Aircraft Sales Aviation Articles

Why Do People Fly Business Aircraft?

The Oct-Nov Business Jet Traveler (BJT) just arrived in my mail this past week. For the third year they published their Readers' Choice Survey. 1,100 of their subscribers responded with their thoughts and ratings regarding business aviation. The more things change, the more some things remain the same. Let's see.

The top three reasons people fly privately?

1. Save time

2. Ability to use airports the airlines don't serve

3. Ability to work enroute

No surprises. In fact all three really are about the productive use of time. You cannot save time, only spend it wisely. People who value their time use business aviation. That doesn't ever change.

The top three aircraft features among the BJT readers were:

1. Range

2. Economical operation

3. Cabin size

Speed was number five and baggage space, last on their list of choices. Economics was a surprise. Yes range and cabin are perennial favorites much as you'd expect. Speed ties directly into saving time, but not at any cost. So having the title of the World's Fastest Business Jet makes for great PR but if it is too expensive... Economics being number two makes me happy as that is how my company makes it living. I think this all ties into a Best Value for the business aviation user: saving time in a non-stop comfortable environment that makes fiscal sense.

Good news: more than half of the respondents flew the same or slightly more in 2013 than they did in 2012 and expect to fly the same or more next year. I'd say that bodes well for a slow and stable recovery. Only 4% reported that they will fly "much less than in the past year."

One set of questions were the same for fractional, jet card and charter users. It asked the respondents to rate those three sources of business aviation from 1 (low) to 5 (high) among nine factors. What interested me of those nine were customer service, value for the price paid, and overall satisfaction. All three scored very close to the same for customer service:

1. Jet Cards Customer Service = 4.20

2. Charter operators Customer Service = 4.18

3. Fractional shares Customer Service = 4.16

With no breakdown among the numbers reporting in the above categories, I'd say the average customer service levels were very good among the three types of service. I've heard anecdotally that some owners were less happy with fractional share companies but I think I have an answer there. Value was a bit different:

1. Charter value for price paid = 3.70

2. Jet Cards value for price paid = 3.70

3. Fractional shares value for price paid = 3.49

Fractional shares rated lower for value than the other two. They also rated 3.15 for Residual Value Terms. Given the drop and non-recovery in used airplane prices since 2008, I'd expect fractional shares to rate lower here versus a non-ownership option. I think this is where the fractional share owners' disappointment lies. They may have been enthusiastic about the ability of a business jet to maintain its value (or felt they were oversold on that?). When they saw that business airplanes lost value and are not recovering, they expressed their disappointment.

For overall satisfaction, I think the issue of residual values caused fractional share owners to be slightly less favorable towards their overall experience:

1. Charter overall satisfaction = 4.00

2. Jet Cards overall satisfaction = 4.00

3. Fractional shares overall satisfaction = 3.89

BJT showed overall satisfaction broken out by manufacturer for owned airplanes. No numerical average was shown so a direct comparison with charter, jet cards and fractional is a bit difficult. "Excellent" rating were from 38% to 67% except for Hawker Beechcraft at 22%. Their financial woes, especially among Hawker Beechcraft jet owners I'm sure contributed to their lowest "Excellent" ratings. But, at that, they did get 54% of their owners giving them a "Very Good" for overall satisfaction. So for the business airplane manufacturers, every one had over 80% of their customers rating them as very good or excellent. I'd say that is, well, a very good rating for ownership.

Aircraft reliability is also rated quite high among business jet owners with all the major manufacturers having very good to excellent scores by 90% or more of their owners. 

Among the business helicopters, BJT had enough scores to report on Bell and Eurocopter. Oddly, Sikorsky did not have enough responses to be included. While Bell rated above Eurocopter (excellent and very good scores) for each of the categories queried, both manufacturers had fewer excellent rating in all categories versus their business airplane owners. Not sure whether helicopter owners are a fussier group or whether, as an industry, helicopter manufacturers are not quite as good at taking care of their business-flying customers as the fixed wing folks. 

The last question asked was "If you could receive a complimentary year of flying on the following, which aircraft would you choose?"  They had four helicopter categories, two turboprop categories and seven business jet categories. You'll have to go see the survey to see if your favorites were the readers' favorites. Let me say that being given any one of those models free to use for a year would make me very happy!

A Wrench in your Deal

Or a Screw in your wing?

