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The Aircraft Acquisition Plan - Sources Of Information

by David Wyndham 12. February 2018 11:00
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In the two previous issues, I discussed that the foundation of the Aircraft Acquisition Plan is to understand the aviation mission. That understanding leads to identifying the key missions of the aviation function. Those most important missions are what allow you to derive a set of objective evaluation parameters. Those mission-specific parameters can include payload, passenger seats, range, runway performance etc.

Given a set of parameters, you will need to find out which aircraft are capable of meeting those parameters. For example, if you are an Emergency Medical Services (EMS) operator, you may need to carry 2 liter patients plus two attendants. You may also need to lift that load from a 3,000 foot elevation on an 86F (30C) day. You know the capabilities of your current EMS helicopter. Where do you get the information about possible replacement helicopters? What about performance on specific trips such as London City airport to Cairo, Egypt? What about the maximum payload you can depart Eagle, Colorado and make Charlotte, North Carolina non-stop? There is generally available data and specific data calculations. 

There are three generally available categories of published sources of information and data. Trade publications, off-the-shelf databases and the manufacturer published data.

Trade Publications. There are a number of excellent publications that publish surveys, list performance reviews/pilot reports, and have new aircraft pricing. These magazines are readily available via subscription. In addition to hard copy, many have electronic copies and some maintain past issues on their website. The cost to receive them is nominal. This is a good first step to get general information. The ones with pilot reports may have more technical information versus general product reviews. These articles may not answer your detailed questions or cover all the aircraft models you are interested in.

Published Databases. There are a number of databases published in the US that can provide a great deal of useful information. They cover four areas: acquisition costs, operating costs, performance and specifications, and specialized data. While trade magazines usually do a good lob of listing new aircraft process, they don't have a lot of information on pre-owned process. Information that is published on acquisition costs relies on sellers or buyers reporting their transactions to the publisher. Not every transaction is reported and there is a time lag in the reporting of a transaction and the ability of a publisher to analyze and publish their data. When markets are changing rapidly, this data has less value than in a stable used market.

Operating cost databases focus on the day-to-day costs of owning and operating aircraft, including taxes and fixed costs such as insurance.  Operating cost databases also have limitations. No two operators operate their aircraft in the exact same way.  Some operators do much of the routine maintenance in-house while others use a service center. Unscheduled maintenance is just that, unscheduled. There is no way to predict unscheduled maintenance save for using generalities and defining assumptions. Guaranteed hourly maintenance programs may help, but each manufacturer or program seller will use different assumptions and many allow for some variability in charging based on utilization. As they say with automobiles, “your mileage may vary.” These databases can be a valuable tools for comparing relative costs, but aircraft costing is not an exact science!

Performance and specification databases are useful provided that the person using them is knowledgeable about aircraft performance.  They go into more detail than many magazine articles and they tend to have standardized formats for each category of aircraft. These generally come in software versions. Unless you buy the flight manuals or subscribe to a database that offers that level of detail, the ability to change the data for your exact mission can be limited. Again, as a relative comparison tool, they can be invaluable. 

Costs of the above databases vary from several hundred dollars to over $1,000 for complete sets. They tend to offer a fair amount of detail, are impartial, and given the time involved in gathering each bit of information on your own, a very worthwhile investment. Our company has published a number of these types of databases for over 30 years.

Other specialized databases do exist. They can be for things such as charter listings, aircraft for sale listings, airport databases, and en route winds and temperature statistics. Depending on your mission, they still may not answer the very specific question that you may have.

Manufacturer's Data. The information from the aircraft manufacturer can range from the sales brochures' optimistic, best case information, to very specific performance analyses. Be cautious reading generalized sales information as they may or may not conform to standardized criteria. They may also be out of date. The flight manuals are the best source for specific calculations. Buying them for one-off comparisons can be quite expensive, especially when researching a number of different aircraft models. 

Detailed performance questions can be easily answered by the manufacturer. Contacting the manufacturer does inform them of your interest and usually generates sales calls and perhaps a visit form your local aircraft sales person.  If you wish to maintain your anonymity, you may wish to order a technical manual through the product support group. 

What are the other sources? Consultants can be paid to do all or part of the work in the Aircraft Acquisition Plan. When we do a study for someone, we work closely with both the aviation professionals and well as the end user to make sure all the right questions are asked, and answered. Other operators can be a wealth of "inside" information, as are maintenance facilities and training companies. When asking questions, be specific. Ask a general question, get a general answer. List price is not necessarily selling price, nor does a flat-rate cost for an inspection tell you what to allow for unscheduled and “over and above” maintenance.  

