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Buying or Selling an Aircraft?

by GlobalAir.com 25. March 2015 09:50
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Written by: Joe Carfagna Jr.
Leading Edge Aviation Solutions, LLC.
This article first appeared in Business Jet Advisor!

FIRST BUY AN EXPERT

It can be tempting for someone to consider handling an aircraft purchase or sale on their own. No one wants to spend money if he or she feels they have the resources to achieve the desired goal themselves. Perhaps they have a skilled aviation manager, or chief of maintenance, an excellent corporate lawyer or a business associate who has been down this road before. Consider, however, these people, no matter how skilled they are at what they do, have only gone through the aircraft purchase or sale process, once, twice, perhaps a few times in their lives. The aviation broker does it for a living, over and over again, under many different scenarios. Hiring a good broker is an insurance policy against making mistakes. In fact, it could be argued that an aircraft broker’s #1 job is to prevent the client from making mistakes.

Today an aircraft broker is not just someone who puts a buyer and a seller together. Following is a list of some of the things, and by all means, not the only things a good aviation broker should be able to do for you:

Even though considerable information is available on the internet, interpreting the information is critical. A reputable broker is following the market every day, knows and understands the market and can interpret trends.

On the sell side a reputable broker will professionally photograph the aircraft, create a color brochure, utilize other marketing materials perhaps video, will utilize e-mail communication, print advertising and perhaps Facebook and Twitter.

If purchasing an aircraft, an analysis of the client’s aircraft utilization requirements should be made to determine appropriate aircraft models for their mission, whether to buy new or used, or supplement with fractional ownership or jet cards, for example. This process is useful even when the client believes they know exactly what they want. The analysis can serve to reinforce their decision or offer alternate choices that could be preferable. The ultimate goal is to have an informed client and to prevent costly disappointments. And part of this evaluation process is an exit strategy. Future market value and marketability should be part of the purchase equation. The value of an aircraft includes its life cycle: Purchase, Use, and Sale.

With the above in mind, one of the most important functions a broker performs for either a buyer or a seller is establishing a price for an aircraft. Nothing exceeds good market knowledge for this process. Pricing an aircraft correctly is critical to the sale process. While the goal is to provide a seller with a good price for an aircraft, realistic pricing is required for an aircraft to sell. Conversely, understanding the market in a purchase transaction is even more critical in order to not overpay and get the best value.

A reputable broker will go on site to physically examine an aircraft whether for sale or purchase. An examination of log books will be performed, maintenance status evaluated, service bulletins and airworthiness directives checked, cosmetics evaluated and equipment surveyed and enumerated.

An aircraft broker typically negotiates the purchase or sale for the client together with the client’s attorney. Market knowledge, technical knowledge and transactional experience are the tools for a successful transaction whether buying or selling, and this is especially true for international transactions. There are a host of considerations in an international transaction for which a good experienced broker can be of invaluable help. Regulations are different in other countries and an aircraft must meet FAA regulatory standards with regard to equipment and modifications if it is to be U.S. registered, and if being exported, there are the regulatory concerns of the foreign country. There are lien searches, de-registration and registration issues, and import and export requirements to be addressed.

An experienced broker can greatly assist in the pre-purchase inspection, a process which is adversarial in nature because it involves issues for both the buyer and the seller. It determines the aircraft’s condition and if it is as represented, what needs to be fixed and who is going to pay for the discrepancies found. Some brokers have in-house technical experts who will go on site for this important inspection to mitigate risk for their client. They will make sure the client is being protected from unnecessary expense, that only the scope of agreed upon inspection is being accomplished, and that no bill is presented for anything that has not been previously approved. If you are the buyer, you want all the discrepancies uncovered within the scope of the inspection. If you are the seller, you want to be sure you are not being held responsible and/or billed for something that should be for the buyer within the scope of the agreed upon inspection.

A good broker can help to orchestrate a successful closing by coordinating with the various people and companies that may be involved in the transaction such as attorneys, an escrow agent, a like-kind exchange agent, tax people, an aviation manager, a chief pilot, a maintenance manager and financing banks.

Attempting to perform an acquisition or disposition on your own with the intent of saving the brokerage fee can be foolhardy. When this approach is chosen it typically costs the inexperienced aircraft purchaser or seller wasted time, motion and money. There can be missed opportunities, deals that go nowhere, higher legal fees, problems coping with the other side’s employees or representatives, all of which can result in frustration, disappointment and most importantly money left on the table.

