as though the packages didn t live up to their expectations. Or did they? Perhaps it depends on whose expectations were they were expected to live up to. As one OEM representative put it, We all drank the Kool-Aid. (Manufacturers) invested heavily in glass-upgrade STCs just because we had the technol- 34 D a l e S m i t h ogy. I don t think any of us took the time to step back and ask the owners if they would be willing to spend all that money on upgrading their aircraft. If we had, we may have done it differently. While it s true panel retrofits haven t exactly set the avionics world on fire, there are some opportunities out there they just might not be where you were expecting to find them. With the mix of a soft economy and some exciting new avionics hardware becoming available, Avionics News decided now would be a good time to ask representatives from small, medium and large avionics shops just what is going on in the cabin and interior retrofit markets. We wanted to know the good, the bad and what they re doing to maximize the opportunities they find today. Joining us for these interviews (which were conducted individually, then assembled into this article) were: Steve Elofson, avionics installation sales manager for Duncan Aviation Bill Forbes, director of business development for Cutter Aviation Jason Francis, avionics manager for American Aviation Gary Harpster, avionics installation sales representative for Duncan Aviation Blake Hogge, senior director of modification and maintenance sales for Midcoast Aviation Bob Jacobson, owner of Custom Avionics Brian Wilson, director of avionics for Banyan Air Services Avionics News (AN): How is the aftermarket business holding up? Bob Jacobson: It pretty much follows the stock market. One day it s up, the next day it s down. It hasn t really been steady since last March or April. Jason Francis: We re not seeing nearly as much interest as we had in the past. We do have some upgrades going on. They re more on the business aircraft side than the private sector, though. Bill Forbes: There are a lot of new products out there today, but interest has slowed down, obviously due to the economy. Blake Hogge: We aren t seeing anything in the cockpit. Quite frankly, it hasn t been part of our business plan to develop a package. It s risky at best. It s tough to recover your money. The OEMs want you to make a significant volume purchase to go in and do this stuff. You re really sticking your neck out there. Based on current economic trends, I think we did the right thing. Brian Wilson: Definitely RFQs (requests for quotes) are down, but there is still some good activity on some nice installation projects. It just makes you focus more and take a closer look to make sure you are selling real value to the prospects. Continued on following page 35
2 industry fit Round Table o r t e R How s the Avionics Retrofit Business Holding Up? b y F ew things outside the movie industry receive as much hype and pre-play as the much-anticipated arrival of glass-panel retrofit packages. Aviation magazines have been filled with stories of seemingly limitless new capabilities and opportunities for pilots and aircraft owners. But the onslaught of business has yet to materialize. Why? It s not as though the packages didn t live up to their expectations. Or did they? Perhaps it depends on whose expectations were they were expected to live up to. As one OEM representative put it, We all drank the Kool-Aid. (Manufacturers) invested heavily in glass-upgrade STCs just because we had the technol- 34 D a l e S m i t h ogy. I don t think any of us took the time to step back and ask the owners if they would be willing to spend all that money on upgrading their aircraft. If we had, we may have done it differently. While it s true panel retrofits haven t exactly set the avionics world on fire, there are some opportunities out there they just might not be where you were expecting to find them. With the mix of a soft economy and some exciting new avionics hardware becoming available, Avionics News decided now would be a good time to ask representatives from small, medium and large avionics shops just what is going on in the cabin and interior retrofit markets. We wanted to know the good, the bad and what they re doing to maximize the opportunities they find today. Joining us for these interviews (which were conducted individually, then assembled into this article) were: Steve Elofson, avionics installation sales manager for Duncan Aviation Bill Forbes, director of business development for Cutter Aviation Jason Francis, avionics manager for American Aviation Gary Harpster, avionics installation sales representative for Duncan Aviation Blake Hogge, senior director of modification and maintenance sales for Midcoast Aviation Bob Jacobson, owner of Custom Avionics Brian Wilson, director of avionics for Banyan Air Services Avionics News (AN): How is the aftermarket business holding up? Bob Jacobson: It pretty much follows the stock market. One day it s up, the next day it s down. It hasn t really been steady since last March or April. Jason Francis: We re not seeing nearly as much interest as we had in the past. We do have some upgrades going on. They re more on the business aircraft side than the private sector, though. Bill Forbes: There are a lot of new products out there today, but interest has slowed down, obviously due to the economy. Blake Hogge: We aren t seeing anything in the cockpit. Quite frankly, it hasn t been part of our business plan to develop a package. It s risky at best. It s tough to recover your money. The OEMs want you to make a significant volume purchase to go in and do this stuff. You re really sticking your neck out there. Based on current economic trends, I think we did the right thing. Brian Wilson: Definitely RFQs (requests for quotes) are down, but there is still some good activity on some nice installation projects. It just makes you focus more and take a closer look to make sure you are selling real value to the prospects. Continued on following page 35