When gathering data, keep in mind the following:

What is the reliability of the source?

What assumptions went into the data?

How would specific information apply to your situation?

In general, starting with the publicly available data allows you to develop a short-list of candidate aircraft. If you want an aircraft with 2,800 nautical mile (NM) range, an aircraft with 2,300 NM is probably not going to be your top choice. Next time I’ll get into the analysis of the numbers.


 

 

 

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Aircraft Sales | Aviation Technology | David Wyndham | Flight Department

Key Missions & Evaluation Parameters

by David Wyndham 4. January 2018 13:05
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In the two previous issues, I introduced the Aircraft Acquisition Plan and your Acquisition Team. To be effective, your acquisition plan should consist of the following elements: - The organization's real aircraft needs. - Key missions and evaluation parameters. - Sources of information. - Technical analysis and ranking. - Fleet size. - Financial alternatives. - Financial analysis and ranking. - Tax Planning. This issue, I’ll focus on the first two items. 

“Mission drives requirements”

The foundation of the plan is to understand the mission assigned to the aviation function. Where does the aircraft add value to your company or owner? Yes, it makes better use of time. To what end? What is the importance of that time, and more over, the value of that time? Connecting the corporate goals and aspirations with the use of the aircraft enables you to define (and defend) the use of the aircraft as a valued business tool. Identify the most important mission for the aircraft as it relates to the achieving the corporations goals and vision. That is the mission which enables the aviation department to select the right aircraft by defining the parameters the aircraft must meet in order to help the corporation succeed. 

In defining the mission, we get to the importance of quantifying the mission. While a decision maker may select an aircraft from emotion, we need to make sure that they have the information needed to quantify their decision.  We need to quantify the mission, the aircraft requirements, and the costs. The decision maker can allow emotions in the process, as advisors, we cannot. Quantify every requirement to the greatest extent possible. 

Be proactive. If today’s mission is likely to change, focus your planning on what will come. While during times of rapid change, it is difficult to forecast, do it anyway. Ask the major users and decision makers for their inputs. Try to get a “probable” and a “best case” scenario. Or, if things are looking poorly, a “worst case” scenario.

Evaluation Parameters (Quantify!)

Evaluation parameters include cabin size, door size, cargo capacity, range, payload, etc. A key mission such as West Cost of the US to Asia could allow for a stop en route. If you can make it to Hawaii, every other over water leg can be made with less range.  The distance from the West Coast of the US to Hawaii is about 2,300 nautical miles (NM). Allowing for headwinds, you need at least 2,500 NM range to make it most of the time and 3,000 NM range to make it under almost any conditions. That Asia mission may require non-stop capability, but be aware of the available options.

Key missions allows you to define with the evaluation parameters needed to evaluate the possible aircraft. Identify aircraft that meet all the requirements and those that fall short in one or more areas. Include your current aircraft in this list as a baseline for judging other aircraft.  Once you have your aircraft criteria, it is usually good to list those in terms of “required” and “desired.” Required criteria are those which you must have to perform the key missions. Desired criteria are nice to have criteria that enhance the ability to perform the mission, but aren’t crucial to its success. 

If you don’t do your homework, you either end up with too much aircraft, or worse, end up with an aircraft that fails to do what was required. There is nothing worse than explaining to the boss why you can’t do the trip that was justification for the aircraft in the first place. Do this work up front and the rest of the analysis just falls into place. You’ll see. 

 

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Aircraft Sales | Aviation Technology | David Wyndham | Flight Department

The Tools of Modern Aviation Engineers

by Tori Williams 1. December 2017 23:33
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Being married to an engineer has opened my mind to a whole new world. People have often speculated where aviation seems to be going and spoken praises for the engineers who have built modern aviation and contributed to the technology boom, but outside of the circle of engineers and tech people, little thought is given to the tools that fuel modern engineering innovation. It’s interesting that above my husband’s desk, hanging on the wall next to his computer monitor is a framed original 1929 engineering drawing of a Waco Biplane. He keeps it there as a reminder of how far we have come in the span of a lifetime while he draws the same biplane in a 3-dimensional computer aided design software called Solidworks.

Up until the late 80s most engineering drawings were made by hand.

