Avbuyer Yearbook 2018 by AvBuyer Ltd.

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YEARBOOK The Best IntelligenceDriven Editorial in One Volume

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2018

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EDITORIAL Editorial Director J.W. (Jack) Olcott 1- 201 572 9284 Jack@avbuyer.com Commissioning Editor Matthew Harris 1- 800 620 8801 +44 (0)20 8939 7722 Editorial@avbuyer.com

Editor’s

Welcome

Consulting Editor Sean O’Farrell 1- 800 620 8801 +44 (0)1903 410231 Sean@avbuyer.com

A Proud Tradition Maintained

Editorial Contributor (USA Office) Dave Higdon Dave@avbuyer.com ADVERTISING Linda Blackburn (USA Sales) 1- 614 418 7064 Linda@avbuyer.com Lise Margin (USA Sales) 1-703 818 1024 Lise@avbuyer.com Maria Brabec (European Sales) +420 604 224 828 Maria@avbuyer.com Karen Price 1- 800 620 8801 +44 (0)20 8255 4700 Karen@avbuyer.com Liam Robinson (Digital Solutions Manager) 1- 800 620 8801 +44 (0)20 8939 7720 Liam@avbuyer.com STUDIO/PRODUCTION Helen Cavalli Mark Williams 1- 800 620 8801 +44 (0)20 8939 7726 Helen@avbuyer.com Mark@avbuyer.com CIRCULATION Sue Brennan 1- 800 620 8801 +44 (0)20 8255 4409 Barry@avbuyer.com AVBUYER.COM Jayne Jackson Jayne@avbuyer.com Emma Davey Emma@avbuyer.com MANAGING DIRECTOR John Brennan 1- 800 620 8801 +44 (0)20 8255 4229 John@avbuyer.com USA OFFICE 1210 West 11th Street, Wichita, KS 67203-3517 EUROPEAN OFFICE AvBuyer House, 34A High St, Thames Ditton, Surrey KT7 0RY, UK +44 (0)20 8255 4000

ontinuing a tradition established two years ago, we are pleased to offer the AvBuyer 2018 Yearbook, a compilation of significant articles from the last 12 months of Business Aviation’s best source for intelligence-driven editorial. Material that was deemed most helpful to professional buyers, sellers and operators of business aircraft was selected for inclusion in the 2018 Yearbook. Culling the best features from AvBuyer’s rich array of meaningful subjects, however, was challenging. Much material was covered during the last year, and the need for comprehensive information is never ending. Business Aviation is a sophisticated endeavor. Being a successful operator, owner, manager or trusted advisor within this profession requires extensive knowledge and considerable experience. Each month, AvBuyer is dedicated to being the professional aviator’s best source of need-to-know intelligence. Every 12-months we gather the best of the best for your review in our Yearbook. Today’s business aircraft, whether new or pre-owned, represent multi-million dollar investments. Transactions to acquire or sell must be accomplished by experienced professionals. Detailed knowledge of finance is required to avoid costly mistakes, and timing is critical. How and when funds are transferred play a crucial role. Professional expertise is essential. Within the pages of AvBuyer, we provide our readers with access to meaningful financial intelligence and trend data within the monthly feature known as BizAv Intelligence, and in the Yearbook we include articles on finance vital to specialists in aviation transactions. To be operated successfully, aircraft must be equipped with the latest in navigation and surveillance avionics capable of functioning throughout the globe, and only the highest levels of safety and dispatch reliability are acceptable. Miscues in equipment selection can result in aircraft being grounded or delayed. Quick fixes are never satisfactory and always

costly. And safety must never be compromised. Making the right decision right from the start of the acquisition process is expected. Particularly as equipage mandates such as ADSB are imposed, failure to be informed is unpardonable for the professional aviator. Today’s business aircraft passenger demands the same level of connectivity with company personnel and clients in flight as they have from their home office. They insist on their aircraft being an office that moves. Cabin connectivity is as important to a business aircraft’s usefulness as having the right avionics for navigations and safety. Throughout the last 12-months, AvBuyer has continued its coverage of cabin connectivity, a rapidly expanding area of technology. As the world of global commerce and politics continue in states of extreme flux, the need for Business Aviation is growing dramatically. Business leaders must be highly mobile. No other form of transportation provides the agility and immediacy of Business Aviation. The need to keep aviation professionals informed has never been greater. AvBuyer recognizes that need and is focused on serving our readers throughout the world. Why, you might ask, does AvBuyer make such effort to publish this Yearbook? Aren’t all articles from throughout the year available online? Yes, all AvBuyer monthly articles can be recalled and researched via AvBuyer.com. We believe, however, that professionals in Business Aviation are proud of their sources of intelligence and desire to have AvBuyer on display at their office, FBO or company aircraft. We understand that the Yearbook is often sent by aviation professionals to their clients. Our decision to publish the 2018 AvBuyer Yearbook is a tribute to our readers and their customers. We trust you will find this tome valuable and impressive. Jack Olcott Editorial Director AvBuyer - your source for Business Aviation Intelligence

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Aircraft Comparisons

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Citation Mustang vs Citation M2 vs Phenom 100

Bell 407 vs Airbus H125

Gulfstream G280 vs Challenger 350

t cos

Speed

Avionics

Capacity

Connectivity: Ensure your Jet’s Up to Speed

Shopping Tips for Aircraft Connectivity

Satellite Services Unplugged

What You Should Know About Avionics Appraisals

What’s the Real Cost of NextGen?

Countdown to ADS-B Compliance - 1 of 3

Countdown to ADS-B Compliance - 2 of 3

Countdown to ADS-B Compliance - 3 of 3

Buying & Selling 74

Buying a Jet – New vs Used

Should you Buy a New or Used Aircraft?

Why an On-Site Jet Appraisal is so Important

Lost Logbooks & Aircraft Value

Keys to Buying Jets Long-Term

International Used Jet Transactions 1

International Used Jet Transactions 2

Nuances of the European Jet Sales Market

100

When is the Right Time to Sell Your Aircraft?

104

How to Successfully Sell Your Jet

Engines

107

108

Buying a Jet? What to Know About the Engines

112

Five Jet Engine Tips to Lower Maintenance Costs

116

What Happens When Engines Age?

Finance & Insurance 124

Importing Used Business Aircraft – Part 1

126

Importing Used Business Aircraft - Part 2

128

Importing Used Business Aircraft – Part 3

132

Understanding Aircraft Finance

136

Used Aircraft Financing Facts

140

Business Aviation Insurance Fundamentals

123

Flight Department Management 144

How to Manage Flight Department Personalities

146

Tips to Keep Staff Pilots & Improve Safety

150

How Pilot Health & Safety are Linked

Maintenance 154

Maintenance Delays & How to Avoid Them

156

How to Get the Best from your Jet Maintenance

160

Refurbishment: Common Mistakes to Avoid

164

Refurbishment: Tips to Sell Your Jet

168

Your Refurbishment & Satcoms

172

Key Consideration for Selecting Aircraft Parts

Ownership 178

What’s Important About Trust Registrations?

182

Aircraft Registries – Home or Away?

186

What’s your Business Aircraft Worth Today?

Profiles & Case Studies 190

High Flyers’ Case Study – Embraer Phenom 300

194

High Flyers’ Case Study – Pilatus PC-12

198

Eagle Aviation Profile

202

The Dassault Story - Part 1

206

The Dassault Story - Part 2

Safety

143

153

177

189

211

212

Business Aviation Safety – Going Above & Beyond

216

Tips on Broadening your Flight Dept. Safety

218

Can Flight Department Safety be Outsourced?

220

NTSB’s Most Wanted List - Loss of Control

224

Aircraft Safety – Learning from Others

ONLINE I PRINT I BROADCAST I EVENTS

Yearbook Contents

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Section Contributor

Mike Chaseâ&#x20AC;&#x2122;s analytical and consultancy services are highly valued within the Business Aviation industry. He is founder and president of Chase & Associates, and works closely with several respected sources to compile his unique Aircraft Comparative Analysis feature. Contact Mike via mike.chase1@verizon.net

Aircraft Comparisons

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Aircraft Comparisons

Aircraft Comparative Analysis Cessna Citation Mustang vs Citation M2 vs Phenom 100 In this Aircraft Comparative Analysis, Mike Chase provides information on a group of popular business jets for the purpose of valuing Cessna’s Citation Mustang.

ow do the Citation Mustang, Citation M2, and Embraer Phenom 100 compare in the market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed, and cabin size) and cover current market values. The Citation Mustang is even smaller and lighter than Cessna’s first-ever corporate jet built in 1971, the Citation 500. The Citation 500 was developed to be the first affordable, entry level executive jet and was marketed to compete directly with the Beech King Air. Ironically today, Cessna and Beech products both come under Textron Aviation. The Citation Mustang (Model 510) was first announced in 2002, and was introduced to compete with the new Very Light Jets (VLJs) being developed for entry level jet customers. The first flight of the Mustang occurred in April 2005, FAA Type Certification was received in September, 2006, and April 2007 marked

the first retail delivery. Powered by two Pratt & Whitney PW615F turbofan engines, the Mustang hosts the all-glass Garmin G1000 avionics system. FAA Type Certification for the aircraft includes single-pilot operations. Earlier in 2017, after a 12-year production run, Textron ceased producing the Citation Mustang, replacing it with the M2. Today, there are 467 whollyowned Mustang business jets (11 are in shared ownership and one is in fractional ownership for a total fleet of 479 in operation worldwide). The percentage ‘For Sale’ is 10.6% with 67% under an exclusive broker agreement and average 302 days on the market. 4.2% of the Mustang fleet is leased, according to JETNET. By continent, North America has the largest Mustang fleet percentage (60%), followed by Europe (23%) for a combined total of 83%. With the announcement that Textron would stop building Mustangs, the M2 - in production since 2013 –

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HOW MANY SEATS

CESSNA

vs. vs.

EXECUTIVE

Citation Mustang

$2.1 Million

$2.9 Million

$3.2 Million

(2013 Model)

Embraer

Phenom 100

(2013 Model)

Cessna

Citation M2

(2013 Model)

WHICH OF THESE ENTRY-LEVEL JETS WILL COME OUT ON TOP Cessna Citation Mustang

HOW MUCH

RUNWAY

Embraer Phenom 100

DO I NEED?

4376 Cessna Citation M2

(Balanced field length, ft)

3250 0

1000

PAYLOAD

CAN WE GO?

CAN WE TAKE?

(Nautical Miles. 4 Pax)

Mustang

1070 1242

1000

3000

Phenom 100

CRUISING SPEED? Mustang

1,000

HOW MANY

OPERATION?

EACH MONTH?

UNITS IN 152 479 345

NEW/USED SOLD

5 (11.3%)

8 (10.9%)

5 (3.3%) 12-Month Average Figure (% = Global Fleet For Sale)

319 425 340 323

M2 1,500

100

150

200

250

300

350

WHAT’S THE COST PER MILE?

Mustang Phenom 100 M2

Sources used: Aircraft Bluebook, Conklin & de Decker, JETNET, B&CA.

(Knots)

Phenom 100

1312 1400

500

5000

LONG RANGE

(Lbs)

1500

4000

WHAT’S THE 1200

Mustang

3980

1380

1000

2000

HOW MUCH

HOW FAR Phenom 100

3380

$1.85 $2.20 $2.47

(Direct operating costs based on 600nm mission carrying 800lbs payload)

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Aircraft Comparisons

Table A - Payload & Range M

Mustang Phenom 100

53,572

becomes the new entry point for the Citation line. Did Textron raise the bar for entry into the new-build Citation market? We hope to clarify this among other things in the following analysis…

Payload & Range

8,645 10,472 10,700

MTOW (lb)

2,580

2,804

3,296

Max Fuel (lb)

105

1,150

Fuel Usage (GPH)

1,774

1,410

550

Max Payload (lb)

646

514

1,141

Avail Payload w/Max Fuel (lb)

1,194

1,354

Max Fuel w/Avail P/L Range (nm)

Source: Conklin & de Decker, Chase & Associates; B&CA May 2017 Purchase Planning Handbook and Aug. 2016 Operations Planning Guide.

Chart A - Cabin Cross Section Embraer Phenom 100/E/EV

4.92 ft

Cessna Citation M2

4.50 ft

4.75 ft

Cessna Citation Mustang

4.58 ft

4.83 ft

5.08 ft

Table B - Interior Cabin Length Mustang Phenom 100 M2

6.7 ft

9.0 ft

8.8 ft

Main Seating

9.8 ft

11.0 ft 11.0 ft

Net

9.8 ft

11.0 ft 11.0 ft

Gross

Interior Cabin Length Source: B&CA May 2017; Conklin & de Decker; * M² Performance Group, LLC

163

212

201

Cabin Volume cu. ft

40.8

53.0

50.3

Personal Space* cu. ft

As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. Table A (left) reveals the Citation Mustang (at 550lbs) offers greater ‘Available Payload with Maximum Fuel’ than the Citation M2 514lbs, a value less than that offered by the Phenom 100 at 646 lbs. In addition, Table A shows the fuel usage by each aircraft in this field of study. The Mustang is the most frugal business jet, burning less fuel per hour (88 gallons per hour (GPH)) compared to the Phenom 100 (95 GPH) and the M2 (105 GPH). The GPH calculation is fuel usage for a 600 nm mission with a flight time of 1 hour and 56 minutes, as sourced from Chase & Associates.

Cabin Cross-Section Views

Chart A (middle, left) offers a cabin cross-section comparison and depicts that the Mustang offers less width (4.58 ft) and height (4.5 ft) than the Citation M2 (4.83 ft. x 4.75 ft.) and Phenom 100 (5.08 ft. x 4.92 ft.). Interior height is measured at the center of the cross section. It may be based on an aisle that is dropped several inches below the main cabin floor that supports the passenger seats. This is the case for all three of our comparative aircraft. There are two width dimensions that can be used; one for the widest part of the cabin and the other at floor level. We use the measurement of the widest part of the cabin – the maximum interior width. Meanwhile, cabin length can be measured in three ways, each yielding differing cabin volumes. For example, the Main Seating includes all passenger seats but not the lavatory areas. Due diligence by an owner/operator

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is required to understand comparative aircraft interior measurements. Depending on the interior cabin length measurement that one selects from Table B (bottom, left), prospective buyers will find different cabin volumes for each aircraft. More important, however, is the measurement of personal space (cubic feet) when comparing aircraft cabins, which will give a relative value to compare between candidate business jets. Table B reveals that the personal space per passenger calculated for the Mustang is 40.8 cubic feet – less than the M2 (50.3 cubic feet) and the Phenom 100 (53 cubic feet) based on the gross cabin volume measurement using four seats in each aircraft. Some manufacturers provide ‘optimistic’ measurements. Prospective buyers are advised to measure the aircraft themselves or consult with interior experts to provide an apples-to-apples comparison.

Range Comparison

As depicted by Chart B (top, right) using Wichita as the origin point, the Citation Mustang shows less range coverage than the Embraer Phenom 100 and the Citation M2, which have almost the same range. Note: For jets and turboprops, ‘four passengers with available fuel’ represents the maximum IFR range of the aircraft at Long-Range Cruise with four passenger seats occupied. NBAA IFR fuel reserve calculation for a 200nm alternate is assumed. The lines depicted do not include winds aloft or any other weather-related obstacles.

Powerplant Details

The Mustang is powered by two Pratt & Whitney PW615F engines with 1,460 lbst each. The Phenom 100 is also powered by two Pratt & Whitney powerplants (PW617F-E) each offering 1,730 lbst, while the M2 is powered by two Williams International FJ441AP-21 engines with 1,965 lbst.

Chart B - Range Comparison

Cessna Citation Mustang Embraer Phenom 100 Cessna Citation M2

999 Nm 1,178 Nm 1,184 Nm

Chart C - Cost Per Mile* Mustang

$1.85 $2.20

Phenom 100 M2 $0.00

$2.47 $1.00

$2.00

$3.00

US $ per nautical mile *600 nm mission, 800lbs payload

Cost Per Mile

not represent an average price for the year. Chart C (above) details ‘Cost per Mile’ and compares the Mustang to the Phenom 100 and the M2, factoring direct costs and with each aircraft flying a 600nm mission with an 800 pound (four passengers) payload. The Mustang shows the lowest cost per nautical mile at $1.85 compared to $2.20 for the Phenom 100 and $2.47 for the M2.

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Aircraft Comparisons

12 Total Variable Cost

Chart D – Variable Cost Mustang

The ‘Total Variable Cost’ (hourly) illustrated in Chart D is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Mustang computes at $636 per hour, which is considerably less than the Phenom 100 at $748 per hour and the M2 at $908 per hour.

$636 $748

Phenom 100

$908

M2 $0

$600

$1,200

Aircraft Comparison Table

US $ per hour

Table C - Aircraft Comparison Mustang Phenom 100 M2

319

340

323

Long Range Cruise Speed

999

1,178

1,184

4 PAX w/available Fuel nm

$3.350 $4.495 $4.500

Vref New Price $M

479

345

152

In Operation

*Average Pre-owned Full Sale Transactions in the past 12 months; Source: JETNET Data courtesy of Textron Aviation; Embraer; B&CA; Vref; JETNET

Table D - MACRS Depreciation Schedule

10.9% 11.3%

% For Sale

3.3%

Average Pre-owned Sold*

Table C (left) contains the New prices from Vref Pricing Guide for each aircraft. The average speed and 4-pax ranges are from Textron Aviation and Embraer, while the number of aircraft in-operation, fleet percentage ‘For Sale’, and average sold are from JETNET. The Mustang business jet has 10.9% of its fleet currently ‘For Sale’ and the Embraer Phenom 100/E/EV is at 11.3% ‘For Sale’ followed by the M2 at 3.3%. Also, the average number of new and used transactions (sold) per month for the Mustang is eight aircraft compared to the Embraer Phenom 100 and M2 (five each).

Depreciation Schedule

Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period. In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS.

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Aircraft Comparisons

14 Asking Prices & Quantity

The current used market for the Citation Mustang shows a total of 50 aircraft ‘For Sale’ with 23 displaying an asking price (ranging between $1.495m and $2.825m. We also reviewed the used Phenom 100/E/EV market (40 for sale) and Citation M2 market (eight for sale) and noted asking prices ranged between $1.695m and $3.695m. According to Vref, a 2013-model Citation Mustang’s value - as a percentage of the New Retail price - has declined to 65%. A 2013-model Phenom 100 has retained its value marginally better at 69% of new, and the M2 has declined to 75% of its new price in 2013. While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price, and the final negotiated price remains to be decided between the seller and buyer before the sale of an aircraft is completed.

Chart E - Productivity Comparison Price (Millions)

There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period. Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six-year recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. Table D (previous page) depicts an example of using the MACRS schedule for a 2017 Mustang business aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a new retail price of $3.350m, per Vref Pricing guide.

$6.0 $4.0

2017 Phenom 100

$2.0 $2.0 0.000

0.040

0.080

0.120

Index (Speed x Range x Cabin Volume / 1,000,000,000)

2. The long range cruise speed flown to achieve that range; 3. The gross cabin volume available for passengers and amenities. Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size we can determine how the Citation Mustang ranks within its field. The Mustang is priced less than the Phenom 100 and M2, offers much lower costs, is the most frugal in fuel usage, but offers less range and a smaller gross cabin volume compared to the Phenom 100 and Citation M2. Operators should weigh up their mission requirements precisely when picking which option is the best for them. The Citation Mustang is showing good monthly full retail sale transactions that have averaged eight aircraft sold per month compared to Phenom 100 and M2 with an average of five per month each. From the above data, we can also conclude that the entry-level into Textron’s

Productivity Comparisons

The points in Chart E (above) are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors: 1. Four/Passenger Range (nm) with available fuel;

2017 M2

2017 Mustang

CITATION MUSTANG CABIN

new business jet ownership just got slightly higher with the retirement of the Citation Mustang, perhaps reflecting on the continued popularity of the Mustang in the used market at this time. One of the other interesting trends to watch for will be that of brand loyalty. Will the majority of Citation Mustang owners looking to move up into something bigger automatically select the Citation M2, or be lured by the competing Phenom 100 EV and HondaJet? Time will tell…

Summary

Within the preceding paragraphs we have touched upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance, terminal area performance, and time to climb that might factor in a buying decision. The Citation Mustang continues to be popular today as it ends production after 12 years. Those operators in the market should find the preceding comparison useful. Our expectations are that the Citation Mustang will continue to do well in the used jet market for the foreseeable future. T

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Aircraft Comparisons

Aircraft Comparative Analysis Bell 407 v Airbus H125 (formerly the AS350B-3e) In this Aircraft Comparative Analysis, Mike Chase provides information on a pair of popular single turbine helicopters for the purpose of valuing the Bell 407.

ver the following paragraphs, we’ll analyse the performance of the Bell 407 and Airbus H125 (formerly the Eurocopter AS350B-3e) to see how they compare within the market. We’ll consider productivity parameters (Payload, Range, Speed and Cabin Size), and give consideration to the current market values. The Bell 407 is based on the 206L-4 LongRanger fuselage, but offers a wider cabin and larger cabin windows. Introduced in 1995, the Bell 407 series is still in-production today in the form of the 407GXP. It features an all-composite, four-blade rotor, a carbon fiber tail boom, and is designed for superior hover performance in hot-and-high conditions. Bell introduced the 407GX model in 2011, featuring the Garmin G1000H Integrated Avionics system with two high-resolution LCD displays. The system includes a Helicopter Terrain Avoidance Warning System (HTAWS); a Traffic Information System (TIS); Helicopter Synthetic Vision Technology (HSVT) with terrain and

obstacle alerting; and a range ring. Today, 211 Bell 407GXs are operational worldwide (per JETNET data). Subsequently, the Bell 407GXP was introduced in 2015, and is a variant of the Bell 407GX. The 407GXP offers an additional 50 lbs. of payload capability and an engine with improved performance and fuel efficiency. There are currently 240 Bell 407GXP helicopters inoperation worldwide. All told, there are 1,060 wholly-owned Bell 407 rotorcraft operating globally and an additional six that are in shared ownership (giving a total in-operation fleet of 1,066). Furthermore, 9.8% (105) of the Bell 407 fleet is leased. The fleet percentage currently ‘For Sale’ is 4.7%, with 30% of those aircraft under an exclusive broker agreement. The average days on the market before a Bell 407 sells is currently 531 days, according to JETNET. By continent, North America holds the largest fleet percentage (68%), followed by Asia (9%) and South America (7%) to give a combined total of 84%.

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HOW MANY EXECUTIVE

BELL

SEATS?

BELL 407

$2.40 Million

Manufactured between 1995 - 2014

(2013 Model)

vs.

AIRBUS H125

$1.9 Million

Manufactured between 2013 - Present

(2013 Model)

WHICH OF THESE HELICOPTERS WILL COME OUT ON TOP UNITS IN

CRUISING SPEED?

(Rate of climb, ft per minute at MTOW)

1850

HOW MANY

WHAT’S THE

HOW FAST WILL I CLIMB

OPERATION?

(Knots)

1959

120

2000 (ft)

563

122 0

100

150

200

HOW MANY

HOW FAR

1500

1,066

NEW/USED SOLD

CAN WE GO?

EACH MONTH?

(Nautical Miles) 281

6 (4.7%)

300

1000 0

100

150

200

250

12-Month Average Figure (% = Global Fleet For Sale)

300

HOW MUCH

WHAT’S THE

PAYLOAD

500

10 (2.8%)

COST PER HOUR?

CAN WE TAKE? (Lbs) 1,998

1,926

$608 0

500

1000

1500

2000

2500

3000

$583 Sources used: Vref, Conklin & de Decker, JETNET, Aircraft Cost Calculator.

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Aircraft Comparisons

Table A - Payload & Range

Payload & Range

Bell 407 Airbus H125

5,250

5,225

MTOW (lb)

856

939

43.2

42.3

1,998

Fuel Usage (GPH)

Max Fuel (lb)

1,926

Max Payload (lb)

1,142

987

281

Avail Payload w/Max Fuel (lb)

300

Max Fuel Range (nm)

Source: Conklin & de Decker, ACC – Aircraft Cost Calculator; B&CA May 2016 Purchase Planning Handbook and Aug. 2016 Operations Planning Guide.

Chart A - Cabin Cross-Sections Bell 407

300

Max P/L w/Avail fuel IFR Range (nm)

Cabin Cross-Sections

Airbus H125

Source: UPCAST JETBOOK

Chart B - Cabin Floor Plans Bell 407

281

The data contained in Table A (top left) are published in the B&CA, May 2016 issue but are also sourced from Conklin & de Decker. As we have mentioned previously, a potential operator should focus on payload capability as a key factor. The Bell 407 ‘Available Payload with Maximum Fuel’ (1,142 lbs) is more than that offered by the Airbus H125 (987 lbs). Table A also shows the fuel usage of each aircraft (as sourced from Aircraft Cost Calculator). There is almost no difference between the fuel usage of the Bell 407 (43.2 Gallons Per Hour) and the Airbus H125 at 42.3 GPH.

Airbus H125 (High-Density)

According to Conklin & de Decker, the Bell 407 cabin volume measures 84 cubic feet. The Airbus H125 has less cabin volume (61 cubic feet). Chart A (left), courtesy of UPCAST JETBOOK, offers a cabin crosssection comparison, showing the Bell 407 has less width (4.8 ft. vs 5.41 ft.) and slightly less height (4.2 ft. vs 4.26 ft.) than the Airbus H125 cabin. Note: Conklin & de Decker measures the cabin dimensions differently for each of these aircraft. The dimension given does not include the cockpit for the Bell 407. Additionally, the H125 cabin design is curved, whereas it’s squared-off in the Bell 407 (Chart B, left).

Range Comparison

The Bell 407’s maximum VFR range of 281nm is slightly less than that of the Airbus H125 (300nm), according Conklin & de Decker. The Bell 407 is powered by a single Rolls-Royce turbine 250-C47B engine offering 813 shp, while the Airbus H125 is powered by a single Turbomeca turbine Arriel engine with 847 shp. (The transmission rating is a limiting factor in the total rated and usable engine power output.) As a matter of interest, using design and engineering licensed from Bell Helicopter, Eagle

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Chart C - Bell 407 - Top 10 Countries

Copters, Ltd. of Calgary, Alberta has developed a dual-channel FADEC Honeywell HTS900 engine retrofit called the Eagle 407HP. This offers more power, better fuel efficiency and lower operating costs than the standard RollsRoyce 250-C47B engine.

Percentage of Bell 407 Operators by Country 50% - United States 9% - Canada 18% Other

4% - South Africa

4% - Mexico

Operator Countries and Fleet Owners

Chart C (top, right) shows the Top 10 of the 60 countries worldwide that operate the Bell 407, with the United States having 50% of all operators worldwide. Additionally, 120 operators own 580 (or 54%) of the Bell 407 fleet. The largest single fleet owner is PHI, Inc., Lafayette, LA, United States with 63 Bell 407 helicopters.

2% - Papua New Guinea 2% - India

3% 4%

2% - Russian Federa on 2% - China

2% - United Arab Emirates

18% - Other

Source: JETNET

Total Variable Cost

Chart D – Variable Cost

Using data published in the May 2016 B&CA Planning and Purchasing Handbook and the August 2016 B&CA Operations Planning Guide we will compare our helicopters. The nationwide average Jet-A fuel cost used from the August 2016 edition of B/CA was $4.90 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published. Note: Fuel price used from this source does not represent an average price for the year. The ‘Total Variable Cost’ illustrated in Chart D (right) is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Bell 407 computes at $608 per hour, which is $25 higher than the Airbus H125 ($583 per hour).

$608

Bell 407

$583

Airbus H125 $0

$200

$400

$600

$800

US $ per hour

Table B - Aircraft Comparisons Bell 407

Aircraft Comparisons

Table B (right) contains the new prices from Vref Pricing Guide for each helicopter. The average speed, cabin volume and maximum payload values are from Conklin & de Decker, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET. The Bell 407 has 4.7% of its fleet currently ‘For Sale’, and the Airbus H125 has 2.8% ‘For Sale’. The average number of

3% - Brazil

50% -United States

Airbus H125

120

122

Long Range Cruise Speed

Cabin Volume Cu Ft

281

300

Max P/L w/available Fuel Range nm

$2.4

$2.1

Used Vref Price $US Mil 2014

*Average Pre-owned Full Sale Transactions in the past 12 months; Source: JETNET Data courtesy of Conklin & de Decker; JETNET; Vref

1,066

563

In Operation

4.7%

2.8%

% For Sale

Average Pre-owned Sold*

1 Comp Analysis.qxp_YearBook Template 06/09/2017 16:32 Page 13

Aircraft Comparisons

Table C - Part 91 & 135 MACRS Schedule

pre-owned transactions (sold) per month for the Bell 407 is six units per month compared to the Airbus H125â&#x20AC;&#x2122;s ten.

MACRS SCHEDULE FOR PART 91 Year Deduction

20.00 %

32.00 %

19.20 %

11.52 %

5.76 %

14.29 %

24.49 %

17.49 %

12.49 %

8.93 %

8.92 %

8.93 %

4.46 %

MACRS SCHEDULE FOR PART 135 Year Deduction Source: NBAA

Table D - MACRS Depreciation Schedule 2014 Bell 407 - PRIVATE (PART 91) Full Retail Price - Million Year

$2.400 1

20.00 %

32.00 %

19.2 %

11.5 %

5.8 %

Depreciation ($M)

$0.5

0.8

0.5

0.3

0.1

Depreciation Value ($M)

$1.9

1.2

0.7

0.4

0.1

Cum. Depreciation ($M)

$0.5

1.2

1.7

2.0

2.3

2.4

Full Retail Price - Million

$2.400

Rate (%)

2014 Bell 407 - CHARTER (PART 135) Year

14.3 %

24.5 %

17.5 %

12.5 %

8.9 %

4.5 %

Depreciation ($M)

$0.34

0.59

0.42

0.30

0.21

0.11

Depreciation Value ($M)

$2.06

1.47

1.05

0.75

0.54

0.32

0.11

0.00

Cum. Depreciation ($M)

$0.3

0.9

1.4

1.7

1.9

2.1

2.3

2.4

Rate (%)

Source: Vref

Price (Millions)

Chart E - Productivity Comparison $3.0

Bell 407

$2.5

Airbus H125

$2.0 $1.5 0.000

0.100

0.200

0.300

0.400

Index (Speed x Range x Cabin Volume / 1,000,000,000)

0.500

Depreciation Schedule

Helicopters that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table C, (top, left). In certain cases, helicopters may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS. There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, helicopters used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period. Helicopters used for qualified business purposes, such as Part 91 industrial aid flights, are generally depreciated under MACRS over a period of five years or by using ADS with a sixyear recovery period. There are certain uses of the helicopter, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. Table D (middle, left) depicts an example of using the MACRS

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schedule for a model Bell 407 helicopter in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a new retail price of $2.400m, per Vref Pricing guide.

Asking Prices & Quantity

The current used helicopter market for the Bell 407 shows a total of 50 aircraft ‘For Sale’ with 26 displaying an asking price ranging from $1.477m to $3.07m. We also reviewed the 16 used Airbus H125 helicopters ‘For Sale’, which displayed asking prices ranging from $1.823m to $2.550m. While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price. Of course, the final negotiated price remains to be decided between the seller and buyer before the sale of an aircraft is completed.

Productivity Comparisons

The points in Chart E (bottom, left) are centered on the same helicopters. Pricing

used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors: 1. Range with full payload and available fuel; 2. The normal cruise speed flown to achieve that range; 3. The cabin volume available for passengers and amenities. Others may choose different parameters, but serious helicopter buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Bell 407 displays a high level of productivity. The Bell 407 shows a higher retail price but greater productivity compared to the Airbus H125. The Airbus H125 has a lower

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variable operating cost and slightly longer range advantage, but the Bell 407 offers a larger cabin volume and a greater ‘Payload with Full Fuel’ capability. The used Bell 407 shows good monthly full retail sale transactions averaging six units per month, and is still a very popular model on the used helicopter sales market today. Operators should weigh their mission requirements precisely when picking which option is the best for them.

Summary

Within the preceding paragraphs we have touched upon several of the attributes that helicopter operators value. However, there are other qualities that might factor in a buying decision too. The Bell 407 continues to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Bell 407 will continue to do well on the used helicopter sales market for the foreseeable future. T

.COM

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Aircraft Comparisons

Aircraft Comparative Analysis Gulfstream G280 vs Bombardier Challenger 350 In this Aircraft Comparative Analysis, Mike Chase provides information on two popular business jets for the purpose of valuing the Gulfstream G280.

ow do the Gulfstream G280 and Bombardier Challenger 350 compare in the market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed, and cabin size) and cover current market values. When General Dynamics (GD) announced the acquisition of Galaxy Aerospace Company from Israel Aerospace Industries in 2001, it aligned the entire family of Galaxy aircraft with Gulfstream, which it had acquired in 1999. GD also chose to rename the Astra and Galaxy models the Gulfstream G100 and G200 respectively. The final G200 rolled off the production line on December 19, 2011 and a total 250 units had been built over the years. In 2005, Gulfstream began designing a follow-on aircraft. The new model, known as the G250 was launched in 2008. It was later renamed the

Gulfstream G280 and began delivering in 2012. The Gulfstream G280 has many new features including four more side windows than the G200 and acoustical insulation improvements to provide a very quiet cabin environment. The G280 has inflight access to the aft baggage compartment, and it has standard auto-throttles and autobrakes not available on competing aircraft. Today, there are 106 wholly-owned Gulfstream G280s and two in shared ownership, giving a total fleet of 108 in operation worldwide. The percentage for sale is 2.8%, with 33% under an exclusive broker agreement. The average ‘days on the market’ is 226 days. At present, 16.7% of the Gulfstream G280 fleet is leased, according to JETNET. By continent, North America is home to the largest Gulfstream G280 fleet percentage (77%) followed by Asia (11%), accounting for a combined total of 88% of the worldwide fleet.

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HOW MANY

EXECUTIVE

GULFSTREAM G280

(Manufactured between 2012-Present)

vs.

SEATS $21.5 Million (2016 Model)

BOMBARDIER

Challenger 350

(Manufactured between 2014-Present)

$21.0 Million (2016 Model)

WHICH OF THESE Large cabIN JETS WILL COME OUT ON TOP HOW MUCH

RUNWAY

5160

DO I NEED?

4836

(Balanced field length, ft)

HOW FAR

1000

2000

(Nautical Miles. 4 Pax)

CRUISING SPEED?

LONG RANGE (Knots)

459

4050

459

3400 4000

1,000

2,000

3,000

4,000

HOW MANY

OPERATION?

EACH MONTH?

UNITS IN

181

7000

CAN WE TAKE? (Lbs)

3000

6000

WHAT’S THE

3600 2000

5000

HOW MUCH

3690

1000

4000

PAYLOAD

CAN WE GO?

3000

NEW/USED SOLD

5,000

100

200

300

400

500

WHAT’S THE COST PER MILE?

2 (2.8%)

108

4 (1.1%)

$3.97 $4.00

12-Month Average Figure (% = Global Fleet For Sale) Sources used: Aircraft Bluebook, Conklin & de Decker, JETNET

(Direct operating costs based on 1000nm mission carrying 800lbs payload)

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Aircraft Comparisons

Table A - Payload & Range

Payload & Range

Gulfstream G280 Challenger 350

39,600 40,600

14,600 14,150

284

Max Fuel (lb)

MTOW (lb)

297

4,050

Fuel Usage (GPH)

3,400

Max Payload (lb)

1,000

1,800

Avail Payload w/Max Fuel (lb)

Source: Conklin & de Decker, B&CA May 2017 Purchase Planning Handbook.

Challenger 350

Source: UPCAST JETBOOK

Table B - Cabin Length Measurements Interior Cabin Length

3,235

Max P/L w/Avail fuel IFR Range (nm)

Cabin Cross-Sections

Chart A - Cabin Cross-Sections Gulfstream G280

3,636

The data contained in Table A (left) are sourced from Conklin & de Decker and B&CA’s Purchase Planning Handbook. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. The Gulfstream G280 ‘Available Payload with Maximum Fuel’ (1,000 lbs) is less than that offered by the Challenger 350 (1,800 lbs). Also worthy of note is the fuel consumption of each aircraft. According to Conklin & de Decker, the Gulfstream G280 is the more frugal jet in this field, burning 284 gallons per hour (GPH), versus 297 GPH for the Bombardier Challenger 350.

Main Seating

Net

Gross

Gulfstream G280

17.7 ft

25.8 ft

32.3 ft

Challenger 350

16.6 ft

25.2 ft

28.6 ft

Chart A (left), courtesy of UPCAST JETBOOK, offers a cabin cross-section comparison. The Gulfstream G280 has the same width (7.2 ft) as the Challenger 350, but offers marginally more height (6.3 ft vs 6.1 ft). Note, however, that the Bombardier Challenger 350 cabin has a flat floor. At this point it’s worth taking a little more time to discuss cabin interior dimensions. Interior height is measured at the center of the cross-section. It may be based on an aisle that is dropped several inches below the main cabin floor that supports the passenger seats, as is the case for the Gulfstream G280. Two width dimensions can be used – one for the widest part of the cabin and the other is the aisle width at floor level. We have used the maximum interior width measurement at the widest part of the cabin. The aisle width of the Gulfstream G280 is reported at 21 inches compared to the Challenger 350 at 16 inches. Cabin length can be measured in three different ways, each yielding differing cabin volumes. For example, the Main Seating includes all passenger seats but not the lavatory area. Due diligence by an owner/operator is required to

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understand comparative aircraft interior measurements. The different length measurements for the aircraft in our comparative field are presented in Table B (bottom, left). The cabin volume will depend on the interior cabin length measurement selected. More important, however, is the measurement of personal space when comparing cabins. The goal is to determine comfort levels for each potential passenger. The personal space per passenger calculated for the Gulfstream G280 is 116.9 cubic feet and the Bombardier Challenger 350 is 107.5 cubic feet, based on the gross cabin volume measurement using eight seats in each aircraft. Of course, different seating arrangements including divans or double-club seats will result in different personal space measurements per passenger. Prospective buyers are advised to consult with interior experts to provide a fair comparison when choosing the right aircraft interior for their mission needs.

Chart B - Cost Per Mile* Gulfstream G280

$3.97

Challenger 350

$4.00 $0

$2.00

$4.00

US $ per nautical mile

* 1,000 nm Mission costs, 800lbs Payload

Chart C – Variable Cost Gulfstream G280

$1,799

Challeger 350

$1,804

$500

$1,000

$1,500

$2,000

US $ per hour

Powerplant Details

The Gulfstream G280 is powered by Honeywell HTF7250G engines with 7,624 lbst. The Challenger 350, meanwhile, is powered by two Honeywell HTF7350P engines each offering 7,323 lbst.

Cost Per Mile

Using data published in the August 2016 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2016 edition was $4.90 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published. Note: Fuel price used from this source does not represent an average price for the year. Chart B (top, right) details ‘Cost per Mile’ and compares the Gulfstream G280 to its competition, factoring direct costs and each aircraft flying a 1,000nm mission with

an 800 pound (four passengers) payload. The Gulfstream G280 shows the lower cost per nautical mile at $3.97 compared to $4.00 for the Challenger 350 – an insignificant difference.

Total Variable Cost

The ‘Total Variable Cost’ illustrated in Chart C (above) is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts

Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Challenger 350 computes at $1,804 per hour, which is slightly greater than the Gulfstream G280 at $1,799 per

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Aircraft Comparisons

Table C - Aircraft Comparison

hour. Again, the difference is insignificant.

Aircraft Comparison Table

Gulfstream G280 Challenger 350

459

Long Range Cruise Speed

935

860

3,646

Cabin Volume Cu Ft

3,250

$24.5 $26.6

Max P/L w/available Fuel Range nm

108

Used Vref Price $USm 2017

181

2.8%

1.1%

Average Pre-owned Sold*

% For Sale

In Operation

*Average New Pre-owned Full Sale Transactions in the past 12 months; Source: JETNET Data courtesy of Bombardier; Gulfstream; B&CA; JETNET; Vref

Table D - Part 91 & 135 MACRS Schedule

Table C (left) contains the used prices from Vref Pricing Guide for each aircraft. The average speed and cabin volume are from Gulfstream and Bombardier, and the four passenger range is from B&CA May 2017, while the number of aircraft in-operation, percentage ‘For Sale’ and average sold are as reported by JETNET. The Gulfstream G280 has 2.8% of its fleet currently ‘For Sale’ and the Bombardier Challenger 350 is at 1.1% ‘For Sale’. The average number of new and used transactions (sold) per month for the Gulfstream G280 is two compared to the Bombardier Challenger 350 at four.

Depreciation Schedule MACRS SCHEDULE FOR PART 91 Year Deduction

20.00 %

32.00 %

19.20 %

11.52 %

5.76 %

24.49 %

17.49 %

12.49 %

8.93 %

8.92 %

8.93 %

4.46 %

MACRS SCHEDULE FOR PART 135 Year Deduction

14.29 %

Source: NBAA

Table E - MACRS Depreciation Schedule 2017 Gulfstream G280 - PRIVATE (PART 91) Full Retail Price - Million Year Rate (%)

$24.5 1

20.00 %

32.00 %

19.2 %

11.5 %

5.8 % 1.4

Depreciation ($M)

$4.9

7.8

4.7

2.8

Depreciation Value ($M)

$19.6

11.8

7.1

4.2

1.4

Cum. Depreciation ($M)

$4.9

12.7

17.4

20.3

23.1

24.5

Full Retail Price - Million

$24.5

2017 Gulfstream G280 - CHARTER (PART 135) Year Rate (%)

14.3 %

24.5 %

17.5 %

12.5 %

8.9 %

4.5 %

Depreciation ($M)

$3.5

6.0

4.29

3.06

2.19

1.09

Depreciation Value ($M)

$21.0

15.0

10.71

7.65

5.47

3.28

1.09

0.00

Cum. Depreciation ($M)

$3.5

9.5

13.8

16.8

19.0

21.2

23.4

24.5

Source: Vref

Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table D, middle left). In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS. There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated

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Aircraft Comparisons

28 under MACRS over a sevenyear recovery period or under ADS using a twelve-year recovery period. Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six-year recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. Table E (previous page) depicts an example of using the MACRS schedule for a 2017 Gulfstream G280 business aircraft in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a new retail price of $24.5 million, per Vref Pricing guide.

