Avionics News February 2017 - 20

industry

SALES QUOTAS,
DEALER DISCOUNTS,
AND PICKING A
RETAIL PRICE

S T O R Y

A N D

P H O T O S

B Y

S C O T T

W

M .

S P A N G L E R

ith the rapidly approaching Federal Aviation Administration
mandate for ADS-B Out equipment, shops nationwide are
growing increasingly busy. The 2016 AEA Rate & Labor
Survey shows that many have reached or are close to their workload
redlines unless they can hire more qualified technicians. But a decades-long
view reveals an aviation marketplace in transition, and it seems clear that
aviation's original equipment manufacturers and the dealers who represent
them are in a capitalistic struggle to maintain or increase their respective
slices of the shrinking economic pie.
The cost of new technology, and the periodic requirement for its
installation, has mitigated, in part, the bottom-line consequences of fewer
customers. But will it last? The third-quarter AEA Avionics Market Report
revealed a 6.2 percent decline compared to the same period in 2015.
This decline in a time when shops are busy may be the start of a new and
concerning trend.
Retrofits account for roughly half the total sales for the OEMs, and their
dealers are the source of most of them. To deliver predictable numbers,
essential for planning, many OEMs motivate dealers with minimum sales
quotas and tiered rebates based on volume. Some manufacturers have
changed the equation by selling equipment directly to the end users, who
then seek out someone to install the equipment.
Many dealers have wondered whether these motivational requirements
are necessary in today's changing marketplace. Or should they be more
robust and give shops that sell more units a better dealer price? And would
this exacerbate the challenges dealers face when setting their retail price,
20

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Table of Contents for the Digital Edition of Avionics News February 2017

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Avionics News February 2017 - Intro
Avionics News February 2017 - No label
Avionics News February 2017 - Cover2
Avionics News February 2017 - 1
Avionics News February 2017 - 2
Avionics News February 2017 - 3
Avionics News February 2017 - 4
Avionics News February 2017 - 5
Avionics News February 2017 - 6
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Avionics News February 2017 - 8
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Avionics News February 2017 - Cover3
Avionics News February 2017 - Cover4
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