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The Acquisition Team

by David Wyndham 1. January 2006 00:00
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Remember the old TV show called the A-Team? A rag-tag bunch of former soldiers roam around town fighting criminals and righting wrongs. The A-Team was borderline psychopathic, but they were at least on the good guy's side. Regarding an aircraft acquisition, it takes your own A-Team: an Acquisition Team. You need to know these people and, if not available within your operation, know where to find them! (Note: I don't recommend the characters from the TV show).

The first team member is the technical analysis person. This person is responsible for defining the mission and developing the measurable criteria for judging the ability of the aircraft to perform its mission. If you are the pilot, this will be you. That person should be familiar with aircraft performance measures, and have available information that enables them to predict passenger loads, trip lengths, etc. Every manufacturer publishes data, but often the assumptions differ. The technical person needs to be able to have fair and balanced data to make an "apples-to-apples" comparison.

The next person to get on the team is the financial analysis person. That individual needs access to what it costs to own and operate aircraft. There are different ways to finance an aircraft, and if it is for business use, different tax ramifications. This person needs to understand Life Cycle Costing and be able to look at the total cost of owning and operating the aircraft.

If leasing, what are the return and buy-out options? Many leases have significant penalties for early returns, and most have specific return conditions that can add cost. Leases can be a great way to acquire an aircraft, but they aren't for everyone.

A close ally of the financial analysis person is the tax/ownership advisor. How do you plan to structure the ownership of the aircraft? Where and when will you take delivery? Do you need to do a tax-deferred like kind exchange? Are there sales or use taxes due and if so, who is responsible for collecting and remitting them?

An aviation attorney needs to be consulted to ensure that the contracts are appropriate and that the various regulatory issues are addressed. Are there leases, timeshare agreements, charter? The FAA can be strict in enforcing the regulations regarding "for-hire" operators and you need to make sure that you are operating legally.

Don't forget your insurance broker. They need to be kept informed as to what, when and how the aircraft is to be used. If you don't mention all the uses for the aircraft you may not be insured. What are your insurance company's requirements for the training and currency? Will it be different if you acquire a different aircraft?

Next is the aircraft sales professional. This individual needs to know the state of the aircraft sales market, what the availability and lead times are for various models, who to contact about pre-buy inspections and appraisals, and what sort of time it could take to dispose of your current aircraft. Anyone with Internet access can "find" aircraft for sale. The aircraft sales professional needs to act in an advisory role and as a facilitator to make sure the deal closes with all parties happy as a result.

Lastly, don't forget the a title search for used aircraft. The minor cost of this is well worth the piece of mind.

Acquiring an aircraft should never be done in a hurry. There are many issues to cover and remember the PPPPPP rule! (Prior Planning Prevents Pitifully Poor Performance). Buying on impulse and without planning can be a costly exercise. Don't set yourself up for a turbulent ride through the closing. Assemble your team in advance and things will happen smoothly.

Any horror stories to pass along? Change the names and dates and let me know!

CAMP Systems

by Jeremy Cox 1. January 2006 00:00
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If you own and operate a small piston single aircraft that you use purely for your own enjoyment, you probably only maintain a notebook to keep track of the last time that you changed the engine oil, changed brake pads, had the last annual inspection done, when the last altimeter and transponder check was carried out, even maybe when you did your last VOT check, the date of your last bi-annual flight review or even the date of your last medical. This tracking system keeps you and your aircraft operations in-compliance and it is also pretty portable, since it will fit in your shirts breast pocket. Now consider if you own and operate a 60,000 lb multi-engine turbo-fan, jet aircraft in aircraft charter operations and it is necessary for you to track almost 2,000 individual inspection, maintenance and overhaul items that all have different compliance times and/or dates that must be tracked. This is obviously to ensure that you and your aircraft stay in full compliance. I think that you can now imagine that your simple breast pocket size notebook just got a whole lot bigger!

