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Aircraft Asset Management 101

by David Wyndham 1. December 2009 00:00
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Do you own a car? Your home? A boat or a plane? If so, then like it or not, you have become an asset manager. Most asset management discussions tend to look at financial assets such as stocks, bonds, and mutual funds. But physical assets are also included. Asset management includes the management of the physical asset from acquisition, through its use and dispossession. As an aircraft operator, pilot, or maintainer, you are responsible, in whole or in part, for the value of that asset. How you operate, care for and maintain that asset will have a significant impact on its value. Regarding an aircraft, anyone who touches that aircraft has a part in maintaining its value.

When should you sell your aircraft?
Parts - repair/overhaul or replace?
Install that optional service bulletin?
Is it time to refurbish the paint and interior?

These are just a few questions that involve asset management of an aircraft.

Aircraft Asset Management has four main components:

  1. Regulatory - Is the aircraft compliant with applicable airworthiness regulations?
  2. Operational - What is needed to keep the aircraft reliable and safe?
  3. Financial - What is the market value of the aircraft?
  4. Owner - What is the return on the investment and what is the quality of the experience?

Proper maintenance is essential. This involves more than just meeting the regulations to have a safe, airworthy aircraft. If you just meet what the regulations require, then you have met the minimum standards. To maintain its value, the aircraft must be kept in top operating condition. This means both in the routine care and in the major maintenance of the aircraft. Anyone how has gone through a pre-buy can tell you that the aircraft in impeccable condition goes through smoothly. Find something amiss in the pre-buy and you keep looking. An aircraft that is clean looks well maintained. Or, an aircraft that is well maintained and looks well maintained will command the higher price (value). Who does the maintenance is just as important as what was done.

Proper maintenance records. What would be the value of an aircraft if it were missing all of its maintenance records? Again, the regulations specify what records must be kept and in some cases, for how long. This meets the spirit and letter of the law, but does not sufficiently maintain the aircraft's value. The more complete and thorough the maintenance record, the more secure is the value of the aircraft. Uncertainty causes a loss of value. Proper maintenance records detail the entire maintenance history of the aircraft and what is on paper should accurately reflect what is in the hangar.

If there is damage history, how was it documented and corrected? Was the damage repaired or replaced with new? Has the aircraft been returned to service is the same or perhaps better condition? Damage history, if fully documented and accounted for need not be the kiss of death.

Proper record keeping also means proper security of those records. You should have some sort of back up of the records, stored off site. With many operators maintaining their records on computer, this should be easy. Even paper records can be scanned, indexed, and stored off site. When the aircraft and records go off to a maintenance facility, you'd better have a backup copy. While rare, aircraft do leave the maintenance facility missing some of their records. If that happens, you can get into some expensive arguments about who was responsible and how much that the lost records are worth. How much can lost records cost? How much is that aircraft worth if is was not able to be proven as airworthy?

Proper upgrades and enhancements. What is the service bulletin status of your aircraft? Beyond the mandatory service bulletin lie a number of optional service bulletins. Which ones add value to your aircraft (i.e. are popular for your model)? Have you added or upgrades the avionics? If so, is the aircraft a unique design or is it brought up to newer standards? In art, a one of a kind piece is essential to its value. With aircraft, it is not. Non-standard modifications do not add value. They may be essential to the mission, but uniqueness in an aircraft is not a selling point.

Asset management should be part of the aircraft planning from the start. All too often, asset management is only considered when the decision to sell the aircraft is made. This just touches the tip of the asset management game.

What are your thoughts or tips on your current asset management program? Your feedback is what we need to learn more.


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