Chart D - Productivity Comparison

Asking Prices & Quantity

can be defined (and it is here) as the multiple of three factors:

The current used market for the Gulfstream G280 shows a total of three aircraft ‘For Sale’ with two displaying an asking price ranging from $14m to $17.9m. We also reviewed the used Challenger 350 market, which yielded asking prices ranging from $16.5m to $17.5m. According to Vref, since 2014 a Gulfstream G280’s value has depreciated 61% over its new price, while a 2014 Bombardier Challenger 350 has depreciated 66%. Each serial number is unique and the Airframe (AFTT) hours and age/condition will cause great variations in price. Of course, the final negotiated price remains to be decided between the seller and buyer before the sale of an aircraft is completed.

Productivity Comparisons

The points in Chart D are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity

Price (Millions)

$40.0 $30.0

2017 Challenger 350 2017 Gulfstream G280

$20.0 $10.0 $0.0 0.000

0.500

1.000

1.500

2.000

2.500

3.000

Index (Speed x Range x Cabin Volume / 1,000,000,000)

1. Four/Eight Passenger Range (nm) with available fuel; 2. The long range cruise speed flown to achieve that range; 3. The gross cabin volume available for passengers and amenities. Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size,

we can conclude that the Gulfstream G280 displays a high level of productivity. The Gulfstream G280 has a comparable operating cost compared to the Challenger 350, but is priced approximately $2.17m lower (2017 model). It offers a greater cabin volume, greater range, but offers less available payload with maximum fuel. Operators should weigh their mission requirements precisely when picking which option is the best for them.

Summary

Within the preceding

paragraphs we have touched upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance, terminal area performance, and time to climb that might factor in a buying decision. The Gulfstream G280 continues to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Gulfstream G280 will continue to do well in the new and preowned markets for the foreseeable future. T

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Section Contributors

Jeremy Cox is VP at JetBrokers, Inc, a National Aircraft Appraisers Association (NAAA) Senior Certified Aircraft Appraiser, as well as a NAAA Qualified Buyerâ&#x20AC;&#x2122;s Agent. Contact him via jcox@jetbrokers.com

Ken Elliott is a highly-respected industry authority on avionics as a member of the NextGen Advisory Council sub-committee and Technical Director, Avionics at Jetcraft. Contact him via ken.elliott@jetcraft.com or www.jetcraft.com

Dave Higdon is a highly respected aviation journalist who has covered all aspects of civil aviation over the past 37 years. Based in Wichita, he has several thousand flight hours, and has piloted pretty much everything from foot-launched wings to combat jets. Contact him via Dave@avbuyer.com

Brian Wilson is the National Key Accounts Manager at Gogo Business Aviation, an industryleading provider of in-flight connectivity solutions. Prior to Gogo, he sat on numerous Dealer Advisory Boards and was a member of the Aircraft Electronics Association Board of Directors. Contact him via Bwilson@gogoair.com

Avionics

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32 19

How to Ensure Your Jet’s Up to Speed

With Connectivity Ever Changing, What are the Tips to Keep Ahead of the Game? Research shows consumers have two-and-a-half times the level of fear that they’re going to miss out by not buying an item than they have anticipation of the benefits when they do buy. Brian Wilson considers how to manage that fear when time comes for a cabin connectivity upgrade…

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Let’s begin with a smartphone example. We’ve all seen the snazzy commercials of new, exciting companies, and we have been enticed with their low-rates and expanded features only to see the provider fold due to their financially unviable business model. The consumers that bought their products end up with phones and service plans that are not worth the paper they’re written on. The technology companies that have been around for many years and have invested hundreds of millions, even billions of dollars on their networks know what it takes to offer a viable and sustainable solution to their customers. Thus, it’s solutions that should serve as the foundation for research into connectivity equipment for your business jet.

Get Multiple Input

Make sure everyone connected with the airplane has an opportunity to offer their input for the discussion about connectivity solutions. Flight crew, operations personnel, frequent passengers aboard the jet, and the flight attendants all have valid contributions to make. The more you understand the needs and concerns of the entire team, the better placed you will be to seek a viable and economic solution. Following those discussions, try to set a priority list based around the features and performance expectations of those who contributed.

Hone in on Technology

Now that you have gathered what the aircraft users and flight department are collectively seeking to do, it’s time to focus on the technology. The place to start is looking at what’s currently on your aircraft. By doing so, you’ll have assessed what your current system provides and how its features serve what you want to do over the next few years. You will have a clearer picture of needed connectivity improvements. Following are some questions to ask: • • ne could justifiably assume consumer anxiety increases when it comes to purchasing technology-related products. Coupled with the fact that technology on-board an aircraft requires extensive installation and downtime (not to mention cost), making the right decision will impact the ability of the aircraft to carry out its essential business objectives. A costly mistake could also have big implications for the decision-maker’s job. So how do you break down the different components of a cabin connectivity upgrade to ensure anxiety is minimized?

•

Does your current provider offer an upgrade path to meet your future expectations? Do they have an upgrade promotion or other financial incentive to ease your transition costs? Do they have a platform that’s scalable and that might allow you to do some provisioning now to offset future costs?

Invite the sales manager to meet with as many of those who participated in the original discussion as possible. Make it clear to the provider that you either want a product manager there in person or one who can participate in a webinar with your team. It should raise a concern if the vendor can’t provide the time and resources to meet with your department.

A Firm Foundation

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“...seek companies that are financially stable and can offer platforms that are scalable at least 3-4 years into the future.”

At this point, be concerned if a vendor is seeking to conceal some of the details of their technology. Lack of transparency raises questions of whether the provider’s platform and network are fully developed – even if they do already have a secondgeneration solution in mind. You must also ensure that the provider can substantiate, document and share their technology, and provide a roadmap with your team regarding how their solution will unfold in your aircraft. Always avoid committing to a financial “early bird” discount since you might as well put your money in the cloud!

Forward-Thinking

It’s a fact that technology on-board business aircraft is changing faster than at any previous time. To avoid paying for an outdated solution or requiring a new installation in 1-2 years’ time, you are well advised to seek companies that are financially stable and can offer platforms that are scalable at least 3-4 years into the future. Although 3-4 years may not sound like a long time, companies vested in technology rarely disclose plans that are 5 or more years out as they must keep their competitive edge.

Narrowing the Choices

Having spoken to various potential providers, you will need to narrow the choices down to 2-3 solutions – after which is a good time to bring in your IT representative and/or your Chief Information Officer (CIO), if you have one. Set up one more conference call to cover any concerns raised after the review of documentation from your first meeting. Your CIO and IT representatives will undoubtedly bring up a few concerns not addressed in your prior meeting. They’ll focus on

how secure the network will be, and how the data are protected going to and coming off the aircraft. Many businesses will want to use a Virtual Private Network (VPN). Companies that provide both the equipment and service will have their own Cybersecurity people who can sit in on the call and address these important matters.

Moving Forward to Upgrade

After briefing the company CEO or owner of the aircraft and a decision has been made to purchase a solution, it’s time to plan for the upgrade. Getting three quotes is wise practice, even if you have one specific maintenance provider in mind. Remember to ask for any sales promotions or reward programs that the sales manager discussed with you. (It’s quite astounding how many estimators are not familiar with all the programs surrounding the array of products they promote.) Nobody likes to hear the word ‘downtime’. One client once protested, “We don’t have these aircraft so they can sit in the hangar”. An operator is forced to use other aircraft when theirs is idle, resulting in increased expenses at the same time their own airplane is absorbing costs because of maintenance. With that said there’s a bright spot to using the downtime to plan an upgrade of your existing Inflight Entertainment and Connectivity (IFEC) system. When consulting with the right resources, additional provisional work can also be done that saves downtime and money in future upgrades. Most installations will require interior and substructure to be removed, so this may be a perfect time to request installation of some ‘provisional’ wiring in the aircraft to save time and money at

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36 the next maintenance interval or when incorporating an anticipated upgrade. Maybe the ‘roadmap’ provided by your provider shows a future upgrade offering expanded features but requiring interface with other equipment. If so, wiring could be run to each location in readiness, to lessen the expense/downtime later. In the case of an additional antenna that might be added, the coax cable could be run in preparation and stowed. I’ve experienced push-back from OEMs about doing such provisional work because they questioned the cost savings or challenged whether the new generation equipment will even materialize. But all of the work I recommend helps limit the required downtime in the future (with its associated cost). Instead of doing the next phase of work at a major inspection, you may need only a smaller inspection at a time when the aircraft is not required on a business trip.

Key Questions to Ask Yourselves

Ahead of the connectivity upgrade, and in order to properly plan for this event, your flight department must address a few fundamental questions, including the following: •

What is the primary mission of the aircraft?

•

How long do you plan to keep the aircraft?

•

Where does the aircraft fly; percentage of domestic versus international?

•

Will this change in the future?

•

What do the principal passengers want to accomplish when on board?

•

What are the features and capabilities of your existing IFEC?

•

What are the inadequacies?

•

How does your vision of your future IFEC system coincide with how long you plan to keep your aircraft?

•

How do you solve the shortcomings you have today and prevent yourself from falling into the same situation again just a few years into the future?

In Summary…

Once you’ve picked your connectivity provider, think of that company as your partner in satisfying the one thing we know about our passengers: They always want to be Connected. Returning to the smartphone analogy – there have been times I’ve been left frowning at my monthly bill and sorely tempted to accept one of those TV offers for a cheaper service. But I always come back to the importance of reliable service. With my present provider, wherever I am in the world I have yet to see those three dreaded words, No Service Available! Reliability should motivate your buying choice when time comes to upgrade your business jet connectivity. Reliability and dependability in this fast-paced world of technology are driving your purchase decision. T

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Top Tips When Shopping for Aircraft Connectivity

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So Many Options, So Many Terms, So Much Potential for Buyer Confusion… When shopping for what was once a limitedoption product, today’s aircraft owners and operators must wade through pages of online reviews and brochures for aircraft cabin connectivity solutions, notes Dave Higdon. Here’s how they can cut through the plethora of information to find the best fit for their aircraft. ew areas of Business Aviation suffer a lack of options designed to address a need. That’s certainly true when the discussion turns to aircraft connectivity (specifically Satcoms). There are multiple service providers, some of whom offer overlapping packages that draw on multiple satellite solutions. It's enough to make some people long for a return to the halcyon days of deciding between installing or not installing an in-flight phone. To address a common question in today’s Business Aviation market, AvBuyer spoke with a variety of users with experience in selecting satellite communications systems in aircraft they operate. What are the important questions to answer, and what features are likely to make a difference? The result of those discussions is the following five popular tips for shopping and selecting Satcom systems and services.

Tip #1: What’s Your Budget?

The traditional starting point for so many investment decisions is to know your budget, which will help you avoid wasting time looking at options that are clearly beyond your means, while simultaneously opening the door to options you incorrectly thought too costly. Because of the multiple elements involved, putting together a budget for Satcom in many ways parallels the general budgeting process for buying the airplane originally. In essence, it involves two related but separate sets of numbers. • The first and most obvious consideration involves the price of purchasing and installing the Satcom system. You may know nothing of these costs at the beginning of the search – but you'll quickly become aware.

•

The second (and no-less-important) consideration is the running costs of the services on your shortlist, and how they're priced.

Similar to the aircraft itself, purchasing the system is just the start. Once delivered and operating you'll need to understand the ongoing, recurrent cost of the services. Of course, it pays to be aware that flexibility comes into play. Maybe your budget will pay for more system than you considered. Either way, be ready to re-examine your budget as new data come in.

Tip #2: What Are The Geographic Limitations?

While many customers automatically equate ‘satellite’ with ‘global’, not all Satcom systems operate equally in all parts of the globe. Some systems may not be licensed to function legally with satellites in various parts of the world. Further, not all satellite-based systems provide coverage for the entire globe. These satellites generally are parked in geostationary orbit to cover a specific swath of the planet – which will not be a problem for operators who fly exclusively within the boundaries of such services, but is an obvious shortcoming for international operators once they fly beyond the coverage limits of their satellite-service providers. Other systems employ multiple satellites circling the planet in overlapping orbits with the pattern designed to reach virtually every inch of the planet's surface; they may or may not offer services outside their home markets. But you may have options when dealing with such global providers.

Tip #3: What Are Your Bandwidth Needs?

You are advised by those we surveyed to be liberal when assessing your bandwidth needs and estimating how much your chosen Satcom system will be utilized. Allow for extra use. Experience shows that users tend to expand their activities after initially underestimating their access to the aircraft's Satcom system’s capabilities. Think of common experience with smartphone data limits. Typically, early smartphone users generally metered their surfing and texting to stay within tight bounds on data use – with hefty penalties for exceeding the published limits. Often, those users

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quickly found themselves inadvertently exceeding their data package limits and facing hefty fees. It wasn’t a lot different with users of early Satcom systems. But much like cellphone service providers who increasingly offer unlimited or flat-rate service packages, Satcom providers have found that raising limitations on bandwidth and data use is profitable, helping them retain customers – and attract new ones. Nevertheless, be sure not to underestimate your needs before signing up for a package.

Tip #4: What Services Do You Need?

Satcom can encompass a wide range of telecommunications services between aircraft, the satellites, and people and facilities on the ground. Over the past two decades we've seen rapid evolution in aircraft connectivity services. Today Satcom services encompass everything we're doing on the ground. While today's Satcom providers increasingly offer the full spectrum of capabilities, weigh your preferences to maximize the chance of finding a system or package tailored to meet the needs you’ve defined. Ability for passengers to use their personal phones, tablets or notebook computers connecting through the Satcom system is increasingly considered a standard feature by Business Aviation passengers. Finally, a robust Satcom system installed in the aircraft may also offer a gateway to a host of in-flight entertainment options. And IFE capabilities can include a variety of cabin options, from large-screen television to moving-map route maps and weather displays, to exterior cameras and online downloaded movies or on-board CD players.

Tip #5: How Important is Security to You?

“...you'll want to be sure the system you pick uses the most effective security available.”

What can be hacked on the ground can be hacked in-flight, say the experts. Even powering down the entire aircraft isn't iron-clad protection against the on-board system suffering an unauthorized intrusion into the aircraft's Satcom hardware. From software to protect against worms, malware and more, to hardware and software firewalls and other digital forms of protection, you'll want to be sure the system you pick uses the most effective security available. Then you'll want to obtain assurance that those protections are themselves protected and upgraded often enough to thwart would-be aggressors. Robust password protections and multiple layers of protection are not reliable unless they are kept up to date. And if the airborne office allows connections to the ground-based computers, you're working to protect both potential vulnerabilities.

Bonus Tip: Shopping with your Aircraft in Mind

With each passing week more options seem to win approval for installations in more aircraft. Business Aviation is approaching the point where even larger piston aircraft can enjoy the benefits of in-flight connectivity. But we're still at a point where not all options are available for all airframes. So when the time comes to shop, start by seeking the options available for the aircraft you're flying (or plan to fly) by the time you expect to write the check for your Satcom capabilities. T

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Satellite Services Unplugged The ‘Who’, ‘What’ and ‘Why’ of Business Aircraft Cabin Connectivity Satellite services keep BizAv users connected, but who provides what? Dave Hidgon explores this fascinating technology in practical and understandable terms. nce upon a time, an aircraft’s cabin isolated passengers from direct access to people on the ground, whether desired or not. Then technology introduced an in-flight telephone and communications progressed to a point where virtually every technology available in an office suite can also be found aloft—producing the office in the sky Today's all-access in-flight connectivity solutions exist through the capabilities of several constellations of earth-orbiting satellites (and in some cases with use of ground-based cell towers). Satellite owners and operators sell the capabilities

and capacities of those satellites to a wide range of service providers who, in turn, sell their hardware and connectivity services to aircraft owners and operators, introducing a new age of global connectivity.

A Potted History of Connectivity

Since the 1980s satellite-based systems have evolved, providing voice and data services on-board business aircraft similar to those enjoyed in the main office. The Iridium satellite constellation brought global phone coverage, albeit at low throughput. These rudimentary satellite networks, burdened with narrow bandwidth and low data speeds,

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inevitably gave way to the advances speeding through ground-based Internet-access systems. Hot on the heels of the fully-functional airborne office came improved In-Flight Entertainment (IFE) systems. Soon corporate fliers found that IFE systems could be structured to provide video conferencing, enhancing the existing functions of the airborne office. Subsequently advances have focused on expanding bandwidth and increasing throughput. As ground networks served up ever-faster connection speeds, savvy in-flight users refused to settle for airborne connections closer to the dial-up speeds akin to the Internet's early years. Beyond making available at altitude the productive trappings of an office-suite, satellite connectivity options today include Automated Flight Information Reporting System (AFIRSTM) and flight tracking to go along with the communications options of voice and data. Coupled with ground-based connectivity tools, people in industrialized nations enjoy the option of constant connectivity - from their home, in the car, the office, the airport, while airborne, and all the way back home again.

Today’s Satellite Network Providers

If you’re shopping for the latest Cabin Connectivity solution today, it’s worth not allowing yourself to become overwhelmed by the technical issues (such as which band and what service you need) initially. Instead, start with hardware options approved for the aircraft you operate and then research the service providers available to that equipment. The chances are that you'll find multiple options to satisfy your individual need for connectivity. Three satellite operators—Inmarsat, Iridium and ViaSat—stand out for their in-flight connectivity products today. With that understood, the vast majority of in-flight connectivity services come through resellers of products from these satellite companies. These connectivity service-providers make their own hardware engineered to work with the specific satellite provider. Bandwidth, throughput and prices vary depending on the company and service package. Over the decades, satellites have been launched servicing various segments of the frequency spectrum, from C to K, to Ka and Ku. Indeed, development continues today, and options exist providing high-speed Internet connectivity, wireless Wi-Fi connectivity within the cabin, VoIP voice services, SMS text messaging and email. Speeds vary according to the satellite and hardware package aboard the aircraft, and connections from a few thousand Kilobits per second (Kbps) to more than 15 Megabits per second (Mbps) provide varying levels of service and capabilities. Following, we offer a brief outline of the main service providers to Business Aviation operators in today’s market…

AirSatOne

AirSatOne (ASO) strives to provide the best customer service in the industry with reliable, competitively-priced Iridium and Inmarsat Satcom services. Who: ASO offers specialized airtime packages for operators of aircraft ranging from a Single-Engine Piston up to VVIP aircraft in the Businessliner category. What: Services range from voice to high-speed internet with email and instant messaging, video conferencing and more for the main cabin. On the flight deck ASO also provides FANS 1/A communications, performance monitoring, live weather updates and powerplant-health monitoring and reporting. ASO's services work through a variety of equipment and satellite-system configurations, and are priced according to the system and usage. More information: https://airsatone.com/

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44 ARINC Direct/Rockwell Collins

It's been almost five years since Rockwell Collins paired with ARINC, combining the trusted networks of ARINC with the industry-leading cabin communications technologies of avionics powerhouse Rockwell Collins. Who: ARINC Direct provides hardware and services for business-turbine aircraft across a broad range of models.

BendixKing

Honeywell division BendixKing is well known for its cockpit avionics. Today the company also offers in-flight connectivity via its Inmarsat-compatible AeroWave 100 system. Who: Light FAR Part 23 aircraft and up (including Piston Twins, Turboprops and Light jets).

What: The merger expanded Rockwell-Collins' full range of cabin connectivity solutions, including Inmarsat’s new JetConneX high speed broadband services. Depending on the package and hardware installed in the aircraft, JetConneX connection speeds can go as high as 15 Mbps, enabling video conferencing and streaming, as well as the more-common needs such as connecting with office networks, sending and receiving email, web surfing and voice connections.

What: Designed, sized and priced for smaller aircraft, the AeroWave 100 works through what the company calls “the world’s smallest footprint Inmarsat LGA” (low-gain antenna), enabling discreet installation even on smaller airframes. An integrated GPS simplifies installation by eliminating the need to interface with an onboard position source, and new lighter components allow more flexibility on AeroWave’s location in the aircraft.

More information: www.arincdirect.com

More information: http://bendixking.com

Arycom

Gogo Business Aviation

South America's leading operator and provider of satellite communications solutions offers complete state-of-the-art solutions to customers in the Americas. Who: Arycom offers systems and services for business turbine, commercial and helicopter aircraft. What: Like most providers, Arycom offers services through multiple satellite systems, including Inmarsat, Iridium and ViaSat Yonder. Connectivity is as global as the satellite orbits, with connectivity speeds varying depending on the service option selected, resulting in speeds from a few hundred Kbps using older systems to 15 Mpbs with Inmarsat's JetConneX. More information: www.arycom.com

Originally known as Aircell, today Gogo Business Aviation is the business aircraft oriented division of Gogo Inflight Internet, which serves commercial, air cargo and private aviation (the roots of Aircell's business). Who: Multiple options for equipment exist, including hardware sufficiently small and lightweight for smaller FAR Part 23 aircraft right up to VVIP, along with multiple service combinations. What: Today, Gogo offers the full spectrum of services through Gogo Biz 4G, Gogo Biz, 2 Ku-band services and such familiar names as JetConneX and SwiftBroadband, and in-flight entertainment via Gogo Vision through Iridium. More information: https://business.gogoair.com

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Ku-band products, SmartSky Networks and others. It also offers voice services and a wealth of operational services to support flight requirements in terms of logs for aircraft and crew, and in-flight entertainment services. More information: www.satcomdirect.com

SmartSky Networks

After its founding in 2009, SmartSky Networks launched its advanced air-to-ground network in 2011 providing the full range of high-speed access using its proprietary beamforming technology and ground-based 4G connections. Who: SmartSky Networks delivers real-time bidirectional connectivity without the latency of satellite-based solutions to the business-turbine aircraft cabin. What: SmartSky Networks' SmartSky 4G and SmartSky Select work through ground-based cell towers to provide up and down connections with equal multi-megabit-per-second speeds, allowing computer browsing, text and voice messaging, video conferencing, movie viewing, and multiple other service options through selected apps.

Honeywell/JetConneX

Honeywell is another provider of Inmarsat SwiftBroadband services for cabin connectivity, in-flight entertainment, and situational awareness via Iridium satellite connections and capabilities gained with the company’s acquisition of Satcom1 in 2015. Who: JetConneX provides hardware and both cockpit and cabin connectivity for mid-sized and larger business jets. What: For connectivity, Honeywell offers its JetConneX service, using Inmarsat's I-5 satellite network to serve up excellent global coverage and network availability (thanks to the network's high-speed capabilities). With speeds up to 15 Mbps, passengers traveling at Flight Levels can video-conference, upload or download large files, stream videos, surf the net – everything they can do on the ground. Honeywell also offers Satcom1 cabin-connectivity plans through GoDirect with services geared to both flight deck and main cabin at competitive speeds and price.

More information: http://smartskynetworks.com/

ViaSat

ViaSat offers a high-quality, high-speed cabin connectivity service over land and water via its global Ku-band network. According to ViaSat, its system is “built for tomorrow’s internet”, ensuring users enjoy a good solution to their communications needs for at least the mid-term future. Who: ViaSat aims its satcoms solution at the business jet market, and supports hundreds of aircraft around the world, using the highest-capacity Ka-band satellites already in operation on commercial airlines. What: Users are able to accomplish all regular office tasks (web browsing, email, etc.), and stream media and tele/videoconferencing, as well as watch HD IPTV and videos, and connect to corporate VPNs. They also enjoy predictable monthly fees. Service is available through all phases of flight including taxi, takeoff and landing, and coverage extends to over 90% of the world’s most popular flight paths.

More information: https://aerospace.honeywell.com

More information: www.viasat.com

Satcom Direct

Prices and Choices

In 2016 at NBAA-BACE the Business Aviation community learned that Satcom Direct, a leading supplier of global in-flight connectivity solutions, was acquiring phone maker TrueNorth in a marriage of complementary capabilities. Who: Satcom Direct offers a broad range of equipment and service packages for the business-turbine aircraft cabin and cockpit. What: Satcom Direct offers Internet services through Inmarsat's SwiftBroadband, Inmarsat JetConneX, ViaSat's

Investing in the hardware, installation, service contracts and accessories to provide a full range of aircraft cabin Office-inthe-Sky/In-Flight Entertainment capabilities begins by finding equipment approved for the airplane in question. From there, the decisions should follow the same path as for selecting any other business service: Budget, Need and Expected Use level. Wherever those decisions lead you, there will be providers that have a solution to fit your requirement, while allowing the flexibility to raise or lower the bar on the service package as needed. T

AvBuyer.com

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What You You Should Should What Know About About Know Avionics Appraisals: Appraisals: Avionics Understanding the True Value of a Retrofit or Upgrade on a Jet Jeremy Cox draws on his experiences as an aircraft auditor to highlight how the devil is most definitely in the detail when it comes to appraising avionics systems… he Equipment List located in the Aircraft Flight Manual (AFM) often is incorrect because it has not been updated to reflect removed and/or retrofitted equipment and system components. Such has been my experience when called upon to audit aircraft for appraisal or resale. It is probable that avionics systems and component changes documented on FAA Form 337s are also found in the AFM to support the Supplements at the back of the manual. Sometimes component changes can be found in superseded

Weight and Balance Reports in the same AFM. My ‘go-to’ and most important source of avionics equipment ‘make and model’ data, however, is the airframe log books. The only reliable way to find everything is to sort ‘page-by-page’ through every log, carefully jotting down when installed equipment is listed in an entry. It is important to work from Back-to-Front (i.e. start by reading the ‘Latest-and-Greatest’ entries and work back from there). If you perform your audit from Front-to-Back you will be constantly scratching through noted equipment that was

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subsequently replaced by a newer system or component. I am a great advocate for Computerized Aircraft Maintenance Programs (CAMP) used to track the status of an aircraft. However, as with anything that requires human data input, the adage “garbage in; garbage out” is key. Therefore, I avoid collating my equipment data from any tracking program reports that are provided to me.

A History of Mandated Upgrades

The avionics system changes and upgrades viewed through the log books usually read as though I was reading a regulatory mandate calendar. It’s usual to see a mid-1980s to mid-1990s aircraft have a Traffic Collision Avoidance System (TCAS) installed as an aftermarket item. As TCAS progressed into today’s Airborne Collision Avoidance System (ACAS-II), I see these same TCAS systems getting upgraded to meet the hybrid surveillance requirements that will become law on 1/1/2020 through ADS-B Out. Next came Satellite Communications Systems as well as Ground-based Airborne Telephone Communications Systems. It also became possible

to receive broadcast television while in-flight. Many of the Satellite-driven systems had immense pricetags for those that wanted to enjoy this new technology at the time. With the new millennium came the requirement for Terrain Awareness Warning Systems (TAWS), which were mandated for 3/29/2001 and required existing systems to be interfaced with a GPS system to ensure position accuracy. All transatlantic-capable aircraft as well as Europe-based aircraft then had to have their Communications Transceivers upgraded to extended frequency ranges, commonly known as ‘8.33 kHz spacing’. Onboard VHF Navigation Receivers also had to receive an internal modification making them immune to non-aviation FM broadcast signals; a modification commonly known as ‘FM Immunity’. As the skies of the world became crammed with more aircraft and the safety risk of keeping the aircraft that travelled the most crowded routes separated, next came the need for increased accuracy of on-board Air Data Systems and Altimeters to comply with the performance requirements of Reduced Vertical Separation Minima (RVSM), which was introduced system-wide in the US on 1/20/2005. Today, the hot avionics change items include Electronic Flight Instrumentation Systems (EFIS), Cathode Ray Tube (CRT) replacements with Liquid Crystal Displays (LCDs), Future Air Navigation System (FANS), ADS-B and In-Flight Internet Connectivity, via a Wi-Fi Router.

“ ...the resulting ‘error in value’ will amount to tens-, if not hundreds-ofthousands of dollars.”

Specific Airplane Avionics Appraisal

Above, we touched upon the fact that often a significant modification or upgrade to avionics equipment is poorly annotated in the aircraft records, and the system status can only be confirmed by either a model number or part number. If you miss any of these variables during your audit, the resulting ‘error in value’ will amount to tens-, if not hundreds-of-thousands of dollars. As an aircraft broker, I always advise clients that they will recover 50-80% of the cost of an avionics upgrade if the outlay makes the aircraft more attractive to buyers and improves its market position, with the intent of making theirs the next aircraft to sell. Yet, as an appraiser, I must make the following statements regarding avionics upgrades: • Avionics systems and individual equipment pieces (especially if they are highly desired and/or considered to be necessary, like Controller Pilot Data Link Communications

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48 •

•

• •

(CPDLC), ADS-B, High-Speed Internet driven Wi-Fi, etc.) could add 100% of their total cost to the appraised value of the aircraft. It is important to understand that, in the case of compliance equipment, this value increase shall be driven down to ‘zero’ as soon as the mandated deadline has been passed; Avionics are no different than any other piece of equipment. They will be depreciated over time, both by accountants and by the values determined naturally by the resale market driven by demand and availability; Aircraft Bluebook provides an avionics value depreciation chart listing the percentage of new values corresponding to equipment age (from 60% of new list price after one year, down to 30% after five); Avionics values quoted by the price/value guides, unless specified, always provide the ‘new – retail, uninstalled’ price for each system or component; New aircraft order/options price lists provide the best insight leading to more accurate base values that can be used in an appraisal; Aftermarket installation quotations are important in establishing base values, but there are always installation compatibility issues

•

specific to each aircraft that are extremely hard to translate against another aircraft being appraised. The whole point of an appraisal is to provide both an accurate and credible value for the authorized recipient of the report; The appraisal process that does not evaluate and assign individual values to systems and components is not reliably accurate; there are very few ‘standard equipment’ aircraft in existence; If an aircraft is parted-out and sold piece-bypiece, the prices realized on ‘serviceable-as-removed’ avionics gear will literally be ‘pennies on the dollar’, worse than any numbers quoted by a depreciation chart, unless there is a strong demand due to a lack of availability in the marketplace.

The bottom-line ‘gotcha’ with avionics appraisal, therefore, is that all provided documentation must be minutely examined to guarantee that the actual equipment installed is what is appraised and valued. Appraising an outdated system that was removed years previously is indeed an example of unprofessional, shoddy appraisal work that is (in my opinion) unforgiveable. T

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What’s the Real Cost of NextGen?

While much has been published on the subject of NextGen compliance, understanding the terminology and the required installation dates and, most of all, the value impact NextGen is likely to have on an aircraft has been foggy, at best, for many owners. Tony Kioussis and Barb Spoor seek to clarify…

extGen is likely to have a profound impact on General Aviation aircraft values and the overall economic life expectancy of many assets.

The ‘What’ of NextGen

While there are a number of new requirements that aircraft owners will need to address, we’ll start by translating three key acronyms and explain the role these systems have been designed to play. • ADS-B Out (Automatic Dependent Surveillance–Broadcast Out): This NextGen technology is a data communication system that allows aircraft to ‘broadcast out’ their altitude, airspeed, location, and to indicate whether they’re climbing, descending and/or

•

turning, utilizing the aircraft’s GPS. The ability to receive such information on board an aircraft (‘broadcast in’) is available, but installing this capability is optional. ADS-B is a core component of the NextGen infrastructure that - over time - will replace radar as the primary method by which ATC will track aircraft and manage controlled airspace. The system is expected to enable more efficient aircraft separation and provide coverage in areas presently not served by radar. PM-CPDLC (Protected Mode – Controller Pilot Data Link Communication): This is an air-ground data link communication that is similar to text messaging. Most aircraft that were manufactured with PM-CPDLC automatically meet the ADS-B mandate. FANS (Future Air Navigation System): This architecture consisting of satellite communication and satellite navigation is designed to enhance the information displayed on radar consoles to create a superior environment for aircraft surveillance and control.

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PM-CPDLC: While rules initially required all aircraft operating above FL285 within European airspace to have PM-CPDLC/Link 2000+ installed by February 5, 2015, the mandate was suspended due to technical issues. New rulemaking designed to resolve these issues was expected by late 2017. Within the US, certain airports are already utilizing this technology as an optional communication method. As airports convert this technology into a requirement – expected to occur in the near future—aircraft not equipped with PM-CPDLC will be unable to access those destinations.

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FANS: Within oceanic regions, FANS 1/A currently permits aircraft to fly within airspace providing reduced separation between FL360-390. FANS 1/A will be expanded to cover airspace from FL290 and above in 2020. Additionally: - FANS 2/A went into effect on February 15, 2015 covering operations within FL360-390 through tracks within the North Atlantic Track System; - FANS 2/B became effective on December 7, 2017 covering operations between FL350-390 throughout the North Atlantic region; and - FANS 2/C requirements will go into effect on January 30, 2020 and cover all Minimum Navigation Performance Specification airspace throughout all ICAO North Atlantic airspace at FL290 and above.

The ‘When’ of NextGen

Having outlined these key components of NextGen, let’s examine exactly when each of these requirements must be installed. As with most regulations, the answer is “it depends”. • ADS-B Out: Broadcast (Out Only) capability must be installed – or must have been installed – on an aircraft by the following dates in order to meet national and international regulatory mandates: - Australia 2014/2016 - Singapore 2014 - Indonesia 2014 - Hong Kong 2014/2015 - EASA Jan 1, 2020 (the regulations were originally scheduled to go into effect in 2015/2018, but were moved to 2020 to accommodate FAA-registered aircraft) - FAA Jan 1, 2020 Many operators are of the opinion the aviation authorities will move the regulation effective date back as we approach 2020. However, the Agencies have been firm about the current due date, citing it has been pushed back twice and will not be moved again.

Can Your Aircraft be Upgraded?

Interestingly, for some owners, the answer to the question whether their aircraft can be upgraded is “not at this time”. However, once a technical solution becomes available for your asset, it may not be economically logical, or functionally manageable, to upgrade your aircraft. While we suspect there will be a type of solution for virtually every aircraft, certain ‘standalone’ solutions may not be appropriate for those operating aircraft within high traffic density airspace. Standalone solutions could significantly impact an operator’s safety management environment as these ‘solutions’ will require the flight crew to enter and maintain information on yet another communication system in what is already a heavy workload atmosphere in crowded terminal environments.

How Soon Should You Seek to Comply?

Let us assume you have identified a solution appropriate for your aircraft and mission requirements. We strongly advise aircraft owners to complete the required work as soon as possible. But why is this necessary? First: While some people may think that costs to secure and install the necessary equipment will decrease as time goes on,

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the opposite will most probably occur. In fact, many speculate that, as we approach each due date, costs may rise exponentially as a result of limited component availability and facilities capable of accomplishing the required modifications. Second: It may take longer than you think to obtain the necessary components and secure an installation slot. One of our clients wishing to upgrade their Bombardier Challenger 604 ordered the required equipment/components and sought to schedule with the installer to perform the work in September 2016. However, the installation was not completed until July 2017 as a result of slot availability. Be aware that there are a finite number of facilities able to install equipment for each make/model aircraft. By one OEM’s estimate, less than 10% of their turbine-powered fleet has been converted to meet ADS-B requirements thus far. With 100 hours required per aircraft, on average, to complete the required work, the OEM has estimated there are unlikely to be sufficient facilities to address aircraft whose owners have not secured a position in the very near future. For owners who wait too long and are unable to comply prior to the due date, additional expenses will arise due to storage fees, calendar-based maintenance, and other fees associated with an aircraft that is grounded until it can meet NextGen regulations – not to mention the cost associated with the asset’s loss of use. By way of encouraging owners to install ADS-B early, the FAA began offering a rebate of $500 to the first 20,000 applicants that qualify. The rebate became available on September 19, 2016, and information is available on the FAA website.

What if You Miss the Compliancy Date?

What will the impact be to aircraft owners and operators that are not NextGen compliant by the due date? In simple terms: •

•

Without ADS-B (Out) installed, an aircraft will be effectively grounded. While the aircraft may, in some cases, be operable within uncontrolled airspace, such flying will, in most cases, need to take place below 2,500 feet AGL, which is not practical for business operators. In addition to the airport access issues noted above, aircraft not equipped with PM-CPDLC will not be able to operate on the North Atlantic Track System or the Pacific Organized Track System, limiting operations to routes sometimes far off the preferred course, leading to increased flight hours and greater fuel burn. Any aircraft that is not FANS 1/A+ compliant will not be able to operate on the North Atlantic Track System between FL350-390 after December 7, 2017, and from FL290 and above effective January 30, 2020.

So What is the Real Value of NextGen?

All of the above brings us to the issue of value for compliant versus non-compliant aircraft. It is our view that: •

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Aircraft currently equipped with ADS-B (Out) and meeting other NextGen requirements carry greater value that will decrease over time, based on a sliding scale, until each mandate’s deadline is met. Commencing January 1, 2020, we believe aircraft

•

equipped with ADS-B (Out) will gain no added value, since such equipment will simply make an aircraft compliant with the regulations. Conversely, following the 2020 deadline: - Any aircraft not equipped with ADS-B (Out) will suffer a value decrease equal to 100% of the average cost to acquire and install the necessary equipment, plus an additional penalty covering the time required to cure the regulatory requirement, plus (potentially) the additional cost of lost revenue/opportunity based on the installation time and the aircraft’s mission-specific loss of utility. - Any aircraft capable of intercontinental flying not equipped with FANS 1/A+ will incur a value decrease equal to 100% of the average cost to acquire and install the necessary equipment, plus an additional penalty covering the time required to cure the regulatory requirement. For aircraft on a charter certificate, the penalty will also include the cost of lost revenue and/or the higher cost to reach international destinations based on sub-optimal routings.

In Summary

There is little doubt many owners will find it challenging to justify the expense of meeting the various mandates based on their aircraft’s present value. In fact, the regulations are likely to accelerate aircraft retirements – an unintended consequence of NextGen some are viewing as a “silver lining” that they hope will favorably affect aircraft values. While an older aircraft may represent an investment holding a firm expiration date and little, if any, current redemption value, it is important not to unintentionally reduce the value of a worthwhile asset by failing to take appropriate and timely action. More information from www.assetinsight.com T

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Countdown to ADS-B (Out) Compliance - Part 1 Over three articles, Ken Elliott addresses Automatic Dependent Surveillance - Broadcast (ADS-B) mode, less than three years before the equipage requirement comes due… e begin this series addressing equipage rates, summarizing the technology, data sources and operational requirements before diving deeper in Part 2 to explore the technical aspects of ADS of interest to operator flight departments. There we will provide insight into future spacebased ADS services. We will conclude the series with a close look at worldwide implementation and operational differences in greater detail.

Equipage Rates

The storm clouds are forming as the ADS-B Out ‘mandate front’ draws near, bringing torrents of ADS-B Out installs. The more bunched together the installs, the greater the turbulence will be. Weather watchers and storm chasers are providing ample notice to all, but a reluctance to heed

warnings of a bumpy ride to compliance may make matters worse. The number of aircraft needing to comply with ADS-B Out becomes murky as you begin counting the Single Engine category, and murkier still when the Light Sport and Experimental crowd are included. The FAA measures equipage statistics against a range of between 100,000 and 160,000 aircraft. This makes sense, because ADS-B Out is not required everywhere, as Table A (right) demonstrates. It is notable that Class D and G Airspace is not mentioned within Table A, so to clarify... Class D Airspace: A defined cylinder of airspace centered on a Class D airport that needs an Air Traffic Control Tower to coordinate airport operations. Unlike Class B and C airports, however, Class D airports don't require a mandatory approach and departure control (though many do have approach/departure). Class D airspace extends upward to 2,500ft AGL. Surrounding airspace is Class E. ADS-B Out is not required in Class E airspace below 2,500ft AGL anywhere and only above 10,000ft MSL otherwise, (except for the

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Doing the ADS-B Math

As of February 1, 2017, between 12.9% and 20.7% of all USbased GA aircraft were equipped for ADS-B Out, with 22,609 installations scheduled or completed by March 1, 2017. GAMA approximates the population of US General Aviation aircraft is greater than 210,000, so the roughly 10% equipage rate is a pretty grim situation, given there are only 34 months until the ADS-B Out US mandate demands compliance by January 1, 2020 (counting from March 1, 2017). Note the GA aircraft population includes rotorcraft and all fixed-wing outside of air carriers, military and government operations. If you assume 20% of the aircraft will elect not to operate where ADS-B Out is required, that would leave 168,000 still to complete, less those already compliant (by equipage and not necessarily fully operational), leaving around 140,000 yet to comply. Repair Station membership of the Aircraft Electronics Association, a worldwide group representing the interests of the Avionics community, is an adequate indication of the number of ‘shops’ capable of performing ADS-B installations, albeit in many cases light GA. US based Repair Station membership of the AEA sits at around 723 shops. So, assuming 140,000 installs over 34 months across 723 avionic shops, there would need to be 5.7 installs a month, on average, for each shop. It’s doable, but only if all the stars are aligned. To keep things in perspective, the spread of aircraft between single-engine and turbine is heavily weighted toward single engine, and many of those will upgrade with novel, low-cost and (critically) shorter downtime solutions.

Types of ADS-B Service

Gulf of Mexico). So a blanket of ADS-B Out ‘free-airspace’ exists everywhere below 2,500ft AGL and outside of Class B or C airspaces. This by implication includes Class D airspace also. Class G Airspace: A blanket of narrow airspace following the contour of the ground and up to either 700 or 1,200ft AGL. Because this airspace also exists below 2,500ft AGL it is also free from the requirement for ADS-B Out.

Unique to the US there are two types of ADS-B Out service, one being based on the Universal Access Transmitter (UAT) and the other 1090ES. UAT operates at 978 MHz frequency and will allow for additional traffic and flight service information being provided to the aircraft. The 1090ES service, as the title suggests, operates at 1090 MHz frequency and uses Extended Squitter (ES). This latter service is mostly utilized by turboprops and business jets that are equipped with the more expensive and elaborate transponders required. Of those, there were 18,828 ADS-B Out equipped aircraft that are using the 1090ES and 5,074 using the UAT service, as of February 1, 2017. It is not possible to correlate the 22,152 turbine GA aircraft to the 1090ES count because a number of piston-powered GA aircraft have the same capability. One measuring stick for understanding the crowding likely to occur in scheduling and subsequent installation, is to show a best-case scenario of turbine aircraft potential upgrade rates based on a start date of 2012, roughly when operators and OEMs began to actively install ADS-B Out. There are 96 months between January 2012 and January 2020. This required, in 2012, a start-up rate of 230 aircraft per month being delivered with ADS-B Out. If one assumes each

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turbine aircraft upgrade takes an average of five work days (or four aircraft per month), compliance requires, in the US alone, 57 avionics facilities working at full-steam to complete all the aircraft in time.

