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Legal Representation: It's a Good Idea

by Greg Reigel 1. April 2007 00:00
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The Peril Of Pro-Se Representation In An Enforcement Action



© May, 2007 All rights reserved.

In a classic example of why an airman should retain an aviation attorney to represent him or her in an FAA enforcement action, the NTSB recently affirmed a 120 suspension of a private pilot's certificate after he represented himself ("pro se") in the enforcement proceeding. In Administrator v. Danko, the FAA charged the private pilot with violating FARs 61.56(c)(flight review), 91.13(a)(careless and reckless), 91.409(a)(annual inspection), and 91.203(a)(1)(airworthiness certificate) and issued an order suspending the airman's certificate for 120 days. The airman, representing himself without the aid of an aviation attorney, appealed the order to the NTSB.

In his answer to the FAA's complaint, the airman admitted the majority of the factual allegations that were then deemed established. Subsequently, during the course of discovery and in later submissions by the airman, the airman made statements that effectively admitted the remaining allegations in the complaint. For example, with respect to the allegation that the annual inspection was not performed when required the airman stated "TIME FLIES. AN ANNUAL WAS DUE IN 2003. I WAS TARDY IN GETTING IT DONE (2004). MY MISTAKE." In addressing the flight review claim the airman responded that "SINCE 1999 MUCH OF MY FLYING HAS BEEN DONE WITH A CFI. I COULD HAVE BEEN SIGNED-OFF (BFR) MANY TIMES. NOT HAVING IT DONE OFFICIALLY WAS AN OVERSIGHT ON MY PART."

Based upon the airman's answer and subsequent statements, the ALJ found that no material issues of fact were present (since the airman had effectively admitted to all of the allegations). The ALJ then granted the FAA's motion for summary judgment and affirmed its order of suspension. The NTSB subsequently rejected the airman's arguments on appeal finding that, indeed, no issues of material fact were present and the ALJ acted appropriately in entering summary judgment.

Additionally, the Board rejected the airman's apparent argument that his pro se representation should somehow justify reversal of the ALJ's decision. The Board observed that the Office of Administrative Law Judges informed the airman it was advisable to have an attorney for the proceeding the Office even provided a pamphlet to the airman that stated, "...If an airman can afford it, it is advisable to have legal representation...." The Board then noted, albeit in the context of a hearing, "[t]hat an attorney may have argued his case more effectively or presented evidence differently is not a sufficient reason to require a rehearing."

In enforcement actions, the FAA has the burden of proving its allegations by a preponderance of the reliable, probative and substantial evidence. However, in this case, the airman clearly made the FAA's case for it. And, unfortunately for the airman, the fact that such errors occur during pro-se representation, or even representation by counsel for that matter, by itself, is not grounds for appeal. Although representation by an aviation attorney in the matter may not necessarily have changed the ultimate decision by the ALJ, it is quite likely that the airman would have at least had the opportunity to fully respond to the FAA's case and present his own case at a hearing on the merits.

Do you have any pro or cons to this article?  If so please click on the link below and tell us why or why not legal representation is a good idea.  Everyone gains knowledge from your input so please lets hear from you!

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Greg Reigel

Service Bulletins Redux

by Greg Reigel 1. April 2007 00:00
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If you follow this page on the Globalair.com site, which is quite likely if you are reading this article, you know that I have written several articles discussing service bulletin compliance. Not surprisingly, this issue has generated a significant amount of debate. And as a result, I am often asked questions about service bulletin compliance. In fact, I was recently asked my opinion regarding the following:

The Factual Scenario

Aircraft owner ("Seller") enters into an agreement with aircraft buyer ("Buyer") under which Buyer will buy Seller's aircraft following a satisfactory pre-purchase inspection. The purchase agreement states that the aircraft will be delivered "in an airworthy condition and in compliance with all airworthiness directives and manufacturer service bulletins". Buyer's pre-purchase inspection discloses a number of service bulletins with which the Seller's aircraft is not in compliance.

Buyer subsequently demands that Seller pay for compliance with the service bulletins. Since compliance with the service bulletins would cost approximately $50,000.00, Seller refuses. Seller argues that compliance with the service bulletins is not mandatory and that the aircraft is still airworthy even though the aircraft was not in compliance with all service bulletins. Who should prevail? Under the facts presented here, Buyer should prevail. Why? Because the purchase agreement states that the aircraft must be in compliance with all service bulletins.

Analysis

At the outset, it is important to note that service bulletin compliance must be viewed from three distinct, and oftentimes inconsistent, perspectives: regulatory (FAA enforcement); tort liability (getting sued based upon negligence or product liability); and contract (what two parties have agreed to). We have talked before about the implications of the regulatory and tort liability perspectives, as well as the implications of both. In this case, the contract perspective takes center-stage and dictates the obligations of the Seller.

