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Aircraft Market Report: 2007 Q3

by Jeremy Cox 1. October 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.

WE NOW LIVE IN THE AGE OF THE BILLIONAIRE
The Overall Market has been showing an Increase in value 'Across the Board', equal to 1.43% over the last twelve months. Most of this gain is due to the massive increases in value of the Large Cabin, Long Range Aircraft from the Falcon 2000 all the way up to the Global Express. Even the gargantuan Boeing Business Jet's value is navigating into a new rarefied atmosphere of extremely high values. Even the smaller Jet Aircraft are seeing value increases which is being helped by aircraft that have been sitting on the shelf for a very long-time, to actually start trading. Even the Falcon 20/200 series is seeing their value decline checked by at least a 3.5% reduction in it's value nose-dive. However There is a general trend towards softening prices in the Piston arena. This all indicates that we have now entered the 'Age of the Billionaire.'

All of the economic indicators show that if you have a lot of money, and I mean a lot, you are in a much better market/wealth position than you were a year ago. However for the rest of us that are truly feeling the pinch at the fuel truck, and in the pocket due to higher interest rates, we are living a totally different market driven lifestyle.

Overview
DOW
OPEC Crude
London


Take a look at all of the Large Cabin/Long Range Aircraft on this months spreadsheet. You can see some impressive value increases amongst that group, the most notable of which are the Gulfstream GV/GVSP/G500/G550 series.

GulfStream
Global Express


Now look at the worst performers in this Quarter:

Piper
Cessna


If you are thinking about buying any aircraft, now is a good time; however if you are in the market for a large cabin/long range aircraft I can only suggest that you move quickly as the prices are most definitely not going down!

Okay, I will see you next month and please remember that 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.

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

Winglets

by Jeremy Cox 1. October 2007 00:00
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So what's so special about these aerodynamic devices?

Recently I attended the Annual Meeting and Convention of the National Business Aviation Association, which this year was held in Atlanta, GA. I had the pleasure of spending the a day at the associations static aircraft display at the Fulton County Airport, with a gentleman that is relatively new to aviation. While admiring the new aircraft being displayed by Dassault Falcon Jet, he asked me what the purpose and function of the new winglet feature on the Falcon 2000. I had to stop and dredge up old and nearly forgotten knowledge to explain why Dassault had decided to install these new features on their proven and venerable wing design. His question along with my long-winded explanation has thus spawned the subject of this month's article.

Many of you have probably noticed how slowly our aviation world is being populated by more and more aircraft that are sporting winglets, tip-sails, raked tips, non planer tips, etc. Like my friend, you may also have been wondering why this is the case. Please let me try to explain.

A wings aspect ratio is one of the design factors that determines how fast, how far, and how much a wing can support aloft. Aspect ratio is determined by dividing the wingspan by its mean aerodynamic chord (MAC.) High aspect ratio wings are normally long and narrow, the ultimate rendition being those normally sported by high performance sailplanes. Low aspect ratio wings are normally short and wide, think F104 Starfighter.

Everything in aircraft design, as in life, is a trade-off. High aspect-ratio wings normally exhibit poor roll-rate, which can be attributed to both the lever-arm distance between the wing tip and the fuselage, and also due to the fact that a long wing has to overcome more forces to change its position, i.e. it's inertia (the tendency of a wing to maintain its state of rest or uniform motion in a straight line. Additionally, long wings take up a lot of ramp and hangar space, and they also have much higher bending stresses and therefore must be have greater structural reinforcement than which is required by a shorter wing.

On the plus side, high aspect ratio wings do create considerably less induced drag, which allows an aircraft with this type of wing to reach its self supporting and lifting, flying speed at a much lower required engine power setting or level, i.e. less power required = less fuel burnt, or more load can be supported for a smaller amount of power required. Parasite drag is higher with a high aspect ratio wing and therefore long wings are not normally associated with high speeds.