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What's an Airplane Cost? Common Aircraft Price Tags

by Sarina Houston 16. March 2015 11:10
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Curious how much airplane you can get for your money? If you’re just starting your search for an airplane, you might be surprised to learn that aircraft prices vary widely, depending on the year, modifications done to the airplane and the relevancy of the avionics, among other things.. A Cessna 172, for example, might cost $40,000 or $400,000 dollars.

From light aircraft to business jets, the costs vary from large to small. Here are some examples of what you’ll pay for a few of the most commonly purchased airplanes:

The Cessna 172


1982 Cessna 172P: $39,000

1981 Cessna 172P: $72,000

2007 Cessna 172SP: Approximately $150,000-$250,000

2015 Cessna 172SP: Approximately $364,000

 

The Mooney M20

 

1977 Mooney M20J: $65,000

2009 Mooney M20TN Acclaim: $425,000

 

The Beechcraft Baron 58
1977 Baron 58P: $175,000

2005 Baron 58: $649,000

 

The Piper Meridian
2007 PA46-500TP: $1.2 million

2015 PA46-500TP: $2.3 million

 

The King Air
1981 King Air B200: $825,000

2004 King Air B200: $2.3 million

 

The Citation Sovereign
2007 Cessna Citation Sovereign 680: $6.9 million

2008 Citation Sovereign 680: $8.0 million

 

The Gulfstream G550
2006 Gulfstream G550: $25.0 million

2014 Gulfstream G550: $49.9 million

Look ahead or get left behind

by David Wyndham 10. March 2015 10:41
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Back in early 2007, the Blackberry was The Smart Phone. They had corporations and governments wrapped up and knew they were the dominant player in the smart phone market. If you asked them how they were doing on June 28, 2007, they would have been very optimistic. On June 29, 2007 the first iPhone was released. In 2014, Blackberry reportedly sold 7 million phones. Apple sold 74.5 million phones in the last quarter of 2014. So how are things looing ahead in your flight department?

Image Bornfree / Shutterstock.com

Blackberry's parent, RIM, did not see nor did they understand what was happening with society and technology that lead to the original iPhone.  They never saw the warning signs. Today they are almost irrelevant in the mobile device market. The same can happen to any business. If you are a flight department, here are some of the danger signs that this problem is happening in your operation. 

The business aircraft is used by only a few individuals within your organization.  

The number of people using your service is decreasing.  

The company (or your client's companies) are once again growing at a torrid pace, but your annual flight hours are onstant or increasing only slowly. 

If the company is doing better, why aren't you flying more? What is everyone else using for their air transportation needs?  

The elemental reason for each of these danger signs is the same - the service your organization provides is not as relevant to the needs of the potential users as it used to be. There are a number of possible reasons, including:

The prices are perceived to be too high

The capabilities of your operation do not meet the needs of the potential users

Your operation does not have the technology needed by the potential users

The potential new users do not know your service exists or think it is irrelevant to them

If you are only at the airport and not involved in the daily dealings and changes within your company, then you may be missing out on valuable information. If all you know is that you serve the big boss extremely well, what happens when there is a new big boss? 

There are three things to avoid being irrelevant. One is to get away from the airport and get downtown. The aviation operation is not the big boss' personal air taxi. It is a business asset. You need to understand your business's mission and how the flight department serves the corporate mission. You need to read the reports and sit in on meetings as appropriate. You need to walk around the halls of power and let folks know who you are and what the aviation team is all about.

The second thing is to find out what your current and potential users think or don't think about your service. It is quite easy to get people to tell you how they perceive your service, even busy people. Yes, think of the flight department as a business unit whose customers are in the corporation. Spend time with your current customers and users and listen to find out what they like about the service, what they don’t like and how they would like to see your organization improve. 

The third thing is to understand the future plans of the company. Then be proactive and plan ahead for the flight department so that you can be ahead of what the corporation needs. Don't assume that the current aircraft which does the job quite well will be effective next year, or five years. Where is the company changing? What are the growth opportunities? Or, is the company getting smaller and if so, how can you adjust? 

Just as corporations like RIM can miss out on what the future holds, so can the flight department miss out on what its future holds. Be proud of the quality service you provide, but seek to improve and always be on the lookout for new opportunities with your own company to further advance the company's mission. 