Figure A: Worldwide ADS-B Coverage Map (courtesy of FlightAware) ADS-B

MLAT

Radar

Oceanic

Projected

A Summary of ADS-B Out & ADS-C

ADS-B Out is a surveillance tool for both aircraft and air traffic control, mitigating the need for existing ground radar, while providing virtual ground radar in places such as mountainous terrain where traditional ground radar would never have worked. In fact, aircraft equipped with both ADS-B Out and In have, in essence, an onboard virtual ground radar. ADS-B provides an additional layer of surveillance and situational awareness to the existing Traffic Alert and Collision Avoidance System (TCAS) as well as Enhanced Ground Proximity Warning System (EGPWS), both of which complete the toolkit to see and avoid. ADS-B enhances the existing transponders by adding further data for broadcasting precise aircraft position. The precision of the aircraft’s position is critical for beneficial performance of ADS-B, hence why the original GPS receivers often require an update. In simplistic terms, you may see overall surveillance/positional awareness as a four-legged stool; TCAS, EGPWS, ADS-B and the existing aircraft weather radar. Now you have surveillance protection from other aircraft, obstacles, terrain and weather. For aircraft, the protection extends to both pre-emptive tracking and the avoidance of collision with other traffic. Critically, as with TCAS, all aircraft are monitoring each other, somewhat in the manner of air traffic control (ATC). While ATC will have its own area of surveillance, each aircraft has a specific localized display of other aircraft activity within its vicinity, providing the operator elects to include the ‘ADS-B In’ feature as part of the upgrade. ADS-B Out is a continental based technology, requiring all aircraft to be within range of the prescribed ground stations (see Figure A, above). For remote areas and ocean regions, the coverage is not via broadcast (i.e., not via ADSB). Instead the surveillance is contracted through the operator’s satellite service provider, assuming the operator is equipped with some form of compatible satellite communications system. This alternate surveillance service is contracted between the operator and ATC monitoring centers. Because it is contracted, the term for this automatic dependent surveillance is ADS-C (Contract). The contract permits the handshake to approve the transfer of the necessary data. It is common to see the ADS-C term alongside FANS (Future Air Navigation System). This is because FANS, an architecture incorporating Controller Pilot Data Link Communication (CPDLC) also uses satellites, is enabled by your satellite service provider, and communicates with ATC. For those operators that elect to connect UAT to their aircraft, there is the advantage of additional FAA-provided data in the form of

weather, NOTAMS, traffic and more. This is not to be confused with ADS-B In, a separate non-mandated capability where each aircraft operator may view the nearby surveillance activity on their cockpit displays (termed CDTI, but may be integrated into existing displays), or on an approved iPad or similar device. It is with ADS-B In that ATC monitoring is somewhat replicated on board each equipped aircraft. Noticeably, pilot action is minimal at best with ADS-B or -C. As with many functions available on aircraft today, there is a greater reliance on automation. This process allows the pilot flying to focus on the core task of flight management. Of course, automation needs to be limited until such a time as its integration into the flight regime is natural and inevitable. As an indication of the complexity for an ADS-B upgrade on larger aircraft, Table B (below) lists the possible equipment required. These items may need to be added, upgraded or amended via software, to provide ADS-B capability. Depending upon your regional location throughout the

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United States: The FAA’s Equip ADS-B website is very useful to flight departments. The website www.faa.gov/nextgen/equipadsb is a central place for finding approved equipment monitoring ADS-B performance. It also covers capability and all aspects of installation. The FAA has another site for ADS-B, www.faa.gov/nextgen/programs/adsb/, which offers a more formal approach to the overall requirement. The above ‘equipadsb’ site was a response to the primary concern of motivating operators to accomplish the upgrade. For example, the site includes the FAA Rebate Program for fixed-wing, single-engine, piston-powered GA. This program is running for one year from September 19, 2016 or until all 20,000 rebates have been claimed. Further Information: • www.faa.gov/nextgen/equipadsb • www.faa.gov/nextgen/programs/adsb/

world, the requirements for ADS-B Out and resources available for guidance will vary. The major regions are those covered by the International Civil Aviation Organization (ICAO), as the governing body for aviation standards and operations across the world, North America and Europe, and (operating somewhat autonomously and in the case of ADS-B specifically) Australia, which was ahead of the pack in embracing this technology. ICAO has a working group that has held 12 meetings, as of end of 2016, covering ADS-B and many related sub-topics spanning technical issues involving individual nation or regional implementation. In 2015 ICAO issued a significant paper (ADS-B SITF/14 – IP/11) outlining differences, primarily between the US and everywhere else, but providing an informative chart depicting what is required (versus what is optional across the four main geographical ADS-B regions: Australia, US, Europe and everywhere else). Asia-Pacific: ICAO has very detailed material for mandates in its Asia-Pacific (APAC) region, relating to implementation, and altitude and phase-in date requirements. Furthermore, ICAO has issued a helpful ADS-B guide. The APAC-released document, Appendix H to APANPIRG/26 – WP/9, covers the topic of ADS-B Out within the regional context. Europe: SKYbrary, issued by ‘European Organisation for the Safety of Air Navigation’ EUROCONTROL, is a good general source of material for all things Europe. This body provides the equipage and operational requirements, as well as the aircraft ADS-B monitoring service. On the other hand, the ‘European Organisation for Civil Aviation Equipment’ (EUROCAE) provides the equipage standards themselves and publishes those via a series of documents under the ED designation. Further Information: • www.skybrary.aero • www.eurocontrol.int • www.eurocae.net

Australia: Of note is the early adoption of ADS-B by Australia. Their Civil Aviation Safety Authority (CASA) provides a very useful and easy to read guidance booklet on ADS-B. This is particularly helpful for those intending to perform flight operations in that region. Further Information: • www.casa.gov.au/sites/g/files/net351/f/_assets/ main/pilots/download/ads-b.pdf

DO 260B/ADS-B Out Version 2

Worth special mention is the term ‘ADS-B Out Version 2’. This refers specifically to the latest format of ADS-B adopted by the US; if not yet universally required, it may soon be. For sure, the primary flight areas and routes worldwide will require it. In some ways, the ADS-B Out Version 2 criteria is more an issue for newer aircraft manufactured and delivered within the last several years, but not for those most recently delivered. Aircraft manufacturers like to deliver current version products and will often deliver provisions for, or versions of, newly required or desired equipment. Unfortunately, while well-intended, they sometimes inadvertently deliver aircraft with equipment that is quickly supplanted by a later version. This is the case with ADS-B. The technology is now in its 3rd iterations, Version 0, 1 then 2. Version 2 is based on the RTCA special committee recommendations documented under DO 260B. For those seeking to wait, based on a further version forthcoming, it is advisable not to abide, as Version 2 is it. When ADS-B In is fully defined as a standard and then as a requirement, you can expect to see some fine tuning, but only after the current mandate has expired.

Operational Requirement

Table C (right) outlines upcoming ADS-B operational requirements. (Also, refer to ICAO’s APAC material for detailed implementation in the Asia-Pacific Region.) From a global perspective, outside of North America and Europe, ADS-B implementation-related work is also being undertaken within all other continents, including: • Africa (Congo, Ethiopia, Guinea, Sierra Leone, Liberia, Namibia, South Africa); • South & Central America (Brazil, Peru, Trinidad and Tobago);

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Asia (Afghanistan, China, Hong Kong, Fiji, India, Indonesia, Japan, Kuwait, Kyrgyzstan, Malaysia, Philippines, Qatar, Saudi Arabia, Singapore, Taiwan, Tajikistan, Thailand, UAE, Vietnam); Oceania (New Zealand).

Advantages of ADS Services

Aside from the obvious operational advantages for each aircraft, ADS-B or C serves a plethora of other purposes. Below, (courtesy of EU’s SKYbrary) most of the advantages are listed. •

• • • •

Full “Network-wide” Surveillance coverage: o Surveillance “everywhere” (i.e. no gaps from gate-to-gate); o Air-to-air Surveillance possible (i.e. traffic situational awareness picture available on board); o The aircraft is an integral part of the Network; o Surveillance data provided directly from on-board systems. High performance Improved safety Increased capacity Cost-efficiency, including: o Reduced cost of the Surveillance infrastructure (ADS-B is less expensive than radar) o More efficient flight profiles (in areas where previously surveillance was not cost-effective) o Fuel savings etc. Environmental sustainability (CO2 reduction) Reduced Radio Frequency pollution (leading to an increased viability of the 1090 MHz datalink) Global Interoperability Foundation for future ATC applications (spacing, separation, self-separation).

When you add in the remote and oceanic space-based coverage, the advantages of ADS-B expand further, particularly in its ability to provide worldwide, real-time, aircraft tracking.

In Summary

Despite the widespread availability of ADS-B (and -C) information, operators and those who advise them, are often uncertain of the requirements. For example, ADS-B Out Version 2 is a US requirement and operators who want to continue using earlier versions of ADS-B Out in other regions may do so. However, this arrangement would preclude operating in the US. If you are going to use ADS-B within the US, even prior to the 2020 deadline, you must operate with ADS-B Out Version 2. There are many aspects to consider when operating, transacting or maintaining an aircraft today. ADS-B Out is just one of them, and yet it has so many nuances, particularly for those who operate internationally. These articles are designed to assist operators in an overall understanding and sourcing of further guidance to assist ADS-B Out implementation. Next time, we will focus on technical aspects to assist flight departments and those that support them, in understanding the deeper layers of ADS-B - especially where there is applicability to overall operations. T

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Countdown to ADS-B (Out) Compliance (Part (Part 22 of of 3) 3)

Continuing his his series, series, Ken Ken Elliott Elliott addresses addresses Automatic Automatic Dependent Surveillance, Surveillance, Broadcast Broadcast mode, mode, less less than than three three years before before the the equipage equipage requirement requirement comes comes due. due.

reviously, we addressed equipage rates, summarized the technology, data sources and operational requirements of ADS-B (Out) compliance. Here, we’ll explore the technical aspects of ADS-B of possible interest to flight departments. We’ll then conclude our series with a closer look at the worldwide implementation and operational differences of ADS-B.

Transponder Evolution

Flight history can be a useful yardstick, recording the incremental steps of aviation and with respect to this article, the evolution to ADS-B. With dates aside, the rationale for ADS-B began with Primary Surveillance Radar (PSR), portraying each aircraft as a single, unidentified dot on a controller’s screen. On-board aircraft transponders responding to interrogations then added the ability to ‘see’ specific aircraft by providing a matched response to an ATC-assigned four digit Mode A code, entered by the pilot. To confirm that a specific radar return on their display was the actual aircraft being tracked, the controller also requested the

pilot push-select an ID button on the transponder cockpit control (known as Squawk ID). This action created an eyebrow feature above the radar return, turning it into an identified target. By then adding Mode C (Mode B was not used), the aircraft’s altitude also displayed in 100ft increments, alongside the identified radar return. Transponders, and what they provided, became known as Secondary Surveillance Radar (SSR). Evolving further, to meet Europe’s condensed airspace requirements, transponders were adapted to provide data-based information, such as FLT ID. Being an early form of Mode S, it combined the existing Modes A & C with additional identification data. Pilots entered their specific Flight ID code into the transponder control unit or flight management system. Each step in the evolution of surveillance provided greater position accuracy. ADS-B is the logical progression in the quest for identifying a specific aircraft in an exact location. Flight ID has since expanded into Elementary Surveillance (ELS), using a personalized 24 bit ICAO address, based on its registration, and then

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For the US, Specifically…

Aside from 1090ES transponders, Universal Access Transmitter (UAT) versions may also be deployed for ADS-B Out, operating at a lower 978 MHz frequency. This version is popular with General Aviation light aircraft, especially if they do not need to fly in Class A airspace or internationally, where 1090ES is always required. Essentially, UAT services are only provided below 18,000 feet and only available in the US. Having 978 UAT also allows ‘ADS-B In FIS-B’, a no cost traffic and flight information service. This FIS-B service is provided in addition to TIS-B, available to all with ADS-B In. Traffic Information Services – Broadcast (TIS-B): a transitional technology that provides aircraft, equipped with ADS-B Out and utilizing ADS-B In capability, with client-based surveillance information. This relates to aircraft that are not ADS-B equipped and over the next three years should be less of a need. To qualify as a TIS-B target, an aircraft must be equipped with a transponder and be within radar coverage.

strapped specifically into each aircraft. If an aircraft changes its registration, a new Mode S address must be added as a maintenance action item. ELS also provides the aircraft’s altitude information in 25ft increments. ELS has further evolved into Enhanced Surveillance (EHS), by adding more data elements to the transponder transmission, using Downlink Aircraft Parameters (DAP) services. These data elements consist of: Magnetic heading Indicated airspeed or Mach number Vertical rate Roll rate Track angle rate True track angle Ground speed Selected altitude. Integration with existing AHRS and Air Data systems is required for some of these data elements while for older aircraft, additional wiring may be required. Also, if aircraft are TCAS II equipped they will have full Mode S capability. For ADS-B Out using transponders operating at 1090 MHz, the EHS version becomes Extended Squitter, or 1090ES.

Flight Information Services – Broadcast (FIS-B): provides meteorological and aeronautical data to the cockpit. This service is not client-based and is always broadcast on the 978 MHz UAT frequency. FIS-B is not available on the 1090 MHz frequency (1090ES). Owners and operators of most jet and turboprop aircraft must determine if they have 1090ES version transponders that are integrated to other aircraft systems for the additional ADSB data required. It is further essential to make sure that Mode S strapping is current for the ICAO address, specifically assigned to your aircraft registration. Another available client-based service is Automatic Dependent Surveillance - Rebroadcast (ADS-R), which relays ADS-B information transmitted by an aircraft broadcasting on one link (for example UAT) to other aircraft equipped with ADSB In operating on a different link (for example 1090ES), and vice-versa. Ground stations convert and relay the respective frequency data matching the aircraft receiving frequency. Aircraft utilizing ADS-R will have a ‘hockey puck’ shaped area created around them, for sharing the ADS-B information with other aircraft within the same area but not on the same datalink (frequency).

Aircraft Position Information

ADS-B not only relies on the communication provided via the Transponders but also on the aircraft’s position, available from the onboard Global Positioning Systems (GPS). The existing

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62 GPS sends a highly accurate position to the transponders that, in turn, broadcast it as part of the extended squitter. GPS receivers and antennas are found in different configurations, with some manufacturers embedding GPS sensors within Flight Management Systems (such as Universal Avionics) and others electing to provide stand-alone modules or cards (such as Honeywell). When updating or adding the GPS to the latest version required for ADS-B, it is possible to go down two paths. One is the update of the existing GPS, via either hardware or software (or both), and the other is to add a third dedicated Flight Management System or GPS sensor that will provide the necessary qualified GPS signal. Sometimes aftermarket solutions are provided. These may be an alternate to the aircraft OEM solution, or available because the OEM has not yet provided a solution. The older the aircraft type, the more likely there is not yet a factory solution available - although, in the case of ADS-B Out, OEMs have made impressive strides to serve older aircraft with solutions. The GPS position source does not need to be the same source as that used for navigation. Because of this, an independent (or third source) may instead be embedded in a dedicated ADS-B system. Some manufacturers are producing single box solutions, housing a 1090ES or UAT transponder and a compatible GPS sensor. If the GPS antenna needs to be changed, or a third one added, its location may incur additional cost impact. GPS antennas are located on top of the aircraft fuselage, requiring access to equipment inside the aircraft’s pressured cabin. This installation can range from minor overhead access panel removal to the complete take-down of a one-piece headliner. Of course, the same panel or headliner will need to be reinstalled, once the antenna has been tested for normal operation and any skin penetration pressure sealed. Adding a third GPS solely to satisfy an ADS-B Out requirement may be fully justified in some situations. However, it may not be best served for most operators to go down this route. There are two concerns with it: 1. Aircraft resale where the buyer, especially if located internationally, may be wary of a solution that might not be fully supported by the regional OEM support facility. 2. It is possible for systems to lose functionality when, down the road, future upgrades are applied to primary avionics

systems. As an example; when a third party aftermarket solution is integrated into the existing avionics bus, the installation relies on the formatting associated with the extant data on the bus remaining the same. If the primary avionics vendor then upgrades the existing systems, possibly altering the format of the data on the main bus, it may render the interface to the third party system inoperable. This unforeseen scenario could be costly and timely to resolve. The qualification of GPS sensors for ADS-B Out is based on the requirements of a Technical Standard Order (TSO), and there are three of them. Table A (above) shows for example the different likelihood of signal availability between them.

ADS-B Out Versions

One characteristic of ADS-B Out that may be confusing to operators while ensuring the compliance of their specific installation is whether the system they have is ADS-B Out Version 0, 1 or 2. (Version 0, 1 and 2 equates to RTCA DO 260, 260(A) and DO 260(B) respectively.) To make matters more difficult, there are regional variations in their requirement. For example, the US, Europe and China mandate Version 2 equipage, so even though some other countries/regions have ADS-B requirements today, they do not require Version 2. Most, however, will require Version 1. If an aircraft is Version 2-equipped it will still operate satisfactorily in areas requiring a lower version number. These ADS-B versions generally indicate different accuracy parameters and designations of data provided. Good advice for those equipping is to cut no corners and make sure you are Version 2 equipped, especially if you operate across oceans or borders and most certainly if operating where Version 2 is required.

ADS-B Monitoring

Not all aircraft noted as equipped are considered to have good installs. This is because when each aircraft is field monitored, the data provided may not be accurate or fully compliant. The FAA, via their ADS-B website, allows the flying public to complete a ‘Public ADS-B Performance Report’ (PAPR), submit it electronically, and within 30 minutes receive a summary of the ADS-B Out performance monitored from a previous flight. These are considered verification tests for operators. Of

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Avionics

64 course, the data of the aircraft, equipment and flight must match the FAA database. It is also recommended to only request a report on flights known to have flown in airspace that has good ADS-B coverage. There is a coverage map provided on the PAPR site. For a PAPR request, you will need to know aircraft equipment information regarding type of transmit datalink (UAT, 1090ES, or both), along with make and model of the transponders and GPS sensors. For the installing agency, the FAA provides an Operational Flight Evaluation (OFE) service. Each flight is conducted to guidelines under FAR 91.407 (b), and the installer then requests a report from an FAA AFS website. The report results must match the FAR 91.227 (or 225) requirement, a very important rule covering ADS-B Out performance. For itself, and to feed data into equipage rates, the FAA also conducts ADS-B Performance Monitoring (APM), an ongoing procedure for operational ADS-B systems. Considered as trend monitoring, data are collected from the last 10-flights per aircraft. Unusual findings are notified to both operators and installing companies held on record. The FAA claims, however, to work with customers in resolving their discrepancies. Equipment found to be noncompliant is termed Non-Performing Equipment (NPE) by the FAA. Aside from operator manual entry errors, some of the ADS-B, installation related, non-compliance issues are covered in Table B (above).

Approval Basis for ADS-B Installations

In March of 2016 the FAA issued a Policy Memorandum titled ‘Installation Approval for ADS-B Out Systems’, which outlined very clearly the different means to compliance of ADS-B Out systems in an aircraft. Interestingly for business aircraft customers, the path for certification is easier if systems have already been approved elsewhere (including the grouping of components within a total system). For example, different GPS sensors combined with different Transponders. Applicants for approvals need to ensure the different ADSB Technical Standard Orders (TSOs) have been met by manufacturers, by verifying the equipment. Deviations for installations approved under Amended Type Certificates (TCs) or Supplemental Type Certificates (STCs) are permitted, as well as the lesser hurdle of utilizing Field Approvals. Because many STCs have been completed under the basis

of an Approved Model List, owners and installers can check for their aircraft type against a list of different aircraft models, all approved under the umbrella of one STC number. The FAA has been very understanding in qualifying the same groupings of equipment into multiple different aircraft models, lessening the burden of certifications for many installing agencies.

ADS-B In

Aircraft that include the addition of a Cockpit Display of Traffic Information (CDTI) will enjoy the features of ADS-B In, turning the cockpit environment into a mini version of air traffic control, enabling crews to view similar traffic positioning and intention as controllers. Specifically, ADS-B In traffic data include aircraft identification, position, altitude, velocity, and other information. The actual targets displayed are predicated upon the limits of TIS-B and ADS-R, as well as broadcasts directly received from other aircraft. ADS-B In data can be surface or airborne traffic. TSO C159b calls out for four ADS-B In equipment classifications, including: •

• • •

Class A: Cockpit display of surface only traffic information. Intended to support the display of ADS-B traffic while own-ship is on the surface and moving slower than 80 knots. Class B: Cockpit display of ADS-B traffic when airborne as well as on the ground. Class C: Airborne surveillance and separation assurance processing (ASSAP). Processes ADS-B messages to generate traffic data for a CDTI. Class D: ADS-B Traffic Advisory System (ATAS) Annunciator Panel with aural application only.

The actual ADS-B In applications are: • Enhanced Visual Application • Basic Surface (SURF) including runways • Basic Surface (SURF) including runways and taxi-ways • Visual Separation on Approach (VSA) • Basic Airborne (AIRB) • In Trail Procedures (ITB) • ADS-B Traffic Advisory System (ATAS) combining TCAS (TAS) tracks, ADS-B In, TIS-B and ADS-R as a single display on the CDTI • CDTI Assisted Visual Separation (CAVS).

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ADS-C

ADS-C (Contract) temporarily fills the void where there is no ADS-B ground station coverage. This includes Oceanic regions and remote continental areas. For meeting Oceanic Separation standards, the world’s Satcom providers enable contracts between individual aircraft and en route air traffic control centers. For aircraft that are FANS-equipped, or planning on it, ADS-C is part of the service offered. Given the Performance Based Navigation requirements of FANS compliant tracks, ADS-C functionality is certainly integral to it. In essence, FANS (including ADS-C), ‘communicates’ critical data via Satcom, including aircraft position, track, trend and its intention to en route ATC.

Space-Based ADS-B

The temporary use of ADS-C should transition into Space-Based ADS-B, where satellites will perform the function of ground stations, allowing both air traffic control and aircraft to enjoy the same benefits of ADS-B over oceans and remote continental regions. The use of Space-Based ADS-B is currently being evaluated and will be addressed in greater detail in our next article. While ADS-C communicates data via the aircraft’s Satcom system, Spaced-Based ADS-B will broadcast data in the same way it does over populated areas, but utilizing satellites as part of the infrastructure.

Summary

Somewhat surprisingly, both ADS-B Out and In have many layers involved in implementation and integration. Sorting through the options, in selecting both the type and extent of your ADS-B solution, is not an easy task and is best supported by a trusted service center. The more one scratches the surface of ADS-B technically, the more information is revealed to share. This article has attempted to focus on the more relevant and interesting aspects of the subject. With less than three years to go until the ADS-B equipage deadline, pilot- and technician-friendly resources are now prolific. Many aircraft and equipment OEMs have informative and dedicated web pages for their customers. Equally MROs and Avionics Shops are providing useful links to all sorts of solution-based ADS-B information. The FAA, NBAA, AOPA and AEA have outshone themselves in ADS-B communications. With all the information available, owners and operators should be aware of ADS-B requirements. They should also understand the options and realize they have until December 31, 2019 to comply. Irrespective of an anticipated status of aircraft ownership and ignoring false rumors of implementation delay, there is every reason to upgrade in a timely manner. To place that in graphical terms, if two identical aircraft are parked side by side on the ramp, one with ADS-B and the other without, it would not be difficult to figure out which aircraft maintains the selling edge. T

“Sorting through the options, in selecting both the type and extent of your ADS-B solution, is not an easy task and is best supported by a trusted service center.”

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Avionics

Countdown to ADS-B (Out) Compliance (Part 3 of 3)

Over a set of three articles, Ken Elliott addresses Automatic Dependent Surveillance, Broadcast

mode, less than three years before the equipage requirement comes due.

e started this series addressing equipage rates, summarizing the technology, data sources and operational requirements, before exploring the technical aspects of ADS-B that are interesting to flight departments. This final article in the series takes a closer look at the worldwide implementation and operational differences of ADS-B, beginning with a definition of the Automatic Dependent Surveillance variants you might come across…

•

ADS-B Out 1090 MHz data link (Extended Squitter (ES)): The most frequent version of broadcast data and TIS-B services, typical for turboprop and turbine aircraft. ADS-B Out 978 MHz data link (UAT): The most frequent version of broadcast data and FIS-B services, typical for light General Aviation aircraft.

•

ADS-B Out dual 978 MHz and 1090 MHZ data link: A popular mix of both ADS-B Out data link variants. • ADS-B In: An ability to monitor other aircraft using your onboard ADS-B equipment and receive no cost TIS-B/FIS-B air traffic information as an optional data service. • ADS-C: A satellite-based contracted service for areas outside of regular ADS-B Out coverage. • ADS-R: A ground based rebroadcast service for aircraft using ADS-B In to monitor aircraft using the ADS-B Out data link variant (i.e., 978 MHz or 1090 MHz) that they are not using. • ADS-B NRA & RAD: A EUROCONTROL designation separating ADS-B coverage in non-radar covered (NRA) and radar covered (RAD) airspace. • ADS-B APT: A EUROCONTROL designation separating ADS-B airport surface coverage. • ADS Space-Based: A future service, currently under evaluation and test, for worldwide surveillance and tracking. The mandated variants of ADS-B are the Out variants. Depending upon your operational requirements and class-of-airspace needs, either or

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Gulf of Mexico Expansion: This air traffic service addresses specific Gulf of Mexico water and coastal surveillance coverage over areas that previously were not possible using radar. This service is of benefit to oil platform helicopter operators and others that may be flying within the covered airspace where traffic is heavy. Aircraft flying at high altitude over the Gulf can be separated by only 5nm instead of the existing 100. Also, aircraft no longer need to be re-routed over land during weather diversions, thereby saving significant operating costs in both fuel and time. High altitude (above FL280) ADS-B coverage is anticipated over the entire Gulf during 2017. FAA and SENEAM (The Mexican air navigation service provider) are working as partners to install ADS-B ground stations on Mexican territory, thereby completing the coverage. Airport Surface Surveillance Capability (ASSC): Deployment of Airport Surface Detection Equipment (ASDE-X), currently installed at around 35 commercial airports, enables real-time monitoring of surface movement during most weather conditions. ASDE-X coverage includes ground vehicle movements, taxi, departure and arrival traffic out to a few miles from the airport.

both 978 MHz and 1090 MHZ variant may be implemented to comply with the 2020 rule. By default, ADS-C will be required by specific operators complying with Controller Pilot Data Link Communications (CPDLC) - Future Air Navigation System (FANS) requirements for oceanic and remote flight track operations. Critically, anyone needing to operate an aircraft in ADS-B monitored airspace outside of the United States will be required to use the ADS-B Out 1090 MHz data link variant (this is predicated on the use of a Mode S transponder). Apart from an eight-station chain of ADS-B ground stations serving specific General Aviation operators over a 1,200nm stretch of Central China, only the US utilizes ADS-B Out 978 MHz data link services and only in limited classes of airspace below 18,000ft. For most corporate operators, it would be wise to ensure the ADS-B Out 1090 MHz data link variant is installed.

Air Traffic Control ADS-B

Largely unrealized by the flying community is the direct use of ADS-B by air traffic control (ATC). The ATC version of ADS-B equates to those airborne operators that have the capability to utilize ADS-B In TIS-B features, such as seeing and tracking other aircraft, including surface movement. US based air traffic services using ADS-B include:

Wide Area Multilateration (WAM): This system is a groundbased surveillance service in areas where radar coverage is inadequate. WAM is located throughout Colorado, in Juneau, Alaska and at a dedicated support sensor at Charlotte (CLT). ATC uses WAM to facilitate aircraft separation.

ADS-B for Spacing & Separation

As an additional set of ATC tools, both FAA and EUROCONTROL have initiated the use of ADS-B for aircraft spacing and separation. EUROCONTROL designates this service as Airborne Traffic Situational Awareness (ATSAW), with its sub-services to include: • • • •

ATSAW In-Trail Procedure in oceanic airspace (ATSAW ITP) ATSAW Visual Separation in Approach (ATSAW VSA) ATSAW during Flight Operations (ATSAW AIRB) ATSAW on the Airport Surface (ATSAW SURF)

The term ATSAW is also linked to ADS-B In, as pilots can self-separate using all the resources provided on the ADS-B In displays. The FAA is creating Advanced Surveillance Enhanced Procedural Separation (ASEPS) that will improve oceanic services for both ADS-C and the future Space Based ADS-B. It will allow ground controllers to provide separation and manage oceanic flights. Space-Based ADS-B may be enabled on ATOPs (Advanced Technologies and Oceanic Procedures) in 2020.

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Avionics

Advisory Services En-Route Service Volumes 68

Current as of October 2015

ADS-B Coverage

For the US, aside from the lower 48 states, coverage includes Hawaii, Alaska, Guam, San Juan, and the Gulf of Mexico (see map above). For areas falling under EUROCONTROL there are over 750 ADS-B ground stations located in the following 28 nations: Armenia, Austria, Azerbaijan, Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Georgia, Greece, Iceland, Ireland, Italy, Latvia, Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic, Spain, Sweden, Turkey, UK and Ukraine. Norway, Iceland and Portugal have begun ATC operations utilizing ADS-B. Australia provides air traffic services using ADS-B, and since February 2017 has required its use for all flights operating under IFR. In Canada, ADS-B implementation is benefit-based, providing ADS-B air traffic services over the Hudson Bay, Greenland and specific airspace over the Atlantic Ocean. Canada has yet to publish an ADS-B mandate. ADS-B implementation is underway in Africa, currently throughout seven nations including Congo, Ethiopia, Guinea, Liberia, Namibia, Sierra Leone and South Africa. Likewise, ADSB implementation is underway in Central and South America, namely in four nations; Brazil, Peru, and Trinidad & Tobago. In Brazil, the initial implementation will focus on the helicopter oil & gas operations within the Campos Basin. China has a specific three-phase plan for implementing

ADS-B, as presented to ICAO in December 2015: • Phase 1: CAAC will provide ADS-B Out service in some core airspace and routes, especially in Non-Radar Surveillance routes throughout West China and the South China Sea. Commencing at the end of 2017, coverage would be provided by 310 ground stations; • Phase 2: ADS-B Out will be promoted and evaluated for safety aspects, between 2017 and 2020; • Phase 3: From 2020 to 2025, a comprehensive nationwide ADS-B service will be constructed. Elsewhere within Asia, Oceania and the Middle East, ADS-B coverage is underway in 19 other nations, including Afghanistan, Hong Kong, Fiji, India, Indonesia, Japan, Kuwait, Kyrgyzstan, Malaysia, New Zealand, Philippines, Qatar, Saudi Arabia, Singapore, Taiwan, Tajikistan, Thailand, UAE and Vietnam. It should be noted that many countries plan to maintain existing radar coverage while using ADS-B to fill in the gaps as well as for providing added backup and not fully relying on satellite-based technology.

ADS-B Requirements

European Regulation (EU) No 1208/2014 amends an earlier regulation (1207/2011) outlining requirements for the performance and interoperability of surveillance under the

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Avionics

70 Single European Sky (SES) program. For ADS-B, this requires all aircraft operating under IFR within Europe to be compliant with Mode S Elementary Surveillance. However, for aircraft having a Maximum Take-Off Weight (MTOW) greater than 5,700kg (12,500 pounds) or a maximum cruising True Air Speed (TAS) greater than 250kts, they must be compliant with both the Mode S Enhanced Surveillance and ADS-B Out requirements. Compliance was mandated for January 2015 applicable to new build, and for December 2017 covering retrofit, with special provisions (including exemptions) for State aircraft. Amended rule 128/2014 pushes dates back, to align with US requirements. For Europe, Mode S (enhanced surveillance) transponders (required for ADS-B 1090 MHz data link variant) were to be operational by December 7 2017 and the overall ADS-B Out equipage operational by June 7, 2020, a few months after the FAA requirement. For in-production aircraft the requirement for ADS-B Out already exists, since June of 2016. Interestingly, for ADS-B NRA areas, the transponders must be to DO260B status and DO260A for ADS-B RAD areas (both covered in the previous article). As in the case of US commercial carriers, some partial exemptions will exist within EUROCONTROL airspace, where certain aircraft may be permitted to operate with an incomplete set of ADS-B Out parameters (data) being transmitted from the aircraft. Furthermore, in both the US and under EUROCONTROL, individual air traffic control centers may permit noncompliant aircraft to fly within their jurisdiction on a case-by-case basis, given sufficient notice prior to dispatching the flight. This may apply to aircraft that are not yet operational or that have developed a fault with their Transponders/ADS-B Out equipment. For Australia, the local rule mandates ADS–B Out for upper airspace (≥FL290) from December 2013 and applied to all aircraft operating under IFR rules to be equipped with ADS–B Out by February 2, 2017. Some additional Australian implementation dates and functional areas are:

•

From 2016, within Western Australia airspace, Class A, B, C or E, under IFR and within the arc of a circle that starts 500nm true north from Perth aerodrome and finishes 500nm true east from Perth Airport, aircraft must carry serviceable and compliant ADS–B equipment. From February 2017, any aircraft over 12,500 pounds that is first registered before February 6, 2014 and operating under the IFR must carry serviceable and compliant ADS–B equipment. Those aircraft below 12,500 pounds have until January 1, 2020 to comply. Australia has guidance NFRM 1305AS and CASA 61/14 for the use of ADS–B in foreign registered aircraft engaged in private operations.

In Hong Kong, the use of ADS–B Out is required: • From December 31, 2013 for aircraft flying over Performance-Based Navigation (PBN) routes L642 or M771 between FL290 and FL410; and • After December 31, 2014 for aircraft flying within Hong Kong FIR between FL290 and FL410. In Singapore, the use of ADS-B Out was required from December 12, 2013 within certain areas of the Singapore FIR (≥FL290). Brazil has decided to mandate ADS-B Out from 2022 onwards and only above 31,000 ft. Departamento de Controle do Espaço Aéreo (DECEA) is the responsible authority. China has a specific delayed ADS-B mandate for the Taipei FIR on January 1, 2020 (applicable only to aircraft flying at or above FL290 within the Taipei FIR). Other nations, in general, follow the lead of ICAO’s Global Plan Initiatives and Aviation System Block Upgrade (ASBU). Typically, for initial implementations, ADS-B is required on certain airway segments and at, or above, defined altitudes.

ADS-B Data

The data portion of an ADS-B message construct consists of elements, including:

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• • • • • •

Aircraft Identification; Surface Position; Airborne Position (with Baro Altitude); Airborne Velocities; Airborne Position (with GNSS Height); Reserved for Other Uses.

Each of these is in turn broken out into separate segments of information that are broadcast (as represented in the table, above).

Space-Based ADS-B

With an anticipated update rate of eight seconds, this virtual real-time service will include advanced aircraft tracking capability. Some future safety net capabilities of global space-based ADS-B will be: • Cleared Level Adherence Monitoring (CLAM); • Danger Area Infringement Warning (DAIW); • Minimum Safe Altitude Warning (MSAW); • Predicted Level Mismatch (PLM); • Route Adherence Monitoring (RAM); • Short-Term Conflict Alert (STCA). There is wide interest in space-based ADS-B. For example, Russia recently signed an agreement with Aireon, a US company, that specializes in the technology. Aireon is placing ADS-B receivers on the Iridium NEXT constellation of 66 Low Earth Orbit (LEO) satellites, intended to relay signals from all ADS-B equipped aircraft to controllers worldwide. Upcoming requirements for more frequent interval distress tracking are propelling the need for reliable solutions. Aireon, in conjunction with FlightAware, is just one of the teams working toward this goal.

Approval to operate ADS-B Out

To operate with ADS-B outside of US airspace, a Letter of Authorization (LoA) is required. For those installation approvals that were not based on Supplemental Type Certificates (STCs), such as Field Approvals, it is recommended to seek the advice

of your installing facility regarding the international operational approval of the system before undertaking the upgrade, to ensure there will be no roadblocks later. This should be a consideration for aircraft that are likely to be exported later when it becomes time to sell. For Europe, it appears that for now no specific operational approval outside of the LoA is required. However, things could alter before June 2020. In Canada, there is some complexity surrounding ADS-B operations. Transport Canada has approved ADS–B for 5nm separation standard in non-radar airspace (ADS-B Out NRA). Operators intending to use ADS-B where it is available must have approval from Transport Canada, and they must advise NAV CANADA (a separate entity) that they have Transport Canada approval. Two operating conditions must be satisfied: • The aircraft is to meet the minimum performance required to transmit ADS–B messages so separation standards can be applied; and • The flight crew must be qualified to operate the equipment within the ADS–B airspace.

In Summary…

From an operations perspective, ADS-B Out (and In) is constantly changing in both coverage and its requirement. Its benefits are expanding with the speedy implementation of space-based ADS-B, not least because of the need to track aircraft over remote regions and for other good reasons. There are, however, privacy concerns centered on broadcasted data and the ability for anyone to monitor aircraft movement worldwide. This concern does need to be appropriately addressed, along with equally valid issues of satellite redundancy and interference. Both areas are subjects of focus shared by the Performance Based Navigation (PBN) community. However, ADS-B has an exciting future with all sorts of applications on the drawing board. At a minimum, it will morph into a powerful surveillance tool way beyond its current capability, serving to support several related technologies operating in the aviation arena. T

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Section Contributors

Andre Fodor has managed flight operations for the U.N. and Flight Options as well as being a senior demonstration pilot and instructor for Embraer Aircraft. He is currently the Director of Aviation for Johnsonville Sausage.

Jet Tolbert is President of American Aircraft Sales. Established in 1968, it is a premier brokerage firm which has been a trusted partner since corporations first began utilizing jet aircraft to grow their businesses. With offices in the US, a Latin America sales team and a partner office in Zurich, Switzerland, American Aircraft Sales is an active NBAA, IBAC, EBAA & ABAA member.

David Wyndham is co-owner & president of Conklin & de Decker where his expertise in cost and performance analyses, fleet planning and life cycle costing are invaluable. Heâ&#x20AC;&#x2122;s formerly an instructor pilot with the US Air Force. Contact him via david@conklindd.com

Buying & Selling

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Buying & Selling

New vs. Used?

A Question Worthy of Careful Consideration Aviation Director Andre Fodor reflects on the risks and rewards of exploring all options when selecting your next business aircraft. s a child of immigrants, it was ingrained in me growing up to be financially resourceful. When I told my parents that I’d purchased a brand-new minivan to accommodate my growing family, they were quick to remind me of the loss in value that would be incurred just by driving the car out of the dealership. The low interest rates, discounted pricing, bundled accessories and all inclusive maintenance couldn’t sway them from their stance. Airplanes in those respects are just like cars. They come with similar purchase incentives, and suffer depreciation in similar fashion. For many flight departments, that makes a discussion about whether to buy a new or used aircraft a very pertinent topic.

Purchasing a New Jet

There is nothing like a shiny paint job, stain free carpet, headliners free of scuffs, and that brand new smell in a new aircraft. The maintenance logbooks are thin, and you can set up everything exactly as you want them to be. With that being said, you will also have in your

hands an ‘infant aircraft’, that is approximately two years short of maturity and reliability, prone to youthful tantrums, malfunctions, failures and postmanufacture squawks that will be yours to manage and overcome through warranty, maintenance programs and professional relationships. With the purchase of a brand new aircraft, you should select the latest avionics advancements that can be afforded. The goal here is that the airplane will not require costly upgrades, or become technologically obsolete for several years. If you are selecting a new airplane, it’s important to avoid the common mistake of dismissing the purchase of an advanced avionics system in favor of cost savings. Upgrading later can not only be costlier, but may significantly add to the inconvenience of downtime (and loss of dispatch ability). Note that many later upgrades of this nature require significant interior removal within the aircraft. By getting the upgraded systems when you first buy your new aircraft, price and taxation are diluted through the acquisition cost and there will be no labor costs associated with the installation. On the more general subject of taxation, it is worth considering that many countries promote sales through tax incentives on new aircraft. It’s therefore essential that your legal and finance team be wellversed in the advantages of early depreciation, tax

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friendly locations, self-leases and any other opportunities for money savings. For companies with heavy tax burdens, the purchase of a large asset may offset higher tax brackets. Finally, consider that when buying brand-new, you will want an experienced professional to accompany the aircraft through its manufacture and certification, assuring that you are getting a high quality jet right from the ‘cradle’.

Purchasing a Used Jet

The alternative option is to acquire a used jet. With current global financial conditions, exciting opportunities exist for the acquisition of very nice aircraft at an equally attractive price. Be sure to know your mission requirements thoroughly – not only for now, but for the mediumterm, because you may find it tempting to buy a larger jet than you need because the purchase price is cheap. The operational costs on a larger airplane will certainly be a sticker shock to the unwary! Buying an older aircraft offers interesting opportunities providing the pedigree of the aircraft is nothing but excellent. Beware of the bottom prices: take the time to learn the history - do your research thoroughly. Prices that differ wildly from market averages (particularly to the south of the market average) are very likely to come with history, possible legal issues, poor care or damage history. I once met an operator who had purchased a used jet for a bargain price, only to find that it previously belonged to Libya’s Muammar Gaddafi. The records were sketchy, and upon its first landing in the US, it was impounded due to unpaid bills. An experienced broker would have been able to raise the much

“I once met an operator who had purchased a used jet for a bargain price, only to find that it previously belonged to Libya’s Muammar Gaddafi...”

needed information to prevent such a purchase from being made. Purchasers of used aircraft must be willing to set money aside for upgrades. In one respect, the airplanes don’t depreciate in value as quickly as new airplanes do (there’s a much steeper depreciation curve at the beginning of an aircraft’s life), and the purchase price is lower, which may enable a larger budget towards upgrading the jet at an appropriate time. As always, you should build a solid team of experts that can help you identify a used airplane of excellent pedigree, know all of the right upgrades to keep it viable into the future, and handle the buying and upgrading process without ending up with a costly, heavy inspection (for example) that was not calculated into the acquisition price. Finally, make sure that any residual warranties and engine and/or maintenance contracts are transferable, and check whether there are any ‘buy-in’ fees regarding these attributes. Be sure there is an ample supply of parts available in the market to keep your aircraft flying and productive well into the future.

In Summary

Regardless of where you choose to go with the new or used aircraft discussion, surround yourself with expertise and experience. These resources will prove to be money well spent and will discourage you from bad decisions and the dreaded buyer’s regret. Stay focused on the end-game, which is to secure a fair deal to all involved and an airplane that will provide your flight department with reliable and efficient corporate transportation for years to come. T

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Buying & Selling

Should You Buy a New or Used Aircraft? 76

The Proverbial Question and the Considerations to Help Answer Itâ&#x20AC;Ś Today, there are a large number of great aircraft from which buyers can choose. The differences between new and used aircraft are significant, however, with price being only part of the story. David Wyndham explores how to decide among available options. onsider the Large Cabin jet market. Since the 2008 recession, this segment stayed relatively safe from the significant descent in used aircraft pricesâ&#x20AC;&#x201D;that is, until 2015. In the last two years, declining oil prices and a slowdown in emerging markets saw new aircraft deliveries of Large Cabin jets decline 8.2% from 2014 to 2015,

and 20.6% from 2015 to 2016 totals. Bombardier, Dassault and Gulfstream all reduced the number of expected new jet deliveries in 2017 too. The Vref Index for Late Model Large Jets fell 52% over the past five years. It consists of the used selling prices for late model Bombardier Global 5000, Gulfstream G450, Gulfstream G550, Falcon 900EX, Falcon 7X and Embraer Legacy 650 jets.