3 retrofit Roundtable Continued from page 35 Gary Harpster: There s no question that the retrofit market has shifted. But what we are seeing now are customers who had told us they were going to buy new airplanes at the beginning of the year but now are calling and asking about upgrades that they can do to their current aircraft. AN: What products or systems are you selling these days? Jacobson: Garmin 430s, transponders, Aspen glass. People see the Aspen Avionics products and they want it, but they don t want to spend the money these days. There are other exciting products the Garmin G600 and Garmin 696 are great. The Garmin 430s are still selling. It s almost a gotta-have for IFR flight. Things like the glass panel upgrades seem to be more elective surgery than something that is necessary today. We still have people on the line they re still talking to us about them, but it s all, first and second quarter 09. Francis: It varies. We were doing the Alliant upgrade packages. We ve done three of those. Also, we re upgrading to some Sandel units. The G600 is probably going to take off as far as PFD-type things. We re putting in a lot of Garmin 430s and 530s and 500-series type systems in the King Airs to replace the old Collins equipment. We ve also done a few S- TEC autopilots recently. One of the guys I ve been talking to for two years, he just decided to do it. The majority of our work is going to be the Garmin 430/530 installations. There is some interest in the G600 and Alliant, but they are kind of holding off to see what the market does during the first part of the year anyway. The new Garmin 696 is great. I ve sold a few of those already. We don t make much money on those sales, but today, a hundred dollars is a hundred dollars. Forbes: Our market has been mostly the G600. We ve done about 10 of those. That s been pretty good, as have the other Garmin products. The next step-up is the King Airs. The G1000 retrofit on the 90s hasn t gone as well as we had hoped. You have the G1000 on the King Air 200 series; that STC should be out here shortly. In the jet market, what seems to be really going right now is the high-speed data in the cabin. It s pretty pricy, but everybody wants it. That s the big draw. If you can t get your BlackBerry to work in the air, you just aren t living. Hogge: We re still seeing money being spent in the back, if not much money being spent in the front. We re doing everything from complete cabin management systems to upgrading monitors. We have a lot of people wanting the ipod docking stations. Most owners have ipods or iphones, and they want to access their music or movies in the cabin. We re still seeing the communications side of it continue. It s not dropping off as bad as some of the areas are. I think connectivity in the cabin is going to take off this year. Even though money is tight, I think we re still going to do a lot of that. Owners want it. People are just dying to get their BlackBerrys to work on the airplane. The Aircell broadband is getting a lot of attention. We provision a lot of airplanes for future installations as product becomes available. Wilson: What s been going strong for us for quite a while is entertainment in the cabin. There are some really good values out there today, where operators, especially back in 04 and 05, were forced to spend a ton of money for RVSM and TAWS, and here the guy paying the check can t put his finger on RVSM or TAWS. Now, these owners are putting in a lot of entertainment packages, which have a moving map, a DVD player, some plug-in monitors or flip-down monitors. Another thing we re doing a lot is installing the ipod docking stations. Everybody who sees it wants it. We put it in everything from Falcon 900s to the smaller cabin aircraft it s amazing. Harpster: Some of the larger aircraft are pretty keen on WAAS. I asked an operator why, and he said they see WAAS as a real advantage because it gives them more flexibility when choosing an airport. Many runways that may not have an ILS will have a WAAS approach. When a crosswind exceeds the aircraft s limitations, they can possibly use a diagonal runway that has the WAAS approach. That gives them flexibility when it comes to selecting an appropriate alternate airport. With WAAS LPV approaches, they can possibly choose an airport that is much closer to their original destination if weather is an issue. Steve Elofson: Surprisingly enough, cockpit retrofits are still pretty popular. Some people are having problems with their current displays they are fuzzy or not real readable, and they ve sent them back to the factory and they don t seem like they re getting the support they are looking for. So, they are asking us what kind of solution we have for them to replace those displays. We ve got two major upgrades scheduled for, and I m talking to other operators. AN: What has been the biggest impact on current business good or bad? Jacobson: The economy. Shops like ours, we sell luxury items. That s the bottom line. You don t have to have a big-screen color GPS tied to the autopilot to go somewhere. We like them to believe that. Things like the 430 are a safety issue. If you ve been in the soup for a couple of hours, you know exactly where you are and what you are going to do next. They ll spend the money for that benefit. Hogge: Selling the benefits. That s always been the tough selling point to panel upgrades. You are spending a lot of money and all you re really getting Continued on page 38 36
