LSA financing options abound for individuals

January 25, 2012

The light sport aircraft market got a welcome boost at the 2012 Sebring U.S. Sport Aviation Expo, with manufacturers and sales reps reporting many new aircraft sales—up to half a dozen each.

For well-qualified individual buyers, financing an LSA purchase is no different from financing a certified aircraft, provided the light sport in question is one of the top-selling and established brands. That according to Bank of America Senior Vice President, Aircraft Financing Jennifer Giampietro, who said the 60 percent approval rate on loan applications for LSA purchases is virtually identical to the approval rate for all aircraft loans (62 percent), though LSA applications in 2011 accounted for less than 2 percent of total loan applications.

AOPA has teamed up with Bank of America for more than 15 years to offer members easy access to financing, one of the many benefits of AOPA membership. Giampietro said that as long as there are enough examples of a particular aircraft already in the market, with enough of a sales history for a market value to be established, there should be no major difference between financing a Part 23 aircraft and an LSA.

“We used to treat it differently,” Giampietro said of the light sport models. As recently as two years ago, there were simply too few LSAs flying to establish a reliable market value on most models—the key to the bank’s ability to secure the loan. “Now, the terms, the loan to value (ratio), all of that is the same.”

The LSA manufacturers that Bank of America finances include Cessna, Cubcrafters, Evektor, Flight Design, Gobosh, Jabiru, Remos, and Tecnam, eight companies that account for the vast majority of sales. (Gobosh, a U.S. distributor of the Polish-made Aero-AT ceased operation in 2011, with Aero AT-USA taking over distribution of the same aircraft. Giampietro said that change will need to be recorded in the blue book and applied to existing Gobosh models.)

There remains a challenge, however, for flight schools, as well as individual buyers who want to lease aircraft back to flight schools. Bank of America does not write those loans, Giampietro said, and manufacturers at Sebring said no one else is writing such loans, either.

Flight Design USA sold 30 new aircraft in 2011, marking a slow but steady recovery toward the high-water mark of 87 annual sales recorded prior to the economic downturn, according to National Sales Manager John Gilmore.

“Flight schools will not, have not, cannot get financing,” Gilmore said. “If we had (flight school) financing, we’d sell a lot more.”

Tecnam North America CEO Phil Solomon said his company is marketing low-cost aircraft aggressively to the flight school market, including universities and other large-scale operations that can operate an LSA for primary training at a third of the hourly cost of certificated aircraft models. But banks remain unwilling to help even a well-capitalized flight school spread the purchase cost over multiple years, Solomon said.

“Nobody has ever come back to us and said, ‘I’m sorry, I can’t buy the aircraft because I can’t get financing,’” Solomon said of individual buyers. “Flight schools, yes.”

Other manufacturers at the Sebring expo echoed the sentiment: Cash is king, when it comes to flight schools. It is a dilemma they hope to see solved. Light sport aircraft sip fuel and offer modern avionics packages that can be used for basic and instrument flight training. Solving the financing dilemma could dramatically expand the LSA market, and in turn make GA more accessible, manufacturers and sales reps agreed—unanimously.

Jim Moore

Jim Moore | Online Associate Editor, AOPA

AOPA Online Associate Editor Jim Moore joined AOPA in 2011 and is an instrument-rated private pilot who enjoys competition aerobatics.