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Aircraft Market Report: 2006 Q4

by Jeremy Cox 1. January 2007 00:00
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Most of the data 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/ As always 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.

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

The Winners

Cessna 441 Conquest II at 18.62% overall, which is an additional 4.22% UP from the last Quarterly Report. This steady value increase is probably an indication that the Conquest II provides the right performance versus its value even though it has not been in production since 1986.

Bell Jet and Long Rangers (B206 and B407), at ?%, which is again ?% UP from the last Quarterly Report.

Most Are Holding Their Own Regarding Value

The Overall Market has been showing an Increase in value 'Across the Board', equal to 2.82% over the last twelve months, however, as I denoted in that last report, I felt that there might be an indication of a general slowdown, and this report appears to confirm my suspicion. The moderate hardening of values has levelled off and stayed in parity with the results of the last report.

The Losers

Rockwell Commander (112, 114 and 115) is a repeat offender this report at -10.11% overall, which is an additional 2.06% DOWN from the last Quarterly Report. Hopefully this downwards slide is now in check and Rockwell Commander owners can sleep easier in their beds. If you are a buyer, then I suggest that you start making your telephone calls now.

Beechcraft Baron 55/58 series has really fallen out of bed this quarter at -11.87% overall, which is a further 7.45% DOWN from the last Quarterly Report. For anyone in the market for a Baron, now is probably the time to start your shopping.

My interpretation of the above results is as follows:

As with all commodity markets of the various kinds, there are winners and there are losers in the constant shifting of values. The Stock markets continue to climb, likely buoyed by the 'baby-boomers' who are all rapidly reaching their retirements while ferreting away as much cash as they can stuff into their burgeoning stock accounts. This upward trend has got to slow down eventually, even though everyone of us hopes that it never does. The oil price is happier story than it was last summer, but unless a major breakthrough occurs in the oil supply industry; this can only really go in one direction, in the long run. The cost of money, i.e. the interest rate is anyone's guess, but according to the trends seen over the last 12 months, we may be seeing stability set-in. We may well have to watch the value of the US Dollar to see any new trends in interest rates, because we are sailing at a low tide right now when it applies to our currency value. It would be a major upset if ever OPEC decided to tie their prices to either the Euro or the Yuan.

We shall revisit the markets here at the Globalair site in another three months and see if there are any big changes occurring this year.

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 when we tackle another aviation related topic.

The Data

Historical Data

LabelData
OPEC Basket Price $51.20
One Year Ago $53.13
Dow Jones IA 12,523
One Year Ago 10,303
LIBOR % Rate (USD) 5.38688
One Year Ago 3.32875
FBO / Fuel Prices by Region (Full Service JETA)
Central Region $3.78
Eastern Region $4.21
Great Lakes Region $3.79
New England Region $4.06
Northwest Mountain Region $3.92
Southern Region $4.02
Southwest Region $3.81
Western Pacific Region $4.06
Alaska Region $4.70

Voluntary Disclosure Reporting Program

by Greg Reigel 1. January 2007 00:00
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What if you hold a Part 135 air carrier certificate and you discover that you operated one of your aircraft beyond the mandatory compliance date without completing a required inspection? Or, what if you hold a Part 145 repair station certificate and you discover that several of your spare parts were either mislabeled or improperly stored? In either situation, a violation of the FARs has likely occurred. But do you have to lose sleep at night wondering if the FAA will discover the violation during the next inspection? Is a civil penalty, suspension or revocation in your future? Not necessarily. If you qualify, the Voluntary Disclosure Reporting Program ("VDRP") may allow you to disclose the violation and merely obtain a letter of correction in your file.

The FAA established the VDRP to provide a positive incentive to certificate holders, rather than the negative incentives of civil penalties and certificate actions, to promote and achieve compliance and aviation safety. The FAA believes that when a certificate holder detects violations, promptly discloses the violations to the FAA, and takes prompt corrective action to ensure that the same or similar violations do not recur, safe operating practices and compliance with the FAA's regulations will result. The VDRP is available to certificate holders issued certificates under FAR Parts 21, 119, 121, 125, 129, 133, 135, 137, 141, 142, 145, 147, Production Approval Holders ("PAH") and for program managers of qualified fractional ownership programs operating under Part 91K (for purposes of this article I will refer to these collectively as "certificate holders").

