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Five Ways to Reduce Your Fuel Costs

by David Wyndham 1. January 2008 00:00
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While aviation is booming, the overall economy is not. If "life is good" for you, this means one of two things: it won't last forever or you've missed something. If your business or pleasure flying is starting to be negatively affected, then you are already concerned. Either way, it pays to review ways to keep your costs down.

Fuel amounts to somewhere around half of your variable operating cost. Here are five things you can do to reduce or keep fuel costs down.

Fly at a reduced power setting to save fuel. In a typical twin-engine turboprop, flying a trip at Long Range Cruise Speed versus High Speed Cruise can result in over 40% decrease in specific fuel consumption with only a 25% or less decrease in speed. Plus you get to log more hours as a pilot.

Work with your local FBO to arrange for fuel discounts. When on the road, shop around for prices and take advantage of fuel discount programs when they make sense for your operation. Global Air's Airport Resource Center and Fuel Mapping tools can make comparison shopping easier. Even five cents per gallon savings will add up. However, don't sacrifice great service to save a few dollars as the hassles often are not worth it.

If you can get a good fuel price discount at home, tankering fuel is an option. Carrying extra fuel does increase your weight. And at that heavier weight, your average fuel consumption will increase. As an example, tankering an extra 1,000 pounds of fuel in a mid-size business jet will consume about 250 pounds more fuel for a three-hour trip. The extra weight costs about 4% in fuel used, so in this instance, make sure the savings are greater than 4%!

You can also save fuel on the ground. Keep your engine maintained according to the manufacturer's recommendations. Clean plugs on a piston or engine washes on a turbine are just two examples where the engine can operate more efficiently with good maintenance.

Keep your aircraft clean. It not only looks better, it reduces drag. Also, cleaning the inside eliminates dirt, saving a little weight, and also helps the cabin heat/air conditioning units work more efficiently which reduces their need for power. These last few are minor, but it all adds up.

At $6 per gallon and 60 gallons per hour, a 10% reduction in fuel use over 300 hours is $10,800 and 1,800 gallons saved. That's real money, and even better for the environment.

Are any of you planning on flying fewer hours this year due to the economy? Let me know.

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David Wyndham

2008 Outlook

by David Wyndham 1. January 2008 00:00
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I hope everyone had a safe and happy holiday season. As we head into a New Year, I thought I'd provide my two cents worth on what might happen in the aviation market.

There are economic threats looming out there for 2008. US consumer spending will have to level off. Consumers have spent more than they earned for several years now, most of that fueled by a boom in real estate prices. That market is in a bust. The sub-prime loan crisis has spread beyond the consumer market and even commercial credit is tightening. That will hit general aviation as fewer aircraft owners will be able to afford upgrades, or to fly more hours.

Fuel prices. 2007 saw fuel prices rise well over $1 per gallon. The Globalair.com Airport Resource Center shows about $4.739 per gallon for 100LL nationwide. However, local prices can range to plus or minus $1 from that average. I don't look forward to any huge fuel price increases quite like we saw in 2007, but don't plan on seeing any decline. There will always be some volatility, so keep an eye on the price of crude oil. I would not be surprised at another $0.50 per gallon increase over the year. This means that with less money in the bank, and more money spent at the pump, general aviation will likely see a decline in flying hours in 2008.

Aircraft Sales. 2007 set yet another record year for general aviation deliveries and sales. However, most of those dollars came from the turbine sector with many new turbine models sold out for two or more years. Piston sales were mostly flat in 2007. The piston market will stay flat or decline in late 2008 as it is closely connected to the US consumer market.

While VLJs won't "darken the skies," at least two, the Mustang and Eclipse, will start to see the accumulation of some fleet hours. The VLJ will be a bright spot in the low end of the market. New VLJ entrants who don't have their funding secure will have a very tough time in 2008.

The Maintenance, Repair and Overhaul (MR&O) market will also see a turbine/piston split. The turbine MR&O will stay strong due to the growth in the turbine fleet. With a declining piston market, things will stay flat at best. Much of the piston fleet is well over 20 years of age. Look for aging aircraft issues to continue to develop.