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78 Discussions with a few experts in the finance industry indicate that a 10% per year decline in values is a good estimate for at least the next two years. Based upon recent market dynamics, a 10-year old version of these aircraft can be purchased with an average savings of $38m over their list price when new (source, Vref 2017 Volume 2). Within all available model years, AMSTAT indicates reasonably good aircraft availability of these popular business jets, see Table A (above). Before we close this case in favor of purchasing used aircraft, consider all the evidence. Remember to set up a competitive acquisition and evaluate all the variables beyond just price.

Big Issue Considerations

New business jets offer the latest in avionics that meet all current and known future air navigation requirements. You specify the aircraft’s paint colors and style, and configure the interior with the layout, materials and options that you desire. Once the aircraft is delivered and accepted by your aviation department, flight operations can begin immediately. Such is not the case with used aircraft; there may be many considerations that cost both time and money, including the aircraft coming with whatever the current owner has for paint and interior. The avionics, while certainly modern and capable, may not meet all the known future air navigation requirements. Below are some rough budget costs for some items that your used Large Cabin jet may require to satisfy your needs: • • • •

Repaint the Exterior: $200,000-$300,000 Refurbish the Interior: $800,000-$1,000,000 (more for a brand new) Avionics Mandates: $200,000-$1,000,000 in upgrades WiFi, Cabin Systems: $150,000+

New aircraft are delivered ready to operate, with zero maintenance due. All of their engines and components have zero time on them. Almost all unscheduled maintenance for a given period of time is covered by the new aircraft warranty. Used business jets typically fly 300-500 annual hours. Thus used aircraft arrive on your ramp with wear and tear on the

airframe, engine and systems. Most business jets tend to require some major scheduled maintenance every six-12 years. Inspections schedules vary, so budget $500,000 to $2m for airframe maintenance on your used aircraft for the first year. Large Cabin business jet engines may be operational for 7,200 hours or more before needing major maintenance or an overhaul. Within this aircraft category, aircraft engines typically are on a guaranteed hourly maintenance program. If not, overhaul costs can run to $1m+ for each engine. Putting the used aircraft into service won’t require that all the above items be accomplished, but comprehensive aspects of the aircraft selected must be considered. What needs to be done will cost both money and time. At a minimum, paint and interior work are needed every six to eight years. Avionics upgrades are commonly needed by then as well. Minimum time to get this work done varies with the complexity of the required tasks, but budgeting between three and six months is prudent.

The Last Item for Your Consideration

The models used as examples in this article are still in production and are among the finest their manufacturers produce. There are newer designs, however, with bigger cabins, more speed and more capability entering the marketplace. An example is offered in Table B (below). Availability of good, used jet models of recent designs is limited, even in the current buyer’s market. Finding the proper balance between timely availability, optimum equipage, pristine livery and price depends on your company’s mission and use for Business Aviation. T

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YO U R PA R T N E R I N B U S I N E S S J E T S A L E A N D A C Q U I S I T I O N

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Why an On-Site Jet Appraisal Is so Important The Certified Appraisal versus a Desktop Valuation There are real dangers in cutting corners on an aircraft appraisal. Jeremy Cox draws on some of his real-life appraisal experiences to highlight the value of getting the job done properly…

here are multiple reasons why an aircraft owner might need to know what his aircraft is worth on a specific date, including: Making the decision to sell; wishing to put the aircraft up as collateral against a loan; divorce settlement; an estate sale; tax settlement; insurance claim; or charitable donation. Except for the situation of making a ‘sales decision’, all the other events listed require that the selected appraiser provide the owner with a certified appraisal instead of merely a market valuation.

“The weight given an appraisal depends on the completeness of the report, the qualifications of the appraiser, and the appraiser’s demonstrated knowledge of the donated property. An appraisal must give all the facts on which to base an intelligent judgement of the value of the property. “The appraisal will not be given much weight if:

The Essence of a Certified Appraisal

“The appraiser’s opinion is never more valid than the facts on which it is based; without these facts, it is simply a guess. “The opinion of a person claiming to be an expert is not binding on the Internal Revenue Service.”

When an aircraft is being donated, a certified appraisal submitted to the US Internal Revenue Service (IRS) must meet specific requirements for it to be accepted. IRS Publication No. 561 states:

• • •

All the factors that apply are not considered; The opinion is not supported with facts, such as purchase price and comparable sales; or The opinion is not consistent with known facts.

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To prove ‘demonstrated knowledge’ of the aircraft that is the subject of the appraisal, the appraiser must physically see and evaluate the aircraft and all its logbooks, on-site and in person. In the unfortunate instance where the subject aircraft will be written-off by an insurance company due to the total-loss of the aircraft, it is still required that all logbooks are reviewed before an appraisal report can be written. The National Aircraft Appraisers Association (NAAA) asserts that “The walk around examination, and inventory of the aircraft, followed by the thorough study of the logbooks, and records, contribute approximately 85-90% of the data in our written report. The other 10-15% of our work is outside research.” A sales specification that has updated hours, landings and equipment hand scrawled on it, along with a handful of images, does not come close to being a suitable substitute for an on-site inspection. It is impossible to apply a rating to the condition of the paint and interior by only examining an onscreen, or printed image, in-place of seeing the actual aircraft in person.

Why Have an Inspection?

Rarely will a sales specification ever mention the existence of any damage history, or accurately assess current maintenance and inspection status. The only sure way to determine the overall condition of an aircraft, and ultimately its value, is by inspection. The logbooks are a critical part of the determination process. An excellent example of why an on-site inspection and log book audit is so vital to accurately report on an aircraft happened in an audit of a Dassault Falcon 900B I was involved with recently. The Falcon 900B was in the late stages of a work scope at a major MRO, and I was provided with a sales specification that was produced by an aircraft broker who had sold this aircraft a little over a year before the date of my audit. I also downloaded a CAMP Status Report after being granted ‘read-only’ access through my CAMP-Online account. If I had utilized this supplied specification and CAMP Report instead of creating my own, I would have been very wrong on multiple equipment and inspection status issues. For example, Collins TDR-94 Transponders had reportedly been installed, when in reality Honeywell MST-67 Transponders were the actual units onboard (installed over 10 years before).

Furthermore, the ‘C Check’ date reported was later than the actual sign-off and release for return to service (another potentially very costly error). And while doing the audit, I even found two engine logbooks among the archives that did not belong to the subject aircraft…and never did at any time in its history... This was not an isolated incident. Other examples over the years have included: • • • • •

A Learjet ‘wide’ cargo door (reported) versus the narrower executive door (actual); Citation CJ2 ‘3-tube EFIS’ (reported) versus ‘2tube’ (actual); Falcon 20-5 thrust reversers (reported) versus ‘none’ (actual); Gulfstream GV crew-rest compartment (reported) versus ‘none’ (actual); Global Express with a ‘heads-up guidance system’ (reported) versus ‘provisions-only’, i.e. an empty box above the #1 pilots’ head (actual).

I could go on, and on with tales of aircraft that were reported as ‘perfect’, only to find otherwise in the aircraft’s logs. The bottom-line: if the certified appraisal that you paid for and used to satisfy an official requirement was created without an on-site inspection and audit by an appraiser, even with disclaimers, it is questionable and probably unreliable. T

“ The only sure way to determine the overall condition of an aircraft, and ultimately its value, is by inspection.”

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Lost Aircraft Logbooks 82

What’s the Impact on Aircraft Value?

Jeremy Cox, Sr. Certified Aircraft Appraiser, makes the unambiguous case for maintaining aircraft logs in proper order.

he FAA advises all aircraft owners that they are legally required to keep and maintain all of the following records pertaining to an aircraft and its key components (see FAR 91.405/91.417/AC43-9): • • • • • • • • • •

Records of maintenance; Records of alterations; Copies of all FAA Form 337 issued against the aircraft; Records of required or approved inspections; Current inspection status; List of unairworthy discrepancies; Current Airworthiness Directives compliance status; Records of total time-in service; Records of time since overhaul; Status of life-limited parts.

Such records are only required to be retained until the work is repeated, superseded by other work or

for one year (except for altimeter and transponder checks, which are to be retained for two years). Operationally, the FAA also requires that the following documentation be aboard the aircraft at all times: • • • • •

Airworthiness certificate; Registration certificate; Radio station license (international operations only); Operating limitations (AFM, or POH); Weight & balance documents.

Have you ever heard the term ‘Provenance’? It is used extensively by the major auction houses like Sotheby’s and Christies, and its definition according to Merriam-Webster is: 1. Origin, Source; 2. the history of ownership of a valued object, or work of art or literature. Another relevant term is ‘Pedigree’. This is particularly popular amongst horse breeders, but I often hear it used when talking about an aircraft.

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invoices, manuals, and logbooks should be complete, concise, and stored, ready to be included with the aircraft at the time of sale to a new owner.

Again Merriam-Webster defines it as follows: 1. The history of the family members in a person’s, or animal’s past, especially when it is good or impressive; 2. The origin and history of something, especially when it is good or impressive.’ The history of an aircraft is documented in its log books. Probably every reader will agree that an aircraft is a ‘valued object.’ To elevate a specific aircraft to being an example with ‘pedigree,’ its ‘history’ has to be ‘good’ or impressive (preferably both). How can ‘pedigree’ occur in an aircraft? Consider the two following responses to that question…

1. Achieving ‘Good’ History

The aircraft can’t have any damage history. The aircraft must be maintained by following the recommended Factory Maintenance Program, achieved either by an OEM service center or by a well-known and reputable MRO that is a certified repair station. All mandatory and preferably all recommended Service Bulletins must be accomplished, and the interior is fire-blocked. No items should be installed under a field approval, and no insurance claims be made against the aircraft. There should be few, if any, FAA Form 337s issued for the aircraft. All FAA 8130 airworthiness tags, all work order packages,

Pedigree is not quite as conclusive as ‘Good’ History, because the issue is subjective to different people, each of whom brings with them varying points of view. The classic expectation of Pedigree is usually achieved when an aircraft is ‘one owner since new’ and the owner is a Fortune 500 or similarlyrated company. The aircraft will have been operated and maintained exclusively under cfr 14, FAR Part 91 privately (or its equivalent outside of the USA), and lastly its total-time and landings will reflect the standard 400 to 500 hours per annum use. Highertime/cycle aircraft have a perceived diminished pedigree even though they meet all of the other requirements. The aircraft will have at least an ‘8’ rating for both paint and interior. Some people consider that an aircraft that is certified and operated under cfr 14, FAR Part 135 conversely has a higher pedigree than one flown exclusively under FAR Part 91. I can see this point of view, but I do not agree with it. The opposite of good pedigree, by most people’s expectations (mine included), is one that has had more than three previous owners, flies charter regularly, has high-time, has a ratty interior and exterior paint, and has obviously been “used hard, and put away wet”. Regardless of where an aircraft fits in the spectrum of Good History and Pedigree, it still garners a certain book and market value. Pedigree, etc. will elevate the desirability of the applicable aircraft, along with its matching higher value. A ‘dog’ aircraft still rates a US Dollar value, even though that value will be lower and ‘days on market’ considerably longer than an aircraft with good pedigree.

Lost or Missing Log Books/Records

Consider the following sad story: A maintenance office containing the records of multiple aircraft, burnt to the ground. This single event affected the value of more than ten large turbine business aircraft. I handled the sale of one of the affected aircraft years later, and I remember how some of the logbooks were literally photocopies of burnt and charred pages – some only 25% of their original size, i.e. 75% of the page was burnt away! Determining value of the aircraft affected was difficult. Always accomplish the following actions: 1. Store all of your Log Books and Archive Records in a fireproof, waterproof and lockable filing cabinet/safe.

2. Establishing and Maintaining Pedigree

“ Store all of your Log Books and Archive Records in a fireproof, waterproof and lockable filing cabinet/safe.”

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84 2.

Perform a digital scan or digital image of every page of your archive records, and use the same protocol for all existing and future records. Often this digital backup creates a significantly useful tool for the in-house Director of Maintenance, because if ‘optical character recognition’ (OCR) works with your chosen archival database system, the entire history of the aircraft will be searchable digitally. This feature is amazingly useful, especially during a pre-buy inspection.

The FAA recognizes that the use of ‘wood-pulppaper’ records are quickly becoming obsolescent, and in 2002 it issued Advisory Circular No. 120-78, titled: Acceptance and use of electronic signatures, electronic recordkeeping systems, and electronic manuals. Electronic records do not guarantee that all prospective buyers will be satisfied with the aircraft’s pedigree. There will always be a perception issue, where a percentage of aircraft buyers only consider the purchase of an aircraft that has physical paper records by the box-load, instead of a simple thumbdrive or link to a data storage cloud.

Bottom Line

So, how much value will be lost if an Appraiser can’t read your entire modification, maintenance and repair history? The Aircraft Bluebook Price Digest publishes in its ‘User’s Handbook’ the following advice regarding the value impact of ‘missing log books’: Electronic records do not guarantee that all prospective buyers will be satisfied with the aircraft’s pedigree. “The fact that an aircraft does not have original or complete log books diminishes its value. The reason for missing log books could well be innocent and out of the owner’s control – theft or destruction by fire,

for example – but the result is the same. Missing log books mean that the aircraft’s history is no longer available for scrutiny. If an aircraft has damage in its history or has had lapses in maintenance, destruction of that airplane’s log books would be a convenient way to hide these facts. “If an aircraft has been maintained by one facility or mechanic, the log books could be reconstructed, and doing so minimizes the impact of missing log books. “The question remains: how much to deduct for missing log books. Research indicates that missing log books could diminish the value of an aircraft by as little as 10% or as much as 25%.” The National Aircraft Appraisers Association offers the following Guide Note information: “Beginning immediately, when dealing with lost log books an NAAA member should use twice the major damage deduction on piston engine airplanes as the average reduction in value. From there the member will evaluate the situation regarding that particular aircraft and decide whether a higher or lower reduction is warranted. “If an aircraft has no log books not only will the reduction be twice the major damage deduction but the appraiser may choose to make it higher based on the individual situation. In addition, the engine will be run out, the propeller will be run out, and an estimate for complying with all AD notes will be made. It may also be necessary to estimate the cost of complying with other airworthiness issues such as an annual inspection… “For turbine aircraft continue to use the same methods and values you have been using. The damage deductions for turbine aircraft are significant.” When I run the damage deduction numbers through the NAAA proprietary software, twice the Major Damage Deduction usually results in a 30% reduction in the base value of a ‘Missing logbook aircraft’. T

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Keys to Buying Jets for the Long-Term 86

Forming a Long-Term Vision for a New Market Reality

One renowned aircraft broker speaking after the economic slump of 2008 noted of the market, “These are uncharted waters”. Almost a decade later, those words are still deserving of some consideration says Aviation Director Andre Fodor. How can we adapt? ircraft acquisition prices have plummeted since the onset of the Great Recession, while political changes and major global markets that until recently were the source for optimism have dried up, creating major challenges to some of the OEMs in the industry. The knock-on effect is that Flight Department Managers must redress their thinking as they consider their next aircraft acquisition/fleet upgrade. In this new reality, whether you are new to the market or a seasoned Business Aviation operator, a sound plan is needed that takes a long-term view of ownership. We should be seeking to better

harmonize the value of the airplane with our operations, seeking to equalize the gulf that currently exists between acquisition and sale prices. With a well thought-out plan for the long-term usage of an airplane in place, an owner can take full advantage of tax depreciation and other taxrelated benefits, provided they have a strong warranty program/maintenance plan in place to offer predictable maintenance costs. Within our new normal, we must also consider the health of the aircraft manufacturer itself since the purchase of the aircraft represents a major investment. Relationships with OEMs should be like that of a partner – suppliers should be on a sound business footing and able to fully support their products. The last thing an aircraft owner wants is to find a few years into their ownership experience that there’s a lack of technical support, engineering, a shortage of parts and a dropping resale value.

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Avionics Planning

For the long-term ownership plan to work, owners must also consider the evolution of airspace regulations, avionics mandates and how changing realities might impact the long-term ownership of an aircraft. Without a platform designed for long-term ownership and an open architecture that enables cost-conscious upgrades, an aircraft may become obsolete - thus the investment in that aircraft will not meet long-term expectations of the owner. Furthermore, we need to consider the evolution of how pilots interface with the avionics and the ergonomics in the cockpit, especially on long-range aircraft. Touch screen capabilities, point-and-click architecture and voice recognition cueing are trending now. At a recent IoT (Internet of Things) Conference, the focus was on interfacing the internet with physical things and the power of voice recognition. Interfaces such as Arduino and Raspberry devices as well as low-cost sensors are not yet certified for aviation, but these could become standards for future cockpit design. In essence, we need the most modern and upgradable architecture that will allow for modular upgrades with short downtime and costs. In the cabin entertainment system, we should look for open architecture standards that are primarily based on wireless networks and that

allow for the utilization of off-the-shelf devices (iPads, Androids, Blackberrys, etc.) that are not permanently part of the aircraft. With the burden of certification, the OEMs have difficulty keeping up with the latest technology. In an ideal world, the OEM would provide interface systems that the operator can purchase off-shelf just as we do at home. Such an environment would prevent early obsolescence and stale cabin systems that have become outdated. Operationally, we should aim for common type ratings among similar platforms; this will ease the burden of fleet building and aircraft upgrades and provide us with a stronger network of simulators and reduced waiting times for training slots. The addition of home-based computer training will enhance quality and improve crew availability for revenue flying.

To Summarize

New products should be evolutions of existing technologies that reduce costs and cross-utilize technologies. This approach will lower the acquisition prices and thus help the market grow. Choosing the right OEM is a science as well as an art. A buyer must consider a company where employees are invested in long-term relationships and care. Choose your OEM like you would choose your marriage partner... T

â&#x20AC;&#x153;Such an environment would prevent early obsolescence and stale cabin systems that have become outdated.â&#x20AC;?

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International Used Jet Transactions: What Role Do Common Business Practices and Local Behaviors Play? Are you considering the purchase of a used jet from abroad? Jet Tolbert offers a few tips on international etiquette that could tilt a ‘go’ or a ‘no go’ buying decision in your favor… ith demand for used aircraft mostly coming from the United States at present, buyers continue to include within their aircraft searches jets ‘For Sale’ that are based outside the US. The following paragraphs are designed to help US buyers increase their bargaining power and international sellers harness the current US-based demand. A successful international transaction requires the buyer to have a clear understanding of the technicalities of importing an aircraft. Unfamiliar costs should be considered and calculated prior to contract negotiation, and the appropriate contractual mechanism should be built into the closing/import process. Correctly managed, such homework can be accomplished easily.

In reality, though, owing to cultural differences and/or a lack of familiarity with regulations, an unwitting buyer can be sucked into a black hole of convoluted negotiation ambiguity—a fate that can burn time and money (and the opportunity to purchase another aircraft). From the selling perspective, it is vital for international sellers to send the right message by understanding the market demand coming from the US and showing a willingness to adjust their pricing expectation. As an example, the time and expense of international travel as well as the process of switching an aircraft from EASA to FAA jurisdiction can be considerable for the buyer. Therefore, a savvy seller will appreciate the buyer’s perspective and integrate planned ‘concessions’ into the negotiation to help sell the aircraft more quickly.

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PERFORMANCE INTEGRITY R E P U TAT I O N

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90 Depreciation Aware

Obviously achieving the right price needs a balanced approach by buyer and seller. But sellers have to be keenly aware of the cost of owning the aircraft for a longer period as a delay to the sale occurs, and truly understand the impact of depreciation. It is not uncommon to find an international seller holding out for ‘just a little longer’, passing on an offer deemed too low only to sell their jet for dramatically less further down the line. We are aware of an aircraft that was not sold a year ago because the seller rejected a solid offer that was 13% higher than today’s ask price. When combined with the other costs of ownership during that period, the seller’s loss is probably closer to 20%. This example is a clear case of a seller suffering as a result of eschewing trusted guidance to make the right decision at the right time.

International Etiquette

Most obstacles to international aircraft sales are surmountable. Often, however, the respective parties to a transaction fail to consider the cultural differences, misreading the signals being sent from the other side of the negotiating table before and during closing. The US buyer needs a clear signal regarding when they have a partner who is serious in their commitment to sell the aircraft and close the deal. Detecting that sign can be very difficult if the buyer is unfamiliar with local business practices. Misreading of cultural cues and etiquette, one party can easily gain a false expectation or understanding of the other side. Whether in client consultation meetings or crossborder negotiations between buyer and seller, such miscommunication can lead to unnecessary waste of time and money at best, and a missed opportunity at worst.

While it is ideal for all parties within the transaction to adopt a direct manner, culturally some sellers will be perceived as ‘hiding’ information and motives. This may be expected practice within the seller’s culture, and US buyers need to be clear on these customs to avoid misunderstandings and loss of trust during the transaction. That said, there are extreme cases in which an aircraft and its equipment may be deliberately misrepresented, or a company is hiding its involvement in pending litigation. A buyer must be discerning to tell the difference. Ultimately, the seller as well as the broker will likely have advisors within their own region. Between them they will be able to read into the motives of the seller early in negotiations.

In Summary

The best way to move forward with an international transaction is to partner with a broker representative who can demonstrate deep industry knowledge in multiple regions and has a long history of success in transactions around the world. Familiarity with technical aspects of trans-border transactions is required, along with strong industry connections that will reinforce a deal structure and offer insight into understanding ‘cultural norms’. In today’s used jet sales market, the best value may come from an aircraft under international ownership. This is an exciting time in our industry, and we expect international sellers to continue to drive the market on the supply side for the time being. As demand and aircraft values strengthen in the domestic US market, those international opportunities will become increasingly alluring – and all participants could benefit. An understanding of international business etiquette becomes crucial to make sure you’re proceeding down the right path, with the right seller, and not wasting time and missing a good opportunity elsewhere. T

“ Often, however, the respective parties to a transaction fail to consider the cultural differences, misreading the signals being sent from the other side.”

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International Used Jet Transactions: Aircraft Registration Considerations for Buyers and Sellers… Today’s used jet market creates an increased opportunity for cross-border transactions. Aircraft Broker Jet Tolbert asks why more buyers and sellers don’t consider the registration process as an opportunity to add extra value to an acquisition? reviously we covered cross border relationships and noted that the technical aspects of the aircraft itself are part of the used aircraft sales equation. This time we discuss an additional yet very important factor—the aircraft’s registration. Whether you are a buyer or a seller, registration can impact the perceived value or total cost of the aircraft. An aircraft’s registration sends a clear signal regarding the standard to which the aircraft was maintained and where it likely spent most of its time. These issues and the perceptions associated with them can create significant hurdles to the sale if not properly managed. Like it or not, there are psychological barriers that

create a selection bias among buyers. If you suggest to a US buyer that they should consider acquiring an aircraft that is currently on a foreign registry, you may well be met with a glazed look. Well informed (and advised) buyers, however, can turn a perceived barrier into an opportunity by finding an overlooked diamond in the ‘rough’. Likewise, a well-informed seller (also with good advisors) can be better positioned for a successful sale. Many great deals are being made cross-borders. Today, globalization has profound impacts on the aircraft sales process, and buyers should consider how the domestic and international markets interact to determine the best value and total cost of an acquisition.

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When considering a trans-border transaction, a buyer should understand the technical aspects of the available aircraft’s current registration, as well as the registration options going forward if that aircraft were purchased.

The Buyer’s Perspective

Acquiring an internationally-registered aircraft often has little practical impact on a US buyer. Many times the process can be as simple as performing an FAA inspection concurrent with the pre-purchase inspection, with no additional downtime required. That being said, there are other times when the change of registration can indeed be time consuming. A savvy buyer can acquire an internationallyregistered aircraft swiftly, putting it directly into operation under their new home-registration or by selecting the right off-shore registration that will accept the current aircraft configuration and its new ‘foreign’ ownership. Under the off-shore registration option, the new owner can legally operate the aircraft before

transferring its registration to their home country at the next major maintenance event, or remain on the off-shore registration if desired. Either option would significantly reduce the burden of downtime for the registration change. Similar to foreign domiciled businesses in Ireland, Cayman or British Virgin Islands, in some cases corporations may find tax advantages or other efficiencies to make an off-shore registration attractive – but when using this option the counsel of trusted advisors is vital. If registering the aircraft in its final location means complying with a maintenance program other than the FAA or EASA, then the option to remain on a foreign registry that accepts either FAA or EASA maintenance programs is worth detailed consideration; it is essential to ensure that compliant maintenance is available globally. Operator-friendly off-shore registries include Aruba, Isle of Man and San Marino, which have offices around the world allowing the aircraft owner to factor the ultimate geographic base of the aircraft into the decision of which registry to use.

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“ As such, aircraft sellers must consider the geographic source of current and future demand for their aircraft in relation to its registry.” The Seller’s Perspective

Although the above points may be pragmatic, buyer preconceptions still exist. Sellers should prepare their aircraft to meet market demand by demonstrating how it is ready to meet a buyer’s needs. As such, aircraft sellers must consider the geographic source of current and future demand for their aircraft in relation to its registry. Parties to the transaction should understand the technical differences between the current and most likely future registry once the aircraft is sold. Transfer costs could contribute to a value deduction and a lower perceived value by most potential buyers in the market. The end result should be an understanding of how the market perceives different registries; the varying costs to change between them; and how to best present the aircraft within the market. Done correctly this understanding will reduce the number of days the airplane is on market before a sale, thereby lowering the seller’s exposure to holding cost and changing market values. To a motivated seller, this could potentially mean changing the registration to meet the expected market demand. If the seller has the

aircraft placed with a registry that uses something other than FAA or EASA maintenance programs, then that alone should be cause for strong consideration of registering the aircraft off-shore (Aruba, for example, accepts both FAA and EASA). There are many examples where having used one of these registrations in the initial purchase of the aircraft, leaving it on an off-shore registry during the ownership period could have saved time and expense throughout the seller’s ownership cycle.

In Summary

There are many buyers competing for the right used aircraft. Broadening your understanding of the marketplace and aircraft registrations could make you a real winner. There are several factors to consider with international transactions, but the well-educated buyer in the right place, at the right time gets the right used jet, at the right price. Be sure to work with a reputable broker that is client-focused and keeps buyer and seller needs in sight by being well informed with the right connections and experience. T

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Nuances of the European Jet Sales Market 96

Teamwork is Key to a Successful Aircraft Buy…

Buying a business jet is not a simple process, note Brian Proctor and Richard Emery, Mente Group. Investment from the outset in a professional team of experts to unravel the complexity and make the whole process run smoothly is a must for European buyers or sellers.

is registered. So, when we engage with a prospective purchaser we will bring a team of experts together as a priority. Because of complicated tax issues and structures, we work with a lot of consultants and aircraft registries.”

t can take many months to fine-tune a client’s requirements. Once the right jet for the mission has been identified, navigating the purchase and closing process can take time. Assembling a team that complements the expertise of your chosen broker (aviation insurance agent, tax expert and aviation lawyer) goes a long way to provide confidence. “Experience has shown that handling pre-owned aircraft sales in Europe leads to more complexities in ownership structures,” notes Brian Proctor, Founder & CEO, Mente Group. “For example, frequently we find that an aircraft on an AOC is not consistent with where it

Borne out by what was a record year of transactions for Mente in 2016, the pre-owned aircraft market continues to fare better than new aircraft sales activity right now - on both sides of the Atlantic. In addition, the pre-2008 order boom with the plethora of new jets entering the market then is creating robust activity for MRO and engine MRO providers now. Many of the aircraft that entered service in the mid-2000s are coming up for their 10year checks, and 2017 also could have been a good time for owners to consider a cabin refurbishment too. As the OEMs rationalize production and bring to market several new models, aircraft owners are spending their money updating their assets not

Pre-Owned Market Strengthening

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Buying & Selling

RICHARD W. EMERY

BRIAN PROCTOR

About Mente

98 just in terms of exterior paint and modern interiors but also as they seek to meet upcoming mandates (including ADS-B by 2020). Several factors are influencing the trend towards pre-owned purchases at this time. Firstly, there is a generational shift: millennial CEOs and founders are more used to the ‘sharing economy’ as generated by business models like Uber and Airbnb, preferring ‘value’ over brand loyalty. In addition, falling residual values on new aircraft make owning and operating a new aircraft a very expensive proposition right now. While a business jet’s residual value historically decreased by between 3-4.5% annually, we’re now seeing them decline by as much as 12% per year (depending on type).

Better Value in Europe?

The pre-owned jet market is improving because business aircraft are dollardenominated assets: as the dollar continues to strengthen, buyers in Europe (along with Asia and the Middle East) are seeing better value in selling their aircraft. The North American Business Aviation market, the largest in the world, is soaking up these international sales and taking advantage of that market. So, we are seeing a lot of international sales but fewer international purchases at this time. Europe is a highly regulated environment, so a transaction can take considerably longer to complete, explains Richard Emery, COO, Mente Group. Richard, together with Brian, has been leading Mente’s growth in European transactions. According to Richard, the pre-buy inspections undertaken for clients whether from the OEMs directly or from factory-authorized facilities, are a crucial

part of the process once the aircraft type has been determined. “We find there is a lot of confidence in Europe with so many of the aircraft transacted there on AOCs. “The record keeping in Europe tends to be more consistent than anywhere else - and this is crucial, because when jets change hands we need to ascertain that no maintenance issues exist and all due-date inspections are logged.”

Understanding Tax (and other Nuances)

The EU imposes regulatory and tax regimes that apply to aircraft whether or not they are registered or even based in Europe. Sales tax is an important consideration for any aircraft buyer looking at an aircraft in the region, and this extends to VAT for Europe. If multiple parties plan to use the aircraft, complications can multiply too – a scenario Mente has walked clients through previously thanks to the pool of partner-specialists that it has developed and can tap for expertise. But the question on many people’s lips ultimately relates to the impact of Brexit, the outcome of which is unpredictable at this time. Mente doesn’t see Brexit being an issue in the future in terms of pre-owned aircraft trading, however. “The UK is going to need to trade with the EU, and we can’t see the EU holding the UK hostage,” Richard offers. “The OEMs too aren’t going to allow the exit of a country (ranked third in the number of business jets and turboprops flying under an AOC and privately owned) to affect the selling of aircraft to its customers – although we do expect there will be some impact on the aircraft registries, with some being more attractive than others.” T

Mente Group aims to approach all business aircraft transactions from an impartial consulting perspective, and its senior management team brings considerable experience internationally. Analytical services begin with initial feasibility studies to determine what Business Aviation option would suit clients best. Fleet planning is a core competency, as well as operational and financial analysis. Technical support is also offered to assist clients with aircraft appraisals, pre-purchase inspections and completions. Mente works with a pool of trusted specialists in Europe, including TAG Aviation, Jet Aviation, The Air Law Firm, DLA Piper and Kayway.Aero (among others). Among the Mente leadership team are: Richard Emery: Actively involved in managing aviation organizations for over 25 years (including Gulfstream, Bombardier and Hawker Beechcraft), before joining Mente, Richard led the customerfacing and business activities for Hawker Beechcraft worldwide and steered the OEM’s international organization through Chapter 11 restructuring and its eventual sale to Textron. Jim Lewis: Bringing 40 years’ experience in aircraft sales, Jim is VP Sales and previously served as Regional Sales Director at Embraer and Gulfstream, earning the accolade of salesman of the year on 16 occasions. Dan Dunn: Mente’s Managing Director is former VP of the largest international corporate aviation brokerage company and together with Richard has been steering Mente’s international march. Dan is trained on eight corporate aircraft types including Bombardier, Boeing and Gulfstream models as well as possessing extensive avionics, engine and training experience. More information from http://mentegroup.com

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When is the Right Time to Sell Your Aircraft? A Look at the Factors that Drive a Change of Aircraft The average length of business aircraft ownership is between three and five years. That doesn’t mean that many owners have made wrong purchases or suffered buyers regret. They are merely responding to evolving needs. Jet Tolbert, President, American Aircraft Sales explores…

usiness and personal needs change, and often the company aircraft will have to change to meet those new requirements. Whether due to business expansion, a family situation, or a home or key executive based in a new location, flight departments often find themselves expanding into new destinations that change the demands on the aircraft. Different stage lengths and available airports can ultimately drive the need to purchase the next jet, either as additional lift or as a replacement to

the aircraft that is currently being operated. Some of the driving factors may be evident to the principal owner and C-Level executives, but there are many other less obvious factors that can shape the need to purchase a replacement or supplemental aircraft. Some of these are covered below…

Staying Ahead of Regulation

Savvy owners value having an aircraft that meets the needs of the company not only for today but also for the rest of the planned length of ownership. Often owners of older aircraft bear the burden of a costly, time-consuming process to comply with regulatory mandates (such as ADS-B or FANS-1/A). The silver lining to this gray cloud of regulatory flux is that it’s a great time to trade-in or purchase

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Duncan Aviation was founded in 1956 as an aircraft sales organization and is a founding member of NARA. Since 1956, we have conducted more than 3,500 transactions. Backed by 2,150 aviation experts worldwide, each with an average of 12 years with the company. The aircraft sales team partners with these experts to provide technical support before, during and after the aircraft transaction.

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“The biggest question to a flight department is whether it will wait to be the one left holding the bag when potential buyers disappear?” an additional aircraft for the fleet, keeping the passengers in the air with a seamless transition from one aircraft to the next. When buying a replacement aircraft, there will probably be a short period when the company has an excess of aircraft on the books. This situation enables those utilizing the company jet to simply walk out of one aircraft and onto the next, and bridge financing options exist to facilitate the ownership of an additional aircraft, providing a cushion until the previous jet can be sold. Experienced sales firms are also on hand to market the older aircraft first, helping to align the sale of the old jet as closely as possible with the purchase of the replacement aircraft. With the looming January 1, 2020 ADS-B Out regulation and the limited number of facilities available to offer compliance to a vast fleet of aircraft, whether you plan on owning your aircraft beyond the deadline or not, it makes good sense to upgrade your aircraft now. Being prepared for upcoming regulations means different things to different owners, but compliance is mandatory, and a compliant jet is a far more attractive jet when it comes time to sell.

Aging Fleet

At a certain point the market tends to lose interest in great aircraft. It appears that when the annual cost of

owning an aircraft gets close to its resale value, the pool of interested buyers diminishes. The biggest question to a flight department is whether it will wait to be the one left holding the bag when potential buyers disappear? On too many occasions I have seen owners realize that the value of their aircraft has dropped so low they can’t justify selling it. You can be sure that the value of an older aircraft certainly will continue to ebb away. When the pool of buyers has dried up or when new regulations threaten to restrict your flight operations, you will have to make a difficult decision. You may even become a ‘new buyer’ all over again, with no equity in the flight department. It may be best to plan your aircraft succession strategy that includes selling or trading when the value is still liquid.

In Summary

The vision of a technologically-advanced, well purposed office-in-the-sky is what drives most buyers to take the plunge into aircraft ownership. Couple this vision with the market experience of a detailoriented aircraft sales firm and the result will be an ownership experience that leaves nothing to be desired. Part of the trick, however, will be knowledgeable, decisive action from the owner regarding when to buy and sell the Flight Department’s aircraft… T

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How to Successfully Sell Your Jet There will usually come a time when buyers of business jets become sellers, notes Aviation Director Andre Fodor. With that in mind, what does it take to be a successful seller? o be a successful seller, aircraft owners need to use all the experiences that helped them become savvy buyers of their current business jet. Beginning at Day One of ownership, they need to prepare for the time when they come to sell their aircraft. In present market conditions (where new aircraft can be deeply discounted and there is a large inventory of aggressively-priced used jets for sale), having the best airplane with immaculate records and superb maintenance will assure you the best ratings on a prospective buyer’s list, and shorten the time to sell your aircraft. That means flaws in the airplane’s DNA must be kept to a minimum.

Document, Document, Document!

If there have been minor incidents or unpredictable events, it's crucial to document their resolution with precise detail. As an example, I previously managed a large jet that required an engine to be removed for repair at 150 hours (since new), owing to an improperly installed gasket. This situation caused the engine times and cycles to disagree, and consequently the aircraft’s permanent records were blemished by an engine removal entry. That minor anomaly alone would prompt questions and could be used against us during final pricing at the time of sale. We minimized the impact by incorporating within the aircraft’s records a favorable statement from the engine OEM, plus borescope pictures providing accurate and definitive explanations for the discrepancies. With all that being said, advertising the airplane with mismatched engine times still decreased the number of calls received from prospective buyers trawling a market laden with bountiful inventory.

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AvBuyer.com

Once tasked with selling an immaculate Large Cabin jet with only 850 hours of total airframe time, I had to come to terms with the fact that one of the competing aircraft on the market was newer, had only delivery hours on its airframe, and was priced similarly. After leaving the factory, it had been stored in a hangar for almost 15 months. Even with an exceptional aircraft for sale, we needed to develop a ready list of reasons why our airplane would be a better choice for prospective buyers. This approach included alerting them that the maintenance manual required an aircraft ‘run-up’ every seven days in order to maintain the engine warranty/ program - and that a FADEC download was required regardless of aircraft usage every month. Impressing upon the eventual buyer’s broker the importance of these procedures, I submitted our ‘run-up’ records together with the maintenance manual pages describing the upkeep requirements. This documentation placed us in the number one spot on the buyer’s list. Having expertise in your aircraft type is a sure way to sway buyers that your jet is the right choice. Consider also providing operational support during the buyer’s transition to the aircraft, actively helping with the transfer of maintenance programs and subscriptions to the buyer; perhaps even offering to oversee the initial operating experience of the new owner’s crew. Such “value added” can close a deal. If, as a seller, you can add value through your expertise, you will place yourself in a favorable position as the preferred aircraft on the market.

Plan, Thoroughly… Employ a Good Cleaner…

Having always approached aircraft cleaning as the cheapest and best form of corrosion prevention, I have found that a well trained cleaner can find small squawks ahead of maintenance inspections. The cleaner literally touches every inch of the airplane’s surface and can find small paint blemishes and other easily corrected discrepancies before they deteriorate. Needless to say, cleaning will also keep the airplane looking and feeling new and extend exterior and interior value. Having a good quality cleaner will certainly help with the eventual sale process, and the cost vs. benefit is exponential.

Buying New? Consider a Trade

If you are purchasing a new aircraft to replace your existing asset, consider negotiating a trade with the eventual sale of the new acquisition in mind. Granted, the trade-in value may be less than what you would expect to get in the open market. The OEM will likely need to add some pricing cushion to offset their risk. Nevertheless, a trade is a clean transaction that will eliminate the possibility of your aircraft languishing on the used market, along with amassing the cost of hangar charges and maintaining engine and maintenance programs.

Planning when you expect to place your new aircraft can be very important. As an example, an aircraft I once managed was purchased for an ownership period of seven years. The appropriate years of maintenance were pre-purchased, a depreciation scheme built around the expected ownership period was planned, and an internal lease arrangement to improve taxation was tied-in. Unexpectedly, the owner decided to upgrade to a different aircraft two years later. The cost projections of the original plan fell apart as the asset had not been used for long enough to offset the loss in aircraft value. As a consequence, we placed the aircraft on the market with a higher value than the market would bear. Over a painful 18month period, the price had to be drastically reduced before the asset finally sold, and we suffered a loss of all pre-paid maintenance investment because in most cases the arrangements were non-transferable.

In Summary

Have a realistic plan that addresses as many of the “what if’s” as possible. Seeking the optimum may lead only to disappointment. A well-defined strategy prepares you to weather the challenges, and when graced with smooth sailings you will only have good news to bring to the boss—a goal everybody embraces. T

105

Demonstrate Your Expertise

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Engines

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Section Contributors

Mike Saathoff has over 20 years of experience in corporate aircraft maintenance. He has held several service technician and quality control positions with Elliott Aviation and currently serves as the Director of Sales Operations & Engine and Accessory Sales. Find out more at www.elliottaviation.com

John Terpstra is Senior Director, Airframe and Engine T.A. Services for JSSI. As a licensed Airframe & Powerplant Mechanic, he began his career with JSSI in 1999. Currently, John has global responsibility for the JSSI airframe and on-wing engine team. Visit www.jetsupport.com

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Buying a Jet? What to Know About the Engines Top Five Engine Items to Understand When Purchasing an Aircraft With many variables including engine OEM, engine programs, parts obsolescence, maintenance history and more, doing your research ahead of time can help you avoid costly mistakes when entering an aircraft transaction, says Mike Saathoff. What are some items that can make you a smarter buyer?

hroughout the lifetime of an aircraft, the engines will probably be the most expensive item to maintain. Unfortunately, there is no simple onesize-fits-all solution to apply to every make and model of engine. Fully understanding your variables and knowing the right questions to ask your service center are critical considerations when selecting the best aircraft for your mission. Following are five key areas to focus onâ&#x20AC;Ś

1. Engine Times & Cycles

The value of an engine depends upon the cost of complying with inspection and overhaul requirements, the time or cycles remaining before such requirements must be met, and the cost of components. In reviewing the engines of an aircraft you plan to purchase, make sure the seller has the current and upto-date times and cycles of each engine, including the APUs (if applicable). These data are primarily tracked and documented in a flight log. Make sure all cycle-limited components are tracked. Numerous items inside a turbine engine are tracked independently and have different cycle-limited replacement or overhaul requirements. Someone on your team who is familiar with logbook research, or a knowledgeable consultant with similar skills, can determine if engine times and cycles are accurate. Such expertise will avoid costly mistakes. It is essential to check whether the aircraft engines are up-to-date on service bulletins (and if not, why not), to check for inconsistencies in engine times, and to evaluate recurring issues.

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2. Enrolment in a Program?

There are many engine programs in the industry, including JSSI (Jet Support Services, Inc); RollsRoyce CoroprateCare; Honeywell MSP (Maintenance Service Plan); Pratt & Whitney ESP (Eagle Service Plan); Williams TAP (Total Assurance Program); and more. With each program there will be many variables and options. Some programs are highly customizable for the customer, and could vary from covering a portion of the major events, to covering every possible expense the engine might incur. When purchasing an aircraft that is enrolled on an engine program, don’t assume total coverage make sure you fully understand what is and what is not covered. Ask for a copy of the current engine maintenance agreement, and review this agreement with your engine representative or the program representative. When reviewing the agreement, ask the following questions: •

Is the existing contract transferable?