4 retrofit Roundtable Continued from page 36 are some pretty displays. Realistically, you probably have a better chance to get someone to belly up for the retrofit money if they are a pilot/owner. They will see the benefits or they want the bells and whistles. There are a few people doing them, but I don t hear a lot of it now. I don t think anyone is setting the world on fire with the retrofits. AN: What would you like to see the avionics OEMs do to help? Jacobson: (OEMs) need to lower the prices or give some incentives to customers to act now to get the money flowing again. I know the OEMs are hurting because all of us little shops are hurting. Throw in some $1,000 discounts or something to interest customers. Francis: Anytime you re fighting a down-turned economy, it is with reduced pricing. (OEMs) are doing that to a point. You buy this and get this at a reduced cost or buy this and get that free. Some of the charts and stuff you can put on the MFDs, or some of the interfacing with the weather products, you get a discount on those. That kind of entices buyers. But from my perspective, when the bottom number for that major piece of equipment is still $30,000 or more, giving them something that isn t a necessity to start with doesn t entice them as much as having the money knocked off of the major part and to buy the extras later on at their cost. Wilson: The OEMs need to develop programs that will help us. What they can do is to listen that s a key word: listen to their dealers and react with what the dealers think are the hot products and price targets that they can meet. That s what they need to do. One major OEM created a dealer advisory board 10 years ago, and I can tell you they are listening to us and producing products that meet our needs not everything, but a lot of it, and it helps. Elofson: The OEMs are going to offer some special prices or deals considering the economic climate now that s very good. We d also like to see them get out and offer more demonstrations and seminars that focus on their new products: WAAS and high-speed data. There s a lot of confusion out there on those subjects. When there is confusion, people are not apt to buy anything. AN: What are you doing to help attract customers today? Jacobson: We are doing a lot more ing and postcard mailings to our customers. We are also becoming more active on our website. We now tie into selling all the Aviall products and Avionics International products. We ve never had much of an Internet presence, but we re working on it more now to try and shore up our business during these hard times. Francis: We send out more mailers than we did in the past. When it starts slowing down, we have to attract the customer by letting them know what s out there. We may decide to cut back a bit on our install prices. We pride ourselves in the end result. That s one thing we are selling to our customers. You can maybe get it done for a few dollars less at shop X, but are you getting the same quality of work attention-to-detail type items? Continued on page 69 Elliott Aviation Announces Upgrade with Universal Avionics Display Suite Elliott Aviation has received FAA certification for an upgraded Elite Series cockpit installation in a Falcon 10/100 aircraft, which features the latest generation of the Universal Avionics EFI-890R display suite. Elliott Aviation originally earned FAA supplemental type certificate approval for its Elite Series cockpit installation in Falcon 10/100 aircraft in The certification aircraft received triple Universal EFI-890R flat-panel integrated displays, as well as the Universal Avionics UNS-1LW WAAS flight management system for which certification is still pending, enabling the aircraft to fly the newest generation of GPS precision approaches, localizer performance and localizer performance with vertical. Nearly 1,500 WAAS LPV approaches have been published to date. Elliott Aviation s original elite series cockpit for the Falcon 10/100 included RVSM air-data computers, Universal UNS-1F FMS, Universal Class A TAWS, Universal Vision-1 synthetic vision, Universal cockpit display with electronic charts, checklist and WSI Nexrad weather, TCAS II/ACAS traffic and RA commands, weather radar and Stormscope sensor data. Elliott Aviation also offers installation of a growing list of safety products available to Falcon 10/100 operators, including RVSM, Honeywell Mark VII EGPWS with windshear alerting, Collins TCAS-4000 TCAS II/ACAS, Universal Class A TAWS and Universal MFD-640 for Falcon 10/100 aircraft operators. 38
5 Retrofit Roundtable Continued from page 38 It may cost us a few dollars, but in a competitive market you have to entice them one way or another. We get a lot of repeat business from our customers. That s a key to success these days. Positive word of mouth is huge. Forbes: We ve been doing more customer seminars with the various manufacturers. Things we probably should have been doing all along. When things were good, they probably could have been even better. We ve been doing a lot more press releases and that type of stuff to get our name out there. That s the biggest thing: let people know what s out there. Whether it s just upgrading their weather to EFIS, they need to know everything the equipment is capable of doing for them. Wilson: One thing that I ve learned over my years is you ve got to continue to make every customer feel very appreciated. We are also going to create products that are still valuable. We re going to be conscious of price targets, and we are going to try and create packages that get to the operator in the back of the aircraft. Let s forget about the pilots for now. We re going to let the people in the back know: Hey, you know what? How about getting all of your s while you are flying around? You go ahead and get rid of that GSM BlackBerry and get a Wi-Fi BlackBerry, and let us augment a cabin system. That s what they want. So we re going to create value products get out and visit the customer and stay in front of them. Harpster: I think we have changed our strategy a bit. People in the industry go by what they read, what they hear on the news. Customers want to know what they should be considering when the aircraft is in for maintenance? It has slowed down, but there still are a lot of customers who use downtime to their benefit. We are being fairly aggressive. Offering some very attractive rates and quotes for products, especially to guys who are already coming in for inspections or maintenance. If the interior is already going to be out, it s a good time to look at upgrades. They know it will make sense. If they re going to do it soon, it makes sense to go ahead now while the aircraft is already down. It s our task to communicate with them. q If you have comments or questions about this article, send s to avionicsnews@aea.net. 69
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