Welcome to GlobalAir.com | 888-236-4309    Please Register or Login
Aviation Articles
Home Aircraft For Sale  | Aviation Directory  |  Airport Resource  |   Blog  | My Flight Department
Aviation Articles

Service Bulletins Clarified

by Greg Reigel 1. August 2006 00:00
Share on Facebook

Back in June of 2006, I wrote an article regarding an opinion by the National Transportation Safety Board ("NTSB") that appeared to state that a manufacturer could specify that its maintenance manual includes all service bulletins and thereby create an obligation under the Federal Aviation Regulations ("FAR's") to comply with those service bulletins. The NTSB opinion contradicted the FAA's longstanding position that compliance with service bulletins, absent an airworthiness directive, was not mandated by the FAR's. It also created quite a stir within the aviation community, including owners, operators and maintenance professionals.

To address the situation, and in an attempt to clarify the confusion, on August 11, 2006 the FAA issued a Legal Interpretation addressing this issue. The Legal Interpretation was issued in response to a specific request regarding whether a manufacturer's service bulletin "requiring" performance of a borescope inspection in connection with cylinder compression test revealing weak pressures during a 100 hour or annual inspection of an aircraft operated under FAR Part 91 was in fact mandatory under the FAR's. Although the Legal Interpretation states that compliance would not be mandatory in this situation, this does not necessarily limit a manufacturer's ability to mandate performance of certain maintenance tasks.

The Request For Interpretation

Procedurally, an individual requesting a legal interpretation from the FAA must provide a specific factual scenario. The FAA will not issue general interpretations of the FAR's. It will only address application of the FAR's to specific facts. In this case, the individual requested a legal interpretation regarding the application of FAR 43.13(a) and FAR 43 Appendix D.

The factual scenario involved an aircraft operated under FAR Part 91 and a manufacturer-issued service bulletin specifying that a borescope inspection must be performed in connection with a cylinder compression test revealing weak pressures during an annual or 100 hour inspection performed pursuant to FAR Part 43 Appendix D. The FAA was asked to provide a legal interpretation to answer the question whether FAR 43.13(a), which requires that maintenance shall be done using methods, techniques and practices prescribed by the manufacturer or other methods, techniques and practices acceptable to the Administrator, mandated compliance with the service bulletin simply because the manufacturer required it.

The Interpretation

The FAA's simple answer was "no". However, it was not unqualified. The FAA stated that "unless a service bulletin is incorporated either directly or by reference into a document that makes its requirements mandatory, the answer is no."

The FAA observed that the text of FAR 43.13(a) "provides a person performing maintenance, alteration, or preventive maintenance on a product with a number of permissible options when performing that work. A manufacturer may legitimately incorporate a service bulletin into one of its maintenance manuals by reference. If it does so, the data specified, and the method, technique, or practice contained therein, may be acceptable to the Administrator." This means that compliance with the service bulletin in this situation would certainly be an acceptable method.

However, it went on to state "unless the method, technique, or practice prescribed by a manufacturer is specifically mandated by a regulatory document, such as an Airworthiness Directive, its contents are not mandatory." Since FAR 43 Appendix D does not specifically require a borescope inspection as the only means for determining the internal condition of the cylinders if the compression test shows weak cylinder compression, other methods such as cylinder disassembly and inspection could be used. As a result, compliance with the service bulletin was not mandatory as long as some acceptable method was used to determine the condition of the cylinders.

According to the FAA, allowing a manufacturer to mandate compliance with a service bulletin would impermissibly authorize the manufacturer to issue substantive rules. Not only does the FAA not have the authority to delegate its ability to make rules, but allowing a manufacturer to issue rules in the form of service bulletins, without public notice and comment, would be contrary to the Administrative Procedure Act.

However, the interpretation also notes that manufacturers do have alternative methods for mandating compliance with the maintenance specified in a service bulletin. A manufacturer could petition the FAA to have the service bulletin incorporated into an AD. Alternatively, a manufacturer could incorporate the maintenance addressed in the service bulletin into its current maintenance manual or Instructions for Continued Airworthiness and, in situations in which compliance with those documents was mandated by regulation, that maintenance work would then be required.

Conclusion

This Legal Interpretation clarifies that compliance with a service bulletin, absent an AD or other regulatory requirement, is not mandatory simply because the NTSB says it is. Although a manufacturer can still accomplish its goal of mandating the maintenance contained in a service bulletin, it will not be able to do so unilaterally. It will need to meet additional regulatory hurdles. For now, compliance with a service bulletin on an aircraft operated under FAR Part 91, absent an AD or other regulatory requirement, is not mandatory.