Although the Seller is correct that the aircraft did not need to comply with the service bulletins in order to be in an airworthy condition, in this context, airworthiness is not the issue. If the purchase agreement simply stated that the aircraft needed to be in an airworthy condition, the Seller would be correct and would not need to have the service bulletin work performed.

However, since parties are free, for the most part, to enter into contracts based upon negotiated terms, the language agreed to by the Seller and Buyer results in a purchase agreement that requires more than simply the minimum airworthiness standards of FAR Part 43. Specifically, the purchase agreement states that the aircraft must also be delivered in compliance with all service bulletins. As a result, in order for Seller to fulfill its obligations under the purchase agreement, the Seller will need to have the service bulletin work performed on the aircraft or reach some alternative agreement with the Buyer.

Conclusion

Service bulletin compliance has been, and will continue to be, the subject of spirited debate among aircraft owners and aircraft maintenance professionals. However, in order for these discussions to be productive, and to accurately determine whether compliance with a service bulletin is mandatory, the issue must be viewed from the proper perspective. Depending upon whether the question is analyzed from a regulatory, tort liability or contract perspective, the answer may, and quite often will, be different.

Starting the discussion with the proper frame of reference is critical for arriving at the correct answer. However, if you apply the proper perspective and you are still unsure whether compliance with a service bulletin is mandatory in a particular situation, ask an aviation attorney. He or she should be able to help you apply the proper analysis to your circumstances and advise you whether you must comply with a particular service bulletin.

Interestingly, the repair station that performed the last several annual inspections on the aircraft, signed the logbook stating that the annual was performed "in compliance with the manufacturer's maintenance manual" which states that all service bulletins etc. issued prior to the most recent manual revision are incorporated by reference into the manual.  However, a discussion of the implications of this logbook entry and the Seller's options is best saved for another day.

Aircraft Market Report: 2007 Q1

by Jeremy Cox 1. April 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.

MOST INCREASES ARE DUE TO NEW YEAR PRICING FOR NEW MODELS
The Overall Market has been showing an Increase in value 'Across the Board', equal to 2.96% over the last twelve months. Most of this gain is due to the 2007 pricing that has been introduced by some of the 'available as new' aircraft manufacturers. There is a general trend towards softening prices. A buyers market may again prevail.

I am sorry to say that there are no graphs to accompany this quarterly report. I promise you all that the next report will be much more comprehensive.

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 $63.89
One Year Ago $53.13
Dow Jones IA 13,063
One Year Ago 10,303
LIBOR % Rate (USD) 5.29
One Year Ago 3.32875
FBO / Fuel Prices by Region (Full Service JETA)
Central Region $3.96
Eastern Region $4.29
Great Lakes Region $3.90
New England Region $4.13
Northwest Mountain Region $4.00
Southern Region $4.20
Southwest Region $3.99
Western Pacific Region $4.15
Alaska Region $4.70

New vs. Used

by David Wyndham 1. April 2007 00:00
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If you are in the market for a "new to you" aircraft, you have two big decisions to make:
- which make/model aircraft?
- new or used aircraft?

Which make and model aircraft is a factor of your requirements and fodder for another day. Let's assume that you have made a decision on an aircraft has been in production for about 10 years so there is a fair supply of used models to choose from, as well as new. Obviously the new model costs more to acquire than used.

What do you get for the added cost of buying new?

Warranty. A new aircraft warranty today typically runs for about five years. The new aircraft warranty typically covers any unscheduled maintenance, often both parts and labor. Based on our research, during the warranty period, aircraft can save about 15% on labor costs and 30% on parts costs. Even with a thorough pre-buy inspection, there is still the chance of unforeseen maintenance popping up on a used aircraft - and you incur that cost.

Reduced Maintenance Costs. As an aircraft ages, the costs to maintain it increase. Like all mechanical devices, as aircraft age, parts and accessories wear out, require overhaul, or need some sort of repair. These increased costs occur outside the warranty period. A typical eight-year old business jet can see maintenance costs about 50% higher than that of the new model due to both warranty and the effects of aging.

Increased Availability. In addition to reduced maintenance costs, new aircraft typically spend fewer days in maintenance, leaving more days available for use - especially important to a small operation with one or two aircraft or to a commercial operation that needs the aircraft to generate revenue.

Configuration. When ordering a new aircraft, you get to select the options and configuration that you want. That covers everything to the color of the interior fabrics, to having the latest in safety equipment and avionics. If you want blue carpeting, you can get blue carpeting!

With a used aircraft, reconfiguring not only takes time, it adds additional expenses, and takes time. With a new aircraft, the day you take delivery after completion, it's yours to fly.

Increased capability. In order to keep the new models "new," the manufacturers' add value by increasing the capability or otherwise improving the aircraft. That may mean more fuel/range, greater payload, updated avionics, or a better heating and air conditioning system, etc.