SolidWorks is one of the most popular programs today that allows one engineer to design something in a few hours what would have taken a dedicated team of engineers and draftsmen weeks in the past. Drawing in two dimensions is simple and gets the job done, but as designs become more and more complex, two-dimensional drawings become more and more prone to error. 3D CAD, on the other hand, eliminates errors before they begin by recognizing dimensional conflicts such as over and under defining parts and can generate two-dimensional drawings in a matter of seconds. These programs dramatically boost productivity and eliminate errors, allowing engineers to design more things faster and more accurately.

Why then would anyone want to spend so much time deciphering old hand drawings and making them 3D? This is a popular one for restorers of these old airplanes, like my in-laws. There is a story well known in the Waco community of a man who set out to restore his airplane going off the original drawings. When he finished the individual pieces for four whole wings, he attempted to put it together, but the parts did not fit and he had to scrap them. So imagine finding out the airplane doesn’t fit before buying a single material! SolidWorks does that

Beginning of the right-lower wing of the Waco in 3D CAD. Adjustments already had to made to get the metal brace clips to line up properly.

With the models like the one shown above, engineers can ask the software to check for dimensions that don’t work out and other minor complications that were not thought of. Furthermore, one can ask the software how much the assembly weighs, what the properties are under specific loads and adjust for these shortcomings.

Another fascinating tool that today’s engineers are using is 3D scanning technology. There is a company called Aircorps Aviation that we met at Oshkosh 2017 that uses handheld laser scanning technology to scan aircraft parts to reverse engineer and 3D model. This is extremely useful for aircraft restoration project that deal with parts that are no longer available or difficult to find. Being able to recreate the part by seeing what other parts are around it is ingenious and will help restoration projects that may not have been possible otherwise.

The crazy thing is that with all these technological innovations, engineers are not getting dumber. They are still incredibly brilliant people, but 3D CAD helps them push the line between reality and the impossible, making today the world of tomorrow. Whatever aviation innovations may present themselves in the next few years, these tools are helping make them the most that they can possibly be.

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Aviation Technology | Tori Williams | Vintage Aircraft

5 Major Items Pilots Miss During Their Preflight Inspection

by GlobalAir.com 5. June 2017 17:02
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Perhaps the most critical part of any general aviation flight is the preflight inspection of the aircraft. For most pilots, the preflight inspection follows a checklist along with a routine flow around the aircraft. Most pilots and student pilots perform what would be considered a sufficient inspection, following their checklist and routine items.

Surely 100% of pilots would be able to find discrepancies if they were present right?

Well...not exactly. Sit down, strap yourself in and get ready to read some interesting real-life statistics!

Every year at the Sun N Fun airshow the FAA partners with a local flight school to host the Project Preflight event. The purpose of the event is to test the preflight efficiency of pilots and student pilots of all ages, hours and experience. A flight school volunteers one of their airplanes for the event. Participants are invited to preflight the aircraft like they would before any other flight – checking the fuel, oil, tire pressure and anything with blue tape is unnecessary. The catch is, the aircraft has several intentional discrepancies, some are major squawks! This year we hosted the event and gathered the data from 144 total participants.

Here are the results...

Water Bottle Lodged Behind Rudder Pedals – Out of 144 participants only 30% found this major discrepancy.

Cotter Pin Missing In Right Wheel – Only 28% found this one!

Elevator Nut Missing – 39% found the nut to missing from the right side of the elevator.

Rag Behind The Alternator – Easy to spot but only 63% of participants found the rag!

Cotter Pin In Control Lock – Only 42% found a small cotter pin in place of the control lock, hard to miss but deadly if left in.

Interesting right?! The statistics are concerning to say the least, but what a great insight into a previously unknown sector of general aviation that can be used to educate pilots and future pilots.

So how can we improve these statistics?

Yes, of course we can say “pilots need to be more thorough in their inspections” or “we need to apply more focus and attention to detail during a preflight” but what are some other realistic strategies we can implement to actually achieve that?! Here’s one – maybe it’s extreme and definitely hypothetical but it’s worth pondering.

Again, hypothetical but let’s break it down. We need pilots to perform thorough inspections, how can you put yourself in that “attentive” frame of mind? If you’ve ever rotated the tires on your vehicle yourself, isn’t it likely that you’ll double check and triple check the tightness of the lug nuts before you call it a job done? The theory is that you’ll be taking more responsibility for the state of the aircraft rather than assuming the mechanic or previous pilot left the aircraft in an airworthy condition. This doesn’t mean you should become an aircraft mechanic or add an hour to your preflight, the goal is to find a way to improve our attention and focus when preflighting an airplane.