In the early days of jet operations; meaning: pre personal computers or laptops. A jet aircraft operator had to employ a pretty complex system of 3 x 5 index cards, a schedule book and a schedule board. Chances were that several people were employed purely to keep this inspection, maintenance and overhaul tracking system accurate and up-to-date. Unfortunately portability was not even an option and if you wanted to sub out some of the necessary inspection and maintenance items to another company, you would have to generate the workscope list of due items that you wished to have quoted and worked. There was really no way for you to invite the third party maintenance shop personnel to come in and go through your records to determine this for themselves thus saving you from this chore, without a major ruckus occurring in your office. Fortunately in the mid 1960s, while a single IBM computer took up entire room on its own, Mr. Daniel J. Ryan, an employee in the Service Department at Grumman, conceived of, and introduced a computerized maintenance program for the then new Gulfstream II corporate jet. Shortly thereafter, in 1967, he and three co-workers left the aerospace giant to found a new company called ‘Computerized Aircraft Maintenance Programs' shortened to ‘CAMP.' The purpose of this new company was to bring Computerized Aircraft Maintenance Programs to the business aviation industry at large. This founding team developed similar programs for a variety of other business and commercial aircraft, quickly establishing CAMP as the world leader in Computerized Aircraft Maintenance Tracking. CAMP now offers programs and derivatives for over 3100 aircraft of 116 models and variants built by 17 airframe manufacturers. The core CAMP program has evolved from a basic offering of aircraft status, maintenance due, and history reporting to one that now includes such sophisticated features like operations inspections, inconsistent and insufficient information reports, and task cross-referencing to maintenance source documents. In 1986 CAMP pioneered an on-line through dial-up, fully functional, real time access to its central maintenance database with the introduction of ‘CSI-LINK.'

This original dial-up only, network access has now evolved into a fully web-enabled system that allows CAMP users to now have global access to all of their aircraft information, anywhere and anytime, with no special software required. This is obviously a ‘far cry' from the original index card and schedule book system that had to be employed, before any CAMP System came into existence.

So how does the CAMP System work?

First you send copies or images of all of your logbook pages to CAMP either in Ronkonkoma, New York or in Saint Denis La Plaine, France. A CAMP analyst will be assigned to you and your aircraft and once the current ‘snapshot' of your aircraft status is entered into the CAMP System Mainframe and careful verification reference has been made to all of your logbook entries, your assigned analyst is now responsible for ensuring that your aircraft's maintenance program is managed correctly and that all maintenance transactions and reports are accurate and timely. Your CAMP analyst is tasked with conducting a monthly review of your aircraft's maintenance information with you, either over the phone and/or by email thus confirming for you that your aircraft's information is up-to-date and in full compliance. Fortunately for all of its existing and future users, CAMP conducts user seminars worldwide on an ongoing basis. These free seminars are designed to give first hand experience with new features and functionality of the CAMP system products. In addition, the seminars provide an opportunity for direct feedback between CAMP and its customers.

The CAMP Maintenance Management service includes a variety of reports that make the job of aircraft maintenance tracking and planning a whole lot easier. The primary reports include:

  • Aircraft status
  • Due List
  • Aircraft History
  • Work Cards (including procedural text and illustrations).

Additionally, there are a wide variety of forecasting and historical reports that cover many other information requirements. Every one of these reports are available 24 hours per day, 365 days per year, on-line and can be obtained either by you, or any authorized (by you) maintenance facility or other authorized person. Furthermore, CAMP creates the primary reports for its users every month. These preprocessed reports are available on-line and in a printed version which can be mailed to your office, hangar or home. The majority of CAMP's aircraft owner/operator users follow the manufacturer's recommended maintenance program. There are however, a wide range of users who require custom maintenance inspection programs for their aircraft for regulatory reasons (i.e. FAR Part 121 or Part 135 operators) or due to the size of their aircraft (i.e. Boeing family or Airbus family types of aircraft).

In addition to its standard services, CAMP also provides customized maintenance tracking and planning services which include:

  • Based on your usage and needs, development of a customized inspection manual for your aircraft that can be used to obtain regulatory approval.
  • Ongoing support of custom programs and manuals to allow the operator to keep current with revisions and advisories and maintain compliance with regulatory requirements.
  • Develop and manage a customized maintenance program and schedule based on the approved inspection manual.
  • Provide input and support for your maintenance planning.

Aircraft document retention and management is vital to keeping your aircraft in regulatory compliance. In addition, aircraft resale value can be dramatically lowered if proper documentation is not readily available. The CAMP Maintenance Management service includes a wide variety of choices for integrated aircraft document management and archival. The following is a list of some of the aircraft documents that can be managed and archived through this CAMP application:

  • The CAMP Electronic Logbook allows users to electronically archive all of the logbooks related to the users aircraft and more importantly browse and search them in a flexible way.
  • Completed CAMP work cards are scanned and archived. Furthermore, they are linked to the respective maintenance tasks so that a work compliance form can be easily retrieved when researching a maintenance task's history.
  • Images or videos of inspections (e.g. corrosion inspection) can be attached to the corresponding task for historical reference.
  • Wiring diagrams for the aircraft can be attached to the aircraft or to individual maintenance tasks.
  • Part service tags can be attached to a component that will follow the component irrespective of the aircraft it is installed on.
  • Any structural modification documents (i.e. FAA Form 337) can be attached to the aircraft as a part of its permanent record.