Save time in the search. If you want a new model Z, you negotiate for delivery position, configuration and price, but the supplier is the manufacturer. With a used aircraft, you have as many suppliers and there are aircraft available. With the used aircraft, you need to thoroughly inspect each prospect and try to balance selling price, your offering price, and the value compared to the other offerings. With the new aircraft, you still have to perform a nominal acceptance inspection, but you do it once for your serial number.

What can you save by buying used?

The big advantages of used aircraft are in acquisition cost and (sometimes) availability. A new mid-sized business jet costs about $14 million. An eight-year old used mid-sized business jet today goes for 50% to 60% of that, or $7 to $8.4 million.

If there isn't a significant difference in capabilities between the new and the used, why pay more for new? Or, if you don't need the increased capability of the new aircraft, where is the value to you?

Another advantage of used aircraft is that many can be purchased and put into service in a matter of a few weeks or less. Currently, most new business jets have an 18 - 24 month lead time. If the specific serial number aircraft you are considering has fresh maintenance, a good to excellent paint and interior and you are happy with it as is, then upon closing, you can fly it away.

The new versus used is truly a matter of trade-offs. While used aircraft sell for less, they cost more to maintain and spend more time in for maintenance. Older, out of production aircraft, might not have the needed configuration or avionics needed to operate in today's environment. However, if a used model has all the capabilities you need, the reduced acquisition cost compared to new can pay for a lot of extra maintenance.

There is no clear cut answer to new versus used. Either way it costs money, either up front in the acquisition, or later in maintenance and refurbishment costs. If you look at the total costs of owning and operating the aircraft, many times the dollars spent come out close. You need to consider all the variables and weigh the value of each.

Most of us have gone through this process before and I am sure we have a few opinions floating around.  Give us your input.  There is no right or wrong answer here just a general view.  Your thoughts would be appreciated.

How to Deal with the Aging Issues of Older Aircraft

by David Wyndham 1. April 2007 00:00
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The biggest issue with aging aircraft is that the repair and replacement of parts increase the cost of owning and operating the aircraft. This hurts in two ways. One is the increased costs, which are obvious.

A 20-year old aircraft has about 50 - 60% higher maintenance costs than a new aircraft just out of warranty - excluding the engines! The early years when the aircraft are young and warranties are in effect show very low maintenance costs - less than half of what they are at year 5. However, when the aircraft is 30 years old and wear and tear is taking its toll, the maintenance costs are typically more than double what they were at year 5. As with any mechanical device, this makes sense. The increased maintenance (parts and labor) is primarily due to unscheduled maintenance. Much of the unscheduled maintenance occurs as part of the scheduled inspections - i.e. during the scheduled maintenance check an item is found out of tolerance and is repaired, replaced or overhauled.

The biggest thing you can do is to keep the aircraft well maintained from day one! Don't put off maintenance; keep the aircraft in top condition. When evaluating used aircraft, if the maintenance records are not in excellent condition - how do you know the maintenance was done properly? That low price for the used aircraft may more than make up the difference with some unplanned-for maintenance costs.

Increased maintenance leads to the second big problem: decreased availability.

Availability is defined as the number of days an aircraft is available for flight operations divided by the total number of days in the operating year. In other words, if the aircraft is in the shop, it isn't available for flight.

Our data suggests this becomes a serious issue for aircraft older than about 20 years of age. Availability drops from a high of 95% for newer aircraft, to an average of 70% at age 25, dropping to no better than 55% at age 30. Looking at it another way, it typically takes two older aircraft to have the same availability as one newer one!

Another issue that can make this worse - limited spare parts availability. There are many cases where due to the limited number of aircraft flying, parts suppliers maintain a very minimal inventory and don't replenish the stock until after they run out. Even with larger fleet numbers, certain components may be manufactured in limited quantities by manufacturers who infrequently open up the production line to make more spares.

If you don't fly a lot of hours and can schedule trips well in advance, then you may be able to deal with reduced availability. Still, we've had customers who fly three aircraft - one on the schedule, one back-up and one in the shop. That gets costly!

The last issue isn't one just yet. The General Aviation Revitalization Act of 1994 released the OEMs from much of the liability for the design and safety features of older aircraft. There have been a few reports of maintenance shops not wanting to work on aircraft older than 18 years of age out of concern for the liability potentially falling on the maintenance shop should an accident occur.

Given the number of aircraft built prior to 1994, I doubt this will force many maintenance providers to turn away large numbers of aircraft - but I would not be surprised to see an increase in isolated cases of refusals or release forms being presented to owners before their aircraft is worked on. Before signing any releases, check with your own aircraft insurance carrier to make sure they will cover you.

Older aircraft can be productive for many years. They do require more maintenance and at some point their cost and declining availability make them less useful to many. When to replace an aircraft is not an easy formula. It does require monitoring and tracking of costs and availability, and a willingness to say goodbye to an old friend.

As always we look forward to your comments and opinions.



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