 

 

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Aviation Technology | David Wyndham

Pilots Bill of Rights 2: Medical Exemptions, Due Process & NOTAMs

by Sarina Houston 2. March 2015 22:42
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Photo © Robert Couse-Baker/Flickr

In a move that is being applauded by the general aviation community, Senator James Inhofe (R-Okla.) last week introduced two new GA-friendly bills. The new laws– the General Aviation Pilot Protection Act and the Pilots Bill of Rights 2 (PBOR-2) - could have a significant impact on general aviation operations if they move through congress.

Sen. Inhofe successfully led the first Pilot’s Bill of Rights through Congress in 2012. PBOR-2 expands upon the pilot protections offered by the initial PBOR.

"The first Pilot’s Bill of Rights was a victory for the aviation community and made possible by the support of pilots and industry leaders across the nation,” Inhofe said. “Since being signed into law, more issues facing the general aviation (GA) community have surfaced. The Pilot’s Bill of Rights 2 addresses these concerns and builds on the success of my previous legislation.”

Twelve sponsors, including Sen. Joe Manchin (D-W.V.), House General Aviation Caucus co-chair Sam Graves (R-Mo.), and a variety of industry stakeholders, such as AOPA, EAA, and GAMA, supported Sen. Inhofe’s Pilot Bill of Rights.

Mark Barker, President of AOPA, released this statement: “The introduction of the Pilot’s Bill of Rights 2 is great news for the general aviation community and we are grateful to Sen. Inhofe for putting forward this legislation that would do so much to help grow and support general aviation activity. Pilots have already waited too long for medical reform, so we’re particularly pleased to see it included in this important measure. We will actively work with Congress to build support for this legislation that is so vital to the future of GA and the 1.1 million jobs that depend on it.”

The General Aviation Pilot Protection Act was first introduced in 2013. The 2015 version intends to expand the medical exemption requirement for pilots, and the PBOR-2 addresses the same medical exemption requirements, along with a handful of other issues.

According to Sen. Inhofe’s website, highlights of the new bill will include the following:

  • Medical Certificate Exemption:
    Allows more pilots to operate without obtaining an aviation medical certificate. Under the new law, private pilots would be able to fly VFR or IFR in aircraft under 6,000 pounds, below 14,000 feet MSL, and under 250 knots.
  • Due Process:
    PBOR-2 will maintain the rights set forth in the first PBOR from 2012, and will extend those rights to all FAA certificate holders instead of just pilots. This means that maintainers, dispatchers and other certificate holders will also be granted due process rights along with the right to appeal an FAA decision through a merit-based trial in Federal Court.
  • Violation Transparency:
    The new bill will require the FAA to notify pilots of any pending enforcement action, as well as provide specific documentation.
  • Flight Data Accessibility:
    Under the new bill, pilots will be able to access data from contractors, including flight service stations, contract controllers and controller training programs in order to defend themselves from enforcement action.
  • Protection for Volunteer Pilots:
    PBOR-2 will establish a Good Samaritan Law to protect volunteer pilots from liability.
  • Protection for individuals performing federal tasks:
    PBOR-2 will establish liability protections for individuals performing federal tasks, such as designated examiners, medical examiners and airworthiness inspectors.
  • NOTAMs:
    PBOR-2 will require the FAA to develop a better NOTAM (Notice to Airman) system, and maintains that the FAA will not be allowed to bring about enforcement action on pilots until they complete the NOTAM Improvement Program

The FAA has 180 days to weigh in on the regulations. If the organization doesn’t respond, the bills will automatically become laws.

The Danger of Windshear

by GlobalAir.com 2. March 2015 14:29
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Writen by: David W. Thornton
Aviation Examiner

The copilot accepted the approach clearance and I turned the Lear 45 toward the initial fix for the approach.

We were flying into Victoria, Texas to pick up two members of the family that owned the airplane for a trip to sunny Florida. Sunny was something Victoria was not today. The ATIS, the recorded weather broadcast for the airport, reported low ceilings, heavy rain, gusty winds and limited visibility. Our airborne weather radar indicated a band of rain just south of the airport. We had been enveloped in clouds for the entire short flight from Houston.

We descended to 2,000 feet to start the instrument approach, a GPS-based approach to runway 31 right. We configured the airplane for landing and began the descent along the electronic glide path toward the runway.

We had only descended about 200 feet when the airspeed went crazy. First, the speed increased by 30 knots, almost reaching the maximum speed for the flaps. Then, just as quickly, it reversed and dropped rapidly into the red, low-speed tape on the primary flight display.