• • • • • •

What are my monthly costs? What items are completely covered? What items will I be responsible for at small and large engine events? Does the program cover normal inspections and discrepancies? Do I have to use a particular service provider to complete the service, or Are there advantages to using certain providers?

3. Maintenance History & Cost

One item that some owners overlook is the engine maintenance history. The primary question should be whether they have been maintained by a reputable facility that carefully follows maintenance guidelines? Like many other items, much of this information can be obtained with thorough logbook research. Most aircraft are consistently serviced by the same facility. Check whether that facility has a good track record for the type of aircraft you’re purchasing. In order to establish any upcoming maintenance

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5. Understanding the Value of Installed Engines

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costs on the engines, you should be able to use all of the information gathered from the logbook research and supply that to your preferred maintenance provider, who should be able to provide you with an estimate of the upcoming maintenance costs on your engines, based on your estimated utilization. Aircraft owners need to understand where the engine is within its current lifecycle, and what upcoming events are coming up. You can then discuss any potential expenses with your planned maintenance provider or the agency providing the Pre-Purchase Inspection.

4. Location & Operation

The primary location of the aircraft during its prior operation can have a major impact on engine life and cost. Have the aircraft’s engines been operated in an extremely sandy environment, a corrosive (i.e. coastal salt air) environment, or in an area with significant pollution? Have they been exposed to the elements for a significant amount of time? These factors make a difference on the internal condition of the engine. Even more significant is if the engine has been run through a complete cycle recently and on a consistent basis (for long enough to get them to the appropriate operating temperatures to meet the engines’ needs). Does oil sufficiently coat all internal components requiring it, and have all areas been heated to remove the contaminants? Many times this is tracked in the engine or flight log. Each engine will have its own particular requirements for calendar limit between cycles – so consult the engine OEM’s manuals. Trend monitoring is often used to understand how an engine has been operated. Many of the current generation of avionics systems have digital trend monitoring that will track relevant parameters through all engine operations. Additionally, there are many aftermarket or manual-tracking methods that can be used.

“Each engine will have its own particular requirements for calendar limit between cycles – so consult the engine OEM’s manuals.”

The items presented in this article impact the value of an aircraft’s engines, thus they greatly influence a buy or sell transaction. An additional factor is how and where engine maintenance was performed. Was it completed “onwing” or “off-wing”, was the facility factory-authorized, and what is its reputation? Have the engines been modified? If so, do those modifications have an effect on the engine or airframe warranty? Aftermarket parts, facilities used to maintain the engine, and parts obsolescence all influence the value of the engine and the cost of repairs. An independent ASA Accredited aircraft appraiser is a valuable resource in determining engine value. ASA Accredited appraisers deal with valuing aircraft every day and are the most knowledgeable professionals in the industry.

Gaining Full Understanding

Fully understanding aircraft engines during a transaction can be difficult and time-consuming. However, working with an experienced maintenance provider and broker dealer to explain all the parameters will make a significant difference in your comfort level when making a decision. Ultimately, you have to make the decision that will be best for you. Do your research, talk to reputable shops and talk to other operators. Never feel pressured into a transaction without fully understanding all of your available options. Weigh the pros and cons and when you come to a conclusion, you will know that you made the right call! T More information from www.elliottaviation.com

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Five Jet Engine Tips to Lower Maintenance Costs One common theme when managing aircraft maintenance costs is whether to spend a little more now or to pay more later, highlights John Terpstra, Jet Support Services, Inc. Following are some key tips to help lower your aircraftâ&#x20AC;&#x2122;s overall engine maintenance expenses.

ver the following paragraphs, we present lessons learned from real life that will help you answer questions on whether to spend a little more now or pay more later when it comes to your business aircraftâ&#x20AC;&#x2122;s engine maintenance.

Tip 1: Life Limited Component Replacement

Installing a Life Limited Component (LLC) with low-time remaining may seem like a great way to save out-of-pocket expense at the time of a maintenance event, but if the component has

insufficient time or cycles remaining to get you to the next major inspection, it can quickly lead to added expense. We sometimes see operators considering a lower-cost, low-time LLC part, but it is possible their decision will mean additional downtime later, along with additional expenses related to engine removal, reinstallation and consumables. Ultimately, this could also diminish the overall value of the aircraft. Be sure to carefully calculate the time needed from the LLC to get you to the next event.

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Tip 2: Engine Performance Issues

preservation is a crucial lesson to learn with regard to saving on maintenance expense. There are typically periods of high utilization with business aircraft - and, likewise, there will be periods of low utilization. For a myriad of reasons, your aircraft may be parked outside for extended periods of time. Too often, the need to preserve the engines during this time is overlooked. In many instances, preservation goes well beyond installing inlet and exhaust covers. Almost every engine OEM has set requirements for preserving engines, based on the expected period of inactivity and whether the engine is installed or removed from the aircraft during that time. These may include:

Tip 3: Engine Preservation

• •

Trend monitoring provides valuable insight into the overall engine condition. Monitoring these trend data can reveal shifts in performance that are indicative of potential issues. Although most shifts are subtle, due to the expected degradation of the hot section of an engine over time, some changes point to a serious problem. Don’t wait until later. Investigating the condition at an early stage could result in saving hot section components from further damage. Failing to address issues with the combustion chamber, turbine nozzle or turbine blades (for example) over time could result in an expensive, unscheduled shop visit, or much higher than average costs at the next scheduled shop visit. My JSSI colleagues have all addressed this recommendation in past articles, but engine

Monthly to bi-monthly engine runs; Disconnecting electrical power to the engines;

“In many instances, preservation goes well beyond installing inlet and exhaust covers.”

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“...you may have access to certain components that are repairable now but would require more costly replacement down the road...”

• • •

Full preservation of the fuel system; Routine oil samples; and Occasionally dry-motoring the engine.

The above requirements are not only limited to aircraft parked on a ramp, however. Many engines stored in a controlled environment still require some form of preservation. It is therefore important to discuss the need for this process with any facility where you plan to leave your aircraft for an extended period. Regardless of the method and how involved it is, the consequences of not following the OEM’s guidelines can be very costly in the longer-term. Depending on the length of inactivity, a full engine teardown could be required to return the engine to service (at a minimum cost of $100,000).

Tip 4: Unscheduled Event = Opportunity for Scheduled Inspection

Many business jet operators miss the excellent opportunity to accomplish a scheduled event while the engine is disassembled for an unscheduled repair… If you are in the unfortunate situation of needing to access an internal engine component outside of one of your regular scheduled shop

visits, it will be in your best interests to inquire about the additional costs to complete the signoff for the next major inspection. You could be pleasantly surprised; in some instances the additional costs are minimal. By performing the inspection now, you will not incur the extra expense for the same access just a short time later, thereby turning your misfortune into opportunity. There’s an additional silver lining of savings here too: you may have access to certain components that are repairable now but would require more costly replacement down the road with continued engine operation.

Tip 5: Auxiliary Power Unit

Replacing the Auxiliary Power Unit’s fuel nozzle(s) and ignitor(s) - even when the requirement is only to inspect and replace when necessary - could save you expense and unexpected downtime later. Operators have seen increased reliability by implementing this maintenance action. In particular, they lower their risk of damaged hot section components related to poor fuel nozzle spray patterns, which lead to streaking and hot spots. They also avoid unscheduled downtime related to a faulty ignitor.

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With certain APUs, the cost to replace ignitors and fuel nozzles at each routine inspection, regardless of condition, could range from $10,000-$20,000 over a period of 1,000+ operating hours. It is better to spend this amount than be faced with a $150,000– $200,000 repair later due to hot section damage that could have been avoided. Though this approach would be considered elective maintenance and not a guaranteed means of eliminating performance issues, it’s certainly justifiable given the potential cost avoidance.

Bonus Tip: Don’t Skip the Pre-Purchase Inspection

It is hard to address the issue of maintenance costs and not mention how critical a PrePurchase Inspection (PPI) is when acquiring an aircraft or engine. As part of your due diligence, it is highly recommended that you include a PPI performed by a service facility with which you are comfortable. In addition, hiring an experienced individual who will look out for your best interests is never a bad thing. From a technical standpoint, no pre-purchase is complete without a thorough review of the logbooks. The value of an engine varies greatly

depending on Service Bulletin and Airworthiness Directive compliance as well as inspection status and time remaining on LLCs. There is no better way to assess the overall condition of an engine than through a borescope inspection. If damage is found, either the seller or their hull insurance (depending on damage type) should be responsible for the costs to remedy. Alternatively, this can be negotiated into the purchase price. By accomplishing these two items—logbook review and borescope inspection—you will come away with a good understanding of the overall status and condition of the engine and have a much better feel for anticipated costs going forward.

In Summary

The above lessons point to taking a proactive approach to managing your jet engine’s maintenance costs. It is worth spending a little more now rather than taking the risk of paying much more later! More information from www.jetsupport.com T

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What Happens When Engines Age?

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Facing the Future with Older Power Sources Itâ&#x20AC;&#x2122;s hardly difficult to draw the correlation between an aircraftâ&#x20AC;&#x2122;s age and increased maintenance costs, notes Dave Higdon. But how can an operator keep those costs predictable and controllable? esearch puts the rate of maintenance cost-growth for aircraft between 5-15 years of age at about 3.5% per year. After that, allowing for engine and overhead costs, the total maintenance expenses grow relatively little. But surprises are possible. Of course, Part 135 charter operators may fly their aircraft more than operators flying privately under Part 91, but the point remains: Older business aircraft stop becoming progressively more expensive to maintain overall after factoring in engine-related costs and aircraft overhead costs. The engine need not be a major factor with the appropriate planning and investment. Handled at its best, the worst aspect of engine maintenance will

be the required downtime for installation of a Loaner engine, enabling the aircraft owner to keep flying while the regular powerplant is overhauled. Even that period can be put to good use when major avionics upgrades or airframe maintenance are done at the same time. With detailed planning, control and scheduling, an engine issue need not become a major disruption to your travel opportunities.

Time, Cycles, Rotables & Recurrents

A detailed examination of logs, maintenance records, and airframe and powerplant checks are standard procedure when considering the purchase of a used aircraft. For the powerplant, that process should include an examination of internal components â&#x20AC;&#x201C; particularly parts subject to high rotation speeds and higher temperatures. Every engine comes with its own upkeep instructions and periodic maintenance times. Some approved maintenance cycles include instructions on replacing parts well before they can fail from

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interest on what they have to spend on the overhaul. In between these extremes many operators pay for powerplant insurance through a program proscribed to meet their particular needs... theirs and the aircraft (see sidebar overleaf). Depending on the operator’s contract, the fees may cover only catastrophic maintenance needs or everything from preventive maintenance to overhaul or replacement. The most complete programs leave nothing uncovered in return for a flat fee per-engine-hour, assessed monthly. Those fees work similarly to insurance policies, and are based on fleet numbers, known issues and maintenance costs. As the aircraft engine ages, the per-hour fee may be adjusted over time to allow for changes in costs and fleet numbers. Programs exist to help operators with various levels of financial strength match their resources to a program suitable for their needs, and typically provide the subscriber with a single point of contact designated to act on their behalf – backed by staff experts in the hardware involved.

From Inlet to Exhaust

fatigue. Depending on the powerplant, those replacement cycles may be hours-based, cyclebased, calendar-based or even condition-based (meaning if no flaws are detected the part can stay in service indefinitely). Modern turbine engines for business aircraft boast remarkable inspection periods, most upward of 2,000 hours, but some beyond 4,000 hours. That 2,000-hour inspection cycle covers 5.7 years of flying 350 hours a year with nothing more than routine maintenance. Oil changes, oil-level maintenance, clean heat exchangers and exceedance avoidance all contribute to long engine life at minimal maintenance costs or downtime.

Assurance of Minimum Downtime

Some operators – particularly owner/operators – put aside an overhaul reserve based on a current-time estimate of an overhaul at some future date, divided by the hours remaining before the required inspection or overhaul. Other operators simply plan to write a big check – confident that they'll have the liquid funds to cover what can be a six-figure undertaking. Some operators refinance the aircraft in question, paying

The fundamental components of turbine engines spend their lives in a spin. Up front the inlet fan of a high-bypass turbine engine feeds the majority of its atmospheric consumption through chambers in the engine cowl, with a smaller proportion routed into the engine core. In the core an axial compressor consisting of many stages progressively squeezes the air into ever-smaller spaces. As the compressor performs its job, the act of compression heats the squeezed air to hundreds of degrees Celsius. Because of the extremes in temperature and extreme loads of the compressor blades spinning at thousands of revolutions per minute, routine maintenance requires periodic inspection of the compressor section. For some engines, that means removal from the aircraft. For others, the inspection occurs on-wing. The compressor pushes scalding-hot air through an exit that opens into the combustion chamber – a metal can fitted with fuel nozzles that spray highpressure fuel into the air where igniters light it. The combustor, or combustion chamber, endures the heated compressed air plus the extreme heat of a blue-flame jet-fuel fire. So it's another point of inspection on a cycle basis prescribed by the manufacturer. The gases expand out of the combustion chamber through a series of nozzles, impinging on the blades of the various power turbines near the back end of the jet engine. Those turbines power the air compressor section and accessories. While turbofan engines use the hot gasses to generate jet propulsion, turboprops use the energy to drive a propeller.

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Engines

Between the extreme heat (upward of 1,400°C) and high rotation speed of the turbine wheels – the turbine blades endure a torturous existence. Again, these parts face a rigid inspection schedule, and some operate under mandatory replacement limits set by the engine maker and approved by the FAA.

Other Engine Issues...

118

Turbofan engines employ accessories that also experience great swings in temperatures and high-speed rotation of parts (such as oil pumps, hydraulic pumps, starters, alternators and starter/generators). Most of these are components relatively easily removed and replaced – particularly compared to the engine’s internals. Turboprop and turboshaft engines feature gearboxes that also experience high loads, temperature extremes and many rotating parts. In most turboprop engines the power turbine spinning the propeller turns the propeller shaft through a reduction gear, regardless of whether they are free or geared turbines. In helicopters the high-speed rotational power of the powerplant runs through a gearbox to drive the main rotor and antitorque mechanism, whether a tail rotor or a fan that provides air power to counter the main rotor’s torque. Both types of reduction gears carry their own routine and preventative maintenance needs, and both can be sources of maintenance issues as they age.

The Inevitability of Down Time

Even the best-maintained machine

occasionally suffers from an unanticipated failure – often something simple. Alas, no shop keeps spares for every powerplant component for every engine. And as the age of the powerplant advances, availability of spare parts can become more of a challenge. While overhaul costs have been shown to remain relatively stable up through age 15, that’s less the case for turbine aircraft aged above 20 years (and for turboprops over 25). In many cases new turboprop engines are available as replacements for original equipment engines under supplemental type certificates (STC). And, in a bit of good news, the replacement costs can come in below the expense of overhauling the originals – as well as offering

Hourly Maintenance Programs

Just as foot soldiers are advised to take great care of their feet, aircraft operators should pay particular attention to the wellbeing of their aircraft’s engines. Careful attention to powerplant maintenance protects an aircraft’s value and contributes measurably to safety. An hourly maintenance program, typically known as power-by-the-hour, offers the added advantage of removing the unpredictability of costs associated with aircraft engine upkeep. JSSI, the world’s largest independent provider of hourly cost maintenance programs for aircraft engines and airframes, for example, offers contracts tailored to a highly extensive range of airframes and powerplants. An

significantly higher overhaul periods and greater fuel efficiency with lower specific fuel consumption. That makes the replacement option a win/win for many operators – and a path to reducing both maintenance and direct operating costs on older airframes. Regardless of the aircraft, it pays to remember that maintenance and overhauls are part of the experience of aircraft ownership and operation. The universal advice for avoiding most surprises and keeping maintenance costs at their lowest: Keep up with routine maintenance; don't defer unexpected needs; and have an alternative form of lift on stand-by because, inevitably, it will be needed. Plan ahead and be prepared! T

aircraft owner pays an amount of money per hour flown, which provides them with coverage for maintenance needs along with the technical expertise from a company with over 25 years’ experience in the market. Discover more at www.jetsupport.com. Some operators prefer a program provided by the powerplant’s OEM, and Rolls-Royce (among others), provides just such a solution through its CorporateCare engine management program. The concept is the same – pay a per-flight-hour amount in return for receiving complete engine management, from line-maintenance parts to full engine overhauls. Find out more at www.rollsroyce.com/civil/services/corporatecare/

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Advertorial.qxp_Layout 1 29/06/2017 13:10 Page 1

ADVERTORIAL

Interview by Jeremy Cox

Since the depths of the global financial crisis, some subscribers to engine programs have been opting out of their contracts. They are prepared to gamble that when they come due for overhaul there will be sufficient serviceable ‘mid-time’ engines available to them, costing less than an accumulated hourly service subscription or the actual overhaul shop visit. Thus Sean Lynch at Engine Assurance Program (EAP) believes there is a large niche for his company to offer a solution to these owners. Speaking from the perspective of both an Aircraft Broker and a Senior Certified Aircraft Appraiser, I can see many pitfalls for owners choosing to “fly naked” without engine coverage, therefore EAP is a valid solution to the problem some operators are facing. Following is an interview with Mr Lynch to enable you to decide for yourself.

Cox: Why did you start the Engine Assurance Program (EAP)?

JT15D ENGINE

Lynch: A decade ago the average Falcon 50 was worth $10m. Today it is worth between $1m and $2m; yet there are no lower-priced options for engine programs. That’s a problem we looked to address. The Engine Assurance Program was created to deliver hourly engine coverage to operators who we believe have been overlooked in the marketplace. The Honeywell TFE731 and the Pratt & Whitney JT15D power more than 3,000 business jets today. Using our business model, we believe these engines can be operated more economically in the years to come.

Cox: What kind of savings can an operator expect to make?

TFE731 ENGINE

Lynch: The Engine Assurance Program costs, as an example, approximately $100/hour less than other engine programs regarding TFE731-3 engine coverage. Therefore, an operator of a Falcon 50 or Falcon 900B that operates three engines for 400 hours per year saves $300 per hour and $120,000 annually without cutting corners.

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ADVERTORIAL

More information from www.eap.aero Cox: At which point is it best for operators to enroll if they decide this is the right option for them? Lynch: The best time to enroll is either prior to, or during an aircraft’s sale. By involving EAP during the acquisition, operators can begin saving immediately after they close on the transaction. Alternately, they could enroll after closing on an aircraft and prior to transferring the existing engine program (if any).

Cox: What are the key features and benefits of this program? Lynch: Our Comprehensive Coverage Program is a full-coverage program. There are no exhibits in the contract that substantially limit coverage, and operators can be assured that the LifeLimited Components (LLCs), LRUs, rentals, shipping, R&R, and 24-hour AOG service are covered, other than normal stipulations such as misusing or incorrectly maintaining the engines (coverage is always 100% without component exclusions). Our focus is specifically on the legacy TFE7312, TFE731-3, TFE731-5 and the JT15D-4 and JT15D-5 engine platforms because we fully understand the cost to maintain these engines.

Cox: What is the buy-in and rates comparison? Lynch: Let me offer an example of when we were contacted by a Falcon 50 operator with 750 hours left before three MPIs came due. Based on the status of the life-limited components, we enrolled all three engines into a comprehensive program for a very competitive buy-in rate, with an hourly rate of $225/hour per engine. Once the engines go through their pending MPI, the hourly rate will drop to $195/hour/engine, which – I believe – is unheard of in the engine business. Our focus is to aggressively pass savings to clients.

Cox: Where do you plan to be with this program in 10 years from now? Lynch: I am an entrepreneur, and I have my eyes on other areas of the business I plan to pursue in the future. In 10 years, EAP aims to have 125 people on its payroll, and will have a broader menu of engines it covers. Customers will still be able to call at any time to discuss their engines and any 24/7 AOG issues. It is ultimately EAP’s hope that these legacy airplanes might fly a few more years, based on the cost savings that it will pass directly to the operators.

Cox: How do you plan to get to that point, 10 years hence? Lynch: In my 20 years in this industry, I’ve never been involved with any product that has created more excitement or value in the eyes of the endusers. We’ve been overwhelmed by the positive response to our program within the marketplace to date.

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Section Contributors

Heidi R. Albers is an aviation attorney at Cooling & Herbers, P.C. with offices in Kansas City, Missouri and Wichita, Kansas. Ms. Albers appreciates the contributions to her article from Robert Hopson, Vice-President and aviation insurance specialist with Lockton Companies. www.coolinglaw.com

Keith Swirsky is president of GKG Law, P.C., and Chairman of the firm’s corporate aircraft and tax groups. A founding member of NBAA’s Tax Committee, he is a regular speaker at tax conferences. Contact him via kswirsky@gkglaw.com

David Wyndham is co-owner & president of Conklin & de Decker where his expertise in cost and performance analyses, fleet planning and life cycle costing are invaluable. He’s formerly an instructor pilot with the US Air Force. Contact him via david@conklindd.com

Chris Younger is a partner at GKG Law, P.C. practicing in the firm’s Business Aircraft Group. He focuses his legal practice on business aircraft transactions as well as issues relating to federal and state taxation and regulation of business aircraft ownership and operations. Contact him via cyounger@gkglaw.com

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Importing Used Business Aircraft (Part 1 of 3)

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How to Deal with Commonly Encountered Issues. In a reversal of traditional selling patterns, business aircraft that had been exported from the US are being imported and registered with the FAA. Attorneys Keith Swirsky and Chris Younger describe what such transactions entail. istorically, two-thirds of the world’s business aircraft fleet has consisted of aircraft based and registered in the United States. Consequently, US companies considering the purchase of a used business aircraft have typically searched for an ‘N’ registered aircraft located domestically. In the past it was unusual for US companies to consider the purchase of an aircraft that was based or registered in a foreign country. However, in the years preceding the 20072008 recession, many new and used business aircraft were sold to buyers outside the United States. Consequently, the percentage of aircraft in the worldwide fleet that are now foreign registered is substantial. Furthermore, today’s stronger US Dollar combined with the generally less robust non-US economies, have created a situation where a significant percentage of non-US based aircraft

are for sale, and such aircraft may be substantially less expensive than an equivalent model located in the United States. It is therefore more likely today for a company to conduct a worldwide search for a used aircraft. Due to the complexity of purchasing an aircraft that is based or registered outside the United States, a company considering such a transaction must identify, analyze and resolve a host of issues that do not exist in connection with the purchase of an aircraft based in the US. The acquisition process will typically be more protracted and take longer than a domestic purchase transaction. There may also be cultural differences and communication difficulties that make it more challenging and expensive to negotiate, document and consummate. In this series of articles, we will examine many of the unique issues that a company must confront in connection with the acquisition of a foreign based or registered business aircraft.

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Location, Location, Location

The primary obstacle to acquiring a foreign based aircraft is simply conducting an initial visual inspection and demonstration flight. For example, it is not uncommon for aircraft brokers to rate the interior and exterior cosmetics on a scale of 1–10. That assessment is subjective, however, and the seller’s broker may rate the cosmetics higher than the buyer’s broker/consultants. Sending a buyer’s representatives around the globe looking at candidate aircraft, however, can be time consuming and expensive. Some buyers will not have the patience to conduct sufficient visual inspections and will be disappointed with the aircraft that arrives on their ramp. Perhaps the most significant technical issue is whether a candidate aircraft will qualify for a US Certificate of Airworthiness. Naturally, it would not be acceptable to a buyer to purchase an aircraft only to discover after the fact that an unidentified technical issue prevents the FAA from immediately issuing a US Certificate of Airworthiness (and with a possibly large additional expense to rectify the issue that prevented the FAA from doing so). However, resolving such a problem can result in a classic “chicken-or-egg” dilemma because the FAA will not issue a US Certificate of Airworthiness until after the aircraft is registered in the US (which typically occurs after the buyer purchases the aircraft). Of course, it is necessary to resolve this issue before the company’s deposit becomes nonrefundable, since the buyer may not want to purchase the aircraft in such a situation. In multiple transactions we have conducted, the buyer has required the foreign seller to obtain a United States Certificate of Airworthiness for the aircraft prior to closing. In this scenario, either the foreign seller may transfer title to his US broker or to a US trustee, who will then register the aircraft in the US and obtain a United States Certificate of Airworthiness.

The more common scenario is to have a Designated Airworthiness Representative (DAR) inspect the aircraft and records prior to purchase and delivery of the aircraft. The DAR inspection typically occurs concurrently with the prepurchase inspection and, as a condition precedent to the obligation of the buyer to close, the DAR would be required to issue a letter or confirmation email saying that the aircraft has been inspected, meets the requirements for the issuance of a United States Certificate of Airworthiness, and is suitable for issuance of a United States Certificate of Airworthiness as soon as the aircraft is registered domestically. If the pre-purchase inspection occurs outside the United States, either the buyer or the seller will incur the DAR’s travel costs and daily per diem to conduct this inspection (unless an appropriately authorized foreign inspection facility with qualified personnel is engaged). The location of the pre-purchase inspection is often a contentious negotiating point. A US buyer would naturally prefer to have the inspection conducted at a geographically convenient location in the United States. However, a foreign seller will typically not agree to this unless the buyer agrees to a nonrefundable deposit at the time of contract execution. Also, the cost to ferry an aircraft to the United States can be high, particularly for aircraft that are located in Asia. Many foreign sellers will demand that a US buyer pay all or part of such ferry costs associated with such an inspection. Conversely, conducting the pre-purchase inspection in a foreign location will be more expensive for the buyer. Next we will discuss the process of deregistration of aircraft from a foreign registry. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

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Importing Used Business Aircraft (Part 2 of 3)

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How to Deal with Commonly Encountered Issues Attorneys Keith Swirsky and Chris Younger continue their examination of importing into the USA a business aircraft that does not have an N-registration. hen importing a non-US registered aircraft from another country, the purchasing company must consider the timing of aircraft deregistration from the foreign registry. The deregistration process sometimes takes several days or longer, depending upon the country where it is registered. The FAA will not register the aircraft in the United States until it receives confirmation directly from the foreign registry that the aircraft has been deregistered. Consequently, a buyer usually wants the aircraft to be deregistered from the foreign registry and the notice of deregistration to be delivered to the FAA prior to the closing, so that the aircraft can be registered in the US at the time of closing and delivery. The seller may also be required to obtain governmental/regulatory approvals to sell and export the aircraft. Obtaining these approvals can be time-consuming and add additional unanticipated

expense for both the buyer and the seller. Foreign sellers may refuse to deregister their aircraft until the buyer has paid the purchase price in full at closing. This is most likely to occur if the seller is concerned that the buyer may default or back out of the deal after the aircraft has been deregistered or if the aircraft is currently subject to commercial financing. In the event of a buyer default after deregistration, the seller could be unable to move the aircraft until it is re-registered in its foreign home country, which can take several days or longer, depending on the country. In such cases, an acceptable compromise could be to have the entire purchase price placed in escrow prior to deregistration, together with an irrevocable escrow instruction letter, jointly executed by buyer and seller, requiring the escrow agent to deliver the purchase price to the seller as soon as the foreign registry delivers a notice of deregistration to the FAA.

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â&#x20AC;&#x153;...the ability to receive financial disclosure to ensure that the buyer may rely on such a guaranty and enforce it is difficult.â&#x20AC;? Determining Ownership/Title

Also of significance, determining the ownership and status of clear title to a foreign-registered aircraft can be tricky. In one transaction, a client was purchasing an aircraft that was: i) ii) iii)

Owned by a company formed in one country, which was owned by other companies that were formed in several different countries; Registered in a third country; and Based in yet another country.

Needless to say, the process of verifying the identity of the aircraft owner, confirming that the aircraft owner (and its owners) were all bona fide individuals or companies in good standing (and were not on any United States governmental blocked persons lists) and that the aircraft was completely free of liens at closing, was challenging, time consuming and expensive. The process required the assistance of attorneys based in several countries. Moreover, if the buyer is financing the purchase of the aircraft, the lender may impose requirements regarding title and authority to sell that are expensive or possibly impossible to meet.

Still More Challenges

A related problem, which may be remote but costly if it occurs, emanates from the inability to recover damages from a foreign seller after an aircraft is purchased if a title or transfer issue arises. As in most aircraft transactions, the seller is typically a special purpose entity that has no assets other than the aircraft it is selling. Obtaining a guaranty from a financially solvent affiliated party is usually difficult, and obtaining a personal guaranty from a wealthy individual principal is nearly impossible. Furthermore, the ability to receive financial disclosure to ensure that the buyer may rely on such a guaranty and enforce it is difficult. Although title insurance is available to mitigate some of this exposure, there is no title insurance policy currently available that covers all of the risks associated with these issues. Furthermore, the seller and its affiliates may be in a location where there is no recourse to normal legal remedies. Therefore, a company needs to have advisors with close connections to competent foreign advisors who are able to conduct all the necessary due diligence regarding these issues and render advice or an opinion regarding them. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

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Importing Used Business Aircraft (Part 3 of 3)

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How to Deal with Commonly Encountered Issues Attorneys Keith Swirsky and Chris Younger conclude their analysis of challenges facing companies and individuals desiring to import business aircraft registered outside the US. urchasers of aircraft imported from outside the US for the purpose of entering ondemand service for hire must consider whether the aircraft has been maintained and its records documented in such a manner as to permit it to be placed on a Part 135 certificate. If the buyer desires to allow the aircraft to be operated in Part 135 charter post-closing, the buyer needs to involve the Part 135 certificate holder’s Director of Maintenance in the acquisition process during the pre-purchase inspection, to determine that there are no equipment issues or deficiencies in the aircraft’s records preventing it from being placed on the certificate holder’s Part 135 certificate. Several other issues may arise in the course of negotiating the purchase agreement. For example, foreign sellers customarily require that buyers insure the seller for a two or three year period post-closing. In other words, the seller requires the buyer to

place the seller on the buyer’s insurance policy, as an additional insured, to cover the potential that the buyer’s operations post-closing could lead to litigation that names the seller as a defendant. In addition, the amount of coverage may be relevant. In our experience, foreign sellers often want more coverage than US buyers customarily place on their aircraft. If the delivery location is outside the United States, the purchasing company must engage foreign advisors to address legal and tax issues relating to delivery in the foreign location. Additionally, the choice of governing law under the purchase agreement is contentious. Also, all parties to the transaction must agree upon which country’s courts will have jurisdiction to hear a case in the event of a dispute, or whether an arbitration clause will require arbitration in a distant foreign location. Naturally, each party will want the

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“The company will need knowledgeable advisors who are experienced in the field of international transactions...” laws of their own country to apply, and each party will want the convenience of local courts in the event of a dispute. There is no easy resolution to this issue.

than anticipated, and might desire to ‘negotiate’ the deal further prior to closing. Other variations on this theme are clearly possible.

Still More

In Summary

Finally, we have occasionally seen currency fluctuation issues affect a pending transaction. In particular, if the transaction is denominated in US Dollars, and the US Dollar weakens relative to the foreign currency, the foreign seller will be yielding a lower purchase price for the aircraft. This situation provides an incentive for the seller to default and refuse to deliver title to the aircraft. As it is most common that a seller’s default will only cause the seller to be liable to reimburse the buyer for its out-of-pocket expenses, the seller may be financially compelled to default on a contract. However, if the transaction is denominated in US Dollars and the US Dollar strengthens against the foreign currency, there will be no added cost to the buyer. Nevertheless, a sophisticated buyer will realize that the seller is yielding a higher purchase price

This three-part series on importing used business aircraft has addressed some of the issues that may arise. Certainly there are other issues not addressed, and as the used aircraft import (and export) market continues to mature, custom and usage between and among the US and other countries will converge. Until such time, however, US buyers will experience these and other difficulties in negotiating a purchase agreement, and coordinating the logistics of inspection and closing. The company will need knowledgeable advisors who are experienced in the field of international transactions, thereby increasing the likelihood of a successful foreign-based aircraft acquisition. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

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PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). Equipment financing and leasing products are provided by PNC Equipment Finance, LLC, a wholly-owned subsidiary of PNC Bank. Aircraft financing is provided by PNC Aviation Finance, a division of PNC Equipment Finance, LLC.In Canada, PNC Bank Canada Branch, the Canadian branch of PNC Bank, provides bank deposit, treasury management, lending (including asset-based lending through its Business Credit division) and leasing products and services (through its Equipment Finance division). Deposits with PNC Bank Canada Branch are not insured by the Canada Deposit Insurance Corporation. Deposits with PNC Bank Canada Branch are not insured by the Federal Deposit Insurance Corporation, nor are they guaranteed by the United States Government or any agency thereof. Lending and leasing products and services, as well as certain other banking products and services, require credit approval. ©2016 The PNC Financial Services Group, Inc. All rights reserved.

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Finance & Insurance

Understanding Aircraft Finance 132 While cash deals still make up most turbine aircraft transactions today, financing remains a viable option for many, notes Conklin & de Decker’s David Wyndham.

he US Federal Reserve Board has indicated that it plans to increase interest rates gradually. Regardless, financing is very inexpensive at this time. Financial institutions tend to base their aircraft rates on the London Interbank Offered Rate (LIBOR). LIBOR is the interest rate charged by the leading banks in London when they borrow from other banks. LIBOR currently is the highest it has been in eight years, but rates are still below 2% for their 12-month term. If you or your company has investment-grade credit, money is inexpensive to borrow. If you plan to purchase an aircraft to be used primarily for business, you may want to have the tax depreciation benefits. In general, owning the aircraft (whether purchased with cash or finance)

will give that benefit to you. If you don't need the tax benefits, however, leasing may be the best way to go. For those seeking to finance a purchase, there is a choice to obtain financing through traditional public banks, private banks and other non-bank financial firms. (For the purpose of this article, we'll use ‘Financial Institution’ as a general term, unless the text applies to one specific entity.) Buyers of business aircraft should be aware that public banks tend to have greater regulatory oversight and thus may be limited in some of the more creative options that other institutions can offer.

Should I Lease or Buy?

Leasing (in the form of an operating lease) offers a specific period of aircraft access with a defined, fixed-cost of ownership at a specific lease rate. The financial institution that owns the aircraft assumes the residual value risk and will have the tax depreciation benefits.

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“Given the volatility in future aircraft values at this time, lease rates today will reflect that uncertainty.”

Short-Term Lease: Some financial institutions will offer short term leases of 18-24 months. Such an arrangement is particularly useful to operators waiting for delivery of a new aircraft. This solution may be easy to do if the financial institution is also involved in the new aircraft financing or leasing. An important question when leasing is who pays for any unscheduled or major aircraft maintenance? If the leased aircraft is due for a major inspection during your lease, are you going to be responsible for 100% of the expense or will the lessor assume responsibility of at least a portion of the cost? Long-Term Leases: The length of a lease can vary. Since the financial institution carries the risk of the aircraft’s residual value and must retain aircraft ownership at lease-end, it will price its lease terms accordingly to cover that risk. Several experts within the industry have estimated a 10-12% decline in the value of turbine airplanes, annually. Given the volatility in future aircraft values at this time, lease rates today will reflect that uncertainty.

Early Buy-Outs (EBOs) can be offered in a lease, allowing a Lessee the option to exit the lease by purchasing the aircraft. On an eight-year lease, you may have an EBO at years four, five and six (for example). The financial institution will offer the EBO at a fixed-price that covers its estimated residual value risk, and as a result the EBO can be greater than the aircraft’s fair market value at the buy-out time. With many leases you can exit at any time provided you pay off the remaining lease payments. Leases also have requirements for the aircraft’s condition at the end of the contract. There will be adjustments for high utilization and its impact on both the maintenance status of major components as well as the aircraft’s residual value. Many lessors (especially in large cabin jets) will require that the engines be on a guaranteed hourly maintenance program to protect the engine values. With Lessors facing uncertain futures regarding residual values, financial institutions all set the lease rate to cover that uncertainty.

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Finance & Insurance

134 Leases ultimately work best for those who: • Have no need of tax depreciation; • Have a fixed amount of utilization; and • Have a fixed period for which they wish to have the aircraft. Lease buyers should also look to financing to obtain an aircraft. Financing: There are many different options within financing. The better the credit, the more options become available. Interest-only or large balloon payments at term-end are still available. Some loans may have Loan-to-Value (LtV) guarantees to secure the financial institution's risk. LtV is a ratio of the loan's principal balance to the fair market value of the aircraft. The LtV guarantee typically states that the fair market value of the aircraft must be greater than the remaining loan balance. If LtV exceeds 100% it triggers a payoff to the financial institution that brings the LtV back into a safe range for the lessor. Loans may or may not require collateral in addition to the aircraft.

The Twenty-Year Rule

Since the recession, aircraft values have remained low and there is no immediate sign of that changing. There also remains a good supply of preowned models from which to choose. That situation

“On that basis, a 15-year old aircraft would get a five-year loan, but not six years.”

is great if you are the aircraft buyer. Along with new aircraft, younger used aircraft would be the preferred asset to lend against. While the change in residual value on a new aircraft can be significant, the financial institution will have a high degree of confidence that they can sell the aircraft in the event of a default from the owner. Many financial institutions, however, are wary of having to sell an older business jet they’ve taken back from a lease or collected in default. Thus we have the ‘Twenty-Year Rule’ that states, “The age of the aircraft plus the length of the transaction will not exceed 20 years.” On that basis, a 15-year old aircraft would get a five-year loan, but not six years. The Twenty-Year Rule is a soft rule. The more a financial institution knows about you, your intended use of the aircraft, and the technical knowledge they have about the aircraft you are considering, the more flexible the rule becomes. Regardless, a thorough pre-buy by a qualified maintenance facility (not aligned to the seller) will be essential.

Quality Matters, ADS-B Matters

Financial institutions like financing new aircraft. These are in new condition, have the latest avionics, are in warranty and should see no major maintenance expenses during the first years of use. Financing used aircraft requires more work by the financial institution. The quality of the aircraft and its maintenance status ultimately trumps its age.

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ADS-B is a part of the due diligence process for a prospective aircraft buyer. ADS-B is required here in the US by January 1, 2020. On that date, a turbine aircraft not equipped for ADS-B Out effectively becomes impractical to fly. Be warned that there is not enough capacity in all the qualified avionic shops to update the estimated 11,000 turbine aircraft still requiring ADS-B upgrade by 2020 (and that number does not include the thousands of piston-powered aircraft that also will need ADS-B Out). Lending institutions will be reluctant to finance an aircraft that does not have ADS-B Out capability unless it has a scheduled slot for the installation.

Where’s the Best Place to Finance?

Start where you currently bank. You may already have an existing relationship with one or several financial institutions that you can leverage. They know you, your business and your financials. If you have significant financial resources with one institution, it will likely work very hard to keep all your banking business with them. Larger institutions often have an aviation banking division as part of, or even separate from their equipment finance division. If the deal is complicated or your financial institution seems reluctant to work with aircraft, you may wish to look for a financial institution that caters to those types of transactions.

“You may already have an existing relationship with one or several financial institutions that you can leverage.”

The National Aircraft Finance Association (www.nafa.aero) is a great reference for finding an aviation lender. NAFA has teams that focus exclusively on aircraft finance and leasing, and the Association offers a product and services finder that enables you to look up specific institutions. Some lenders have financing specialties such as aircraft loans and leases from $1m-10m. Another relatively new resource is FlyFunder (www.flyfunder.com), which seeks to match financial institutions with aircraft buyers in search of financing. FlyFunder uses general details of the transaction as provided by the buyer. The financial institution can review and choose to respond as "interested" to the buyer. FlyFunder’s income comes from a fee paid by the financier. Another source to find financing may be via the aircraft dealer or broker. Many have successfully closed hundreds of deals that were financed. They may well have recommendations based on the type of deal that you need.

To Summarize

Aviation lenders are ready to make deals, but they are looking for the right deals. The money is there. As with any financial transaction, seek qualified aviation legal and tax advice before making a commitment… T

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Used Aircraft Aircraft Financing Financing Facts Facts Used Cutting Through the Myths of Aircraft Financing Cutting Through the Myths of Aircraft Financing

136 Latent memories of the Great Recession continue to feed myths and misinformation about the availability of aircraft financing and loan interest rates, notes Dave Higdon. But what are the myths, and what are the facts…? he myths surrounding the availability and terms of aircraft financing combine to discourage some prospects from pursuing their desire to buy into Business Aviation, or change their aircraft. It’s important, then, to explore the perceived ‘truths’ of aircraft financing, and where necessary set the record straight. Following are some of the prevailing myths in Business Aviation at this time...

Myth 1: There’s Very Little Good Financing Available

Multiple lenders with credible reputations for fair dealing are servicing today's market for new and used business aircraft. These lenders span a significant variety of institutions and businesses. Today's playing field is arguably smaller, albeit more diverse than it was in 2007, however. Today lenders range from large banks (domestic and international) to smaller institutions focusing on

regional markets. Of course, they all seek to generate profit from their assets but can't make a profit off idle money... so many lend funds to airplane buyers, which (in general) tend to be goodrisk borrowers. Not all lenders offer financing suitable for every deal or airplane category. The key to fulfilling the finance need centers on finding a fit between the chosen aircraft and the lender. Thus, aircraft financing can be as much a matter of knowing what to seek as knowing what to avoid. A business looking to add its first aircraft asset may need nothing more than its local bank when the aircraft is a high-performance Piston Single, older Turboprop or even an older Light jet. But a prospective operator looking to add a late-model Large Cabin jet may find better, more knowledgeable help via a lender specializing in higher-end business jets.

Myth 2: Cash is Always the Best…

The perennial conundrum in aircraft transactions: Cash or credit? In recent years many a business decided to bank profits rather than invest them – or return some to shareholders as dividend payments. Such caches of cold cash allow the holders the option of acquiring the business

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aircraft of their choosing without enduring the process of finding financing, completing loan applications, conducting due diligence documentation and engaging title search companies. Cash purchasing means no loan papers, no credit check, no down-payment and no interest payments. The title check, however, remains a smart move that, if skipped, could produce complications when time comes to sell that aircraft. According to a sampling of dealers, brokers and lenders, cash remains king and accounts for upward of 40% of all used aircraft purchases. Leases of various types are responsible for another third of transactions, leaving between 25-30% of transactions to the lenders. Interest rates for lending remain below historic norms, even after several small upward adjustments by the Federal Reserve in recent months. The 12month US$ London Interbank Offered Rate (USD LIBOR) is the average interest rate at which a selection of banks in London are prepared to lend to one another in US$ with a maturity of 12 months. LIBOR rates provide a good yardstick. The bank rates for loans on business-turbine aircraft in the US range from the low 3% range to under 5%, based on a sampling of multiple

institutions. Take a look at homes and automobile loans and you'll see similar rates for “well qualified” customers. The lowest rates go to new and newer used aircraft – but only for those well-qualified buyers able to make a minimum down-payment of 20%. The lowest interest rates go to buyers making higher down-payments. The planned home-base of an aircraft may impact the interest rate a lender seeks – particularly if the lender is in the US and the planned home base is in a part of the world with security issues. Cash transactions carry lower costs - they tend to take less time, and once the deal is done, it's done. You can base the aircraft anywhere that works for you. The only issue then is between you and your insurer. But, cash reduces the tax implications with no interest payments to deduct. Any depreciation depends on whether the asset remains eligible to be written off. Investment experts caution prospects considering a cash deal to weigh the investment value of those funds against the costs of a loan, of which interest payments are only a part. The cash-or-credit decision will hinge on whether the buyer sees potential to earn more than the loan's cost by keeping the cash in paying

“The bank rates for loans on businessturbine aircraft in the US range from the low 3% range to under 5%.”