When Does The VDRP Apply?

The VDRP does not apply to all violations by a certificate holder. A violation must meet the following five conditions to qualify:

(1) The certificate holder has notified the FAA of the apparent violation immediately after detecting it and before the FAA has learned of it by other means;

(2) The apparent violation was inadvertent;

(3) The apparent violation does not indicate a lack, or reasonable question, of qualification of the certificate holder;

(4) Immediate action, satisfactory to the FAA, was taken upon discovery to terminate the conduct that resulted in the apparent violation; and

(5) The certificate holder has developed or is developing a comprehensive fix and schedule of implementation satisfactory to the FAA. The comprehensive fix includes a follow-up self-audit to ensure that the action taken corrects the noncompliance. This self-audit is in addition to any audits conducted by the FAA.

If all five conditions are not met, the FAA may pursue enforcement action against the certificate holder if it discovers the violation either through a disclosure by the certificate holder or by some other means.

Individual Airmen May Be Covered

The VDRP also applies to individual airmen and agents of the certificate holder if the following occurs:

(1) The apparent violation involves a deficiency of the certificate holder's practices or procedures that causes the certificate holder to be in violation of a covered violation of an FAA regulation;

(2) The airman or other agent of the certificate holder, while acting on behalf of the certificate holder, inadvertently violates the FAA's regulations as a direct result of a deficiency of the certificate holder that causes the certificate holder to be in violation of the regulations. (The VDRP does not apply to the airman or other agent when his or her apparent violation is the result of actions unrelated to the certificate holder's deficiency);

(3) The airman or other agent immediately makes the report of his or her apparent violation to the certificate holder; and

(4) The certificate holder immediately notifies the FAA of both the airman or other agent's apparent violation and the apparent deficiency in its practice or procedures.

How Does The VDRP Work?

The initial notification/disclosure to the FAA must be "timely." Although the FAA state that it should ordinarily occur within 24 hours of the discovery of the apparent violation, an inspector may accept disclosures that exceed the 24-hour policy when the inspector determines that specific circumstances justify the later submission, and in view of those circumstances, the submission is still considered timely. The notification/disclosure may be made verbally, in writing or via the FAA's web based VDRP.

The initial disclosure should include the following information:

(1) A brief description of the apparent violation, including an estimate of the duration of time that it remained undetected, as well as how and when it was discovered;

(2) Verification that noncompliance ceased after it was identified;

(3) A brief description of the immediate action taken after the apparent violation was identified, the immediate action taken to terminate the conduct that resulted in the apparent violation, and the person responsible for taking the immediate action;

(4) Verification that an evaluation is underway to determine if there are any systemic problems and a description of the corrective steps necessary to prevent the apparent violation from recurring;

(5) Identification of the person responsible for preparing the comprehensive fix; and

(6) Acknowledgment that a detailed written report will be provided to the certificate holder's principal inspector ("PI") within 10 working days.

Upon receipt, the PI will respond with a written or electronic acknowledgment of the certificate holder's initial notification that will also include the request for a written report. Although this acknowledgement is sent in lieu of a letter of investigation, the PI will open an Enforcement Investigative Report ("EIR") that will be closed out with a letter of correction if the certificate holder complies with all of the requirements of the VDRP.

The detailed written report submitted by the certificate holder within 10 days of the initial notification/disclosure must include the following:

1) A list of the specific FAA regulations that may have been violated;

2) A description of the apparent violation, including the duration of time it remained undetected, as well as how and when it was detected;

3) A description of the immediate action taken to terminate the conduct that resulted in the apparent violation, including when it was taken, and who was responsible for taking the action;

4) An explanation that shows the apparent violation was inadvertent;

5) Evidence that demonstrates the seriousness of the apparent violation and the regulated entity's analysis of that evidence;

6) A detailed description of the proposed comprehensive fix, outlining the planned corrective steps, the responsibilities for implementing those corrective steps, and a time schedule for completion of the fix; and

7) Identification of the company official responsible for monitoring the implementation and completion of the comprehensive fix.