Jim Odenwaldt -Elliott Aviation Aircraft Sales Manager www.elliottaviation.com

Last month we touched on technical expertise and use of available resources during pre-buy (otherwise known as survey). We have all had bumps in the road as we move deals towards completion. Sometimes, it can be tough to get sellers and buyers to agree on price and terms when the pre-buy list is distributed. Here is a short story illustrating how the use of these skills assisted in delivering the best possible outcome.

Earlier this year, we had a light jet at an OEM service center for a pre-buy. It had come directly from a well-known non-OEM service center facility where a complete inspection had just been conducted for the seller, based on the calendar requirements of the maintenance program, prior to the deal being structured. The seller assumed that no major issues would be found as this inspection had just been completed.

At the OEM service center, during the pre-buy, however, a section of the leading edges was removed for a detailed inspection of the area. It was discovered a countersunk screw that was ¼" too long had inadvertently been installed in the corner of the panel. As this fastener was headed toward being flush on the outside, it was gouging into the structure underneath. The damage was beyond the allowable percentage of skin thickness. The service center had to call OEM Engineering to devise a repair, which could take up to three weeks at an undetermined cost. They did offer a 30 flight hour waiver so we had the option to move the aircraft to P&I, the next scheduled stop after closing. Either way, it had to be fixed.

The non-OEM shop that conducted the inspection sent representatives and ultimately took responsibility for the improper fastener. They agreed to cover the cost of the repairs but found it unacceptable to wait three weeks to get a repair scheme from OEM Engineering with no cost estimate. The buyer was willing to close and have the repair made during P&I but the company who offered to pay the bill, understandably, wasn’t going to offer their checkbook carte blanche.

I went to the buyer and presented the idea of having an independent DER devise a repair procedure and take the aircraft back to the non-OEM facility to conduct the repairs. This would accelerate the schedule and allow them to fix their own mistake. Thankfully, they agreed! We finished the inspection, settled the bill and had the aircraft towed back across the airport. The DER was able to quickly formulate a plan, and the work was completed in about two weeks. We were very fortunate all parties were very reasonable. Everyone proceeded with integrity and patience so this one was able to get done.

Jim Odenwaldt has extensive flying and technical experience with all Beechcraft products and sales expertise with all models of Hawker/Beech, Citation and Gulfstream. After graduating from Embry-Riddle in 1989, Jim worked as a CFI and maintenance technician. While with American Beechcraft Company, he was responsible for aircraft sales in the mid-Atlantic region. In addition to his ATP, Jim is an A&P and type rated in the Beechcraft Premier.

Elliott Aviation is a second-generation, family-owned business aviation company offering a complete menu of high quality products and services including aircraft sales, avionics service & installations, aircraft maintenance, accessory repair & overhaul, paint and interior, charter and aircraft management. Serving the business aviation industry nationally and internationally, they have facilities in Moline, IL, Des Moines, IA, and Minneapolis, MN. The company is a member of the Pinnacle Air Network, National Business Aviation Association (NBAA), National Air Transportation Association (NATA), and National Aircraft Resale Association (NARA).

FBO of the Week - Cutter Aviation/Bob Hoover Jet Center

Only in California can you have a brand new, yet vastly experienced FBO. Cutter Aviation/Bob Hoover Jet Center, founded in 1928 by William Cutter, just opened their newest facility in Van Nuys (VNY) in July.

I spoke with manager Tom Magglos, a veteran ATP rated corporate pilot with five years of FBO management experience, about what makes this facility special. "I believe that the combination of the decades of experience of Cutter Aviation, plus the involvement of aviation pioneer Bob Hoover speaks volumes about what to expect!" In addition, Magglos was proud to be the Piper sales and HondaJet sales and service centers for the region (forthcoming).

When a Deal Gets Technical

Do you have the Resources?
Jim Odenwaldt of Elliott Aviation, Aircraft Sales Manager
www.elliottaviation.com

As aircraft brokers, we represent both buyers and sellers and it is common to be tasked with finding a fair resolution on a technical issue while in the middle of a deal. For the most part, in today’s economy, the prebuy inspection can be difficult to manage. During the prebuy, technically referred to as a survey, the buyer must specifically request inspections deemed important. In recent years, the typical prebuy has become a full inspection (I-V, A-G, etc.) and engine bore scope inspections. It is commonplace for an airplane to have had a recent major inspection, completed by the seller per the normal hourly/calendar schedule, and a buyer’s prebuy, repeating the inspection at a new facility.