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investments. Where the loan costs exceed the funds' investment value, borrowing may not be the preferred approach. But where the funds can earn more remaining in investments, loan payments may be the better-value decision.

Myth 3: Financing Options are Restricted

Pre-recession lending norms returned a couple of years ago, albeit with changes. Today's market bears little resemblance to conditions approaching the used aircraft market of a decade ago. Diminution of residual values in today’s market differ from the heady days before the Great Recession, but younger used jets still command good prices. Availability is the biggest difference here. And now people are flying more – good news helped along by innovative new options for flying private aircraft and the high-visibility downsides of airline travel. As for options for borrowing to buy an aircraft, consider these lender options: Banks: Anyone doubting the desire of banks to participate obviously hasn't seen the advertisements populating aviation and business-oriented magazines. Banks make their profit by lending money to borrowers able to pay the principal and interest on the note. In general, all banks make loans – but not all banks lend their funds for aircraft purchases. Some banks will lend money to fund an airplane when the borrower is a valued customer with an established relationship with the institution. Other banks have departments with staff specialized in making loans on aircraft. Each has its own set of guidelines defining the kinds of aircraft and loans they will make. The key to deciding to do business with a bank is finding one for which the total costs meet the buyer's needs. As noted before, interest payments are only part of the costs, but they are tax-deductible regardless of the depreciation available, provided the aircraft is related to a business purpose. Direct Lenders: These can be a little more difficult to find, but they're out there. These sources of funding are not banks or loan companies, but they are indeed entities that lend money. In some cases, they may be individuals with liquid funds available to lend. Their interest rates may be more favorable

and their overall costs in line with, or below that of a bank or other lender. These sources have the flexibility to act where chartered institutions may not. And they're not bound by rules of banks and loan institutions. Typically, these lenders base their decision to loan more on the credit and resources of the buyer, not the asset itself. They don't always want to encumber the aircraft, instead working with the borrower's own financial security as the basis for making the loan. Asset-Based Financing: Referring to the use of a company's balance sheet assets, this form of financing includes short-term investments, inventory and accounts receivable, in order to borrow money. The company borrowing the funds must provide the lender with security interest in the assets, and with this approach the aircraft itself may not be encumbered. These types of loans are an attractive option for owners who wish to refinance an aircraft to pay for improvements, upgrades or overhauls. The assets used to secure the loan may include company inventory and raw materials used to produce new products. Interest rates may run a little higher, but the terms are often shorter and more flexible.

Lending Market Alive & Healthy...

One bank loan officer who spoke with AvBuyer noted that his institution's two biggest challenges often stem from a lack of buyers and competition from cash. Many prospects, he said, are prone to think that today's finance market remains unchanged from the dark times of 2008 and beyond. In reality, the aircraft finance market returned to a morebalanced status several years ago – and banks have funds to lend. As for the “cash competitor” (as he put it), competing for the business of the cash-flush buyer comes down to showing them what that cash can earn them over and above the costs of a loan. And that, he said, may be the pathway to gaining a customer on two fronts: One a depositor, the other a borrower. So, would-be borrowers interested in an aircraft can rest assured that loan officers across the US are ready to take your call. T

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Finance & Insurance

Insurance Fundamentals Insurance Fundamentals hat Does your Stated Coverage Actually What DoesProvide…? your Stated Coverage Actually Provide…? 140 Heidi R. Albers, an attorney with Cooling & Herbers, P.C., dissects the word ‘insurance’ to examine some of the typical terms and protections of aircraft hull and liability policies. Her checklist format offers owners and operators insightful information...

irst, a word of caution: Although many aviation insurance policies are written on an “All Risk” basis, they do not cover all risks of owning and operating an aircraft. While an essential tool for risk management, insurance policies have coverage limits, restrictions and exclusions that must be understood. Even if unlimited coverage were available on the market, the cost would not be practical for most owners. In a nutshell, here is the best approach when insuring your corporate aircraft: • • • •

Buy as much insurance coverage as you can reasonably afford; Verify that your policy complies with insurance requirements in your aircraft contracts; Check your policy for gaps in coverage; Contact your aviation insurance broker to fix any issue with your policy before operating your aircraft, such as changes to the approved pilots or additional insureds provisions.

As outlined below, there are some common coverage issues that you should consider when reviewing your Business Aviation insurance policy.

Insurance Coverage

Physical damage coverage is insured at an amount agreed upon by the aircraft owner and the insurer. In determining the agreed value, insurers will use the current market ‘retail value’ as a guideline, and owners should consider what it would cost to replace your aircraft with ‘like-kind and quality’. If the agreed value is higher than the true market value, you may be paying a higher premium than necessary and the insurance company may elect to repair any damage rather than declare a total loss, which may impact your aircraft’s resale value. If the agreed value is lower than the true market value, the insurance company may elect to declare a total loss rather than repair the damage and you may not have adequate insurance proceeds to replace your aircraft in the event of loss. Review the agreed value at the time of yearly policy renewal to determine the appropriate amount to replace the aircraft (including all upgrades and improvements) in the current market and to comply with the minimum insured values required by your lender. Aircraft liability coverage limits are available up to hundreds of millions of dollars. The limits are

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of coverage). You may want to limit the amount and extent of coverage available to such insureds to maximize the coverage available to you. For example, if the policy provides $50m overall in liability coverage, you may want to limit the coverage you share to $10m (unless higher coverage is required under your contracts with the Additional Insured). Another common issue for policies with multiple insureds is invalidation of interest/breach of warranty. Generally, if one insured party invalidates the policy, coverage is voided for all insured parties. Lenders and other Additional Insureds usually require an invalidation of interest/breach of warranty clause in their favor to ensure that they have coverage if the Named Insured or other insureds invalidate the policy. Some aviation insurance policies for smaller aircraft restrict coverage to ‘pleasure and business’ use, which means you may not charge for the use of your aircraft. If you plan to operate the aircraft for reimbursement under Part 91 of the FARs, you want a broad usage clause under your policy to provide coverage “for all operations of the Named Insured”. Any commercial usage, such as charter, should be expressly recognized as an approved operation in the purpose of use clause to avoid any doubt that it is covered under your policy.

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Use

Restrictions negotiable and based on a number of factors including the aircraft type, maximum seating, pilot experience and value of assets of the insured. Since future loss is impossible to predict, the best approach is to buy as much liability coverage as is affordable and relevant for your operations. Your aviation insurance broker should explain all the coverages under your policy, including coverage for ancillary expenses such as extra costs for rental aircraft and trip interruption. Ancillary expenses can exceed the cost to repair damage to your aircraft, and without the proper coverage you will not be reimbursed by your insurer.

Named Insured

The Named Insured under your policy should include the aircraft owner and any other related parties that may have legal liability or require insurance defense in the event of a lawsuit. “ABC Company, LLC, its members, managers, directors, officers, employees, subsidiaries and affiliated companies” is an example of a broadly-worded Named Insured clause. The Named Insured owns the policy, is responsible for premiums, benefits from all coverages, and controls the claims process and changes to the policy. Additional Insureds share only some of the liability coverages, do not have as many rights or responsibilities as the Named Insured and do not have control over the policy or the claims process.

Shared Coverage

If you add other parties as Additional Insureds under your policy, your liability coverage is shared with them (also known as dilution

There are many restrictions in an aviation insurance policy that should be carefully reviewed with your aviation insurance broker to ensure that the policy covers your intended operations. These may also be called conditions or exclusions. For example, the policy may restrict coverage to those operations within a certain geographic territory. Another common condition is the Pilot Warranty (Approved Pilots) clause in your policy, which lists the approved pilots for your aircraft and provides an ‘open pilot warranty’ for any other pilots. The open pilot warranty is the minimum qualifications and training requirements for coverage under your policy for pilots not specifically listed as approved in your policy. The use of pilots for your aircraft who are not specifically listed or who do not comply with the open pilot warranty in your aviation insurance policy will void your coverage. A broader pilot approval clause such as ‘any pilot approved by the Named Insured’ is recommended.

Allied Perils and War Risk Coverage

There are several allied perils and war risks that are typically excluded from coverage in an aviation insurance policy with respect to both liability and physical damage coverage. The war risk exclusion is not solely for acts of war, terrorism and hijacking, however. For example, coverage for confiscation and seizure of your aircraft is also typically excluded. Some limited coverage can be purchased to mitigate these risks. It would be wise to talk to your aviation insurance broker about adding war risk liability and physical damage to your policy, particularly if you operate aircraft outside of the US. The premium to add this coverage is usually minimal.

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Non-Owned Coverage

Any aircraft used that you do not own in whole or in part is considered a non-owned aircraft and is not covered under your policy unless you have non-owned aircraft liability coverage. For example, if your aircraft is undergoing maintenance or being used by another person, you may need to lease or charter an aircraft owned by someone else. If there is an accident while using a non-owned aircraft, you may have liability and need to defend yourself for damage to that aircraft or harm to others arising out of your operation or use of that aircraft. The best approach is to maintain non-owned coverage under your own policy, plus be covered as an Additional Insured under the policy for the aircraft you are using. As there are limitations on the applicability of non-owned coverage, this provision should be carefully reviewed with your aviation insurance broker for adequate protection.

Contracts

Submit your aircraft contracts to your aviation insurance broker for review before you sign them. Otherwise, you may later discover that you have agreed to certain obligations that are excluded under your policy. Aviation insurance policies also usually require that you submit a copy of all such contracts to your insurance company underwriter for acknowledgement and approval. Common provisions that require insurer approval include indemnification obligations to your contract partner and additional insured and “waiver of subrogation” coverage obligations in favor of your contract partner.

Exclusions

“ Submit your aircraft contracts to your aviation insurance broker for review before you sign them.”

There are numerous exclusions under aviation insurance policies. Some excluded losses may be covered by adding a ‘write-back’ endorsement to your policy for an extra premium, such as the war risk coverage discussed above. Another common exclusion is for claims relating to the loss of market value of your aircraft as a result of damage history, which is also known as diminution in value. Diminution coverage, which may be obtained through an endorsement to your policy, covers a percentage of the agreed aircraft value depending on the amount of premium paid. This coverage may offset a reduction in resale value resulting from damage history, but the coverage is costly compared to physical damage premiums. If you operate your aircraft in foreign countries, be aware that certain aircraft insurance coverage may be required for compliance with a country’s rules and regulations. For example, if you operate your aircraft in or over the EU, you must have certain liability coverages based on the MTOW of your aircraft and other factors. If you operate your aircraft in Mexico, you need a liability insurance certificate issued by an insurance company licensed in Mexico, which can usually be obtained for a nominal charge. Notify your aviation insurance broker of your intended international operations to ensure that coverage applies while traveling abroad and that all necessary documentation is issued properly. In conclusion, you should consult with your aviation attorney and insurance broker about these and other considerations to ensure that your aviation insurance policy fits your unique operation. T

Section Contributors

Mario Pierobon is a safety management consultant and content producer. He currently is working on a research project investigating aircraft ground handling safety. Contact him via marioprbn@gmail.com

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Flight Department Management

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How to Manage Flight Department Personalities Harmonizing the Assignment of Departmental Duties

144 Recently, Aviation Director Andre Fodor concluded the sale of one of his company’s Large Cabin business jets to an overseas buyer as part of a fleet upgrade. That transaction proved enlightening for him with regards to the effective running of a Flight Department. Here’s why… s transactions go, the sale of our Large Cabin jet was fairly painless – but it wasn’t devoid of peculiarities and surprises. From our first meeting with the prospective buyer, we were told how ready and eager they were to close on the transaction as their previous airplane had already been sold. We provided assurances of full support and speedy collaboration towards accomplishing the prepurchase inspection (PPI), along with the remainder of the closing process. On our part, we delivered as promised, anticipating the roadblocks and correcting the issues that were found during the PPI even before the final inspection report was delivered to the buyer. Yet throughout the process, I noticed that anytime the buyer’s side needed to act, the process ground to a standstill. Responses tended to be scattered and slow, although the buyer’s team appeared well qualified and ready to perform the tasks. It was during a meeting with the buyer’s Chief

Pilot that I was able to gain better insight into the situation. We were selecting new blankets and cabin equipment for the airplane, and I made the suggestion that we place the order to expedite aircraft inception into service. The Chief Pilot explained he would need to get his Principal’s approval for the $200 purchase, and ‘Voila’ – I was able to identify the bottleneck! Through gentle probing, I learned that every aircraft decision required the Principal’s approval. His mechanics, for example, had been late to travel to the PPI because the Principal needed to approve the cost of the airline tickets first. Many critical decisions remained unresolved because the Principal was either busy running his company or was unreachable for other reasons. To summarize, the aircraft remained on the ground well after closing, unproductive as a result of the lack of authorization for even minor decision-making as qualified and trusted people awaited the upshot of their Principal’s micro-management. This story is likely familiar to many aircraft managers. There can be no denying the need for company management to be ‘in the know’ with regard to the Flight Department, but the focus should essentially be on empowering Flight Department personnel through coaching, which leads to an autonomous, energetic and efficient team within which people thrive.

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“ ...it is a useful exercise to encourage staff to set their own schedules, wherever possible, until it’s time to fly a trip.”

Understanding Personalities

There will, of course, always be people requiring specific guidance to perform within the Flight Department. These are not necessarily bad employees - they’re just not skilled at self-managing. Many years ago when I worked for an OEM, we were asked to decide on our own schedule. It was eye-opening to note the high proportion of pilots who preferred exact guidelines over schedule flexibility. That experience taught me better ways to manage and distribute flight department duties going forward. Within most Flight Departments there will be some team members who require very specific and detailed guidance. By understanding those personality-types, assignment instructions can be tailored and checklists followed rigorously, eliminating potential frustration and setting specific expectations. Nevertheless, tools such as The Predictive Index (PI), which is a self-reporting assessment of workrelated personality, can assist within the Flight Department to help tailor the assignment of responsibilities and more effectively encourage and manage personnel. Flight Department staff can essentially become ‘boss’ free when they know their responsibilities and can anticipate new ones, work ahead of deadlines, meet commonly-agreed high standards, and keep

their line-manager informed of the main goals. In a flight department, where schedules are fluid and there is likely to be no daily card punching at the office, it is a useful exercise to encourage staff to set their own schedules, wherever possible, until it’s time to fly a trip. In team-building, a Flight Department Manager must learn how to best manage the people within the team. Being cognizant of your team’s individual personality traits will help harmonize the assignment of workplace responsibilities.

In Summary…

An essential area of managing a Flight Department is to develop clear guidelines and goals for the team so that they know what is expected. Empowerment, creative problem solving, team- and self-growth, attention to detail and customer service are all core skills to be encouraged and worked into the operational mindset. Mistakes are an inevitable part of life. In the absence of a ‘blame culture’, even mistakes can be shared and understood to help the department move forward as a whole. Your Flight Department is comprised of several gifted individuals with the ability to change and grow in skill and potential. If you can manage that skillfully, you will always be closer to providing your customers with the ultimate flight experience. T

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Tips to Keep Staff Pilots and Improve Safety

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How Does Employee Retention Help a Flight Department’s Safety Effort? Being a Corporate Pilot isn’t easy, notes Mario Pierobon. That’s reflected in the relatively short tenure of pilots within a Flight Department. So how can Flight Department Managers keep staff longer and retain the highest safety standards in the process? ne of the realities of Business Aviation is that pilots come and go. They tend to not stick with one employer very long as they seek better opportunities or come to terms with the commercial reality that they have relatively shortterm engagements with those who hire them. Yet a healthy level of employee retention is good for business, and especially useful from a safety management standpoint within the Flight Department. Those Flight Departments that can boast a healthy level of employee retention demonstrate that they can foster a sense of belonging within their workforce. And with belonging comes greater care and personal accountability. Employees are more willing to ‘go the extra mile’ to make things work, and they foster ‘continuous

improvement’ as a true corporate value, not just lip service. With a sense of belonging, a genuine confidence can exist that pilots will report safety issues impacting both themselves and their colleagues (as part of the team). Higher employee retention also ensures that the effects of training are maximized. Furthermore, maintaining proficiency through recurrency courses is not just treated as a ‘necessary evil’ providing addenda to the CVs of employees. So, how does a Flight Department achieve an increased employee retention rate?

Career

The first thing for Flight Department Managers to do is be honest with themselves; they need to be convinced that having employees stick around is a good thing. Corporate Pilots are not looking for a parttime job – they’re looking for a career. In order to deliver consistently in the workplace they need to have profound career aspirations met and fulfilled. There can be no effective management of employee performance if this fundamental

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need is not embraced. Indeed the very same career aspirations that new recruits have are likely the very same ones that motivated Flight Department Managers when they started out as professional pilots.

Salary

Second, new recruits must be offered a suitable salary – yet this is the hardest task to accomplish because the flight operations manager may have relatively little say over budgets. So they often must do the best they can with whatever is made available to them. If new recruits are not given a fair salary it is almost certain that they will leave, and with that departure the need arises to find someone else who will become familiarized with the workings of the organization. Familiarization costs time and money, and that indirect personnel cost may not be duly accounted for by senior management. Thus, the Flight Department Manager should make a compelling case to senior managers and demonstrate how paying better salaries improves the organization’s bottom-line. Paying low salaries is ultimately a short-sighted approach. Advocating this position may require courage and creativity on the part of the Flight Department Manager.

Promotion

The third effort that flight department managers should achieve is helping personnel fulfil their aspirations. Improving personnel retention (and managing their performance) requires more than good remuneration. Corporate pilots expect to advance in

their careers with increasing responsibilities, not just increasing flight hours. A problem with some Corporate Flight Departments is size. The opportunities for employees to grow as people managers can be limited as there are few levels of management as well as managerial posts available within smaller organizations. However, the proactive Flight Department Manager will realise the regulatory requirements for air operators entail several functional managerial roles (safety, quality, training, etc.). Opportunities thus exist for employees to grow as functional managers while continuing to fly, and these requirements should be utilized in order to support the fulfilment of career aspirations. Further, with continuously upgrading aircraft technology there are many shorter-term projects to implement company wide. Electronic Flight Bag (EFB) and Performance Based Navigation (PBN) transition are examples of technological change within the industry, and the transition from one system to another can be assigned to members of staff to help increase their sense of ownership within the department. Such assignments emphasize that the organization values employee input. Management’s efforts to enhance job fulfilment for pilots contribute to employee retention. In short, retaining employees might imply higher remuneration costs, but building a loyal and knowledgeable staff results in improved performance and safety standards, which can be inhibited by high levels of personnel turnover. T

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How Pilot Health & Safety are Linked Who is Responsible for Fitness for

Duty in the Flight 150

Department?

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n recent years, thanks (in part) to the affirmation of Fatigue Risk Management (FRM) systems within scheduled commercial air transport, the Business Aviation industry has been paying increasing attention to the issue of flight crew fatigue. Fatigue significantly impairs Fitness for Duty of pilots and mechanics, and carries the potential for unsafe operational outcomes within Flight Departments. To tackle the problem, it’s vital to understand that Fitness for Duty is a two-way street. The Flight Department and its personnel each need to take responsibility and be proactive in implementing appropriate measures.

Individual Responsibility

To a large extent, successfully managing the risk of fatigue depends on individual efforts of Flight Department personnel to manage their own fitness – and understand individual levels of fatigue. There’s already a wealth of knowledge available within industry publications concerning the scientific principles for Fatigue Risk Management (we won’t repeat them here), but it should suffice to say that flight crews and mechanics, given the safety sensitive role they have at work, should make every effort to minimize fatigue in the workplace through: • • • • •

Ensuring a healthy, balanced diet; Exercising regularly; Finding frequent time for relaxation and quietness; Seeking counselling in times of distress; Understanding how to maximize the quality of sleep.

Everything that can contribute to the level of fatigue of flight crews that’s beyond the personal lifestyle of staff should be the responsibility of the Flight Department…

Department Responsibility

There is currently no mandatory requirement for FRM implementation in Business Aviation, yet fatigue is recognized as an issue and corporate

flight departments should be proactive about the subject. Here we focus on three high-level practices that proactive operators wanting to target the risk of fatigue should have in place. Practice #1 - Promoting Wellbeing: There is no point in implementing a FRM system if employee wellbeing is not actively promoted within the Flight Department. Employers should show employees that their wellbeing is of prime importance, which can be demonstrated practically in various ways – whether through subsidized memberships at fitness centers, memos sent out recurrently, or other literature reinforcing the importance and principles of Fitness for Duty. The message that the Flight Department cares about employee wellbeing and expects them to look after their health must be conveyed. Practice #2 – Making Realistic Demands: Another important practice to sustain effective FRM implementation is avoiding unrealistic demands on employee productivity. Simply put, flight crews and mechanics are not lemons to be squeezed. Work schedules should ensure that workloads are manageable and that adequate rest levels can be achieved. By its very nature Business Aviation does not run like the Scheduled Airlines. Business Aviation passengers can be unpredictable because appointments take longer – or shorter – than planned, and changes arise at the last-minute. Thus operational buffers (such as the availability of additional crew members on-duty or on-call) must be deployed. Practice #3 – Acting on Issues: The last practice for successful FRM implementation requires the Flight Department to act on identified issues. Data collected as part of FRM may imply a need for significant change (i.e., with regard to crew scheduling). It is essential that Flight Departments are not change-resistant. In the safety business, employees greatly value seeing changes take place after issues have been raised from the line environment. While operational changes may imply higher costs, there is an added benefit in the increased employee commitment that stems from seeking needed corrections and acting promptly on worthy suggestions. A handy by-product of such FRM implementation is increased productivity within safety margins. T

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NBAA has identified a set of foundations for safety in Business Aviation operations, including Professionalism, Safety Leadership, Technical Excellence, Risk Management and Fitness for Duty. Mario Pierobon assesses these elements, beginning with a closer look at Fitness for Duty.

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Section Contributors

Katie Dolan got her start in aviation as a technical writer for Duncan Aviation's Engineering and Certification Department in 2008. Transitioning to the Marketing Department in 2009 allowed her to broaden her focus to press releases, articles for the company newsletter and Duncan Debrief magazine, content for the Duncan Aviation website (www.DuncanAviation.com), StraightTalk books and other marketing materials as needed.

Chad Lombardo is a Technical Advisor for JSSI in the Midwest. He is a licensed Aircraft and Powerplant mechanic and has previously worked at AVMATS and Dassault Falcon Jet in Delaware, where he was responsible for all aspects of project management and customer satisfaction (including many interior modifications). Contact him via clombardo@jetsupport.com.

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Maintenance Delays & How To Avoid Them 154

Who’s Fault Are They Anyway? It’s puzzling that in the dynamic relationship between OEMs, Service Centers and business jet owners there’s hesitation to smooth out the complexities, notes Andre Fodor. What are the solutions to fulfilling customer expectations when it comes to business jet maintenance?

t’s interesting how new aircraft deliveries typically occur at year-end. There are several contributing factors to this, including companies realizing their profits in Q4 and determining the tax ramifications of making a large capital expenditure towards the end of the fiscal year. Here in the US, I believe the government is at fault for being ambiguous regarding valuable fiscal tools designed to motivate large purchases such as corporate aircraft; they should be available yearround to foster earlier sales and allow for more earlyand mid-year deliveries. Yet the fault doesn’t rest solely with the government. The OEMs, hungry to eliminate the

possibility of white tails on their ramps, are eager to discount pricing as the year progresses. If they were to correct their pricing from the early months of the year, there would perhaps be less hesitation from buyers to make a move earlier and sales would be spread more evenly throughout the year. The knock-on effect of the uneven spread of deliveries is less obvious, but significant. For example, aircraft tend to receive their airworthiness certificates in the same time period, which causes maintenance cycle clocks to begin ticking at the same time. So 12, 24 or 36 months later, you find many airplanes with maintenance coming due that flood the service centers with an uneven workload.

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What’s the Solution?

Maintenance scheduling can be harmonized; it just takes a little coaching. By working with operators and owners, the OEM can begin to spread out the jet’s certification and balance maintenance-due cycles. This solution would reduce the strain that causes an increase in labor costs and decreases the returnto-service quality. With education, any seasoned operator will see that offsetting inspections against the rest of the fleet will generate a quicker return-to-service – and hence lower the overall costs. Another coaching opportunity comes in teaching customers how to manage their expectations. It is acceptable particularly with brand-new airplanes – for customers to show up at service centers unannounced and expect prompt attention when a critical maintenance issue causes a potential AOG situation. When that same operator decides, having arrived at the facility, to have a variety of additional squawks containing non-critical items addressed (squawks that should be kept for the scheduled maintenance events), the result will lead to unfulfilled expectations. It becomes essential for the OEM to educate the aircraft owner as to the goal of an ‘unscheduled maintenance stop’ (i.e., to return the aircraft back into ‘revenue mode’), setting a clear understanding and harmonizing expectations of the OEM and the customer. A laundry list of pocketed unscheduled squawks must therefore always be received with the caveat, “time and workload permitting”.

Missing Proactivity

Since a business jet’s maintenance clocks start ticking upon certification, it follows that the OEM has the

information to predict upcoming scheduled maintenance events. Yet there is a lack of proactive process-monitoring and forecasting of due-dates in order to schedule upcoming work with customers. Through pre-planning, an OEM and its service center network can gain business and spread workload through its service centers to help clear bottlenecks. Incentives may be required to persuade customers to move their aircraft to a more distant (but less busy) shop, but again – through education – the benefits can be explained quite tangibly. On the flip side of the coin, however, customers must also be prepared to plan. Not scheduling shoptime in advance when it’s clear the maintenance due-date is approaching shows an amateur approach to aircraft management. (In our Flight Department we schedule inspections six months in advance, finetuning the exact date with the flight schedule.)

So, Who’s At Fault?

It’s puzzling that in such a dynamic relationship between OEMs, Aircraft Maintenance Providers, Service Centers and Jet owners, there’s hesitation to reduce complexities. In a good marriage you have to invest, modify, tailor and settle many times as the relationship changes and matures. Aircraft ownership is no different – requiring long-term investment and commitment. Communication becomes essential. When nurtured coordination between all parties will fulfil your expectations and further your business through growth and positivity. That’s got to be worth working for! Next we’ll take a look at the issue of avoiding maintenance delays from the perspective of a used jet owner and their chosen service center. Stay tuned! T

“Yet there is a lack of proactive processmonitoring and forecasting of due-dates in order to schedule upcoming work with customers.”

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How to Get the Best from Your Jet Maintenance

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It’s Down to us to Exact the Quality It’s DownWe’ve to us to Exact Quality Service Come tothe Expect… Service We’ve Come to Expect… Previously, Aviation Director Andre Fodor discussed how our industry can improve the level of jet maintenance service to meet the expectations of corporate aviators and managers. Here, he discusses the processes he’s honed on the job to get top maintenance service… orporate aviators and managers are people with acute and peculiar priorities. We’re hyper-focused on our airplanes and spend copious time making sure they are perfect and capable of delivering ultimate service and reliability. In short, corporate aviators and managers stand apart, setting the bar at the highest level and settling for nothing less. The first large cabin jet that I managed was a variant of an airliner. As I structured its operation,

I had the engines enrolled in the manufacturer’s ‘power-by-the-hour’ program for a very comprehensive and inclusive coverage. It can only be described as unfortunate that after a few months of use, one of those engines required removal for the repair and the replacement of the fuel metering unit. As we reviewed the paperwork prior to the reinstallation of the engine, we noticed that the “new” part had 18,000 hours of previous use and more than 24,000 cycles.

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How Did That Happen?

It turned out that since our engine type was also used on airliners, the manufacturer saw fit to pick the replacement part from its rotating parts pool and deemed it ok to install this highly-used part on an engine installed on a very new multi-million dollar business jet. Most Business Aviation professionals reading this will undoubtedly consider such a solution unacceptable, yet the engine manufacturer failed to spot the problem. I could understand that both the airlines and we – the corporate operators – have common goals: that is to dispatch the aircraft reliably. Yet the commonality diverges quickly from there, owing to completely different standards. The airlines are emotionally detached from their aircraft while we, as corporate aviators, are not. It took a great deal of discussion and some strong arm-twisting to remedy the problem with the

“Yet the commonality diverges quickly from there, owing to completely different standards.”

manufacturer, but in the end I got my original part re-installed after it was repaired.

Tips for Picking your Shop

The above experience highlights our discussion – that when choosing a maintenance provider you should not only focus on establishing a long-term relationship but also on establishing that relationship with people who understand the sensitivities of your operation and priorities. To achieve this, I have found that a close look at the leadership of the service organization is very helpful. Mandates for excellence within an MRO organization will radiate downward from the top. Without the full commitment of those in charge – with no gold standard to test itself against – the labor force becomes disenfranchised. I recently took one of our large cabin jets for a full re-paint. This included striping it down to bare metal before a new sleek paint scheme I had designed was

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applied. Selection of the paint shop took effort on my part, and in making my final choice I took into account how effectively I could communicate with the project manager; how quickly I received my answers; and how organized the flow of information was presented. With such a big project ahead, I wanted to ensure that our selection not only had the technical expertise but the organizational skills to meet or exceed our expectation. To my surprise, from all of the serious contenders, no one proposed additional work to our aircraft. With a customer not shy of spending a quarter-milliondollars on a re-paint, wouldn’t you offer additional services that would not delay completion of the project (perhaps a re-stitch or a color dye of the seats)? Our due diligence paid off – we found an excellent match for the job. After my initial consultation with the team that would be working on our jet, I presented the paint rendition and asked, “What can we do to make this better?” To my delight, the seasoned group of painters

held nothing back as we spent hours tweaking and redesigning details that added value and experience to our design and excellence to the finished product.

“Our due diligence paid off – we found an excellent match for the job.”

In Summary…

There is nothing worse then a failure to heed valuable knowledge – and that also applies to the maintenance of your jet. Yet, tapping the knowledge of trusted experts does not release me from my responsibility of making final and complex decisions related to the upkeep of the jet within my flight department. Nevertheless, as I matured in my management skills, I developed a habit to trust people 100%, and then adjusting from there as appropriate. To help me attune that trust level, I insist on hearing insights that help me make the right choices. Perhaps you have your own methods that you’ve honed and developed to meet or exceed your jet maintenance expectations? If so, AvBuyer wants to hear from you. Pooled knowledge helps us all perform our duties within the flight department better… T

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Dear Andre

Dear Joel

With reference to your previous article ‘Maintenance Delays and How to Avoid Them’, great job. I would add that hiring an experienced mechanic to solve those unwanted squawks can help reduce your overall labor cost as well. Coming from a recognized Service Center, I worked on many jets that came in with dozens of discrepancies that could literally be fixed in less than two hours, all combined. But, we had to justify the time being charged to the customer. Keeping a good mechanic on staff will reduce that cost incredibly.

One of the problems that I see nowadays, as we take the aircraft to a service center or maintenance facility, is the eagerness of some centers to start swapping [very expensive] parts instead of allowing experienced mechanics to use their experience and ability to troubleshoot the source problem and solve it at the root level. You are absolutely right in saying that having an experienced mechanic saves money and time; although it is possible to structure aircraft ownership that includes pre-paid all-inclusive maintenance by the OEM. As you grow in aircraft size and complexity, having an experienced and type-trained maintenance professional who oversees the airplane’s well-being is a sure investment towards its reliability and lower operational cost.

Best Regards, Joel Ballista, President & Owner, NeatFlight Aviation

Regards, Andre

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Your Aircraft Refurbishment: Common Mistakes to Avoid If you’re contemplating a major interior or exterior refurbishment

project any time soon, following are some common mistakes to avoid, as presented by JSSI’s Technical Advisor, Chad Lombardo…

tart any refurbishment planning process with a few key questions. Before deciding on what interior changes are needed, identify how the aircraft will be used and for what purposes. Perhaps that sounds l odd, but those questions have major implications for your choice of refurbishment. Do you anticipate using the aircraft strictly for the transportation of key company management and principals in business-related Part 91 flights, or will the aircraft be used partly for Part 135 charter flights (in which utilization is typically higher, and the airplane gets treated more like a rental car than a multi-million dollar asset)? Next, does the aircraft need a full or partial refurbishment? There are many aesthetically pleasing options, such as re-covering seats or installing LED lighting, that are ‘plug-and-play’type installations and often easy and cost-effective to complete. Depending on the aircraft and its maintenance status, a partial refurbishment may be the best solution for you. Making a must-have list of what needs to be done now, versus addressing your entire wish-list, can be helpful. If you’re purchasing a used aircraft, and all the scheduled maintenance is up-to-date, you should consider a partial refurbishment. You can replace or fix your must-have items now and wait until the next major inspection is due to have the entire interior, paint and cockpit upgraded at the same time. Clarifying the answers to the above two questions will also help you avoid some of the following common mistakes associated with an aircraft refurbishment…

Too Much Customization

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Let’s imagine your corporate aircraft needs a full refurbishment. Your principal wants to personalize the aircraft with a newly designed interior and fresh paintwork. This is a common situation and one you need to consider carefully. The buyer of one business jet I worked with chose to bring in their own interior designer who had never created an aircraft interior before. The buyers had a long and close relationship with this talented designer who was very familiar with the owners’ taste, personality and preferences. The biggest mistake the buyer and designer made was to choose a highly customized interior consisting of non-standard materials, special leather seats in an obscure color, and an exclusive textured carpet. Firstly, these materials were not burn certified for used on an aircraft, and the process to secure these certifications was challenging, costly and time consuming. Additionally, problems of obtaining replacement materials to match the originals presented a persistent problem for the owner. Other unexpected issues arose too. Costly damage was incurred after placing a standard adhesive maintenance identification tag on a seat made of non-standard custom leather. Ultimately, the owners got the customized interior they wanted but it came at a price that continued to bite for years afterwards. High levels of customization in a cabin refurbishment can also impact the aircraft’s resale proposition. What appeals to you personally won’t necessarily appeal to the wider market of prospective aircraft owners.

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“Many aircraft buyers fail to ask about existing warranties covering the interiors or paint when they purchase a used aircraft.”

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Finally, one aircraft with a customized interior included a beautiful matt-finish credenza with a natural wood top. While it looked superb when newly refurbished, by the time the owner wanted to sell the aircraft the surface had cracked and was covered with scratches. What should have typically cost $600 to touch-up prior to resale, equated to $3,000 for a custom repair. When it comes to aircraft paint, too much customization can get in the way at the time of resale. There are some amazing paint options available today, including metallic or mica finishes that truly look stunning, but they are also very difficult to touch-up. It’s inevitable that at some point you will need to have the paint repaired, especially when you are ready to sell. Other custom paint designs include company-specific themes, such as placing the company logo on the tail. This customization can be great for the current owner but cost $30k–$40k to remove before a prospective buyer can take delivery. Time kills deals, especially when selling an aircraft. Imagine there are two similar Gulfstream G450s for sale at similar prices. If one of the aircraft needs the logo removed from the tail, the metallic paint retouched, and a custom wood cabinet surface repaired, which of the two options will appeal the most to the impatient buyer? Even if buyers are willing to wait to have the necessary alterations made, those cosmetics will probably be at your expense.

Customization Tip: Buy Extra Materials

Having seen many extreme designs and customized interiors end up costing far more than expected over the lifetime of the interior, always ensure that you have extra material, such as that custom shaded leather for the seats or inserts for the oneof-a-kind carpet.

By doing so, when a seat gets ripped or a spillage stains the carpet, the interior can be repaired with the same, certified, customized materials. Further, you’ll avoid the long lead-times for a custom re-order that doesn’t fully match the original color.

Part 135 Charter Interior

As mentioned above, Part 135 charter aircraft interiors tend to take more ‘abuse’. If you plan to charter your aircraft when it’s not in company use, choose fabrics that are easy to clean and replace to keep the refurbishment and repair costs down. Cabinets and surfaces that are easy to touch up, and cabin layouts that are simple but inviting, work well for charter customers. Installing a custom luxury carpet in a charter aircraft makes little sense, since carpets used aboard Part 135 aircraft are typically replaced every two years.

Know Your Warranties

Another potential mistake that is often overlooked is the warranty for paint and interior refurbishments. Many aircraft buyers fail to ask about existing warranties covering the interiors or paint when they purchase a used aircraft. There should always be an ongoing tracking and inspecting process in place by your maintenance team regarding warranties. If you, as a new owner, jump straight into replacing seats, redoing a cracked headliner or repainting the exterior, you could be leaving money on the table if a warranty is still in effect from the previous owner. Moreover, there are airframe maintenance programs that can be transferred with the aircraft purchase and may cover certain refurbishment expenses. Choosing the right refurbishment plan for your aircraft can be both challenging and exciting. To enjoy a beautiful interior and prevent costly mistakes down the road, take a moment now to plan for the future. T

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Make-sense Makeovers Before Selling: Get Maximum Value Without Over-Investment in the Refurbishment Owners of business jets may consider investing in improvements in the

hope of getting a better sale price, notes Dave Higdon. Although the reality will usually disappoint in today’s market, there are nevertheless items sellers can undertake to refurbish their jets and position them well to sell…

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he types of refurbishment work discussed below that a seller might undertake will ensure the asset attracts its actual nominal market value. However difficult the topic of residual value is in today’s market, there is every reason for sellers to present their aircraft in a favorable light. Anything less simply cheats the seller, since the aircraft will take longer to attract a buyer in a competitive marketplace and render lower offers from those who do take an interest.

Maximum-Value Turnkey

Market preferences among pre-owned aircraft shoppers seem to take a circular course over several years, with buyer preferences swinging from a high level of ‘Do-It-Yourself’ bargain-hunters to cash/credit-flush shoppers seeking a turnkey buy (one already outfitted with the preferred cockpit and cabin amenities). Between the looming mandates for Automatic Dependent Surveillance-Broadcast (ADS-B) and Controller-Pilot Datalink Communications (CPDLC), today’s buyers seem to want aircraft already outfitted to meet those mandates. Both upgrades, however, require significant investment on the part of their present owners, and some scheduled down-time to install. Simpler, shorter lead-time upgrades tend to find favor among many buyers. Of the four basic categories of upgrade (cockpit, engine, exterior and interior), the one with arguably the most flexibility may also offer the biggest bang for the buck: the interior. Interior upgrades come in a variety of forms, from down-

to-the-sheet-metal makeovers to updates focused on improving the cosmetics while eschewing more significant, longer-term work. Let's look at the options for making the aircraft look, feel and smell like brand new.

Seating Surfaces

Upholstery takes a lot of wear and tear. It’s inside the cabin that business aircraft often show battle scars. It’s where the owners and users spend most of their time. For the prospective seller, there are a multitude of opportunities to burnish the aircraft's ramp appeal, while focusing on some of the simpler, lower-cost options for renewing or refreshing the interior. Reupholstering seats, for example, requires relatively little downtime compared to other moreinvasive jobs such as a full-interior makeover. With advance planning and coordination, renewing the seating upholstery can fit into the time window of an annual inspection or longer-term C- or DCheck. And by selecting more common materials, you’ll find them readily available when you need them, at a lower cost than customized items, while giving your airplane a pleasant cabin environment that will likely increase the aircraft’s appeal to a wider pool of prospective buyers.

Carpeting & Trim

At the same time as you consider upholstery renewal you may also want to replace foot-worn carpeting, which can be – with advanced planning with the interior shop – accomplished

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within the downtime of an annual inspection. Unless you want to give the interior an all-new look color-wise (perhaps neutralizing it a little from a highly customized interior for the purpose of achieving a sale), a carpet vendor will be able to help you find variations in carpet nap and depth without changing the overall color scheme of the interior. Conversely, combining the replacement of carpeting and upholstery together can open up the option to change the interior look altogether. Remember, much like upholstering seats and sofas, fitting carpeting to an aircraft interior typically involves more planning than carpeting your rooms at home. Not only does the carpeting need cutting and trimming to fit the floor plan, but the carpet pieces require edging to be sewn and prevent them from fraying. Hence the need for planning prior to the airplane going into the maintenance hangar, so that carpet pieces are ready to install.

Buckles, Trim and Woodwork

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If you’re planning on selling your jet at any point in the near future, the shine in your newly refurbished cabin will owe much to the buckles, trim and woodwork. While renewing the appearance of upholstery and carpeting, it makes sense to consider giving equal treatment to related hardware. Seat belts and buckles get as much wear as the upholstery, and they are relatively simple – and inexpensive – to replace… ditto for wood-finish inlays, metal-finished trim-work, and side-panels in the cabin. Again, advanced planning and thorough coordination with the shop charged with producing the replacement hardware is a must for this work to be successfully accomplished during downtime.

Interior Renewal Alternatives

Even if your airplane has been refurbished relatively recently, you should consider hiring a cleaning or detailing crew to give the entire interior a deep cleaning prior to placing it on the market. If the interior of the jet you’re selling is not brand-new, it should certainly seem newer and less worn than its competition.

Regulatory Limitations

One sticking point for some operators involves the more constrained options of fabrics, leathers and carpets for aircraft use. Always remember that fabrics, leathers and carpeting approved for aircraft use under Part 23 or Part 25 must meet FAA burn standards for the type certificate in use.

Ramp Appeal Enhancements

Finally, while the interior appointments may get the most use – and the most attention – never forget that first impressions start with first viewing. A deep cleaning, waxing and polishing of the exterior can make old paint look newer. Of course, new paint is always an option - but a full-blown repaint typically takes a week or two. That's because for the best-quality finish the job starts with the removal of ailerons, elevators, flaps, gear doors, rudder, and trim tabs;

windows and door seals must be masked off, the surface prepped, primed and finally painted. The paint then needs time to cure, preferably in a climate-stable environment similar to what's needed to apply the paint. A deep cleaning of the paint, polishing of stainless steel and polished aluminum surfaces can render an old paint job like-new. If the trim colors are faded or dated but the base color is in decent shape, a change in trim-colors design can help make an old paint livery look more contemporary. Often the new trim colors can be applied without the removal of control surfaces.