Low aspect ratio wings are the aerodynamic inverse of the long skinny variety, borne out by the fact that they have much less parasite drag, and greater induced drag, i.e. this type of wing is generally capable of faster speeds at the expense of more power being required to reach and attain flying speed = more fuel burnt. Remember my reference to the F104 Starfighter in association with short, wide wings (stubby is the term that leaps into my mind.)

The concept of the winglet was contemplated and patented all of the way back in 1897 by Mr. Fred Lanchester, a failed heavier than air, flying machine inventor from England. He realized through visualization that a wing end-plate would better control wingtip vortices

A vortex is generated at an aircrafts wingtip due to the high pressure fast moving air that is beneath the wing, mixing and colliding with the slow and low pressure air that is above the wing having been created by the design curvature of the wings aerofoil (remember Mr. Bernouilli's principle?)

With higher the speeds, the forces creating the vortices also increase. A violently collapsing and turbulent vortex will rob a wing of a large part of its efficiency, unless it is smoothed, reduced and/or channeled. Now this is the area of drag where the winglet device really shines. If designed properly, it will provide a much smoother area of transition for both types of air pressure to collide and mix, thereby reducing the vortex forces, reducing the vortex in size (maybe) and ultimately reduced the amount of drag being created by the vortex.

There are many types and designs of winglet systems that are in existence. Almost all of them achieve the following:

  1. The aspect ratio is increased without increasing the overall wingspan of the subject aircraft.
  2. Overall drag reduction.
  3. Improved available lifting force.
  4. Improved take-off performance.
  5. Improved climb performance.
  6. Range increase/better economy due to the aircrafts improved ability to climb higher, in less time for the same amount of energy.
  7. Increased payload capability (sometimes.)
  8. Improved stall characteristics.
  9. Higher cruising altitudes are also attainable.
  10. Lower airport noise.

Even though the concept of the winglet was patented before the Wright Brothers conquered heavier than air, powered flight at Kittyhawk in the Kill Devil Hills of North Carolina, the principle was not properly applied to aircraft design on a large scale until after world war two. The winglet principle was manifested in the production of aircraft that featured Non-Planer wingtips, i.e. the wing was angled up towards the tip into a polyhedral configuration, i.e. local dihedral (think of the Avions Jodel series of aircraft starting in 1946, designed and built by Frenchmen Edouard Joly and his son-in-law, Jean Delemontez.) The ultra-modern Airbus A350XWB also has this type of wing tip configuration.

The non-planer wingtip in conventional aircraft design circles was soon overtaken by the Raked Wingtip, meaning a wing tip that features a higher degree of sweep-back than the rest of the wing. The latest iterations from the Boeing line of commercial aircraft feature this type of performance enhancing, tip design. The blended winglet is probably the most common type of device seen today. This is effectively a wing extension that is attached perpendicular to the existing wing through a large radius and smooth chord transition structural fairing.

Now back to the Dassault Falcon 2000 series that now sports the Blended Winglets from Aviation Partners, Inc. Seattle, WA http://www.aviationpartners.com/ The Falcon 2000 derives the following performance improvements directly attributed to the new winglets:

  1. Reduced Fuel Consumption (5% at Mach 0.80; 7% at the Long Range Cruise setting.)
  2. Increased Range (up-to 260 NM.)
  3. The need for Step Climbing is either reduced or eliminated.
  4. Optimum Cruising Altitude is elevated by 1,500 feet.
  5. Higher Speeds attained for the same power settings.

Pretty impressive by any standards. Now I hope that I have managed to answer the question, "What's so special about winglets?"

Okay, I will see you next month and please remember that 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.

Airmen Liability for Aircraft Airworthiness

by Greg Reigel 1. October 2007 00:00
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What happens if an airman operates an aircraft and a subsequent inspection discloses that one or more of the aircraft's systems or components were broken during the airman's flight? Alternatively, what if maintenance is performed on an aircraft, but then the appropriate maintenance entry is not included in the aircraft's logbook prior to an airman's operation of the aircraft?