Once the PI receives the proposed comprehensive fix, he or she will work with the certificate holder to implement the fix and to ensure that any systemic problems that caused the violation are identified and remedied. Typically, this occurs over a period of time. After initial implementation of the fix is completed, the PI will issue a letter of correction. The PI then monitors the remaining corrective steps identified in the plan. If the certificate holder does not complete the fix or takes actions inconsistent with the fix proposed in the plan, the PI may rescind the letter of correction, re-open the investigative report, and initiate appropriate legal enforcement action.

When all corrective steps are completed, the PI will perform a final assessment to confirm that all required steps were satisfactorily completed. The certificate holder will also perform a self-audit to confirm that the condition that gave rise to the violation has been corrected. If the PI determines that the fix was satisfactory, he or she will then complete a statement of follow-up investigation and close the case.

Privacy Of Disclosures

As an additional incentive to certificate holders, records submitted to the FAA for review pursuant to the VDRP are protected from release to the public under
FAA Order 8000.89, Designation of Voluntary Disclosure Reporting Program (VDRP) Information as Protected from Public Disclosure under 14 CFR Part 193.

Conclusion

By taking advantage of the VDRP, certificate holders can identify and correct their own instances of noncompliance and invest resources in efforts to preclude their recurrence. This sure beats losing sleep at night regarding an inadvertent violation.

If you would like more detailed information regarding the VDRP, you should review Advisory Circular AC 00-58A, Voluntary Disclosure Reporting Program.

We always look forward to your comments.  If you have something to recommend we would love to have your feedback plesae.  Please see below!

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Greg Reigel

The RFP: It's Not Just for Big Business

by David Wyndham 1. January 2007 00:00
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By: David J. Wyndham

Government agencies and large organizations require a Request For Proposal (RFP) on large acquisitions. However, you don't have to have a huge corporation to make use of this process. It works even for a small organization or an individual. It is the process that counts. I'll go over the "rules" and downsize them as appropriate.

Rule #1. Separate performance and cost. Set up your RFP so that there is a clear distinction between the two. The performance covers the technical, support, warranty, configuration, and schedule, requirements. Cost covers the method(s) of acquisition, and associated fees and costs. Make sure the mission drives these requirements. Downsizing this is not needed. Whether your mission is New York to Paris or New Haven to Burlington, you want to make sure the aircraft you are considering will perform whatever mission you have. Separating cost and performance allows you to do an unbiased evaluation of the technical merits of the aircraft and the proposals before even considering cost.

Rule #2. Make sure your RFP is complete. Does it cover all major, relevant areas, such as avionics, cabin furnishings, optional equipment, warranties (including any extended warranties), training (flight crew, cabin crew and maintenance personnel), trade-in allowance (if applicable), delivery schedule, payment schedule, etc? Downsizing this means make a list of all the options that you want.

Big Jet or LSA, make sure your list clearly distinguishes between the required items (must have to do your mission) and desired items (would enhance the ability to perform the mission). The smaller the aircraft, the smaller this list gets. This is important so that "nice to have" items don't outweigh the "must-have" items. It also plays a part in establishing the value of the proposal.

Rule #3. Stick to measurable items. Each item listed must be quantified. You can't rank order "nice" and "attractive" but you can rank order pilot leg room and baggage space.

This allows you to easily assign a rank order to each item. Here is one that is straight forward:

0 = Does not meet required criterion (i.e. unacceptable)
1 = Meets required criterion
2 = Exceeds required criterion
3 = Meets or exceeds desired criterion

Any aircraft getting a zero in a required category does not meet your mission requirement and it no longer need be considered. A zero with a desirable quality will not disqualify an aircraft, but other aircraft with better scores may be a better value to you.

Rule #4. Be fair. Make sure each company that you send this RFP has the necessary information to respond. Downsizing this is a mater of communicating your requirements to whatever aircraft sales organization that you deal with. It can simply be a list of questions for each sales group along with a cover note.

Rule #5. Be prepared for the evaluations. Having done your homework and having already researched the costs, evaluating the proposals is a mix of confirming what you know, and adding in the details to what was in question. Downsizing this means you do it yourself, and maybe with a friend.

The goal of the RFP process is to have an objective way of ranking the technical & performance aspects of an aircraft along with the costs, and "value" to you. Rank ordering in this way will give you guidance for making the final decision. Remember; acting on impulse with aircraft (or women) can get you into trouble some times!

As always we welcome your input and experiences please post your questions or replies below.

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David Wyndham



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