Overall, I'd expect 2008 to be a good year for general aviation, the turbine market much more so than the piston market. This is more due to the inertia of 2004-2007 than a strong economy in 2008. Look for cracks in the aviation economy as we go into the second half of the year. The piston market already is experiencing the pain now.

Are you expecting to fly more, less or about the same hours in 2008? Why? Click reply and let us know.

Airplanes Can Make People Act Crazy

by Greg Reigel 1. January 2008 00:00
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As I reflect back on 2007, a variety of my experiences with clients re-affirm my long-held belief that airplanes can make people act "crazy". Why do I believe that? Well, over the years I have had multiple clients who are intelligent individuals, but when they became involved with airplanes they did things that, to me, were just plain crazy. That doesn't mean they are bad people. On the contrary, they are often some of the most honest and good-natured people you will find. Unfortunately, in the face of the aviation disease with which we pilots are all infected, these individuals' common sense sometimes takes flight.

Several examples of this "craziness" come to mind:

1. Individuals buying or selling aircraft on a handshake without a written purchase agreement. Now, don't get me wrong, I will be the first to admit that, in a perfect world, this is the way a deal should be done. Unfortunately, we don't live in a perfect world and successful handshake deals are few and far between. A similar, and equally distressing situation for me, is when a client presents me with a purchase agreement he or she has already signed and asks me what the language means, or the client informs me that the other party now wants to get out of the deal and the client wants to know if he or she can stop them, what happens to the earnest money etc.

In the latter situation, the purchase agreement was typically not reviewed by an attorney or someone else with the needed knowledge to protect the client's interest. In both situations, the client lost the opportunity to negotiate and not only protect his or her interests, but also to make sure that the deal is structured the way he or she wants it structured. When you are spending the amount of money necessary for an aircraft purchase (e.g. thousands and, oftentimes, hundreds of thousands of dollars), it seems crazy to me not to have a negotiated and written agreement dictating exactly how the transaction will proceed and what will happen if the deal doesn't close.

2. I see clients making similarly crazy decisions when they lease aircraft without a detailed lease agreement. In the absence of a written aircraft lease agreement an aircraft lessee may be exposing him or herself to liability for more than just an hourly lease fee. For example, what happens if the aircraft is damaged while in the lessee's possession? For what is the lessee responsible? Does the lessor have insurance to cover the loss and is the lessee also insured? Who is responsible for the cost of maintenance and/or repairs when the aircraft is in the lessee's possession? A written aircraft lease agreement should provide answers to these questions so both the aircraft lessor and aircraft lessee each know where they stand.

3. Another less than prudent client decision, in my opinion, occurs when a client buys an aircraft without having a title search performed to identify any liens or encumbrances against the aircraft. The client later learns that the aircraft was, and still is, encumbered by a lien, mortgage or some other similar security interest. The client then comes to me wondering whether he or she has any recourse against the seller. Unfortunately, at that point in time the client's remedies may be limited.

If the client had obtained a title search before the closing, the client would have been aware of the lien(s) and could have required the seller to satisfy the lien(s) or the client could have either satisfied the lien(s) directly from the purchase proceeds or simply terminated the transaction. Often in this situation the client did not sign a purchase agreement or the purchase agreement is very short and less than thorough. As a result, the purchase agreement may not provide much assistance. In any event, the seller has typically spent the purchase price paid at closing and may or may not have the resources to satisfy the lien(s), not to mention any payment to the client for damages he or she may incur as a result of the lien(s).

4. Another potentially serious error would be talking to an FAA inspector or "calling the tower" prior to consultation with an aviation attorney. You have probably heard the story: A pilot is on a flight and some type of incident occurs (e.g. runway incursion, altitude/clearance violation etc.) and ATC instructs you to contact the ATC when you land. Or, at some point in time after the flight in question, an FAA inspector contacts you to discuss the flight. Although you are not required to talk to the inspector or call ATC, many times pilots feel obligated to call and think they can explain the situation or otherwise "make it go away." Unfortunately, this is far from the truth. Typically, during his or her communication with the inspector or ATC the pilot not only confirms that he or she was operating the aircraft, but the pilot also may make other admissions that the FAA will later use against the pilot.