“STALL… STALL,” the electronic voice of the Learjet’s warning system called out.

I advanced the throttles to maximum thrust and called out, “windshear, flaps eight,” to begin the missed approach procedure. We “cleaned up” the airplane from landing configuration, retracted the flaps and landing gear, and climbed to the missed approach altitude. Or rather, we climbed through the missed approach altitude. With the airspeed in safe territory but still fluctuating, we ballooned several hundred feet high. Even with reduced power and pointing the nose down, the Learjet did not want to descend.

Shortly after, the controller assigned us a climb and vectored us around for another try. With the weather rapidly moving through the area, we were able to fly behind the squall and land successfully and without experiencing anything abnormal other than rain so heavy that it partially obscured the view through the windshield.

What we had experienced was the worst windshear of my career. Windshear is any sudden change in wind speed or direction over a short distance. It can occur either horizontally or vertically. While windshear can occur at any altitude, it is more dangerous when the aircraft is close to the ground.

In 1985, Delta Air Lines Flight 191 crashed when it encountered windshear on approach at Dallas - Fort Worth International Airport (KDFW). The Lockheed L1011 was flying through the rain shaft of a thunderstorm while on an ILS approach when the headwind suddenly decreased by 25 knots and ultimately increased to a 30 knot tailwind while the downdraft increased from 18 to more than 30 feet per second according to an FAA analysis. In spite of applying full power to all three engines, the aircraft hit an open field just short of the runway then became airborne again to strike a light pole and car on a road near the approach end. The airplane ultimately hit two water towers on the airport property and exploded. The accident killed 136 of the 163 passengers and crew plus the driver of the car.

An analysis of the accident showed that the plane likely flew through a microburst, a very intense downdraft that is localized to an area about two miles in radius. The airplane first encountered increasing performance as it flew through the updraft at the periphery of the microburst, causing it to go high on the glideslope. Then, as the airplane entered the downdraft, the airspeed slowed dramatically and the airplane went below the glideslope, triggering an alert from the plane’s ground proximity warning system (GPWS). In spite of going to full power, it was too late for the airplane to successfully fly out of the windshear.

Although windshear was known in 1985, it wasn’t well understood. According to the FAA, the Delta 191 crash resulted in changes to training to help pilots better recognize the danger of windshear and make a decision to use an escape maneuver early rather than continuing the approach. New technology, such as airport low level windshear alert systems (LLWSAS), better radar, and enhanced GPWS with a windshear protection mode have contributed to safety as well. There are limitations though. In my windshear incident, the GPWS windshear alert was not triggered because the airplane was above 1,500 feet, outside the danger zone for takeoff and landing.

The windshear escape maneuver can vary from airplane to airplane, but is typically similar. The flying pilot should advance the throttles to maximum power and pitch the airplane nose up sharply. It should go without saying that the autopilot should be disconnected for this. No configuration changes, such as retracting or extending flaps and landing gear, should be made while the airplane is in windshear. Once the airplane has gained the safety of altitude and airspeed, flaps and gear should be retracted.

If windshear is likely on takeoff, the pilot can choose to delay rotation. Delayed rotation means extra airspeed in the early stages of the climb that can be very helpful if the airplane encounters windshear shortly after takeoff. Rotation speed (Vr) can generally be increased by 10 percent to a maximum of 20 knots (check your aircraft guidelines and limitations). This speed should be briefed, but should not be set with an airspeed bug. Consider the extra runway that will be needed due to the longer acceleration time as well.

Similarly, the landing reference speed (Vref) can be increased as well. An old rule of thumb is that landing speeds can be increased by half the gust factor. If the wind speed is reported as “10, gusting to 20 knots,” Vref can be increased by five knots. Stable approaches typically require that the airspeed on approach be no more than 20 knots faster than Vref, so this should be considered a limit for increasing the landing speed. Again, consider the runway since a higher landing speed means that more stopping distance is required.

Ultimately, avoidance is the best tool for surviving windshear. The Flight Safety Foundation identifies several warning signs for windshear. These include thunderstorms, gusty frontal passages, blowing dust, rings of dust, whirlwinds, mountain waves, and, of course, warnings from airport windshear alert systems or pilot reports. If conditions are ripe for windshear, be prepared to go around. In some cases, a delay or diversion might be the best course of action. Microbursts often only last for about 15 minutes so a short delay can make a big difference in safety.

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