Closing Thought…

The shorter the downtime, the lower the cost of accomplishing a renewal that is sure to help improve the ramp appeal – and sale prospects – of your older business jet. T

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Cabin Refurbishments & Aircraft Connectivity Business Aviation passengers expect to be fully connected with the ground while in-flight, notes Duncan Aviation’s Katie Dolan. As capabilities grow,

so will expectation, meaning you’ll need to keep ahead of the connectivity curve. A cabin refurbishment offers a great opportunity to do so...

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wners and operators seeking to install cutting-edge solutions for aircraft connectivity aboard their aircraft, now and for the future, must understand the options available to them. To remain connected as you fly around the world, operators need to consider satellite-based services (i.e. Ka-band, Ku-band, Inmarsat, SwiftBroadband or Iridium). Terrestrial-based systems offer coverage over the continental United States, with some coverage extending into Canada and continental Europe. Terrestrial solutions are fine if your short- to midterm plans exclusively include flying where ground stations are available – but if you foresee your current mission changing to include overseas operations, you’ll need to consider expanding the type and capability of connectivity solutions. As noted by Steve Elofson, Duncan Aviation’s Avionics Service & Sales Rep, “When it comes to aircraft connectivity today, you have plenty of options”. With that in mind, don’t postpone understanding the possible solutions to your medium-term needs when planning your next cabin refurbishment.

Connectivity: What are Your Satellite Options?

Ka-band: This is a satellite-based broadband network that uses Inmarsat’s Global Xpress satellites. Business aircraft need to have a mechanically-steered antenna installed under a radome on top of the vertical stabilizer. Upload speeds (sending data from the aircraft) are up to five megabits per second (mbps), and download speeds (to the aircraft) are up to 49mbps.

Inmarsat: This option operates a lower-speed satellite-based network, offering a service called SwiftBroadband (SBB), with worldwide coverage at speeds of around 500 kilobits per second (kbps). Iridium: This satellite-based system has a network providing mostly voice and texting services due to its lower connectivity speeds. Ku-band: Offering coverage in populated areas of the world, this satellite-based service has download speeds currently reaching about 1mbps. There are upgrades in process for Ku-band performance to match Ka-band. Greater speeds mean cabin occupants can livestream data (including video conferencing and live TV). Accessing the Internet with little-to-no latency becomes possible, as does sending and receiving email with or without attachments, and accessing social media apps.

How to Save Time & Money…

To install the equipment needed for an Internet connection, your aircraft’s sidewalls (if not the entire interior) will need to be removed. That is the key reason why, if you’re already planning to refurbish your interior, you will want to consider adding an Internet connection or upgrading your current connectivity. The downtime for installing the equipment necessary for a new or upgraded Internet connection is typically two-to-four weeks. A full interior refurbishment will likely take slightly longer. If you complete the projects concurrently, the equipment for Internet connectivity can easily be installed during the downtime necessary for the

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refurbishment, and it won’t typically add time to the work scope. Additionally, some costs associated with installing an Internet connection are for the labor necessary to remove and reinstall the interior. By combining an interior refurbishment with a connectivity upgrade or installation, you’ll save on the labor costs.

What Are the Mistakes to Avoid?

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As with our terrestrial-based mobile devices and Internet systems, new equipment and technology advancements are constant. As passengers aboard business aircraft require higher speeds, service providers are complying with upgrades to infrastructure and equipment. To take advantage of most of the services providing faster speeds, you’ll need new equipment installed in your aircraft. Supplemental Type Certificates (STCs) are often required for these systems. STCs typically lag behind the new technology and equipment, however, so find out which makes and models are covered by existing STCs before deciding on a new service. If your make/model is not currently covered by an STC, one can be developed - but that action will create additional downtime. Not only does the service coverage and connection speed vary from provider-toprovider (as mentioned above), but costs do as well. You’ll typically pay more for faster connection speeds, and satellitebased systems are generally more expensive than terrestrial-based systems. Do your homework before selecting your solution.

Connectivity Considerations Before You Sell

If you’re thinking you’ll get away from the whole connectivity issue by selling your aircraft, think again. “If you’re selling your aircraft to a buyer who will put it on a Part 135 Charter certificate, the buyer will definitely want an Internet connection, and that definitely affects the value of the airplane,” warns Duncan Aviation’s Aircraft Sales Representative Doug Roth. “Lack of cabin connectivity will induce a drop in the sale price by the cost of installation. Because the aircraft will be removed from service for the duration of the installation, factor in the cost of the

downtime to the charter company, as well, which will translate as a further deduction in the purchase price of the aircraft.” Roughly 75-80% of the buyers of private aircraft want connectivity, notes Roth, so an Internet capability adds to the value of the aircraft and should be a major consideration when time comes to refurbish your aircraft for a sale. “Even for the small number of owners who see zero value for themselves in having a connected aircraft, we point out that installing Internet adds at least 50% to the resale value of the aircraft,” Roth concludes. “The majority of buyers looking for aircraft today want an Internet connection.” T

“...the buyer will definitely want an Internet connection, and that definitely affects the value of the airplane.” - Doug Roth, Duncan Aviation

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Key Considerations for Selecting Aircraft Parts

What are the Differences between OEM and PMA Parts? 172

When your jet comes due for maintenance and the problem comes down to a part needing replacement, options exist for the aircraft owner, notes Dave Higdon. But which is the right option to take: OEM or PMA? e don't hear much anymore about Original Equipment Manufacturers (OEM) creating doubts over the safety of aircraft parts produced by other companies under an FAA-issued Parts Manufacturing Approval (PMA). There was a time when OEMs regularly talked down PMA parts produced in competition with their own products with statements focused mainly on safety claims and violations of OEM warranties. At the request of the OEMs, in 2008 the FAA and EASA undertook a lengthy and detailed investigation into those claims and, in turn, issued SAIB NE-08-40. The investigation uncovered no evidence pointing to PMA parts being unsafe, and out of the same investigation the agencies concluded that there were no problems with their processes for approving PMA parts.

Nonetheless, owners and operators remain ultimately responsible for the airworthiness of their aircraft, regardless of the source of parts or the employment of the technicians performing maintenance on their business aircraft. It’s understandable that some operators – particularly those who are relatively new to Business Aviation – might harbor concerns and outright confusion about the safety and legality of PMA-approved parts, and parts from the OEM (be it airframe, avionics, engines, propellers or environmental systems). Aviation generally is a complex regulatory world. The number of acronyms alone is enough to make eyes glaze over. The following paragraphs address some fundamentals about maintenance parts, whether produced by the OEM or under PMA.

OEM or PMA: What’s the Difference?

What makes a part ‘approved’; what makes it ‘OEM’; and what makes it ‘PMA’? Approved: This element is relatively simple. An approved part is one for which the FAA has issued a specific type approval, whether as an individual item or as part of an airframe, engine, etc. Parts in aircraft,

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the airworthiness standards of the aircraft, engine, rotor blade, propeller, etc. The PMA also bars a part or modification from infringing on an OEM’s patent. Second, the prospective PMA supplier must pass an FAA review of the quality assurance system used in production of the part or component, both to determine that the QA system exists and to verify that each part manufactured adheres to the FAA’s design approval.

Exceptions to Approved Parts Requirements

While certificated aircraft in general must be maintained with approved parts, exceptions do exist under three narrow conditions. None of the following three conditions allow the sale of parts produced for use in other certificated aircraft under any of these exceptions.

engines and avionics must meet FAA standards that are specific to their role, so we have approved parts in approved engines and approved parts in approved airframes. Per FAA regulations an ‘Approved Part’ must conform to FAA-approved production standards (FAR 21.305), or be a part repaired under the terms of Part 43. Those standards cover both OEM Type Certified (TC’d) and PMA’d parts. OEM: The holder of a Type Certificate for an aircraft is the OEM. Only the TC-holder can produce parts under the TC, and those parts must be shown, labeled and documented to meet the standards of the original approval. In holding the TC, the OEM has already shown that the part(s) in question work safely in the larger product for which they're designed. That's where OEM parts come from, and the approval process under which they exist. PMA: Parts made under Parts Manufacturing Approval can be made by any person or company choosing to undertake the process of designing, making and documenting the part's equivalence – or more – with the OEM part it duplicates. There is a significant process for any person or business pursuing PMA approval for aircraft hardware. First, they must submit for review to the FAA the design of the part to assure that it is safe and meets the requirements of the FAA regulations. It can be better than the original – but must be no less than equal in its function. The FAA’s design approval certifies that a replacement part or part modification complies with

•

The owner of an aircraft can make parts for installation on that owner's aircraft or appliance without a PMA or TC. The parts, as installed, must meet the requirements of FAR Part 43, however. A commercial carrier (operating under Part 121 or Part 135) may make parts for use in its own aircraft without a PMA. The use and installation of those parts must be approved in accordance with CFR Part 43 and comply with the operator’s accepted maintenance procedures manual and instructions. A maintenance shop with a repair-station license may produce parts without a PMA for use in TC'd aircraft in that shop for repair or maintenance. Guidance on meeting the agency's requirements can be found in FAA Advisory Circular 43-18, Fabrication of Aircraft Parts by Maintenance Personnel. If consulting AC43-18, be sure to get the latest version from www.faa.gov, since the agency has issued definition changes and updates since its initial publication a decade ago.

For some parts, the materials and skills necessary to use one of these three exemptions tend to be commonplace (sheet metal parts, in particular). For other parts, few shops possess the combination of the machinery, engineering knowledge and skill necessary to make a part under any of the three above exemptions. That's when dedicated PMA manufacturers most often offer alternatives to OEM suppliers, and sometimes the PMA part employs technologies that both meet the required standards and raise the game of that particular part beyond the part offered by the OEM - at which point the decision becomes less about cost and more about the long-term advantages of a PMA replacement.

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Case in Point…

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Several decades ago, Dr. Giri Agrawal, founder of R&D Dynamics (http://rddynamics.com/), worked for two mainstream aerospace suppliers. As Chief Project Engineer for one, he received the highest technical award from the supplier’s corporate parent company for his work developing the supplier’s foil bearing designs. These are used in a wide variety of air cycle machines today. As the acknowledged inventor of foil and air gas bearing technology, Dr. Agrawal founded R&D Dynamics Corp. to further advance the use of foil bearing technology to rotating machines other than air cycle machines; the core mission of R&D Dynamics Corporation. R&D also supplies foil air/gas bearings to other industries, and performs maintenance under the name of Hartford Aero Maintenance, specializing in replacement and repair of components like those it produces for the aviation industry. Today R&D Dynamics is one of two main suppliers of the driving hardware in air-cycle machines used to pressurize large aircraft. R&D's parts go into OEM air-cycle machines as PMA parts replacements in air-cycle machines flying on thousands of aircraft, many of them business jets. With its components used widely in aircraft environmental control systems, the parts are exposed to some of the most-extreme conditions in aviation, with the need to compress and cool air for pressurizing aircraft flying at high flight levels. Air that heats under compression must then be cooled to a temperature compatible with the occupants in the aircraft cabin. “Our parts go through the same steps for approval as the OEMs,” Dr. Agrawal explained to AvBuyer. “We do the same deal as PMA manufacturers, as the OEMs. We go through all the same testing as the OEMs, and the same manufacturing quality assurance.” The assurance that a PMA producer meets the requisite standards for a part or system exists in the documentation submitted in the PMA application and in the Parts Manufacturing Approval the FAA issues when the applicant satisfies the requirements of the part or system. In Summary With the same rigorous standards and approvals process in place for both OEM and PMA parts, the operator’s decision when maintenance comes due goes beyond mere cost or convenience. Don’t expect all PMA parts to be less expensive than their equivalent OEM parts; especially when the PMA part offers a longer life as an alternative to a lower cost. Either way, with an OEM part or a PMA alternative, safety remains the priority - for the producers, for the people at FAA charged with reviewing and approving the PMA application, and for the end-user operating the jet with the replacement part. T

Section Contributors

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Ownership

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What’s Important About Trust Registrations?

Not every aircraft owner wants their aircraft registered in their home country, notes Dave Higdon. For those seeking an alternative registration – specifically, a US ‘N’-number – putting the airplane into an aircraft trust can offer financial, maintenance & tax benefits.

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wners and operators in more than 127 countries understand the benefits of a US registration through Aircraft Guaranty Corporation (ACG), a legally qualified provider of aircraft trusts for more than 28 years. AGC specializes in aircraft trusts and registering the aircraft on behalf of those seeking the N-number registration. Aircraft trusts are legal agreements in which a qualified trustee owns an aircraft on behalf of an actual owner. The trustee acts on behalf of the actual owner (beneficiary), but it's the trustee's name on the aircraft title and registration. Indeed, aircraft trusts help keep AGC owner Debbie Mercer-Erwin busy working with trust agents in more than a dozen countries while providing parallel benefits of being ‘a one-stop shop’ for transactions and registrations through Wright Brothers Aircraft Title (WBAT), the company she started over 15 years ago.

WBAT and AGC are co-located at Oklahoma City, Oklahoma where the FAA maintains the US aircraft and airmen registries. Mercer-Erwin acquired AGC two years ago, upgrading the company's services and technologies to streamline the processes for clients of both companies. And that’s particularly useful for those who need the expertise of both.

Trusteeship: No Simple Avenue

The hard truth is that many companies offering trust services are not legally authorized to do so, MercerErwin explained. The FAA doesn't vet entities applying for registration as a Trustee. By law, Corporate Trustees must gain their authority from either a state banking commission or by a court in the company’s state of incorporation – and, those trust powers must be granted in their Articles of Incorporation. Because the FAA doesn't require verifiable state government-issued proof of this authority, many companies with the words ‘Trust’ or ‘Trustee’ in their name register aircraft in trust without the legal authority to perform that service. To protect the integrity of the Trust, Mercer-Erwin says owners should insist on seeing documentation of the would-be Trustee's legal authority.

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Aircraft Guaranty Learning New Tricks

Aircraft Guaranty provides US and International clients with ownership entities and structures that can help solve non-citizen issues, allowing foreign entities to register their aircraft with the FAA. Since entering this business AGC has registered more than 2,000 aircraft for clients from more than 160 different countries. Although she only acquired AGC in 2015, Mercer-Erwin has worked hard to give ACG the technology she used to build Wright Brothers into a major player; and Mercer-Erwin has upped the game for both since she purchased AGC. “The transition has gone really well,” she tells AvBuyer. “With Wright Brothers being in OKC and AGC in Texas, it made it all a smooth transaction. Now we've consolidated the two staffs here in Oklahoma City, which helped us become a one-stop shop. Having everything in one room has been a great advantage.” She also elevated the use of technology for both companies. “Another good thing is that we use the web-based service DocuSign more frequently – thanks to the FAA changing how it recognizes documents. With DocuSign we no longer need to wait on document shipments, making it a smoother, cleaner, quicker process.”

Reasons Vary, Benefits Are Many...

While not widely used in the US, registrations in Trust are a valued solution coveted by many an International operator or owner. Whether for corporate entities or individuals, the reason for registering aircraft in trust varies widely. For some it’s the more favorable maintenance requirements and simplified registration process of the US. For others, Trust registration provides a higher degree of anonymity. Still others gain tax benefits available under certain circumstances. “It varies some for everyone,” Mercer-Erwin explains. Regardless of the underlying logic, registering an aircraft in trust requires a more knowledgeable approach than the simple form the FAA requires of US citizens. “The steps vary somewhat according to the country involved,” Mercer-Erwin offers. Through the process developed by the company, once an

aircraft is registered in trust with AGC it becomes the title holder of an aircraft. That means AGC receives all communication from the FAA regarding airplanes registered in trust with them. The beneficiary retains control and, upon liquidation of the trust, acquires title and registration. “We take [our] responsibility very seriously, and will comply with current FAA guidelines for re-registering your aircraft, maintaining title, and notifying you of any pressing issues that might arise,” Mercer-Erwin assures. “We worry about maintaining your title so you don’t have to.”

Moving Up and On...

When time comes to sell that trust-registered aircraft, AGC and WBAT are on-hand to ease the transition. AGC can help owners navigate the various options for entities that have registered their title in trust. One option involves simply changing the beneficiary of the trust, rather than transferring title to a new entity, for example. AGC works on that change with existing and new owners. For sales involving a new owner Wright Brothers Aircraft Title's escrow and title services include lien and document searches to ensure a clear title. And Mercer-Erwin stressed the importance of using services like WBAT, regardless of the aircraft’s value. “We have a client who bought an aircraft in Europe but didn't do a title search or use escrow,” she illustrates. “In working on the trust the buyer wanted, we performed a title search and learned that he had an airplane with an outstanding mechanics lien on it, and a court order mandating payment. The owner is obligated to pay the lien but isn't going to. So we can't do a trust on it because of that lien. “That's why it's important to do a title search, and why using escrow is important,” Mercer-Erwin stressed. And therein is a key lesson for anyone buying any size aircraft from anywhere in the world. More information from AGC (http://agcorp.com) or Wright Brothers Aircraft Title (www.wbaircraft.com) T

180 THE TEAM AT WRIGHT BROTHERS AIRCRAFT TITLE AND AIRCRAFT GUARANTY CORP (LEFT TO RIGHT): NATHAN DAVIS, DOCUMENT SPECIALIST; GABRIELLE MILLER, ESCROW AGENT; KAYLEIGH MOFFETT, ESCROW AGENT; DEBBIE MERCER-ERWIN, PRESIDENT; AMBERLEIGH RUSHIN, ADMINISTRATIVE ASSISTANT; STEVE ERWIN, MANAGER; (NOT PICTURED, TONYA BUTLER, ESCROW AGENT AND DOCUMENT SPECIALIST).

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Aircraft Registries Home or Away?

Deciding on a Country of Registration 182

is About More Than the Tail Number Business aircraft operators today enjoy a wide array of options when choosing the registry nationality of their aircraft, notes Dave Higdon. Regardless of whether you operate domestically or internationally, there are benefits in making the right choice… any nations offer registry services to non-resident operators. Conversely, many operators conducting international operations select the US as their nation of registration, even though the aircraft may never enter US airspace. The reason is simple: because of the benefits available to the operator by choosing the US option. Selecting a nation of registry ultimately will affect airmen and maintenance regulation, may impact the

taxes for which the operator is liable and will likely influence resale value. Opting to register with one of the many foreign domains may also deliver benefits that are unavailable from a home nation registration – or it could complicate international operations because of other-country hostility toward the nation of registration. In a nutshell, your choice of registry for your aircraft is no small matter and in many ways parallels choice of citizenship. In return for joining an aircraft registry, the nation of registration agrees to take responsibility for ensuring that your aircraft complies with ICAO Standards – as well as operating standards, licensing and recommended airworthiness practices. So while operators enjoy numerous options, nobody should consider registering an aircraft in a

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“The impact of some foreign registries may also affect an operator’s ability to fly within a country during a visit involving more than the arrival/departure airport.”

nation not in compliance with the precepts of the International Civil Aviation Organization. Nations that adhere to the International Standard for Business Aircraft Operations (IS-BAO) should be a minimum requirement. Beyond this non-negotiable consideration, how can you decide the best choice for your aircraft? Answer the following five questions, since they may point you in the right direction for your operation… Access: What will be the impact of a foreign registration on your international operations? In our 2016 series on flying internationally, AvBuyer noted the limitations that some nations place on access to their airspace, depending on both the departure point of a flight and the nation of registration. The impact of some foreign registries may also affect an operator’s ability to fly within a country during a visit

involving more than the arrival/departure airport. Furthermore, there may be times when an operator needs to speak directly with the aviation authorities of country of registry. Thus access also includes connectivity with registration officials. If those conditions are likely to present a problem to your anticipated operations, then a privately operated registry (such as Miami-based Registry of Aruba) may be helpful. Highlighting one of its key advantages, Alexandria Colindres, director of business development, Registry of Aruba told AvBuyer, “Owners and operators have the flexibility to pick up the phone and speak with us directly; they are even able to speak with the Director of the Civil Aviation without hesitation. “The same cannot be said for traditional regulatory jurisdictions like the FAA, EASA, or Transport Canada. We have many operators that have chosen to leave these jurisdictions due to lack of access.”

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“Favorable tax treatment is also a frequently-used point promoted by active overseas registries.”

Conversely, the US does operate consular and embassy offices throughout the world, although the FAA does not have inspectors in every country that allows access by US-registered aircraft. Many international operators opt to register in the US because of the broad acceptance of US “N-Registered” aircraft.

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Security: How might your choice of a registry impact your international operations' security demands? Some nations may impose added security requirements on an aircraft before allowing it into its airspace – for landing and even for overflights. Those requirements may include using local crew for flights inside the nation. And the destination may also impact your ability to fly directly to your next stop by requiring an interim stop. “One of the primary reasons that high profile clients choose a registry such as Aruba is for reasons of privacy and confidentiality,” remarks Colindres. “A more neutral flag allows for there to be an added level of security as any visible trail for ownership is erased.” Undeniably, N-Registering aircraft can attract unwanted, even dangerous attention – and it can complicate access to some international destinations, even requiring detours around airspace not open to US operators. Obviously, such concerns can tilt many decisions. Nevertheless, no single registration (save for Switzerland) gets universal treatment that is politically neutral. Taxes: What are the implications of registering in the country you're considering? Tax implications stand among the more frequent reasons for an operator deciding to use a given nation for registration rather

than registering with the home nation. Favorable tax treatment is also a frequently-used point promoted by active overseas registries. Aruba is one such haven location that attracts operators to its registry for the financial benefits. According to Colindres, “Aircraft buyers and owners, when registering the aircraft in a foreign state, do not need to worry about European Value Added Tax (VAT). Aruba offers 0% VAT, 0% corporate tax, 0% income tax, and more.” In the US, however, business operators can deduct the costs of owning and operating their aircraft for business purposes - and some individual operators choose to put their aircraft on a FAR Part 135 charter certificate, in part for the tax benefits, with leaseback options as a potential source of revenue. But tax deductibility is a limited option compared to some Registries such as Aruba, Cayman Islands and others. Insurance: What implications does your choice have on your needs and ability to insure the aircraft and secure liability protections? Selecting a nation of registry will likely impact how much insurance an operator needs to satisfy nation-of-registry requirements – just as nations visited during international operations may require added insurance. “Aircraft owners with liability concerns should consider all aspects of the jurisdiction in which they choose to register,” advises Colindres. “One thing that should always be considered is if the jurisdiction has joined the Cape Town Convention and its Aircraft Protocol.” The Cape Town Convention took effect March 1, 2006 and

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“It’s important that the legal environment of a jurisdiction is considered for aircraft repossessions when choosing to register your aircraft.” overall score for the country or jurisdiction. “In the second edition of the world aircraft repossession index, Aruba was given an overall score of 100%. Making it a safe and reliable jurisdiction for the safety of your assets.” The US also belongs to the Cape Town Convention and its Aircraft Protocol. As Colindres outlines, it's an important factor to consider for any country an operator may consider for registration. Aircraft Valuation: Will the country of registration impact the resale value of your business aircraft? “Yes, very much so,” Colindres stressed. “You should always consider prior to registering your aircraft in a jurisdiction what implications it may have on your resale value. A Cat-2 country known to have poor regulatory standards might not be your first choice if you intended to resell your aircraft.” The US, like Aruba, is Cat-1 and up to contemporary standards. “Several of our foreign operators have chosen to register their aircraft in Aruba due to the simple fact that their own civil aviation authority does not meet ICAO standards,” Colindres adds. Because of varying maintenance and insurance rules, your choice of registry may impact the value of the aircraft. But rules variations aren't the only influence on aircraft valuation. Climate at the aircraft's operating base may also come to bear, as well as how the operator stores the aircraft. The beauty of registering with the US, Aruba or other ICAO signatory is the relative security of the aircraft’s value – and the overall benefits afforded to operators by the country of registry. T

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established the International Registry (IR) of Mobile Assets (applying to both aircraft and aircraft engines) if nations meet certain thresholds. “The Cape Town Convention offers important default remedies, which can be applied by the creditor in so far as they have been agreed with the debtor in the event of a security interest, repossession, sale and grant of lease or application for the profits/incomes arising from the management or use of the object,” Colindres elaborates. “In the case of a lease or title reservation agreement, the remedies applicable are termination of the agreement and repossession of the aircraft object. The Aircraft Protocol provides additional remedies of de-registration and export of the aircraft object for the creditor in the case of a default from the debtor. “Parties can register their interest on the International Registry created under the Cape Town Convention in order to give notice to third parties and preserve their conventional priority.” Colindres highlights other universal considerations to examine. “It’s important that the legal environment of a jurisdiction is considered for aircraft repossessions when choosing to register your aircraft. “Pillsbury Law Firm published a world aircraft repossession index measuring the legal environment for aircraft repossessions in each country or jurisdiction using seven factors: repossession, insolvency, deregistration, export judgments, arbitral awards, preferential liens and political stability. Each factor is assigned a weighting in accordance with its relative importance, with each factor’s score and its weighting being used to calculate the

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What’s What’s Your Your Business Business Aircraft Aircraft Worth Worth Today? Today? Points of Value Specific to Cessna’s Larger Cabin Business Jets 186

Senior Certified Aircraft Appraiser Jeremy Cox contributed a 2017 series spotlighting aircraft makes and models and their value points in today’s market. In July 2017, the focus was on Cessna’s larger business jet models… hile the Business Aviation community awaits the certification and first deliveries of Cessna’s future $35m flagship model, the Citation Hemisphere, sometime after 2020, how does the owner of a stand-up cabin Citation already on the market evaluate its worth?

Overview of Cessna’s Larger Model Jets

The imminent flagship of Cessna’s Citation fleet is the $23.995m Citation Longitude (expected to begin delivering late 2017/early 2018), which provides performance and cabin enhancements over the ‘game-changing’ Citation Latitude. Curiously its design roots may be more attributable to the Hawker 4000 program that Textron Aviation bought from Beechcraft Corporation. The Citation Longitude is positioned as a stepping stone for

Citation customers looking to step up into the forthcoming Citation Hemisphere, and who typically have a requirement for additional range over what the Longitude offers. A brief comparison between the Longitude and the $16.35m Citation Latitude shows a longer cabin in the Longitude, while its cross-section is the same as that of the Latitude. That extra length is put to good use, as the Longitude will accommodate 12 passengers (over the nine of the Latitude). It will also fly about 800nm further and 30 knots faster. Topping the longer-established in-production models of the larger Citation product range are the Citation Sovereign and the Citation X. There are three versions of the Citation Sovereign, including: • •

Citation Sovereign (original model): Powered by PW306C FADEC engines, and offering Primus EPIC 4-tube integrated avionics; Citation Sovereign (Elliptical Winglets): From 2013, the Citation Sovereign was built with Elliptical Winglets (S/N 501 onward);

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being released from the NetJets program to prevent overall market value loss. The program, implemented by Cessna in Wichita, included a full avionics panel upgrade and a 5-Year/1,500 Hours Warranty, plus two ProParts Enrollment Options, Rolls-Royce Corporate Care Enrollment and Cessna AuxAdvantage Enrollment. Finally, we have the $12.75m Citation XLS+, which differs from the straight Citation XLS by having FADEC controlled PW545C engines with 4,119 lbs of thrust each (128 lbs more than the PW545B models on the Citation XLS, which didn’t have FADEC.) The Citation XLS+ features a fullyintegrated Proline 21 Avionics Suite, with 4-Tube EFIS, whereas the original XLS model has a 3-Tube Primus 1000, and UNS-1Esp FMS as standard, without the full integration provided by the Proline System. The Citation Excel, from which the XLS+ and XLS derive, was powered by PW545A engines. All three models share the same fuselage as the Cessna Citation X.

Earlier-Model Stand-Up Cabins

Citation Sovereign+: After 2014, PW306D FADEC engines were utilized on the $17.895m Sovereign along with the Garmin G5000 touch-screen panel. As a result of these enhancements, the Sovereign+ offers 137 lbs additional thrust (per engine), and 475 lbs greater MGTOW over the original model.

•

Meanwhile, there are two versions of the Citation X, including: •

•

Citation X: The original model delivered between 1996-2012, and was a clean-sheet design. Powered by Rolls-Royce AE3007C engines, this Citation became the quickest civil aircraft following the demise of Concorde. After 2010 Cessna offered the Citation X with AE3007C1 engines, producing 322 lbs more thrust each, while lengthening the cabin by over a foot. MGTOW also increased. Citation X+: In production since 2012, the $23.365m Citation X+ offers 278 lbs increased thrust from each Rolls-Royce AE3007C2 engine and auto-throttles as standard. Garmin’s G5000 avionics suite and Elliptical Winglets also became standard. Citation X Elite: This was a factory upgrade program designed specifically for the aircraft

•

Model III: TFE731-3C-100S engines. Steam gauges until 1985, then Bendix-King EDZ640, 4-Tube EFIS. Multiple Auxiliary Power Units Options available for all years of the III and VI (Sundstrand T-62T-40C3A1/Garrett GTCP36150W). Model VI: TFE731-3B-100S engines. BendixKing EDZ650, 5-Tube EFIS. Sundstrand, or Garrett optional APUs. The VI was introduced as a lower priced model, by having a lower cost avionics suite, as well as fewer interior configuration options than the III, and later VII. Model VII: TFE731-4R-2S engines (780 lbs more thrust than the III and VI.) Honeywell EDZ816, 5-Tube EFIS. Garrett GTCP36-150W Auxiliary Power Unit. The VII had a variety of interior configuration options.

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The Citation III was a radical ‘clean-sheet’ project for Cessna. As the aircraft neared its FAA acceptance in 1982, Cessna was advertising it both as the “…most fuel-efficient…and….the most advanced - business jet in the world”. The most notable difference of the 650 series versus the 500 series Citations is the supercritical 25-degree - swept wing in-place of Cessna’s signature ‘straight wing’ design. It was also the first Citation with a T-Tail configuration. The differences between the trio of CE650 models follows:

Residual Values Thumbnail •

The residual value of a 2015 Citation Latitude is indicated to be at about 83% of its new value, based upon a 2015 List Price of $16.25m, and a retail value today of $13.5m.

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• • • •

The residual value of a 2008 Citation Sovereign is currently at about 41% of its new value (2008 List Price was $16.904m; current retail value $6.9m). The residual value of a 2001 Citation X is about 19% of its new value (2001 List Price was $18.19m; current retail value is $3.5m). The residual value of a 2000 Citation Excel is about 33% of its new value (2000 List Price was $8.545m; current retail value $2.8m). The lowest residual value of the series is found with the Citation III. A 1985 model has a residual value that is about 12% of its original list price ($700k today, versus $5.7m thirty-two years ago).

An Insight into Annual Utilization

All of the current and post production Citations discussed within this article, are projected by the Aircraft Bluebook to accumulate an average of 380 flight hours per year. The highest annual projection belongs to the Citation X (410 flight hours per year). The lowest is assigned to the Citation Excel (350 flight hours per year).

Specific Upgrades/Modifications

Here follows a list of Appraised Value Add-Ons for each Citation model discussed in this article. Note, these are my numbers, not the numbers from the value guides. They are also not valued ‘dollar for dollar’ from the options guides for each aircraft, except for the Latitude, which is too new to have much variance on options values…

Citation Latitude

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• • • • •

Full FANS 1/A - $130,000 CPDLC only – $70,000 Flight Data Recorder - $168,000 GoGo Biz ATG-4000 with Swift Broadband - $135,000 FWD RH Side-Facing Seat - $43,300

Jeremy Cox is experienced in presenting his expertise at aviation meetings, seminars and conferences. If you have an upcoming event and would like to discuss having Jeremy present, you can contact him via jcox@jetbrokers.com

Citation Sovereign • • •

Flight Data Recorder - $90,000 GoGo ATG-5000 - $135,000 GoGo Biz ATG-4000 with Swift Broadband - $150,000

Citation X • • • • •

Cessna Elite Upgrade - $2,500,000 Winglets - $450,000 Autothrottles - $180,000 Flight Data Recorder - $90,000 GoGo ATG-5000 - $135,000

Citation XLS • • •

No Auxiliary Power Unit installed - ($175,000) Deduction Flight Data Recorder - $90,000 GoGo ATG-4000 - $120,000

Citation Excel • • • •

No Auxiliary Power Unit installed - ($175,000) Deduction No External Lavatory Service - ($50,000) Deduction Flight Data Recorder - $90,000 GoGo ATG-4000 - $120,000

Citation III • •

No Auxiliary Power Unit installed - ($100,000) Deduction Flight Data Recorder - $40,000

Citation VI • •

No TCAS-II - ($50,000) Deduction Flight Data Recorder - $40,000

Citation VII • •

No TCAS-II - ($50,000) Deduction Flight Data Recorder - $40,000 T

Respective Cessna Citation Stand-Up Cabin Model Manufacture & Fleet Numbers • • • • • • • •

Citation Latitude: Citation Sovereign/+ Citation X/Elite/+ Citation XLS/+ Citation Excel Citation III Citation VI Citation VII

2014 - Present 2002 - Present 1996 - Present 2004 - Present 1996 - 2004 1982 - 1991 1991 - 1995 1992 - 2000

93 total built (86 currently active) 421 total built (416 currently active) 346 total built (336 currently active) 557 total built (550 currently active) 372 total built (367 currently active) 203 total built (188 currently active) 38 total built (36 currently active) 118 total built (115 currently active)

Total Active Cessna Citation Stand-Up Cabin Jets = 2,094. (Correct in July 2017)

Profiles & Case Studies

Yearbook Covers template 2.qxp_YearBook Template 07/09/2017 15:44 Page 9

Rod Simpson is an experienced journalist and aircraft historian who specialises in Business Aviation. He is the author of more than a dozen aviation books and has worked as a consultant in the US General Aviation industry and contributed to many journals on both sides of the Atlantic. Contact him via rodaeroplan@gmail.com

Rani Singh writes about aviation. A sought after Journalist and author she also reports on news, foreign affairs, politics and business with the worldâ&#x20AC;&#x2122;s largest news organization.

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Section Contributors

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Profiles & Case Studies

High-Flyers’ High-Flyers’ Interview Interview How Howthe thePhenom PhenomProvides ProvidesConcrete ConcreteHelp Help to toOne OneConstruction ConstructionCompany Company

Rani RaniSingh Singhdiscusses discusseswith withthe theowner ownerofofHead, Head,Inc. Inc.how howhis hisPhenom Phenom300 300 opens opensup upa anew newworld worldofofbusiness businessopportunities opportunitiesand andincreased increased

responsiveness responsivenessover overwhat whatthe thenon-BizAv-flying non-BizAv-flyingcompetition competitioncould couldachieve… achieve… 190

im Head, Owner of Columbus, Ohio-based construction company Head, Inc., seldom flies to sites closer than 700 miles away, yet the places he visits are hard to reach flying commercially. For that reasons, and a whole host of others, Head’s Embraer Phenom 300 is indispensable. Jim is a qualified pilot who has amassed 11,000 hours since he first began flying 30 years ago, and so far he’s clocked up 225 hours in his Phenom. “I can’t speak too highly of the aircraft,” he extols.

Over the years he’s scaled up from a Cessna 421 and 441, but the longer range and efficiency of the Phenom 300 appeals to him. “There are only a few airplanes [within this category] that meet these criteria,” he explains. Founded in 1927 as the George W. Timmons Company, Jim Head’s group has always been a family owned business based in Ohio. In the 1960s the Head family took over proprietorship of the firm, and Middleton E. (Ed) Head, Jr. was joined in ownership by his son James M. (Jim) Head in 1972,

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THE EMBRAER PHENOM 300 HELPS HEAD INC. UNDERTAKE CONSTRUCTION PROJECTS IN HARD-TO-REACH PLACES

at which time the company name was changed to Head, Inc. Since its inception, Head Inc. has been involved in public works projects; specifically, concrete paving on airfields. These activities included projects for the Department of Energy, the Navy, the Corps of Engineers, and various municipalities as well as private industry. In 1984, Jim decided to take the company in a new direction by contracting to build an aircraft test facility at Cherry Point Marine Corps Air Station in North Carolina, representing the firm’s

first project outside the state of Ohio. Nearly all of the firm’s projects can be found outside of Ohio these days, mainly within America’s south-eastern states. With his Embraer Phenom 300, Jim can be at a construction site within three hours of receiving a phone call. He never has to worry about being late, and he can attend to two or three jobs per day - or as often as he likes. “My hangar is in Columbus, Ohio, and my office is within walking distance of the hangar,” Jim

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“With his Embraer Phenom 300, Jim can be at a construction site within three hours of receiving a phone call.”

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Profiles & Case Studies

RUNWAY CONSTRUCTION UNDERWAY THROUGH HEAD INC.

highlights. “We can fuel up and go to any of our jobs quickly, and that’s quite a comfort. It means I am able to have access to my jobs at any time.” One of the advantages of Business Aviation over Scheduled Airlines is the coverage it gives its users. “We’re not a very large contractor. Most contractors our size don’t work such a big range,” Jim observes. “We work as far as 1,400 miles away from Ohio.” To fly to a project commercially, he adds, would take all day. “Most of my jobs are in remote places.”

Increased Responsiveness

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Jim highlights how the Phenom 300 helps his busy executives whose time is most valuable. “We recently had an issue requiring my immediate attention in Abeline, Texas. At a moment’s notice I prepared the airplane, took a couple of key people with me, headed down to the job site and got involved in solving the problem.” He got the initial call at 8am in the morning and was on the job site by 1pm. “That type of occurrence happens quite often.” The issue he was called to address was remedied within 24 hours. “Quite often I can do it in the space of one day. I’ll get up early in the morning, fly at first light and be back by dark. Without the Phenom, I would waste a whole day just getting there, assuming the tickets are available.”

Every Situation Different

“ Without the Phenom, I would waste a whole day just getting there, assuming the tickets are available.”

Each situation in which he uses the Phenom 300 is different, Jim notes. “I remember a time when we had an emergency. One of our concrete mixers was down. I literally threw a part in the airplane and was there in three hours. I got the machine up and running that same day. That was unique as I don’t normally run parts.” Naturally, the jet is used for a lot of meetings, and once in a while it’s used to move sick people around. “I’ve had one of my employees fall ill in the past. I needed to pick him up and bring him back home. “That’s actually happened a couple of times… One of the things about the Phenom is that it’s cabin differential pressure of 9.2 psi makes it very comfortable, even at 45,000 ft, where the cabin altitude is only 6,600 ft, so if people are unwell I fly at 30,000 ft, and it’s like barely being above the ground. It happened as recently as a few months ago; when people are ill, flying Scheduled Airlines is never fun.” Head, Inc. presents the picture of a versatile business tool enabling a construction company to be more responsive and extending the firm’s reach well beyond the area where it could otherwise operate. Both the company’s owner and employees benefit. There’s little wonder Jim Head is delighted with his Embraer Phenom 300 business aircraft. T

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9 Profiles & Case Studies.qxp_YearBook Template 07/09/2017 14:35 Page 5

Profiles & Case Studies

High-Flyers’ Interview Business Aircraft: Aircraft: Business

They’re Not Not Just Just for for Mahogany Mahogany Row Row They’re

Yves Roch, Chief Executive of Lausanne-based Fly 7 Executive Aviation, is putting Yves Roch,PC-12 Chiefto Executive ofproviding Lausanne-based Fly 7 Executive Aviation,Europe is putting his Pilatus good use quick, efficient links throughout – his Pilatus PC-12 to good use providing quick, efficient links throughout Europe and not only for those who you’d think can afford it. Rani Singh discovers more…– and not only for those who you’d think can afford it. Rani Singh discovers more… 194

oasting a fleet of 13 business aircraft, ten of Fly 7’s aircraft are in fact Pilatus PC-12s. These single-engine turboprops are based in various locations, including Cannes, France; Liege, Belgium; and Lausanne and Geneva, Switzerland. An additional exclusive agreement with Helsinki-based Hendell Aviation gives Fly 7 access to what was the first commercialy operated PC-12 in Europe. According to Mr. Roch, many of his European clientelle have businesses in remote locations.

“Flying privately in a PC-12 increases the number of feasible airports in Europe to 2,000 destinations, because we can land on small runways. “We find that our corporate clients appreciate the discretion that smaller airports can offer. Moreover, reduced security controls means less time spent waiting, thus they enjoy a considerable gain of time; more time to be productive in their business activities. It is easy to understand why this is an attractive travel alternative for local business men, such as bankers, who wish to retain a low-profile.”

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(BOTTOM LEFT) MATTI AUTERINEN, CHAIRMAN, HENDELL AVIATION AND (RIGHT) YVES ROCH, CHIEF EXECUTIVE, FLY 7

the needs of our market segment perfectly. Our entrepreneurs can get closer to their preferred destinations, allowing them to make a day trip to visit clients, partners or factories in less time than it would take in a commercial airline, or even a larger private jet.”

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So why is the PC-12 such an instrumental aircraft to Fly 7’s operations? “Being based in Lausanne we offer our clients a very good alternative to flying from Geneva,” Roch explains. “With the PC-12 - the largest aircraft that can land at Lausanne - we can compete with Light jets whilst also accessing other small, local runaways such as Saanen Airport that would otherwise not be accessible to our passengers. “Our customers are flying a lot from St. Tropez or Courchevel and the PC-12 enables us to respond to

Schedules Running Like Clockwork…

There are many puns to be made about a Swiss charter company helping its clients’ business schedules tick like clockwork – but on a serious

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note, Roch does offer the example of how the local watchmakers benefit greatly from the use of the PC-12. “The famous Swiss watchmakers are mostly based in a region called La Chaux-de-Fonds, a small town that is a fair distance from the main hubs of Geneva, Basel or Zurich,” Roch explains. “La Chaux-de-Fonds has a good, but small airport. There’s only one aircraft that can fly commercially out of this airport – namely our PC-12. So we are flying a lot from La Chaux-de-Fonds to Paris, or other destinations to enable the watchmakers to get their business done further afield in a single day. We are also able to bring clients directly to the factory doorsteps.” Roch feels that the PC-12 is essentially a niche market. “It’s marketed as an aircraft with a big cabin and an interior capacity that no other small business aircraft can provide. Fly 7 is one of only a few players in the market utilizing a PC-12 for charter.”

Business Aviation for All

Yves is well aware that Business Aviation has an unjustified reputation for being a luxury market, but he is keen to point out a new venutre, Fly Me Home, in which the less prosperous are able to benefit from the services of the company’s PC-12s.

“We also conduct medical flights for a local hospital,” he explains. “We reduce ambulance costs by coming much closer to the hospital. The flights are partially funded by the hospital, but are mainly funded by our generous donors. “We are also having flight hours donated by the owners of the aircraft in our fleet, to bring terminally ill patients back to their families and loved ones. Full medical assistance is not always necessary to do that kind of flight – but thanks to Fly Me Home we can offer those patients the opportunity to spend their last moments in the place they love, with the people they love.”