A similar situation occurs when a pilot receives a letter of investigation ("LOI") from the FAA. According to the LOI, the pilot has 10 days to respond. However, rather than consulting with an aviation attorney before sending a response, the pilot sends in a response to FAA again trying to explain the situation or otherwise "make it go away." Here again, the pilot oftentimes makes admissions that the FAA will later use against the pilot.

Both of these situations represent lost opportunities to mitigate damage, minimize investigation, avoid providing admissions or other evidence that will later be used against the client by the FAA or, at a minimum, to have an aviation attorney run interference between you and the FAA. Although FAA enforcement actions are not criminal proceedings, they have the potential to significantly limit, if not revoke, an airman's privilege to operate an aircraft. Representing yourself in such actions without aviation legal expertise is, to me, acting crazy.

These are just a few examples of the things some people unwisely do, or fail to do, when they become involved with aircraft. No doubt the "type A" personality of some pilots has something to do with this phenomenon, as may the excitement and love of aircraft and aviation felt by those of us enamored with aviation. Regardless of the cause, I encourage everyone involved with aircraft to temper their emotions and to handle these types of situations in a businesslike and professional manner. Trust is great, so long as both parties are trustworthy and reasonable. If you are a pilot or aircraft owner, you have a lot at stake. Make sure your interests are protected. If you are unsure of exactly what your interests are and how they need to be protected, get help. With some guidance and a little common sense, you too can avoid making "crazy" decisions involving aircraft.

What is your crazy story, you are not a pilot unless you have heard of a couple "crazy" stories. Please post one, we all learn from other pilots experiences good or bad. Please remember this is the internet and anything you post can be seen by all, so be funny be inspired but most of all be nice! Here's wishing all of you safe and enjoyable flights through the new year!

Aircraft Mechanic's Liens

by Greg Reigel 1. January 2008 00:00
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When someone provides storage, repair, maintenance or other services to aircraft, he or she typically has the ability to assert a lien on that aircraft and retain possession until he or she has been paid for the services provided to the aircraft. This is commonly referred to as a mechanic's lien or artisan's lien.

A party asserting a mechanic's lien against an aircraft, the lien claimant, usually resorts to a mechanic's lien when the lien claimant has not been paid for the services he or she provided to an aircraft. In order to understand under what circumstances a mechanic's lien may be asserted against an aircraft, aircraft owners and lien claimants need to be familiar with both the federal and state laws that may affect how to "perfect" and enforce an aircraft mechanic's lien.

Perfecting The Lien

An aircraft mechanic's lien must be "perfected" against the aircraft. A lien claimant "perfects" his or her lien by taking the actions required under the law to record or register the aircraft mechanic's lien. Federal law requires that an aircraft mechanic's lien statement or claim be filed with the FAA registry. This means that for all but a few states who do not have aircraft lien recording or notice statutes, the lien statement must be filed with the FAA registry in order for the lien to be perfected.

For those states without such aircraft notice or recording statutes such as Wisconsin, North Carolina, Alabama, Colorado, Delaware and Hawaii, you will need to review the general lien statues and case law for the state to determine the appropriate method of perfecting the lien. Additionally, some states also require a lien claimant to maintain possession of the aircraft in addition to filing with the FAA registry.

The lien statement must be filed within the amount of time established by state law. Depending upon the state, this time period can range anywhere from 30 days up to 180 days from the last date the lien claimant performed work on the aircraft. The lien statement must include the following information: (1) identification of the aircraft by N-number and/or serial number; (2) make and model of the aircraft; (3) the registered owner of the aircraft; (4) the type of work performed; (5) the last day of work; and (6) the amount of the lien claim.