Logbooks are the most essential documents associated with your aircraft. They are critical for compliance, ongoing maintenance, and for resale purposes. However, there are severe limitations when logbooks are maintained only in their physical form. They can be easily lost or damaged, they are difficult to search and they are hard to distribute. CAMP offers an electronic logbook service that addresses the limitations of the physical logbooks. The CAMP Electronic Logbook is based on scanned images of all of your aircraft logbooks (airframe, engines, APU), fully indexing their contents, and making it accessible through the CAMP web-based Maintenance Management application. This type of Electronic Logbook provides you with the following advantages:

  • Complete archival of your logbooks (in case of loss or damage to the physical logbooks) and anytime, anywhere access to them via the Internet.
  • Full indexing of the logbook contents allows your maintenance technicians to be extremely efficient: they can search through all the pages of the logbooks by simply typing in what they are looking for, whether it is a date, hours/landings/cycles, a part number or serial number, an AD or SB, the name of a service center or a technician – anything that's typed or handwritten in the logbook.
  • When the regulatory agencies want to inspect your aircraft's logbooks, you don't have to present the physical logbooks to them. You can simply grant them access to the CAMP Electronic Logbook.
  • When you wish to sell your aircraft, you can easily allow buyers to review your logbook by simply granting them time-controlled access to your aircraft.
  • Most importantly, indexing the contents of the logbooks, allows your aircraft's maintenance records to be cross-linked with its logbooks so that they are in synchrony.

Additionally CAMP has developed an Inventory Management System which is designed to increase the efficiency and streamline the process of ‘cradle-to-grave' parts management. This system can be used by any size facility, from one with a single stockroom to one with a global inventory distributed across multiple, geographically diverse locations. The CAMP Inventory Management System is offered as a hosted, web-based application that allows users universal access to their inventory system without the need for any special software. Issues covered by this system include:

  • A hierarchical and customizable parts catalog for rotables, consumables, expendables, and tools.
  • Powerful physical inventory management with tracking across multiple stock owners / locations and tools for managing optimal stocking levels.
  • Complete parts procurement process that includes requisitions, purchase orders, and receipts.
  • Comprehensive parts information tracking that includes warranty management, management of cores and loaners, and shipping.
  • Information console for providing a quick view into the state of your physical inventory.
  • A full selection of reports that allows the user to get different views into the state of the inventory – inventory status reports, order management reports, stock valuation reports, and historical reports.
  • Full integration with CAMP Maintenance for requisitions and returns of parts, tools, and consumables.

Finally, CAMP has developed a very comprehensive Flight Scheduling system which again is available as a hosted, web-based application that allows authorized persons from your flight department access to the application from anywhere in the world. Users may also choose to install the application on their corporate intranet. The CAMP Flight Scheduling program includes:

  • Comprehensive trip management that includes building trips, passenger manifests, assigning crew, and managing logistic details.
  • The ability to manage crew qualifications, schedules, and assignments.
  • Detailed airport atlas with extensive customization capabilities.
  • Contact/passenger information and preferences management.
  • Customizable trip billing.
  • Extensible reporting module based on Crystal Reports.
  • Integration with CAMP Maintenance Management to post aircraft utilization information and to view maintenance events to assist in flight planning.

I am certain that you will agree that these are an extremely impressive array of Tracking System products that have all been spawned from the imagination of people who were actively working with the index card and schedule book system in the 1960s.

My story about this company does not quite end here because as you know, the GlobalAir site was founded upon the goal of becoming the leading ‘Aircraft for Sale' advertising site. Like CAMP, the GlobalAir site has metamorphosised itself into something that is much, much more.

In 2003 CAMP acquired the New Jersey based, AMSTAT Corporation (www.amstatcorp.com), a provider of market intelligence for business aviation. This expanded CAMP's aviation information product range and has allowed CAMP and AMSTAT to offer new and valuable information services to their users through the integration of their respective knowledge bases and systems.

Primarily the best new program, in my opinion, that has resulted from this recent acquisition is the CAMP ‘Broker Program.' This unique and progressive program gives business aircraft brokers the ability to enroll and maintain aircraft on CAMP at no charge for the period of time that the aircraft is listed for sale. This new program's highlights include:

  • Free logbook review and enrollment onto the CAMP maintenance tracking system.
  • Free electronic access to work cards, status reports, due lists, and other key reports.
  • Free electronic logbook which saves time and travel for logbook review by prospective purchasers.
  • A Maximized resale value by allowing the aircraft to be advertised as "aircraft is On CAMP."