If you have had any situtations where you have found yourself between the FAA and the manufacturer (the preverbal "rock and a hard spot") we would like to here about it.  Place your comments below.

Tags: , , , , , ,

Greg Reigel

Aircraft Market Report: 2006 Q2

by Jeremy Cox 1. August 2006 00:00
Share on Facebook

Every three or four months I will now be providing you with a Quarterly Market Report that highlights 49 fixed wing and 9 types of rotary wing types of aircraft. Most of the data that will be contained in this report is very courteously and kindly provided by the folks from Kansas at the Aircraft Bluebook – Price Digest, http://www.aircraftbluebook.com/ I would like to especially thank Mr. Paul Wyatt, the Bluebook Editor for the use of his data in the production of my report. I hope that you find the report of some use to you.

Column A, Rows 2 through 59 are the featured Aircraft Types. I have grouped these into a series whenever I deemed it as necessary. What I mean by this is that, if we take the Mooney M20 Series as an example, I have lumped (I can almost hear your protests from here, already) every ‘20' designated Mooney aircraft into one large group that encompasses over 30+ separate models that range from the 1955 Mark 20 through the 2006 M20R Ovation 2GX.

Column B, Rows 2 through 59 are the Current Low Retail Prices quoted by the Summer Edition of the Aircraft Bluebook Aircraft Price Digest for each Aircraft Type, series. If you think back to the example of the Mooney M20 Series in the last paragraph, you will now understand that the number in this column at Row 5, that the 1955 Mark 20 is currently reported by the Bluebook as having a (Base) Retail Value of $20,000.00 USD. Continuing on with this thread, Column C, Rows 2 through 59 are the Current High Retail Prices quoted by the Summer Edition of the Aircraft Bluebook Aircraft Price Digest for each Aircraft Type, series. In this case at Row 5, the 2006 M20R Ovation 2GX has a (Base) Retail Value of $478,000.00 USD. Columns D and E, Rows 2 through 59 are pretty self explanatory, i.e. These are the same reported Values from the Bluebook, 12 Months Ago. I am actually planning on keeping these numbers the same for the remaining two Quarters (Fall and Winter) and thus keeping the same reference point for a year, with its replacement occurring on its anniversary, i.e. every Summer edition of this Report will have a new numbers here (yes, you have sussed my drift; the Current Low and High Retail Prices in this report will become the new ‘Year Ago' Reference Figures, this time next year.)

Now my spreadsheet gets interesting with Column F, Rows 2 through 59 because I have used the following formula to crunch these numbers into a comprehensible market indictor:

((B5/D5-1)+C5/E5-1)-1/2 = ‘Percentage'

What I have done is, I have divided the current ‘Low Retail' by the old (last year), then both the current ‘High Retail' by the old (last year) and then both resultants are added together and then finally this result is divided by ‘two' to provide an averaged percentage result.

Column G, Rows 2 through 59 are the Annual Hours Flown in a twelve month period, as quoted by the Bluebook.

Column H, Rows 2 through 59 are the normal Knots True Airspeed for each aircraft Series, as quoted by the Bluebook.

Column I, Rows 2 through 59 are the typical Nautical Mile Ranges of each aircraft, as quoted by the Bluebook.

Column J, Rows 2 through 59 are the Standard US Gallon Fuel Capacities of each aircraft, as quoted by the Bluebook.

Column K Column I, Rows 2 through 59 purely my own input and the figures entered in this column represent the typical US Gallon per Flight hour Fuel Consumption of each aircraft.

Column L, Rows 2 through 59 is thus a simple computation with the use of the following formula:

I2/J2 = ‘Nautical Miles per US Gallon'

What I have done is, I have divided the typical Nautical Mile Ranges for each aircraft by the typical ‘Standard' US Gallon Fuel Capacities of each aircraft, which results in a fairly accurate ‘Efficiency' number that denotes NM/USG.

Next I am going to skip a column in my explanation and move onto Columns N and O. These are the current figures (as of July 15, 2006) that were being reported by this website, https://www.globalair.com/.

Columns P and Q denote the respective, current and twelve month ago figures (as of July 15, 2006) that were being reported by the Organization of the Petroleum Exporting Countries (OPEC) at their website, http://www.opec.org/home/.

Columns R and S denote the respective, current and twelve month ago figures (as of July 15, 2006) that were being reported by Dow Jones for their Industrial Average, derived from their chosen portfolio of publicly traded corporations.