If the FAA learns of either of these situations, it is possible the FAA could charge the airman with violating FAR 91.7(a) ("no person may operate a civil aircraft unless it is in an airworthy condition"), FAR 91.405 (requiring owners and operators to ensure that maintenance personnel make appropriate entries in aircraft maintenance records), or both. What can an airman expect in these situations?

FAR 91.7(a)

In order to prevail on an allegation that an airman violated FAR 91.7(a), the FAA has the burden of proving that the aircraft was unairworthy by a preponderance of the substantial, reliable and probative evidence. National Transportation Safety Board precedent holds that the standard for airworthiness consists of two prongs: (1) whether the aircraft conforms to its type certificate and applicable Airworthiness Directives; and (2) whether the aircraft is in a condition for safe operation.

An aircraft's type design is defined by its FAA approved type certificate, type certificate data sheet, or any maintenance manuals governing an aircraft's maintenance and flight protocol or relevant directives. An aircraft may still substantially conform to its type design even when small, insignificant deviations are present. Also keep in mind that the term "airworthiness" is not synonymous with "flyability." Finally, the NTSB will also consider whether the operator knew or should have known of any deviation of the aircraft's conformance with its type certificate.

Assuming the FAA pursues an enforcement action against an airman, how does the FAA prove this type of allegation at the hearing before the administrative law judge ("ALJ")? Well, the FAA must offer into evidence the aircraft's type certificate, type certificate data sheet, or any maintenance manuals or relevant directives for the ALJ's review. After all, how is the ALJ going to know whether the aircraft conforms to its type design if the ALJ doesn't have the type design with which to compare the alleged non-conformity?

Although this seems like a "no-brainer," the FAA failed to present all of this evidence in two recent enforcement actions. In each case, the FAA's inspectors testified regarding alleged non-conformities, but were unable to testify as to how each alleged non-conformity was contrary to the respective aircraft's type certificate. In fact, in one case the FAA inspectors hadn't even reviewed the aircraft's type certificate in connection with the enforcement action. As a result, the FAA suffered dismissals for its failure of proof in each case.

Unfortunately for airmen, the loss of both of these cases, coupled with the NTSB's clear admonition to the FAA regarding the insufficiency of proof, will likely lead FAA counsel to be more thorough and diligent in future airworthiness enforcement cases.

FAR 91.405

A similar airworthiness issue arises in situations where maintenance is performed on an aircraft, but then the appropriate maintenance entry is not included in the aircraft's logbook prior to the airman's operation of the aircraft. In this type of case, the FAA alleges that the airman violated FAR 91.405, possibly in addition to an FAR 91.7(a) allegation. The FAA again has the burden of proving and must prove by a preponderance of the substantial, reliable and probative evidence that the airman operating the aircraft did not ensure that accurate, complete maintenance records accompanied the aircraft.

The airman can be held responsible for this type of violation if he or she fails to independently ensure that the required maintenance entries were recorded in the logbook, especially if the required entries had not been made. The airman's conduct is not excused simply because the maintenance personnel failed in their duties. The airman has a duty to inspect aircraft logbooks after maintenance has been performed and prior to first flight to confirm that the appropriate entries have been made.

This type of violation is much easier for the FAA to prove. It must simply show that the aircraft was operated when the appropriate entries had not been made in the aircraft's logbooks or maintenance records. The FAA can simply offer an inspector's testimony regarding his or her inspection of the aircraft's logbooks and maintenance records along with evidence of the airman's operation of the aircraft.

How does a non-A&P airman avoid this type of violation? Well, first and foremost, the airman should make sure that the logbook entry following maintenance states that the aircraft is returned to service. Beyond that, the nature and extent of the logbook entries will necessarily depend upon the work the maintenance shop performed.