In order to qualify, the aircraft must be on an exclusive listing and must not have been active on CAMP within the last 6 months. For further information about the Broker Program or CAMP in general, I suggest that you call Ms. Lynn Sosnowski who is the Sales Representative for CAMP Systems International's Broker Program. Lynn was previously a broker liaison for nine years with the AMSTAT Corporation. Lynn has extensive experience and knowledge of the pre-owned aircraft marketplace, and therefore she was chosen to head this new program up for CAMP.

  • So what Maintenance Tracking Systems do you employ in your own flight operations?
  • Have you had any experience with CAMP or any other system?
  • Do you remember the days of the index cards, schedule books and schedule boards?
  • Any input that you care to make will be of great interest to all of the readers here at Globalair.com. So please don't be bashful and go ahead and write your comments and suggestions here.

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Jeremy Cox

Recording Documents

by Greg Reigel 1. January 2006 00:00
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If you purchase or own an aircraft, or if you acquire an interest in an aircraft such as a security or lien interest, you will have to record documents with the FAA to reflect your interest. The documents you will need to record will depend upon your interest, whether as an aircraft owner, aircraft lender, aircraft lessor or aircraft lienholder.

General Recording Information

Documents relating to interests in aircraft are filed with the FAA Registry in Oklahoma City, Oklahoma. Documents must be signed in ink by the appropriate party (e.g. seller, grantor, lien claimant, etc.) or by someone on behalf of the appropriate party with a title acceptable to the FAA (President, Chief Manager etc.). The FAA Registry Examination Guidelines contain a list of titles that are acceptable to the FAA.

The FAA charges a filing fee of $5.00 for each document recorded for each aircraft, engine or propeller. The FAA processes documents it receives in the order it receives them and generally has a document processed within 12 to 16 workdays after the document arrives at the Registry.

Aircraft registration information is also available on the Registry's website. The FAA updates the Aircraft Registration Inquiry website after close of business on each federal workday. If you file information through the website, it will take approximately 10 days for that information to appear on the website. Aircraft information sent to the Registry via mail will not appear on the website until approximately 21 days later.

Documents Filed By An Aircraft Owner

The Registry maintains information regarding the ownership of aircraft. Only the owner of an aircraft can register that aircraft with the FAA and then only in the legal name of the owner. However, for registration purposes, the owner is not just the buyer of an aircraft, but can also be a lessee of an aircraft under a contract of conditional sale. The owner of the aircraft will file title documents providing evidence of that owner's ownership of the aircraft. This is usually an FAA Bill of Sale, but can also be a different document such as a conditional sales contract.

Along with the evidence of ownership, the owner will also need to file AC Form 8050-1 Aircraft Registration Application, signed in ink by the owner. Additionally, if the owner is a limited liability company ("LLC"), an LLC Statement will need to be recorded that provides the FAA with proof that the LLC qualifies as a United States citizen and that the signatories on FAA documents are supported by the LLC documents.

The owner will also need to record any documents necessary to remove any open encumbrances on the FAA records to establish "clear title" with the owner. Clear title means there is no unreleased chattel mortgage, security agreement, tax lien, artisan lien, or similar document on record against an aircraft. These "curative documents" can include releases, satisfactions, court orders or any other document that removes the open encumbrance.

Documents Filed By Someone Other Than An Aircraft Owner

Aircraft owners are not the only ones who will need to record documents with the Registry. If the purchase of an aircraft is financed or if someone other than the owner asserts an interest in the aircraft after its purchase, that non-owner interest will need to be documented with the FAA. Examples of these third-party interests include where an aircraft lender records its security interest in the aircraft or a third-party, such as a mechanic or other service provider, files an aircraft mechanic's lien against the aircraft.

Security Agreement. An aircraft lender will usually record an aircraft security agreement to document its security interest in the aircraft, engines or propellers (also referred to as the "collateral"). The aircraft security agreement must include (1) the names of the parties to the agreement; (2) language which states that the aircraft owner grants the secured party a security interest in the collateral; (3) identification of the collateral by manufacturer name, model designation, serial number, and N-Number.

Aircraft Lien. A party providing services to or for an aircraft may file an aircraft mechanic's lien to document its lien against the aircraft if that party is not paid for its services. Federal law requires that an aircraft mechanic's lien be filed with the Registry. This means that for all but a few states that do not have aircraft specific lien statutes (e.g. some states without such lien statutes include Wisconsin, North Carolina, Alabama, Colorado, Delaware and Hawaii), the aircraft mechanic lien must be filed with the FAA registry in order for the lien to serve as notice to third-parties. However, state law determines the validity or enforceability of the lien.