Columns T and U denote the respective, current and twelve month ago figures (as of July 15, 2006) that were being reported by the British Bankers Association for the London Inter-Bank Offered Rate (LIBOR) percentage interest rate, available as an Excel spreadsheet like this, from their website: http://www.bba.org.uk/.

 

Now my spreadsheet should be easily understood. So what can now be gleaned from this document?

  • Well I believe that it will be found to be useful on many different levels and for various purposes:
  • It is a quick handy reference for anyone who wants to know the current value ‘range' (the high and the low) for their type of aircraft series.
  • The performance data is a ‘down and dirty' handy reference (please don't use the data for flight planning purposes because you may crash!)
  • The Annual Fuel Cost portion coupled with the NM/USG ‘Efficiency' portion of the spreadsheet is very telling, especially in today's ever tightening world oil supply markets.
  • And finally, my spreadsheet should be somewhat of a reliable barometer of the current condition of the used aircraft marketplace (the 12 Month Percentage Change) as it relates to the leading economic indicators i.e. the performance of the stock market, the cost of oil and the cost of money.

My spreadsheet thus shows that:

The following aircraft/helicopters saw the largest gains in value, including the normal yearly/model new price increases:

THE WINNERS

  • 16.29% Bell 206/407 Series
  • 12.74% Cessna 210 Series
  • 10.17% Cessna 441
  • 8.90% Mooney M20 Series
  • 7.71% Falcon 50/50EX Series
  • 7.22% Challenger 300

The Overall Market has shown an Increase in value ‘Across the Board', equal to 3.88% over the last twelve months.

THE LOSERS

  • 8.06% Falcon 20/200 Series
  • 6.35% Bolkow/MBB/Eurocopter BK105/BK109/BK117 Series
  • 4.86 Robinson R22 Series
  • 4.39% Cirrus SR20/SR22 Series

 

What does this mean, I hear you ask?

If you have a new/low-time, medium-large aircraft like the Challenger 300 to sell, you will see it sell for more than you paid for it several months ago.

If you are operating one of the older dinosaur jets like a Falcon 20 or 200, your value is dropping much faster now, due to the price of fuel and also the less desirability of owning a forty-plus year old aircraft.

I need to do more research into the smaller aircraft markets, and by the next quarterly market report I will provide a better insight into what is occurring there (maybe it's the cost of money, I don't know), but I am certain that many of you engaged in the operation and sale of these aircraft already know the background behind the percentage points listed in my spreadsheet.

So in November we shall have a new, Quarterly Market Report.

 

I would like to end this month's column by asking for your help. From time to time I have the pleasure of speaking with people that, like you, read this column each month. I feel a certain responsibility in providing fairly decent content here and therefore would like to ask you, dear reader, what it is that you would like to see from time-to-time, discussed in this column. Obviously as I always state at the end of my ranting each month: ‘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. Please don't forget that whatever you write here, can be seen publicly by everyone that visits this page, so please be funny, be inspired, but most importantly of all, please be nice. See you next month.'

Aircraft Insurance Coverage: Will You Have It When You Need It?

by Greg Reigel 1. August 2006 00:00
Share on Facebook

Most aircraft owners purchase aircraft insurance. In some instances, state law requires the purchase of insurance. In most other cases, aircraft owners purchase the insurance to protect themselves in the event of an accident or other loss arising from aircraft operations. When you purchase an aviation insurance policy you expect that the policy will provide coverage when you need it. However, that isn't always the case.

This article will address situations in which an insured may find that coverage is denied for an accident or loss. Since each insurance policy is unique and contains a multitude of exclusions, declarations and conditions, this article will only discuss exclusions and breaches of policy provisions in a very general sense.

Exclusions And Breaches Of Policy Provisions

All aircraft insurance policies contain exclusions. Exclusions define circumstances in which the insurance company will not provide coverage for operation of an aircraft. An aircraft insurance policy usually includes both "specific" and "general" exclusions.

Specific exclusions arise when you assume additional liability (e.g. you sign a contract that indemnifies or holds someone else harmless for damage they cause), damage occurs to your own property or injury occurs to members of your family. The policy may also specifically exclude coverage for your own medical expenses or for your operation of an aircraft that you do not own.

General exclusions can result in denial of coverage regardless of whether the exclusion directly caused a particular claim. These types of exclusions may preclude coverage for operation of your aircraft in commercial operations (as defined by the policy, not necessarily the FAA or IRS) or if you use your aircraft to commit unlawful acts. Coverage may also be excluded under general exclusions that preclude recovery for damage caused by war or terrorism or when a pilot that is not named as an insured on the policy and who does not meet the open pilot qualifications operates your aircraft and a loss results.

