Airplanes are a modern marvel of engineering, there’s no doubt about it. With many intricate components working together in unison to transport people thousands and thousands of miles around the world, it may seem obvious why airplane parts are expensive. However, there’s more contributing to the exorbitant price of airplane parts than just engineering costs.
So the question that leads to is: why are airplane parts so expensive? Let’s find out!
Regulation & Certification Costs
It takes a lot of resources to engineer, develop and test parts to get an aircraft certified by the Federal Aviation Administration (FAA) and other governing bodies. Aviation requires a lot of paperwork for everything that’s produced — every design, requirement, test; even a simple line of code executed on a specific part needs to be documented and peer reviewed.
The FAA can also change its requirements seemingly overnight. For example, they could add an additional layer of QA to ensure you’re in compliance with the whole production process. Smaller, niche companies that serve this type of market need to recoup the costs incurred from engineering hours spent documenting work and adjusting to regulations. If you were dealing with a car part, you’d be able to spread those engineering costs across a million cars. An aircraft? Maybe a few hundred or thousand if you’re considering a big airline.
Those people that manufacture airplane parts in the United States are generally paid a decent wage. According to the U.S. Bureau of Labor Statistics, aerospace engineers earn a median salary of $109,650 per year. Salaries typically start from $69,150 and go up to $160,290.
Even employees near the bottom of the ladder make decent wages. For example, factory workers at Boeing earn an annual salary of $48,000, 67 percent higher than the national average of all factory workers. Because of the cost of these specialized skills, the cost of airplane parts rises along with it to meet the growing wage demands for manufacturers around the country.
While salaries for workers in the U.S. are high, the Agreement on Trade in Civil Aircraft (CAA) makes many civil aviation products and parts exempt from import duties. While you’d think this would reduce the cost burdens on businesses, that doesn’t seem to be the case in the majority of situations.
Because of the confusion surrounding the rules, it’s forced manufacturers to waste considerable resources navigating customs regulations, dealing with conflicting views of importers, exporters, and various national and international government agencies. Because of this, it’s caused a rise in the cost of airplane parts which is shouldered by you, the consumer.
Inelasticity of Demand
A product is said to be inelastic when there is a small change in demand yet a large change in price. An easy example to grasp would be gasoline — as the price of gasoline increases, the quantity demanded stays consistent.
Similarly, let’s say that you’re shopping for a particular part for your Cessna 172 Skyhawk that the company doesn’t make anymore. Six years ago that part may have been $250 or so — presently, it’s $1800, although the demand for the part has stayed generally consistent.
The aviation industry is a niche market with low production numbers and almost complete inelasticity of demand. This means a manufacturer can charge almost anything they want.
There are many liability costs involved in making an airplane airworthy. Manufacturers of aircraft parts can be held responsible for astronomical amounts of liability costs should their products fail, even 50 years or more after their stamp date, assuming proper maintenance is performed and logged. Manufacturing companies carry insurance for such events, which is expensive, and they build some of that cost into the purchase price of the products that they sell.
How do Commercial Airplane Parts Differ from Private Airplane Parts?
The main difference between part production in terms of commercial vs. private airplanes is the amount of money involved. For example, Boeing has the money to spend millions on a new flight management system. They have the money to spend designing a new turbine engine and spread those costs across thousands of aircraft over several decades.
General aviation fleets, however, are still flying around with 1950s-inspired Lycoming and Continental engines which are built similarly to how they were back then. Any change in design would require a new TSO and that is exorbitantly expensive — it would cost tens of millions just to design a new general aviation piston engine. There simply isn’t a large enough market to recoup those costs when the final engine would cost $80,000. Parts are expensive because its a limited market and its a limited market because its so expensive, creating a chicken-egg scenario.
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