Project Preflight was certainly educational and we had an absolute blast hosting the event. On behalf of SunState Aviation we would like to thank all of the 144 participants for stopping by and giving us your time, without you this educational piece and the safety of future pilots would not be a reality!

By Alec Larson – May 8, 2017
Flight Training, SunState Aviation

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Aviation Technology | GlobalAir.com | News

Oldies But Goodies, the decision to buy a new aircraft versus old(er) aircraft

by David Wyndham 18. April 2017 15:32
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The majority of manufacturers of new turbine business aircraft are still having difficulties selling their new aircraft. Sales remain sluggish. According to GAMA 2016 was the worst year for business jet deliveries since 2004. Ref: http://aviationweek.com/bca/business-jet-shipments-lowest-2004-gama-says

When I talk to brokers of pre-owned aircraft, many are reporting that 2016 was a very good year and that 2017 is continuing the upward trend. Why is that? One reason is that there are still a lot of quality pre-owned aircraft for sales at prices that have not recovered since the last recession. 

A friend in the finance industry who frequently works with high net worth individuals reports that for them, buying new is not financially the best option. Ten, 15 or 20-year old business jets are safe, have relatively low time versus their life, and, if you understand the maintenance requirements, can offer years of excellent service. 

Business jets still depreciate at alarming rates. A rule of thumb for a new business jet? Try 8% to 10% per year! Sources like Vref and the Aircraft Bluebook Price Digest support this with historical data. For a number of models, you can easily buy a seven-year old for about half or less than acquiring new. The manufacturers' sales people stress the new aircraft have much lower operating costs due to the lower maintenance costs, have the latest avionics, and new aircraft warranties. They are right, but still - that market depreciation! Being a numbers person, I ran some numbers.

looked at several popular large cabin business jets and the below is an average of a couple models. I used Vref pricing and ran operating costs to include the costs aging aircraft maintenance using our Life Cycle Cost software. Here are a couple things to consider.

Acquisition

New aircraft list = $44 million 

7-Year old model = $7.5 million

15-Year old model = $3 million

 

Knowing that acquisition is only part of the costs, what about the variable operating costs - including all the older aircraft maintenance?

Variable Cost Per Hour (on engine hourly maintenance program)

New aircraft = $3,800 per hour 

7-Year old aircraft = $4,900 per hour

15-Year old aircraft = $5,100 per hour

$1,300 per hour in operating cost is a lot - 34% greater than for the new model. The new jet, $44 million and you are good to fly right away. The 15-year old might need $2 million to $4 million in upgrades, new paint & interior, ADS-B, and some engine work. Even the 7-year old will need some upgrades. 

But when you look at residual values as a financier does, that difference in the operating cost budget pales in comparison to what (may) happen to the value. After seven years, that new jet may be worth half of new (or less) based on recent history. That $44 million jet may decline by $22 million! The older jet's value will be dependent on the maintenance status, especially the engines. It's possible that after seven years the now 15-year old may still get $2 million or more if the engines are in good shape. Even if you park the 15-year old jet after seven years' use, you are only out $4 to $6 million. 

One area not covered in these numbers is availability and utilization. A aircraft age, they require more maintenance and the extra maintenance burden requires more downtime. When the aircraft is in for maintenance, it is not available for flight. I you need high utilization, that older aircraft will likely make it difficult to maintain a busy flight schedule. But, for the lower utilization owner, such as many high net worth individuals, 200 hours a year is plenty and that 15-year old jet can easily keep up that schedule. 

Can you keep an older jet flying 30-hours a month? Maybe but not every month. I don't have an exact number as there are too many variables, but maintaining consistent 500-600 annual hours will be very difficult in all but newer models. A new aircraft can sustain that use with ease. That seven-year old model can probably sustain that level save for the "once every 8-year" type of heavy maintenance. 

Consider a company like NetJets. They need to minimize downtime. NetJets and the other fractional aircraft providers all tend to operate newer models. They do this to be able to offer the 800-occupied hours per year for their share owners. They cannot consistently get the revenue hours with older aircraft. 

can't ascertain that the new aircraft sales are going to the high utilization operators while the infrequent-fliers are buying the older models. But that can be one reason while the pre-owned aircraft brokers are enjoying a good year. 


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Aircraft Sales | Aviation Technology | David Wyndham



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