Aircraft insurance policies also have requirements, conditions and provisions with which the insured must comply in order for the policy to provide coverage. These requirements often mandate the condition of the aircraft, qualifications and currency of the pilot and accuracy of the information provided by the insured to the insurance company.

If an accident or loss occurs, and a policy's exclusion applies or a policy provision has been breached by the insured, the insurer may have the right to deny coverage. In that situation, the insured could find that he or she is uninsured. But, you may ask, "What if the exclusion or breach of a policy provision is unrelated to or had nothing to do with the accident or loss, will coverage still be denied?"

The answer to that question will depend upon the state law applicable to the case. In some states (Florida, Hawaii, Illinois, Iowa, Mississippi, Montana, South Carolina, Texas and Washington) an insurer cannot deny coverage unless the exclusion or breach was causally related to the accident or loss. In other states (Alaska, Arizona, California, Colorado, Georgia, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Tennessee and Virginia) a causal connection between the policy's exclusion or policy breach and the accident or loss is not required for the insurer to deny coverage. The remaining states have not decided the issue one-way or the other.

Examples Where Coverage Has Been Denied

Pilot Provisions. Most, if not all, aircraft insurance policies have provisions relating to the pilot(s) who will be operating the aircraft. These provisions typically require that the pilot have a current and valid medical certificate and that the pilot be in compliance with all recency of flight regulations. Insurers have denied coverage based upon breaches of these provisions when the pilot did not have a current or valid medical certificate or when the pilot did not have a bi-ennial flight review endorsement. Coverage has also been denied when the pilot did not meet recency of experience requirements for VFR, IFR, day, night or passenger carrying flights.

Airworthiness Certificate. Aircraft liability insurance policies require that the insured aircraft be in an airworthy condition when it is being operated. Coverage has been denied when the insured aircraft was not in an airworthy condition because it had not received an annual inspection within the preceding 12 months or it had not received other required inspections such as VOR, pitot-static and altimeter checks. An aircraft owner's failure to replace an ELT battery or perform required maintenance have also rendered aircraft un-airworthy and those failures have jeopardized insurance coverage.

Conclusion

If you live in a state that does not require a causal connection between an exclusion or policy breach, you need to make sure you comply with all of the provisions and requirements contained in your policy. Failure to comply could very well result in a denial of coverage if you are ever involved in an accident or loss.

If you live in a state in which a causal connection is required between a policy's exclusion or policy breach and an accident or loss, the insurer will have the burden of proving the existence of a causal connection. That may or may not be easy, depending upon the circumstances.

In either case, you would be fighting for coverage. In the aftermath of an accident or loss, a fight over coverage is the last thing an insured should have to do. To avoid these situations and to ensure that you will have coverage when you need it, you need to be aware of and comply with the requirements and conditions of your aviation insurance policy. Then you can enjoy the security of the aviation insurance policy for which you are paying your premiums.

 

Since this is a discussions forum what questions do you have regarding your coverage?  Do you have any experiences with denial of coverage, we would like to hear of any instances where you or your aircraft was not covered.  Please use the reply link provided below.

Tags: , , ,

Greg Reigel

Summer Reflections

by David Wyndham 1. August 2006 00:00
Share on Facebook

It is summer and you know what that means, no not heat waves, but EAA AirVenture! I got my start in aviation at a small airport and along with the EAA, really developed my aviation interests. Today, their air show and meeting covers all aspects of aviation. For those of us not lucky enough to go this year, like me, I'll weigh in on a few items of interest.

For those involved in business aviation, big news event number 1 was the announcement that Honda will build a jet. The HondaJet is another entry in the tight very light jet market. They will be collaborating with New Piper and plan to start accepting sales orders this fall (I'm thinking the NBAA). Honda's goal is to complete type certification within four years. Production will be in the U.S.

They are relatively late entries into what could become a crowded field. Being a Honda-car owner, I see them as a very savvy company who won't enter the competition unless they have a chance at being a leader. The basic data on the jet is promising, and they do have the money, but again, they are late entries and that will work against them.

Business aviation big news event 1B is that Eclipse Aviation received provisional type certification from the Federal Aviation Administration (FAA). The company expects to receive the full type certification for the Eclipse 500 by August 30th.

Keep an eye on Embraer. I'm hearing some interesting things about how they are developing their Phenom line of aircraft.