If this is the case, the seller is usually comfortable with the request since the buyer is paying the flat rate. I always stress, no matter how recent the previous inspection, the prebuy will reveal a new list of un-airworthy items. Although maintenance teams all use the same guidelines and the system is highly standardized, some issues are subjective. In addition, the airplane is in a new shop, being inspected by a whole new set of eyes. The service center may also have a new motivation…a new customer. In any event, the airplane will be subject to special scrutiny. As a broker, it is essential to manage this part of the deal objectively. This often takes substantial technical resources.

A major value of a highly experienced broker is that they will work through every minute detail on a squawk list. These can be high dollar items and resolution can be highly technical. Is the blade sulfidation stage 3? Is that inlet screen corroded? Is that skin gouge beyond 10%? Is that windshield really un-airworthy? It should come down to what is allowable according to the tolerances. Most of the time, I call in the help of an objective specialist. This is typically a technician who is assigned by the manufacture of the particular component in question or a third party engineer and they are required to document their findings. This will dictate our course of action and keep the sale moving forward.

Brokers, shops and pilots alike all want to deliver a perfect airplane to the buyer. Ideally, the airplane will fly along to the next scheduled inspection with no squawks. This makes happy customers who stay in our industry and buy more airplanes. An ownership experience starts with a prebuy for a buyer and also serves as the end for a seller. It is our job to manage this process efficiently and equitably.

Jim Odenwaldt has extensive flying and technical experience with all Beechcraft products and sales expertise with all models of Hawker/Beech, Citation and Gulfstream. After graduating from Embry-Riddle in 1989, Jim worked as a CFI and maintenance technician. While with American Beechcraft Company, he was responsible for aircraft sales in the mid-Atlantic region. In addition to his ATP, Jim is an A&P and type rated in the Beechcraft Premier.

Elliott Aviation is a second-generation, family-owned business aviation company offering a complete menu of high quality products and services including aircraft sales, avionics service & installations, aircraft maintenance, accessory repair & overhaul, paint and interior, charter and aircraft management. Serving the business aviation industry nationally and internationally, they have facilities in Moline, IL, Des Moines, IA, and Minneapolis, MN. The company is a member of the Pinnacle Air Network, National Business Aviation Association (NBAA), National Air Transportation Association (NATA), and National Aircraft Resale Association (NARA).

Shared Light Aircraft Ownership Options for Getting Work Done

With a light aircraft, sharing the costs among two or more owners is common. If you own a small business, using a light aircraft may be ideal and time-efficient. Sharing the costs with another owner can bring down the threshold of cost.

Successful shared ownership requires consideration of the Three C's: Compatibility, Compromise and Contracts.

There needs to be a degree of compatibility between the owners. The type of aircraft must be suitable to the owners' missions. A Cessna 206 and a Mooney Ovation have different strengths. So do a PC-12 and a Piper Meridian. If you are becoming a second (or third) owner, make sure the aircraft will be effective at what you need to do: big load hauler or speedy cross-country machine. Just as important as the mission is NOT having similar flying schedules. If both owners need to use the aircraft every Monday thru Wednesday, sharing cannot work. Ideally owner #1 is a weekend flier and owner #2 is a business-weekday flier. Discuss in advance what your expectations are and how you will schedule the use of the aircraft.

Even if the owners have compatible aircraft requirements and complimentary travel schedules, there needs to be compromise. There will be times when you need to allow for flexibility in the schedules. Visiting family for Thanksgiving? Maybe this year you get the plane and your partner gets it for next year. Other compromises may involve the maintenance and upgrades. If you are a heavy-IRF flier and your partner isn't, then your requirements for upgrading the avionics will differ. If you fly for your business and take passengers, the interior standard you have may well exceed the pleasure-pilot.

Lastly, there needs to be a contract outlining the sharing of the costs and the responsibilities of each owner, and perhaps most important: a way to end the shared ownership. Will you split the fixed costs like hangar and insurance along ownership share? Will you set up a reserve account to pay in advance for the maintenance? What about unscheduled maintenance, how will you split the costs? The engine may cost $38,000 for an overhaul, or cost well over that if you want to do an exchange. How soon do you want that engine back? What do you do if one owner wants out (or cannot afford to stay in)? What if you ant to take on an additional partner? This should be in writing to keep the relationship as amicable as possible.

Before entering into a shared ownership, sit down and really look at the costs. The hourly rental at the local FBO may seem high until you figure out the cost of the initial investment and fixed costs. Sharing the ownership of an aircraft can lower to cost to access ownership, but everyone involved needs to work together to maximize the utility of the aircraft.