The full list includes the following 35 out of the 50 states: Alaska, Arizona, Arkansas, California (General Aviation Only), Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virgin Islands, Virginia, Washington, and Wyoming.

The FAA does not require a specific document for the aircraft mechanic lien. However, a claim of lien, regardless of the title at the top of the document, must include, at minimum, the following information: (1) the amount of the claim; (2) a description of the aircraft by N-Number, manufacturer name, model designation, and serial number; and (3) dates on which labor, materials, or services were last furnished.

When the FAA receives the aircraft security agreement or aircraft lien, it will then send to the filing party a Conveyance Recordation Notice, AC Form 8050-41. This notice describes the aircraft (and engines, propellers and locations if included), lists the parties and date of the aircraft security agreement or aircraft lien, and shows the FAA recording number and date of recordation. This form can later be used as a release of the security interest or lien if the filing party signs it and returns it to the FAA.

However, this form is not the only acceptable method for releasing a security interest or lien. Another acceptable method is simply a letter signed by the secured party or lien claimant containing the same information and a statement releasing all that party's rights and interest in the aircraft, engine or propeller.

Documents Filed Regarding A Leased Aircraft

If a leased aircraft is subject to the Truth-in-Leasing requirements of FAR 91.23, the lessee will need to record a copy of the lease executed by both the lessee and the lessor within 24 hours of execution. The lease will need to properly describe the equipment (N-Number, manufacturer name, model designation, and serial number etc.) and will need to include the truth-in-leasing clause from FAR 91.23.

In a situation where the lease contains a purchase option, it may be prudent to submit a draft of the lease to the FAA Counsel's office for review and an opinion regarding possible registration requirements. Additionally, both the lessor and lessee may agree that it is prudent to locate confidential financial or proprietary information (such as rent, agreed value, return conditions etc.) to an appendix or exhibit.

Cape Town Convention

The Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol (sometimes collectively referred to as the "Convention" or "Protocol") was recently ratified by the requisite number of states and will be in effect on March 1, 2006. The Convention will apply to all transactions involving aircraft that are certificated for at least eight seats (including crew); helicopters that are certificated for at least five seats (including crew) and engines rated at least 550 horsepower. The Convention requires filings and procedures that are in addition to those discussed above for recording interests in aircraft that are subject to the Convention.

Aircraft will still need to be registered with the FAA. However, interests in aircraft and engines subject to the Convention will also need to be registered at an International Registry ("CTIR") created by the Convention. Failure to follow the Convention procedures when applicable could result in loss of the aircraft or interest (security, lien or otherwise) to competing creditors or a subsequent purchaser.

When filing with the FAA, filing parties will complete and file a form to be provided by the FAA (AC Form 8050-135) that will describe the relevant parties, the collateral and the interest claimed in the collateral. The FAA Registry will then provide the filing parties with a FAA/Cape Town transaction code that must then be used to make the appropriate registration of an international interest at the CTIR. It is important to keep in mind that the Convention's requirements are technical and in addition to the FAA filing requirements.

Updating/Confirming Accuracy Of Aircraft Registration With The FAA

According to a December 9, 2005 Notice, the FAA is requiring that aircraft owners check their aircraft registration records online with the FAA Registry to ensure the accuracy of the information and to update the information by February 1, 2006, if necessary. The FAA and TSA believe that national security and aviation safety require this action because it will somehow ensure that only properly registered aircraft operate within the national airspace.

The Notice states that after February 1 "operators of identified aircraft with questionable registrations and or no TSA required security measures/waivers will be: (1) Notified of the deficiency, (2) a pilot deviation will be filed on the operator, (3) operator may be denied access to the NAS. In the event the operator is not the owner, the operator and owner will be notified of the deficiency and both will be subject to any action deemed warranted by the agency in accordance with local, state and federal regulations."

Although most aircraft registration information is current, aircraft owners whose aircraft registration information may be inaccurate could face enforcement action if the information is not updated as required by February 1. Aircraft owners should confirm that their aircraft registration is accurate to avoid the aggravation of having to respond to the FAA if, for some reason, the information currently on file for their aircraft is not accurate.

Conclusion

Properly recording documents with the FAA Registry is a "necessary evil" if you own, finance, lease or provide services for aircraft. Failure to properly record documents evidencing your interest in an aircraft can result in a complete loss of that interest. If you have questions regarding drafting or recording aircraft transaction documents, you should consult with an experienced aviation attorney. Better to make sure all is in order at the beginning of a transaction rather than risk losing your interest if you wait until the end.



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