Reputable shops err on the conservative side and provide detailed logbook entries for the maintenance they perform. Additionally, if you as an airman are unsure of what entries are required and whether the appropriate entries have been made, ask your A&P to explain the entries to you. Not only will this educate you, but it will also give you an opportunity to confirm that the entries have in fact been made and not inadvertantly omitted.

Conclusion

The reality of these airworthiness situations is that the flights typically occur under the FAA's radar. They usually only surface after an accident, incident, ramp check or other type of inspection. However, as illustrated by several recent NTSB cases, these situations do arise with some frequency. Understanding your responsibilities under the regulations and the FAA's burden of proof, along with counsel and advice from an aviation attorney, can help you successfully resolve these types of enforcement cases.

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Greg Reigel

Is There Such a Thing as Too Much Airplane?

by David Wyndham 1. October 2007 00:00
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With sailboats, it is called "Five-foot Fever." You get a sailboat, enjoy it for a few years, and then you start thinking, if I only had a bigger boat, I could. . . It can be the same with an aircraft. Of course, a bigger aircraft is more comfortable, and can carry more, and often can fly farther. But at what price?

With piston aircraft, speed is the lure. Several high performance piston airplanes are claiming some form of "fastest production single." Folks will trade up, and spend some serious money for an extra 10 or 20 knots. 200 knots seems much better than 190, never mind that it mean all of five minutes over a 300 NM trip.

With cabin class aircraft, especially jets, it is cabin and range. One light jet, which has about the biggest "light jet" cabin, is less popular because of its limited range. Another jet, a mid-size (barely) cabin can jet coast to coast but is faulted for its relatively small cabin. Curing both will cost a lot more money!

I'm working with a client right now who is very cost conscious. OK, it is the CFO who is very cost conscious. But, while the CEO realizes the value of private aircraft travel, that person does not want more aircraft than is appropriate for their business mission. How do you keep your desires in check and yet not fall short in what is needed?

1. Analyze your missions carefully. Where and what and when and how often? Focus on both what you can do and what you can't do. Key is how often you can't do a particular type of mission. Separate "nice to have" and "must have" criteria.

2. Don't focus on the 99th percentile mission. Oft times it is better to go with an aircraft that meets 95% of your requirements and use supplemental lift for the rest. It works both ways - it may be less costly to charter for short trips and keep the global machine for the global trips.

3. Weigh your options with a view to "value." Compare performance and costs against your missions to get the best value. If a 10% increase in costs gets you a 15% increase in cabin or range, and you'll use that extra capability, then the more costly option may be the preferred option.

4. Take emotion out of the equation. Use measurable parameters. If your main mission requires X seats and Y miles, then those are your requirements. A "spacious" cabin is not a requirement; while a cabin that is 15% larger than your current aircraft's cabin is a measurable requirement.

5. Make sure the decision makers know their options. For example, 98% of the trips for a $6 million price tag may, or may not, be preferred over the 100%, $13 million alternative. Also make sure the options include all the costs, not just acquisition.

It is important to be able to make a fully informed decision. You may elect to go "bigger is better" but don't delude yourself in thinking there is not much of an associated cost with that capability. If it is needed, then it is worthwhile.

There are several factors to making a decision on which aircraft is what you want and will fit your flight profile. We would like to know what your factors are. Please reply below.

The Value of an Aircraft Purchase Agreement

by Greg Reigel 1. October 2007 00:00
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A recent unpublished decision from the Eleventh Circuit Court of Appeals provides a shining example of a properly drafted aircraft purchase agreement's value in an aircraft purchase/sale transaction.

The Deals

The case arose out of a transaction for the sale of a Learjet 60 in Florida. The Seller and Buyer signed a purchase agreement to document the sale of the aircraft for $6,700,000.00. The Buyer deposited $200,000.00 earnest money with an escrow agent in connection with the transaction.