Once perfected, the lien claimant's claim (the amount which the lien claimant believes he or she is owed) is secured by the aircraft and is established against all others who may claim an interest in the aircraft. The lien claimant's interest is similar to the security interest that a lender holds when it finances the purchase of an aircraft.

Keep in mind that the FAA registry merely records aircraft lien statements or claims submitted by lien claimants. As long as the statement or claim is in the appropriate form (includes items 1-6 above, is from a state with a recording or notice statute and is recorded within the appropriate time period), the FAA registry will accept and record the lien statement or claim. However, the FAA registry will not take any position regarding the validity or enforceability of the lien statement or claim, nor does it get involved with any dispute between the aircraft owner and lien claimant.

Enforcing The Lien

Once perfected, the aircraft mechanic's lien encumbers the aircraft and usually, although not always, prevents the aircraft owner from selling the aircraft without first obtaining a release from the lien claimant. After all, in the vast majority of aircraft transactions, the aircraft owner agrees to sell the aircraft with "clear title" (meaning no liens etc.). Thus, if an aircraft purchaser who desires "clear title" performs a title search and discovers the lien, he or she is not likely to purchase the aircraft without assurance that the lien has been satisfied and no longer encumbers the aircraft. If the purchaser buys the aircraft without receiving a release of the lien, the purchaser will not acquire clear title because the aircraft will still be subject to the lien.

However, rather than waiting until an aircraft sells in order to be paid, the lien claimant can initiate a foreclosure proceeding to foreclose on the aircraft. Depending upon the state, the time period within which a lien claimant can initiate a foreclosure proceeding against the aircraft can range anywhere from 90 days to 18 months from the last day of work. The action must be started within that period of time, otherwise the lien will no longer be enforceable against the aircraft. Once that time period has lapsed, although the lien claimant may still be owed money for the services provided to the aircraft, the amount owed will no longer be secured by the aircraft.

If the lien claimant is successful in the foreclosure action, the court will order the aircraft sold at a sale or auction. This is typically performed by the local sheriff's office. The aircraft is sold to the highest bidder at the sale. If no one bids at the sale, the aircraft is sold to the lien claimant for the amount of the lien. If the aircraft is sold to a bidder for more than the amount of the lien, part of the proceeds of the sale will be disbursed to the lien claimant to pay the lien claim and any excess money will then be paid to the aircraft owner.

Defenses Against The Lien

A common defense to an aircraft mechanic's lien foreclosure action is that the lien was not properly perfected. Usually this claim is that the lien statement was not filed within the proper time period after the last day of work or that the lien claimant did not follow the proper procedures to perfect the lien. Similarly, if the foreclosure proceeding was not initiated within the time period allowed by law, this may also be asserted as a defense.

Another defense an aircraft owner may assert is that the lien is invalid because the lien claimant is knowingly demanding an amount in excess of what is justly due. This defense is very common in situations where the aircraft owner initially disputed the amount being charged by the lien claimant. However, this defense usually requires that the aircraft owner show bad faith on the part of the lien claimant or that the lien claimant knew the lien statement was overstated.

If the aircraft owner is successful in defending against the foreclosure proceeding, the aircraft owner will also probably succeed in a slander of title claim against the lien claimant. This claim is often asserted by the aircraft owner alleging that the lien claimant improperly encumbered the aircraft with an invalid lien. A slander of title claim could have serious and expensive implications for the lien claimant if the improper lien prevented a sale of the aircraft or forced the aircraft owner to accept less in a sale than he or she would have in the absence of a lien.

Conclusion

Perfecting and enforcing an aircraft mechanic's lien can be tricky. In addition to the federal filing requirement, each state has its own specific requirements governing aircraft mechanic's liens. Both aircraft owners and lien claimants should understand how aircraft mechanic's liens are perfected and enforced under their particular state laws in order to assert or defend against an aircraft mechanic's lien. When in doubt, contact an aviation attorney familiar with your state's aircraft mechanic's lien laws to analyze your situation and choose the best course of action.

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Greg Reigel



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