The fun will really begin when these point-to-point air taxi services start operations. That is the biggest question surrounding these jets - can it earn a living in the for-hire world? I'm with Missouri - Show Me. Most VLJs are limited in cabin size, thus limited in baggage, too. They might work well for day travel though. However, who is putting in the entire infrastructure at these small airports to handle the passengers – security screening, baggage, waiting areas? It is an interesting idea and now that the Eclipse is almost ready for their first deliveries, it will be time for these point to point carriers to start putting up the numbers. I wish them luck. They will need it.

I was a bit surprised at big news number two - Raytheon (the parent) is again shopping around for a buyer of Raytheon Aircraft Corp. RAC is having a good year, and despite lengthy delays in the certification process of the Hawker 4000, has a good order book. With increasing fuel prices, those stodgy turboprops don't look so bad after all.

I'd like to see them separate from Raytheon and bring back (in full) the Beechcraft name. That won't solve any problems, but will remind them of their incredible heritage. The big issue they will face is in developing new models. They don't have a strong record of accomplishment in recent years of developing new aircraft on time. My two cents is that it's late to be developing another VLJ. They have some great products, but not a lot of new ones.

Light Sport Aircraft were all the buzz again this year – literally with the sound of some of their engines. Last count I think there were some two dozen models to choose from. That is without Cessna entering the fray. Most of these planes are from small entrepreneurial companies (like Cessna, Piper and Beech in their beginnings). These aircraft are much simpler to design and there may be room for a number of manufacturers to exist. Be careful of the hype, however. Their engines still need maintaining and they will still cost something to insure and store. I wouldn't mind having one for fun flying myself. Anyone know of one that will fit a six foot three pilot?

This is one fun part of my job. We don't sell aircraft so we can stay neutral, run the numbers and see where the competition goes next. While not quite the same as aviation's golden age, there sure are a lot of exiting goings on in aviation today. Let's hope $5/gallon fuel doesn't put out the fire.

Where do you think things are going? Click Reply and let me know.

The True Cost of Aviation Fuel

by David Wyndham 1. August 2006 00:00
Share on Facebook

We all are quite aware that fuel costs keep rising. GlobalAir has a nifty fuel price checker at https://www.globalair.com/airport/ . A quick check and a few things are apparent. 100LL is clearly more costly than Jet-A (Regional fuel pricing), and at a given airport, two FBO's can have very different fuel prices.

It would not be unusual to find a twenty, thirty or even forty cents per gallon difference. You might ask yourself why anyone would go to an FBO with the high fuel cost? Well, that's not the entire story.

Service counts for a lot. If you need a quick turn but it takes 30 minutes for the fuel truck to show up, then is saving twenty cents a gallon such a good deal?

Make sure you call ahead for the latest prices and make sure to ask about the other fees. Those ramps, hangars, crew rest rooms, courtesy cars and flight planning rooms all cost money. FBO's can be creative in finding ways to pay for them. Sell enough fuel, and those services can be offered "free." To do that with fuel sales, they must add a surcharge. Across the field, the other FBO may elect to do an al a carte pricing and charge for each individual service. Both have their advantages.

If you need the "full service" FBO, than paying the higher fuel price but being able to avail yourself of all the services may be a better deal than the budget fuel price plus paying for each additional service. Most FBO's will have a minimum gallon purchase that will get you the "free" services.

If you need a quick turn, then the lower fuel cost may be the better deal. Why pay for the extra services if you don't need them. Call ahead an ask if there is a ramp fee or passenger transfer fee or other charge in addition to the cost of fuel.

For each FBO, add the cost of the fuel with the cost of the additional fees to arrive at your total cost for the stop. You may be surprised that the lower fuel cost FBO isn't necessarily the better deal.

Lastly, most of us are aware of tankering. If you can get a discounted fuel price at home, tankering fuel is a way to save on the cost of fuel. However, the FBO isn't there as a charity, they are trying to provide a service and expect a fair price for that service. Even if you can make the round trip unrefueled, consider the "courtesy fuel" purchase.

Many operators who tanker fuel still purchase a nominal amount of fuel, typically the amount of their required IFR reserves. This gives the FBO revenues in recognition of their being available with their services.

How many of you do courtesy fuel purchases? Did you use to do it but at $5 a gallon, it's now harder to justify? Would you rather get the low cost fuel and pay individually for each service? Let me know.

 

 

Tags: , , , , ,

David Wyndham | Airports



Archive



GlobalAir.com on Twitter