Shortly after entering into the first purchase transaction, the Buyer then executed a separate purchase agreement with a different party under which the Buyer agreed to sell the aircraft to that party for $7,000,000.00. Although the Court does not mention it, the second transaction was presumably, and as a practical matter necessarily, contingent upon the Buyer closing on the first transaction with the Seller. Upon completion of both of these transactions, the Buyer's net profit would have been approximately $300,000.00. (This transaction structure is frequently used by aircraft brokers. However, as this case will show, by placing themselves in between the aircraft owner and ultimate purchaser of the aircraft, brokers may find themselves in an uncomfortable and, ultimately, an costly position.)

The Seller Fails To Deliver The Aircraft

Unfortunately for the Buyer, the Seller encountered problems with the lender holding a secured interest or lien against the aircraft. As a result, the Seller notified the Buyer that it would be unable to deliver the aircraft and close on the transaction with the Buyer. The Seller then returned the Buyer's earnest money and also reimbursed the Buyer for the expenses the Buyer incurred in having a pre-purchase inspection performed on the aircraft.

As you might imagine, the Buyer was not too happy with the prospect of losing its $300,000.00 profit on the transactions, not to mention any additional expenses for which the Buyer may have been obligated under the second purchase agreement. So the Buyer sued the Seller.

The Buyer Sues The Seller, And Loses

At the trial court level in Florida, the Buyer asked the court to order the Seller to complete the transaction with the Buyer. In response, the Seller asked the trial court to dismiss the case based upon its performance in accordance with the clear language of the purchase agreement. The trial court judge agreed with the Seller and held that by returning the earnest money and paying Buyer's inspection expenses, the Seller complied with its obligations under the purchase agreement. Accordingly, the judge granted summary judgment against the Buyer and dismissed its action. The Buyer then appealed to the Eleventh Circuit Court of Appeals.

On appeal, the Court began its analysis by reviewing the language in the aircraft purchase agreement. The agreement provided a specific remedy for the Buyer in the event of the Seller's non-delivery of the aircraft: In the event of breach, the Seller was permitted to terminate all of its obligations under the purchase agreement and Seller had to return the earnest money as well as pay the Buyer's inspection costs.

The Buyer argued that broad, more general language in the purchase agreement made this remedy "optional" and thus, it should not be bound to the limited remedy. However, the Court disagreed. The Court noted that the parties had not only detailed a remedy in the aircraft purchase agreement, but they had also stated that upon compliance with that remedy the parties would have no other or further liability to each other. The Court then concluded that the language in the purchase agreement clearly expressed the Seller's and Buyer's intent to limit the Buyer's remedy for non-delivery of the aircraft to recovery of its earnest money and inspection costs.

Conclusion

Although the case was surely a disappointing loss for the Buyer, the Court's decision was proper. Parties are free to negotiate the terms of an aircraft purchase agreement. In this case, whether the Seller intended it that way or not, the agreement included language that protected the Seller if it was unable to deliver the aircraft to the Buyer. Conversely, the agreement could just have easily contained language providing the Buyer with the ability to seek specific performance and force the Seller to deliver the aircraft and close the transaction, regardless of any issue the Seller may have had with its lender.

As this case shows, courts will hold the parties to the terms of their agreement, whether negotiated or not. Better to make sure the purchase agreement contains language which protects you and with which you are satisfied. If you are presented with a "pre-printed" or "form" purchase agreement, recognize that such an agreement is a place to start, not a place to finish. Have an aviation attorney assist you to include language in the agreement that addresses your specific situation and protects your interests. In the absence of such protections, you may find yourself in an uncomfortable and expensive position if your aircraft transaction fails to close. There are endless cases where buyer and seller have fallen apart and litigation has been the result. There are also many instances where buyer and seller have fallen apart but have resolved their differences with out litigation. We would like to hear from those of you who have settled your differences without the use of the court system. Please submit your comments below, our many readers will appreciate your point of view and how you went about working together for a common solution.

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Greg Reigel



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