In Summary

According to Roch, Fly 7 is getting an increasing number of requests for its Fly Me Home service. “We have already made four trips, and believe me; it is an amazing feeling when you see the relief on the patient’s face to finally be where their heart is! “For people who may not have the money to fund a trip in a private aircraft but have the need, to be able to benefit from the convenience of Business Aviation is just great news!” T More information from http://www.fly7.ch/

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Profiles & Case Studies

Eagle Aviation at 50! E

South Carolina's Home-Grown S Business Business Aviation Aviation Specialists Specialists There are hundreds of FBOs strung along the Eastern Seaboard between Portland, Maine and Key West, Florida. Few lay claim to a half-century in Business Aviation - but Eagle Aviation does. Dave Higdon catches up with David Lipski and Lee Thomas to reflect on 50 years of success… ased in Columbia, South Carolina, Eagle enjoys a reputation far beyond being a local FBO and service provider. “Aircraft sales are our largest profit center and the focus of our business,” long-time president David A. Lipski tells AvBuyer. “After that comes line service, then maintenance and paint, and interior completions. “We focus our aircraft sales efforts internationally as well as locally,” he adds. Over five decades in Business Aviation, Eagle's sales force has moved aircraft into and out of many countries. “It's up around 50 countries,” confirms Lee Thomas, Eagle's aircraft sales manager. A quick overview of the company’s activities shows that it serves as the main FBO and contract fuel supplier for air carriers at Columbia Metropolitan Airport (KCAE), where Eagle also operates a full-

B 198

service maintenance center, a paint and interior completions operation, charter operations, and a flight support shop. “We do have (FBO) competition on the field and another sales organization,” notes Lipski, “but as outlined, our sales are not only local, they're worldwide.” A few miles east of Columbia Metropolitan, Eagle Aviation also serves as the contract FBO operator at county-owned Jim Hamilton L.B. Owens Airport (KCUB), Columbia's near-downtown aviation facility. In addition to FBO, tie-down and hangar services, KCUB is the base for Eagle's Part 61 flight-training operation. Specifically, Eagle Aviation is a Cessna Citation and Beechcraft King Air specialist and a service center for Textron Caravans and Piston Powered aircraft, including Barons and Bonanzas and Cirrus

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Aircraft, which is beginning to deliver its SF50 Vision single-engine jet. These points all contribute to Eagle Aviation's half century of success in Columbia. But aside from a great location, Eagle's success also rests on three other crucial words in aviation: Service, Quality and Connections.

50 Years at KCAE

Columbia serves as the capital of South Carolina – and the city is home to the University of South Carolina. In a basketball- and football-loving region like the Carolinas, college game days attract large crowds. With the university's football stadium capable of seating about 80,000 spectators, home games make for busy days at both airports Eagle Aviation serves. “We fill up at both airports when there's a game at the stadium because the downtown airport is almost walking distance from the game,” Lipski explains. The Masters golf tournament is an hour away from Columbia in Augusta, Georgia and draws large numbers of aircraft flown by golf fans. “We get a lot of people flying in because hotels and restaurants are available at the last minute, and in addition we have US Customs and some hangar space available – and we're less expensive than flying into Augusta

itself. We don’t have the traffic and ground delays often seen in Augusta,” Thomas adds. “We'll have full ramps at both airports.” The company has grown significantly since it opened with five employees in the late 1960s. Today the depth of services offered helps keep 116 employees busy year-round. “Our owner is the original owner of the company,” Lipski expounds. “He bought a small business in 1967. It was basically a single, small hangar offering a little gas sales, a little flight training, a little of this and that.” That owner “expanded it and grew it from its inception to where we are today.” And business aircraft sales quickly became the major focus it remains today. The non-sales growth was all concentrated at KCAE until Eagle Aviation took over the lease at KCUB, an uncontrolled, non-towered field with a single runway and about 120 based-aircraft. A major appeal is KCUB’s proximity to downtown, the state capitol, and the university that helps keep it busy. “The county has an airport manager who runs the field and we provide the services,” Lipski explained. “Flight training is a smaller part of our business, and it's handy because the downtown airport doesn't have the traffic from the airlines and overnight shippers that we have at Metro.”

“The company has grown significantly since it opened with five employees in the late 1960s.”

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DAVID LIPSKI, PRESIDENT, EAGLE AVIATION

Thomas and Lipski noted that KCUB boasts an historic Curtiss-Wright hangar, currently undergoing a conversion into a micro-brewery and restaurant called ‘The Hunter-Gatherer Brewery at Owens Field’. It will feature a taproom and an observation deck overlooking the airport. Even through tough times, Eagle Aviation continued to offer flight training – something missing at many busy FBOs. “The reason we stay in the business is we feel an obligation to pay back, to help grow the pilot population,” Lipski explains.

Growing Metro, Growing Sales

200

According to Lipski, Eagle Aviation's future holds more of the same successes it enjoyed in the past through a continued focus on service and client satisfaction. Aircraft sales in 2016 totaled about 25, Thomas reveals. That’s a bit lower than the previous year (a common report among dealers and brokers). Meanwhile, the company's avionics shop, which took a hit during the Great Recession, is the focus of efforts to rebuild business. Currently, light maintenance and installations are the main focus– and Lipski wants to revive and revitalize that component of Eagle's business. That plan parallels other plans to continue to grow Eagle Aviation's full-service, in-house completions center, where craftsmen and tradesmen handle upholstery, cabinetry, carpeting, bright-work upgrades and paint (all focused at Metro). However, both Lipski and Thomas voiced confidence in the aircraft sales market. “Our phones have been ringing more like usual lately” Thomas

LEE THOMAS, AIRCRAFT SALES MANAGER, EAGLE AVIATION

“ ‘I see the next few years very positively,’ Lipski concludes. ‘The economy has improved. We've moved in the right direction in the past couple of years...’ ”

explained. Along with an expectation of growth in sales, Lipski sounded an optimistic note about the company's service operation. With the new products coming out of Cessna and Beech, Lipski expects to expand the maintenance staff and avionics, this year. “We're in the hunt for good people,” Lipski adds.

Forward-Looking

Lee Thomas took over sales two years ago, with a staff of five. His predecessor passed away after a long career at Eagle Aviation. “We're like family here,” Lipski explains. “We are growing continually – there is no end. We've just been a solid, steady grower as the years have rolled past.” “We're never satisfied with where we are,” Thomas emphasizes. “We've made a lot of good friends and repeat customers, and we value them. You come into the office and you can sit down with Dave or me, and chat; go to lunch. “We know our customers. I'm optimistic about the business in the US and worldwide, but particularly in the US.” “I see the next few years very positively,” Lipski concludes. “The economy has improved. We've moved in the right direction in the past couple of years, and there are greater things on the horizon. We're very, very optimistic.” It appears that after a half-century cultivation, Eagle Aviation’s approach to the business of aviation positions it very well indeed for its second half century in the industry. T More information from www.eagle-aviation.com

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Profiles & Case Studies

The Dassault Story (Part 1)

Pioneers of Innovative Technology in Military and Civil Aviation Rod Simpson reflects on the passion and technology of a unique aircraft company founded by Marcel Dassault, an industrialist who manufactured propellers for World War I fighters but had never been aloft until the conclusion of World War II. s you travel in the soft comfort of a cream leather seat in your Falcon 7X, high above the French countryside, it is hard to appreciate your connection with the helmeted Dassault Rafale pilot flying 10,000 feet above you. Yet, your Falcon and his jet fighter are the product of 70 years of innovation from a design team that has little equal in the world of Business Aviation. Today, Dassault’s expertize encompasses the most advanced aerospace systems, but also ranges far from classic aviation to include 3D Printing, space technology, computerized design tools, unmanned aircraft - and much more. Let’s go back to the beginning. Company founder, Marcel Dassault returned from German wartime imprisonment to re-establish his aircraft manufacturing company that had been a successful pre-war builder of Bloch airliners, and before that, Bloch propellers.

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Not surprisingly, the first new products of Dassault were Flamant light transports for the French Air Force, but the company had experience of fighter design with its MB-152, 700 of which had been built in the early years of the war. Marcel Dassault was soon enthused by the opportunities offered by jet engines for fighter aircraft. Dassault’s mantra was "effectiveness with simplicity", and the first fighter design—named the Ouragan—to come from his team had a fuselage just big enough to contain a Nene jet engine with a nose intake and rear tailpipe. The key to the Ouragan’s performance was its lowset swept thin-section wing - which meant that fuel had to be contained in wingtip tanks. The Ouragan was a great success, and it served efficiently with the French and Israeli air forces. Dassault’s team moved on rapidly with new developments of the Ouragan. Their follow-on design,

Year book adverts.qxp_YearBook Template 28/09/2016 11:13 Page 8

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Profiles & Case Studies

DASSAULT MYSTÉRE

DASSAULT MIRAGE G

the Mystére, was the result of much research into swept wings together with the use of ever more powerful engines. The immediate goal was to go supersonic - which the French designers achieved with the Mystére IIC, first flown by test pilot Kostia Rozanoff. Fitted with a Rolls-Royce Tay 250 engine, one of the Mystére prototypes broke the sound barrier in October, 1952. The subsequent Mystére IVA, which initially was fitted with the Tay but subsequently was powered by the Hispano-Suiza Verdon 350 variant on the Tay engine, had a new and thinner wing with a 38-degree sweep enabling the aircraft to achieve a top speed of Mach 1.2. The Mystere IVA went into production and positioned the French Air Force in the forefront of military aviation at a time when the Cold War was in everyone’s minds. Attendees at the 1951 Paris Air Show made special mention of the smooth finish of the aircraft resulting from Dassault’s extreme attention to detail and extracting top performance through meticulous manufacturing processes.

Mach 2.0 and made headlines by breaking the World closed circuit speed record at 1,100mph. Subsequent versions of the Mirage III raised the top speed to Mach 2.4, and numerous variants were sold to customers worldwide from more than a dozen countries. The other aircraft, the Mirage IV, which first flew in June 1959, was based on the same design philosophy. It was a larger Mach 2.2 twin-engined strategic bomber designed for France’s "Force de Frappe" and capable of delivering large 50-kiloton nuclear weapons. It is characteristic of Dassault’s flexible attention to innovation that the highly successful Mirage III should see constant modification and upgrading. For instance, the Swiss Air Force sought improved maneuverability for their Mirage III fleet, and Dassault responded by developing the Milan which featured retractable canard surfaces mounted in the forward fuselage ahead of the cockpit. These "moustaches" were successful in lowering takeoff and landing speeds, shortening takeoff distance and improving the load-carrying capacity of the aircraft. Fixed canard surfaces would be featured on several later Dassault fighters.

Continued Progress

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The next challenge for Dassault was to produce an aircraft for the Aéronavale (French Navy) that would have supersonic performance - but suitable low speed handling to allow it to operate from the aircraft carriers Clémenceau and Foch. This requirement forced the designers to produce virtually a completely new model - although it borrowed much from the Mystére IVA and its many derivatives. By this time the Whitcomb-designed "area rule" or "Cokebottle" fuselage came into vogue, and Dassault applied Whitcomb’s principles to its new Etendard fighter jet. This aircraft had a larger wing area than the Mystére, folding outer wing panels for carrier storage, a beefed up undercarriage and complex flaps to facilitate carrier operation. Once again, the Dassault team had come up with a winning formula, and the Etendard and its successor, the Super Etendard, served for many years, including operations with the Argentine Navy in the Falklands War, with the last Super Etendard only being retired in 2016. In 1969, Dassault and Breguet merged and from that date became the only combat aircraft supplier to the French military. By that time, Dassault had further refined its fighter products with the Super Mystére. Soon a brand new concept emerged with the Mystére-Delta. Again, it came from the company "religion" to achieve simplicity. The Delta wing allowed a very high degree of sweepback, reducing supersonic drag and easing the buffet at transitional sonic speeds, while maintaining wing area. The delta configuration also made it possible to eliminate the tailplane and fit elevator surfaces to the trailing edge. Overall, the concept allowed an elegant and lightweight structure while maintaining good stability and maneuverability. The end result was two aircraft - the Mirage III and the Mirage IV. The Mirage IIIA, which first flew in May, 1958 was able to fly at

Venture into VTOL

As early as 1954, the French air ministry had been taking interest in vertical takeoff and landing (VTOL) combat aircraft. Several companies came up with outlandish concepts that used a variety of techniques including tilting wingtip engines and tail-sitting aircraft. As it turned out, Dassault offered the most practical solution that was selected for further development, employing a combination of fixed lift engines and a separate turbojet for forward propulsion. To test the concept, the airframe of the Mirage III prototype was converted to become the Mirage Balzac V, which used eight RollsRoyce RB.108 lift engines mounted in the center fuselage and a tail-mounted Bristol Orpheus for conventional flight. It flew in vertical mode in October 1962, with the first transition to forward flight the following March. The VTOL Mirage Balzac presented many challenges, not least that it was very difficult to control laterally, a characteristic that probably led to the aircraft crashing and killing its pilot in the following year. Although the design prototype was rebuilt, it suffered another fatal accident and the design was scrapped. However, Dassault did not give up, and its next VTOL experiment was the Mirage IIIV, two prototypes of which were tested. In many respects this was a successful design. In level flight the aircraft had a top speed of Mach 2.0, but the difficulties of development led to its abandonment - although Dassault had pioneered many new techniques that would be useful for future designs. Yet another cutting edge program was the development of swing wings for combat aircraft. In the United States the General Dynamics F-111 had flown in 1964 as the first practical application of variable geometry wings; at the same time Dassault was working

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MIRAGE 2000 PRODUCTION LINE

MYSTÉRE XX PROTOTYPE

with British Aircraft Corporation on the design of a swing-wing fighter (the AFVG) to equip the British and French navies and the French Air Force. As it turned out, the cooperation soured between British and French partners, and Dassault pulled out - but the project was to result in a new consortium that built the variable geometry Panavia Tornado. Despite this, Dassault pressed ahead on its own and, in 1967, built the Mirage G prototype, which had wings that would sweep to as much as 70-degrees, giving the aircraft a top speed of Mach 2.2. This program, which involved complex challenges related to the structure of the main wing box, progressed through several prototypes. By 1971 the Mirage G8 was in flight test. However, the French Air Force lost interest in variable geometry and the rest of Europe was committed to the Tornado.

engines when turbofans became available, could be converted as a freighter for Federal Express and be fitted with hardpoints for its military roles.

Benefiting from Heritage

Business Aviation has been the beneficiary of Marcel Dassault’s embrace of technology and love affair with clean lines. Falcons were the first civil aircraft to use supercritical wing designs (Falcon 10), area rule (Falcon 50 and 900) and fly-by-wire control systems (Flacon 7X). Computer aided design was employed with the development of the Falcon 10 and all subsequent Dassault designs, and Dassault’s CATIA system was used broadly by other airframe manufacturers throughout the world. The aviation world owes much to a creative man who contributions are enduring. T More information from www.falconjet.com

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Sensing a New Market

Up to this point, Dassault had been a strictly military manufacturer. Marcel Dassault, however, was well aware that the civil aviation market had promising opportunities and diversification would be a wise move in view of the uncertainty of large military orders. Back in 1954 the company had done studies on the Mediterranée twin jet liaison aircraft, but suitable jet engines were not available. In 1962, attracted by the emerging business jet market and with new jet engines such as the Pratt & Whitney JT12 becoming available, the company commenced studies of a new light transport, dubbed Mystére XX, which would use much of the technical knowledge gleaned from Dassault’s military programs. The decision was a gamble because this was a private venture without the safety net of French Government development contracts. As with Dassault’s fighters, the aircraft would have a flawless external skin and the lightest possible airframe using a combination of milled components and alloy box sections. On May 4th, 1963 the elegant Mystére XX made its first flight, laying the ground for the range of Falcons that we know today. For the design team, this was a new experience to produce a fail-safe structure with a fatigue life of more than 30,000 hours and without any life limited parts. It was to be designed to quite different FAR Part 25 certification conditions than military fighters and needed to be a luxurious aircraft with performance and comfort to attract a very discerning clientele. It would include a fully pressurized cabin, de-icing for the wings and tail, a sophisticated flight deck with integration of the latest avionics, and the ability to operate out of demanding airports. Dassault engineers also had to take account of the many roles the aircraft would fulfil - not just executive transportation but also as an air ambulance, cargo aircraft, feeder liner, crew trainer, airways calibration - and military tasks including weapons system training. In fact, the Mystére XX (soon renamed Falcon 20) was an outstanding design that was flexible enough to accept different

New Era of Technology

Back in the military design office, the pressure for a successor to the Mirage III was on. In the mid-1970s Dassault studied an "Avion de Combat Futur", but eventually returned to the drawing board with a new and less complex delta - the Mirage 2000. For the first time, the aircraft would have fly-by-wire (FBW) controls with electronic actuation replacing conventional control rods and wires. This concept took the design team into a wholly new area of technology - one that would be well adapted to the civil aircraft market. The Mirage 2000, which flew in March, 1978, would also be the first aircraft to have extensive use of glass-fiber composites in the airframe in order to reduce weight. The Mirage 2000 in its single and two-seat variants remains a key component of the French air defense lineup. At the same time the Mirage 2000 was getting into the air, the French government launched a new program entitled ACT (Avion de Combat Tactique). Once again, this effort was envisaged as a multi-nation cooperative project, but no agreement emerged between the different air forces concerned and Dassault went ahead with an aircraft that would become the Rafale. In 1984 a new design program was launched that took Dassault into entirely new territory. Gone were slide rules and drafting tables because Rafale would be the first aircraft to use the new CATIA computer aided design and manufacturing system (CAD/CAM) developed by Dassault. This was a quantum leap forward and, as we will see, established the foundation for the company diversifying into a completely fresh field of information technology-led businesses outside the aviation field. By the early 1990s, Dassault was involved in space exploration, flight simulators, engineering software development, stealth technology and much more. It was a far cry from the manufacturing of the 1940s but continued the dreams and philosophies established by the founder - Marcel Dassault.

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Profiles & Case Studies

The Dassault Story (Part 2)

Pioneers of Innovative Technology Dassault had been a world technology leader ever since its post-war revival, but a new era was dawning in the early 1990s. Rod Simpson concludes his Dassault company profile… he CATIA computer-aided design and manufacturing (CAD/CAM) system, developed in the 1980s, suddenly made it much easier for Dassault to design new aircraft. This three-dimension modelling tool, which allows engineers to create complicated structures, became a world-leading technology product in its own right, adopted by many other organizations. By 1990, Dassault was building Mirage 2000s for many customers and was developing the brand new Rafale fighter, involving exciting new systems and concepts. The company was also heading into space with engineering for the Hermes spaceplane, which would be launched using an Ariane rocket. All this required an increasingly sophisticated design organization - which had been established in 1981 as Dassault Systèmes. By the turn of the century, Dassault’s high-end

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computer systems would be grappling with modelling supersonic and hypersonic aircraft designs, calculating weapons system design and integration, and assessing new materials particularly related to stealth technology. Above all, Dassault had always insisted on designing and manufacturing the flight control systems for all its aircraft. Its development of fly-bywire (FBW) systems started in the 1960s at the time it was doing its VTOL fighter projects, and full-authority FBW controls were incorporated into the Mirage 2000 and 4000 and the Rafale. The teams developing these controls also worked on the Falcon series and, while the early Falcons did not have FBW, they benefited from the integration skills of the Dassault technical team. Then there was the civil aircraft family that had started with the Falcon 20 (nee’ Mystere XX). This activity was joined in 1971 by Dassault’s only venture

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Profiles & Case Studies

DASSAULT FALCON 50

DASSAULT FALCON 900

into the commercial market with the twin-engined turboprop Hirondelle and the limited production Mercure airliner. These two aircraft were not commercially profitable, but they did expand the company’s technological skills.

ruling” for the fuselage and used a developed version of the Falcon 900s double-swept super critical wing. It had a glass cockpit, and the engines were managed by dual redundant Full Authority Digital Control (FADEC) systems. This 3,000nm twin-turbofan aircraft introduced CAT III(a) autoland capability coupled to a HUD (Head-Up-Display), allowing landings down to a ceiling height of 50ft and visibility of 700 feet. In the cabin, Dassault provided a spacious, bright and very quiet environment and controlled the quality of finish through its own completion center at Little Rock, Arkansas. This manufacturing decision also allowed the company to develop new materials and furnishing concepts for all its Falcon models. Since the first production Falcon 2000 entered service in 1995, the aircraft has been progressively improved. The current Falcon 2000LXS has winglets, its range has risen from the original 3,000nm to 4,000nm with a 22% gross weight increase to 42,800 lbs, and more powerful PW308C engines have given it a Mach 0.862 maximum cruising speed. Designers of the Falcon 2000 had a target of reducing operating costs by 30% compared with comparable models, largely achieved by the efficiency of the CFE738 engines. The use of CATIA software also allowed Dassault to partner with Alenia (manufacturer of the rear fuselage) by networking the computerized systems and enabling development and production costs to be minimized. Another key goal was to make the aircraft easily maintainable by giving mechanics easy access to components that are logically grouped, and by using digital inspection aids and a computeraided maintenance management system. This philosophy lives on at Dassault in 2016 at the St. Cloud Research and Development Center in Paris. Today, airframe designers don goggles to use virtual reality modelling that allows them to position internal components for maximum ease of maintenance. It allows the designer to test whether, for instance, an actuator can be removed from the aircraft without being obstructed by a piece of airframe structure.

The Birth of EASy

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More successful was the business aircraft line and, by 1990, Dassault’s range of models had grown to include the threeengined Falcon 50 (based on the Falcon 20) and the Falcon 10 "Mini-Falcon". These were soon to be joined by a new and larger aircraft at the top of the line, namely the Falcon 900, which made its first flight on September 21, 1984 and was well into series production by the turn of the decade. The Falcon 900 is still in production and has brought widebody comfort to the Falcon line. It had a flat floor and a very large rear baggage room that could be accessed from the cabin or externally. It pioneered new materials with 18% of its structural parts made from composites, and it had an entirely new digital avionics package with an electronic EFIS and brand new symbology. This aircraft was a major advance in the business jet world. Dassault’s focus on how to make the aircraft more pilotfriendly would continue with successive Falcon 900 models. In 1995, the company launched a research program, aimed at giving the crew better situational awareness and facilitating better inter-pilot coordination so as to improve safety by reducing workload. The result was the Enhanced Avionics System (known as EASy), which used the Honeywell Primus Epic integrated avionics package. This addressed the problem of the crew handling an increasing volume of data - which could result in confusion in stress situations. The principle was that primary information should be limited to what the crew really needed to know - with abnormal situations being flagged up when necessary. Four large screens could be configured to present data in the form most comfortable for the pilots, and the main interface with the EASy flightdeck was through cursor control devices. EASy would become the standard for all Dassault business jets and would move on through continuous upgrades.

Introducing CAT III(a) with HUD…

At the 1989 Paris Air Show, Dassault unveiled its successor to the highly popular Falcon 20. The market had moved on and the wide cabin of the Falcon 900 had such customer appeal that Dassault used the same cross section and flat floor approach for its new Falcon 2000. It was the result of an intense design process to optimize the aircraft’s aerodynamics and to achieve the lowest possible fuel consumption and maximum range. Similar to the Falcon 900, the Model 2000 adopted “area

Design-to-Build, FBW Tech…

With the Falcon 900 and Falcon 2000 well established, the next target for Dassault was a ultra-long range 5,700nm new generation business jet. As John Rosanvallon, President and CEO of Dassault Falcon Jet explained “we analyzed all major city pairs and, out of Paris, for instance, 5,700 nautical miles delivers the major US West Coast cities going west or Tokyo going east”. The Falcon 7X cabin had the same width and height as the Falcon 900 but was about 8ft longer and embodied an important Dassault concept known as “design-to-build”, which aimed at

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DASSAULT FALCON 7X

DASSAULT FALCON 8X

reducing airframe parts counts and reducing manufacturing labor hours. The three-engined Falcon 7X had an entirely new wing employing a high-transonic form with a substantial improvement in lift-to-drag ratio compared with the existing Falcon wing designs. This was not only to improve performance but also to simplify the internal structure, giving weight and cost savings and allowing capacity for a large fuel volume. It was also the first business jet to have advanced digital fly-bywire systems, and it featured sidestick controls and a trackball control to enable a point-and-click system for panel management together with EVS and SVS. It is no secret that the Falcon 7X has been a great success, with around 450,000 hours in service to date, and it created a new platform to allow Dassault to move even one step further forward. In December, 2014 the company rolled out the prototype Falcon 8X, which is now in service and gives a 6,450nm range and a longer cabin. The 8X, however, is not just a stretched 7X. The design team re-examined the internal wing structure and managed to strip out around 600 lbs of weight. There are improvements to the wing leading edge slats, and the winglets have been fine-tuned for further drag reduction. These changes are all part of Dassault’s attention to detail and evidence that they never take anything for granted. Speaking to the designers at St. Cloud, one realizes that they are not afraid to change what has gone before - and they have the most sophisticated tools to help them do so. In parallel with the Falcon 8X, Dassault was also working on a new jet in the 13-passenger, 5,000nm class: in June, 2015 the twin-jet Falcon 5X was unveiled at Bordeaux with an ambitious target for a 20-month test program and certification planned for the end of 2016. But not all programs go smoothly, and the problems were not of Dassault’s making. The brand new Snecma Silvercrest engines that are to power the Falcon 5X suffered a development delay, but the aircraft has now made its first flight. The Falcon 5X has a new generation wing that includes a flaperon and three leading edge slats, and it has an advanced EASy III flight deck based on the Honeywell Primus EPIC system with dual HUDs and sidestick controls. Another innovative feature of the Falcon 5X is the advanced FalconScan system, which gives continual monitoring and diagnostics across 10,000 key parameters to identify technical issues as soon as they occur.

activities. Take, for instance, Drone technology. Dassault has teamed with Thales and the Spanish company Indra to supply the MALE unmanned aircraft. This design is based on the Israeli-built Heron UAV, and Dassault’s experience of integration of complex systems has been crucial to the program. Another UAV venture is the nEUROn combat drone, which follows a 2003 French Government initiative to create an Unmanned Combat Air Vehicle (UCAV). For this, Dassault designed a trio of scale flying wing proof of concept UAVs, starting with the “Petit Duc” and followed by the larger “Grand Duc”. Today, this program has grown into the cooperative nEUROn project that may be the basis for a new generation of unmanned fighters for use by European nations. Dassault’s technology demonstrator focusses on a stealthy radar cross section and infra-red concealment. The prototype, which is very similar in appearance to the American B-2 bomber, was flown in December, 2012; testing is continuing at Istres in the south of France with the demonstrator already having proved its low observability and electro-optical performance. Over the years, Dassault has proved that it can operate in a variety of markets. Certainly, its immediate post-war history was based on military combat aircraft, but many other products - from the Falcon to the Mercure - proved that technology developed in one area can be applied to another. The product design culture of the company is, perhaps, unique, and precise engineering means Dassault’s business jets can be as much as 30% lighter than their rivals.

Engineered with Passion

Dassault Falcon has always declared that its aircraft are "engineered with passion", but that passion also comes through in many other advanced areas of Dassault’s wide ranging

Dassault is involved in many other programs that stretch its capabilities. It is part of the Clean Sky research program, is working in the cooperative SESAR air traffic management and Alpha-BIRD fuel research efforts, and is coordinator of the HYPATHIE project, which is involved with measurement of high altitude humidity to understand connections between aviation and increased cloud cover. In 2015, the Dassault Group recorded turnover of 4,176 million Euros of which 60% came from sales of Falcons and 83% came from export sales. This was a turnover growth of 26% over the past five years. The company faces major competition in both the military and Business Aviation fields, but its forward-looking approach has clearly paid dividends and a focus on its own technology is certain to see it making great advances. Will the company build a supersonic business jet? On this they are reticent, but if they do, expect it to be another outstanding and cutting edge design. T More information from www.falconjet.com

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Many Irons in Many Fires

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Jack Olcott - probably the worldâ&#x20AC;&#x2122;s most recognized expert on the value of Business Aviation, Jack was President of the NBAA from 1992 through 2003, and today his network and personal knowledge of Business Aviation uniquely qualifies him as Editorial Director at AvBuyer. Contact him via Jack@avbuyer.com

Mario Pierobon is a safety management consultant and content producer. He currently is working on a research project investigating aircraft ground handling safety. Contact him via marioprbn@gmail.com

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Section Contributor

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Safety

Business Aviation Safety: Going Above and Beyond

The High-Value of Tailoring an Ongoing Safety Program for your Flight Department Itâ&#x20AC;&#x2122;s one thing to talk about having a safety culture in the Flight Department, but itâ&#x20AC;&#x2122;s another to successfully execute one. Andre Fodor, Aviation Director, Johnsonville Sausage highlights the steps he implemented... n route home after completing my annual recurrent training for one of our large cabin aircraft, I reflect on the twenty hours of ground-school and six hours of simulator time. Engines failed, systems faulted and instrument approaches were mostly followed by a missed approach procedure, all giving me the opportunity to test my skills, review emergency procedures and re-learn aircraft systems. I return home humbled, reminded of just how much there is for me still to learn. In the early days of building our flight department, I was pre-occupied with managing and setting up the new operation. I was well aware that my proficiency was suffering and I had to remind myself to change roles whenever I put on

the uniform to fly a trip. I was, after all, still a crew member and I needed to stay focused in my duty as a pilot. I made a crucial decision to elect another pilot within the flight department as my Pilot in Command until my management duties eased-up. It proved to be a good decision that kept our safety standards high.

The Path to Better Safety

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Since we operate under CFR 91 (General Aviation) there is no mandatory training requirement beyond annual recurrent training. Being a small flight department, we identified the need to maintain high proficiency and a mindset that leads to constant learning awareness.

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10 Safety template.qxp_YearBook Template 31/07/2017 12:52 Page 3

Safety

Step 1: We began with baby steps, first enlisting a medical professional to train our team in CPR and First Aid before developing a program tailored for our operations. Our CPR and Defibrillator hands-on training takes place inside our aircraft where we simulate real life flight emergencies. We train, for example, to handle a medical event while crossing the Atlantic. Today, we conduct emergency procedure drills every three months or prior to any extended overwater flight, and we have noticed that cohesion within the team has strengthened. We became better at making, executing and sticking to a plan. We discussed international corporate safety, became more compartmentalized in our communications about upcoming flights and discussed real-life events that could happen to us during a trip. That was phase one. Step 2: Having worked as a manager for one of the largest charter operations in the world, I’ve seen first-hand how structured training helped pilots stay proficient and I wanted the same for my team. I chose to not pursue IS-BAO certification at this juncture. That decision was taken based on my previous experience in which there was a race to get the IS-BAO certificate hanging on the wall, but no drive to implement its safety standards for the sake of operational efficiencies. I wanted tangible and practical results that would lead to strong Standard Operating Procedures and safety practices; if the aggregate leads us to an IS-BAO certificate, then I will embrace it. Instead, I approached a company who specialized in flight training content to develop a tailored annual program for my flight department. Today, everyone in the team is assigned a block of on-line classes to be completed over the year. We emphasize that there is no rush to complete the assigned coursework, and we meter the material so it is released over the year. The intention is to keep everyone’s mindset focused on learning, rather than to generate additional workload. Our pilots receive training in corporate security, flight operations and international procedures, and our flight attendant learns about food safety and emergency procedures. Our Director of Maintenance learns about record-keeping and accounting. Everyone learns about Hazardous Materials and work safety, and we emphasize the importance of strong interpersonal relationships.

A Timely Reminder

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Here’s a little confession: Last year I didn’t complete all my flight training assignments. As I discussed the coursework for the upcoming year with the chief instructor of our training provider, he asked me if I needed a reduced workload. The question reminded me that daily I need to make

“I’ve seen first-hand how structured training helped pilots stay proficient and I wanted the same for my team.”

time for proficiency; that there is learning to be undertaken. It kept me in check, reminding me of my responsibility to maintain and improve skills every day. I am so proud of my team. Recently, I dispatched them on a difficult mission without me. During the trip in which they transported the principal and his wife, an unexpected circumstance required a radical change in schedule and logistics. The team performed magnificently without me, and the lead pilot messaged me, “we’ve got this, all handled to our standards”. I knew immediately what he meant - no follow up questions were required. Our mission statement is clear; we aim high and deliver unprecedented quality. A rubberstamp for the professionalism of the team, I subsequently received a handwritten note from our chairman. It read: “Your team did great work tonight without you – a sign of great leadership”. He saw value in how much we invest in training and empowering people within our flight department. It all came together in this opportunity for them to shine. My team has wings, and can fly solo! T

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Safety

Tips on Broadening Your Flight Department Safety Maximizing the Effects of ‘Positive Safety Performance’ in the Flight Department. Safety generally, and Business Aviation Safety specifically, can wrongly be

measured by the lack of harm to people, which implies a negative approach to characterizing a discipline, argues Mario Pierobon. How can Flight

Departments instead maximize the effects of ‘positive safety performance’?

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he science and practice of safety has traditionally focussed on counting errors or threats and trying to build better controls around them. Today, this ‘pessimistic’ (reactive) perspective is increasingly being challenged. Among those doing the challenging is safety scientist Erik Hollnagel, who argues that safety does not primarily emerge from controlling the things that work poorly in a technical system, process or

organization – instead, the focus of the safety science and practice should be on the things that go well as efforts are made to try and maximize their positive contribution. This ‘optimistic’ approach is not very well defined yet in terms of workable solutions for safety professionals to put into place, but it is worth considering the ways positive safety performance affects the overall safety in the corporate flight department.

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AvBuyer.com

An Endless List

There’s probably an endless list of positive factors contributing to safe outcomes in the domain of Business Aviation. These include well engineered aircraft; reliable equipment; and well developed training syllabi, etc. Such factors, however, may not universally apply. For example, not every organization has (or can afford) access to sophisticated technical solutions supporting flight safety. Yet, there are some recurrent patterns that apply commonly throughout the Business Aviation industry, almost irrespective of organization, that significantly contribute to positive safety performance.

•

Enthusiasm: First and foremost, a high degree of enthusiasm in the workforce is required. That comes from a passion for the job, be it a flying or support job. How will a Flight Department Manager achieve the level of enthusiasm among the staff to keep them sharp in terms of safety matters? Creativity: Flight Departments tend to be relatively small in size and from this, a series of other positive dimensions emerges, including the need to be creative, and for solutions to be found autonomously. Accountability: Smaller organizations also have strong accountability. Team members know their decisions will directly impact them or their immediate colleagues. Leanness: Small organizations, like corporate flight departments, also tend to be very lean, dramatically improving the efficiency of decision making and getting straight to the point when discussing safety-related matters.

“It is simply not enough to accept the above safety performance enablers are a given; they must be continuously reinforced.”

Business Aviation is essentially a small world. Professionals generally know one another pretty well – and this, at least theoretically – enables an information exchange should issues that impact safety industry-wide emerge.

they are perceived to satisfy the soft skill requirements for ‘enthusiasm’, ‘creativity’ and ‘accountability’. These skills should be fostered during their time on duty (both during line operations and as a part of their professional development). That may mean adequate focus being placed on those skills during crew resource management training. Meanwhile, capitalizing on the ‘lean’ nature of the Flight Department, managers should provide immediate feedback to employees when safety issues are raised. In essence, organizations should always strive to avoid complacency: It is simply not enough to accept the above safety performance enablers are a given; they must be continuously reinforced lest the organization gradually drift into sub-optimal and then poor performance.

Growing the Optimistic Approach to Safety

In Summary

•

In many ways these dimensions are nearly a ‘given’ within Business Aviation. Yet while they have not really been ‘engineered’ top-down in the industry, they survive in spite of financially challenging times. What an ‘optimistic’ approach to safety management does require is the reinforcement of good behaviours. For individual organizations it all comes down to empowering people in the workforce. These empowerment efforts should be exercised throughout an employee’s tenure with the organization. Employees should be hired if

A positive approach to managing safety needn’t replace the more traditional safety efforts – like hazard identification. Yet it should be kept in mind that a Flight Department could always be doing more to understand why things go well most of the time, and reinforce those best practices. Aviation professionals should always be looking to broaden their focus in the effort to better their safety practice. A strong ‘Positive Safety Performance’ focus to the more traditional preventative measures is a leap in the right direction for any Flight Department. T

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C Can Flight Department Safety Be Outsourced? F

Finding the Balance Between Internal and External Safety Can aviation companies successfully outsource their safety management? Aviation safety writer Mario Pierobon says the answer is both ‘yes and no’. So where do you draw the line on outsourcing? n old management adage widely taught at business schools around the world advises to “Do what you do best and outsource the rest.” It’s a sentiment born out of wisdom but as with all adages, should not fall into generalization. Outsourcing is a very delicate practice, and when it comes to outsourcing safety management maximum care should be exercised within the Flight Department. A high percentage of corporate flight departments are small organizations, where there may be a tendency to outsource some practices - but can aviation companies successfully outsource their safety management? The answer is ‘yes and no’. Specific activities requiring specialized expertise can be outsourced, but a Flight Department should not outsource core safety management. The development of a Flight Department’s safety culture and upgrade exercises must happen within the Flight Department.

What Can Be Outsourced?

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Among the specialized activities that can be outsourced is the engagement of an external party to act as the safety manager of the organization - particularly at the early stages of Safety Management System (SMS) implementation. A proficient expert can help the organization understand what the SMS is about, determine how the company wishes to perform, and establish safety performance targets. As an outsider the external agent can acquire an unbiased understanding of organizational dynamics that might otherwise inhibit effective SMS implementation (such as authoritarian attitudes of management), and advise on the revision of such behaviours as needed. Safety Data Analysis can also be outsourced to specialised parties. A variety of vendors offer flight data analysis or even consolidated safety events analysis on behalf of the organizations that collect these data. The advantage is not just in time-saving. Such vendors can also benchmark an individual organization’s data against a wider pool of data, producing a wealth of safety intelligence that a small organization otherwise wouldn’t access. Safety management training can (perhaps

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What Cannot Be Outsourced?

While certain safety management practices can be outsourced, safety performance management remains a responsibility of the individual Flight Departments. It is vital for a mature safety culture to develop and continuously improve. Safety information has to be collected and, more importantly, actions must be taken on identified trends. Such efforts cannot be outsourced; they must be performed by the Flight Department personnel involved in day-to-day operations. Flight Departments at the early stages of SMS implementation - even those that should have a solid SMS in place but in reality have a relatively immature safety culture are prone to believing that performing a set of (outsourced) practices satisfies SMS implementation requirements. This is

simply not the case. Completing the occasional and small things on an ad hoc basis does not develop a professional safety culture within the Flight Department. ‘Paperwork’ compliance does not constitute safety either. A distinct, recognizable safety culture needs to develop that permeates all safety management efforts within the department. Internal and external stakeholders must be able to tell that the Flight Department genuinely cares about safety, and that can only come from within. Behaviours that need to be noticeable both internally and externally include freedom for employees to talk about perceived safety issues; lack of blame for line operator errors made in good faith; solicitation of input from line operators regarding the development of operational safety standards. The development of these behaviours cannot be outsourced and without them, there can be no effective SMS functioning.

In Summary

A Flight Department manager must be careful when choosing which parts of the organization’s safety can be outsourced. Safety management activities requiring specialized knowledge can – perhaps should – be outsourced. The outsourcing of such activities alone, however, is not enough to have an effective SMS that works. Specific behaviours need to develop within the workforce, and this can only be achieved in-house. T

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should) be outsourced to third parties. Outsourced training should not be limited to SMS or safety risk assessment, but also include all courses mandated by law (i.e. Crew Resource Management, Human Factors, Dangerous Goods, Security, etc.). Oftentimes organizations deliver training in-house to save money. Engaging a professional trainer with a broad experience of several different Flight Departments ultimately ensures a better, broader learning experience, as opposed to Flight Department Personnel being exposed to the same faces continuously.

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NTSBâ&#x20AC;&#x2122;s Most Wanted List - Loss of Control

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National Transportation Safety Board listed Loss of Control as a critical safety issue for General Aviation, including professionally flown turbinepowered aircraft. Jack Olcott reviews a classic case involving a Pilatus PC-12… hen a pilot loses control of an aircraft, the risk of a serious or fatal accident is very high. In the United States nearly half of all fatal fixedwing accidents in GA during the last decade resulted from Loss of Control (LOC). Most, but not all LOC accidents involve pilot distractions that result in failure to maintain flying speed, loss of situational awareness and subsequent spatial disorientation, or inappropriate penetration of weather. As the tragic loss of a professionally-flown Pilatus PC-12/45 illustrates, however, even experienced aviators are at risk when procedures are not followed and anomalies not addressed. Except for the number of passengers being transported, the proposed flight of a Pilatus PC-12 was unexceptional. Its pilot was a former military officer with Lockheed C-141 Starlifter experience as well as employment with several air carriers and charter companies. At the time of the accident, he had flown 8,840 hours overall and nearly 1,800 hours in PC-12s, including 10 hours in the preceding 30 days. His FAA record indicated no previous accident, incidents or enforcement actions. The day prior to departing on a repositioning flight from California’s Redlands Municipal Airport (KREI) to Nut Tree Airport (KVCB), also in California, the pilot requested that airport personnel fill the PC-12’s fuel tanks with Jet A, but did not ask that a Fuel System Icing Inhibitor (FSII) be added to his refueling order. The PC-12 Airplane Flight Manual states that an “antiicing additive [FSII] must be used for all flight operations in ambient [outside air] temperatures below 0°C. On a standard day the temperature is 0°C at 7,500 feet, thus nearly all PC12 flights require the use of a FSII fuel additive. Data downloaded post-crash from the accident aircraft’s Central Advisory and Warning System (CAWS) showed that fuel flow anomalies were present during the 1:48 solo leg from KREI to KVCB, most likely because of ice crystals that formed and interfered with fuel flow from the aircraft’s tanks, which are located in each wing, to the single turbine engine mounted in the aircraft’s nose. At Nut Tree Airport the pilot used the airport’s self-service fuel facility to top-off the aircraft with Jet A, but personnel at the airport found no evidence to suggest that he had added a FSII ice inhibitor. Four adults and five children boarded at KVCB for the short, 13-minute flight to California’s Oroville Municipal

Airport (KOVE), where an additional two adults and two children boarded. Thus the total occupancy for the approximately 2:30 flight to the intended destination of Bozeman, Montana (KBZN) was 14—six adults, seven children ages 1-9 years, and the pilot. Two children occupied several single seats, sharing a safety belt, and the youngest child may have been situated on an adult’s lap. While that passenger load was not consistent with either Pilatus or FAA protocol, NTSB investigators stated that occupants played no role in the aircraft’s subsequent loss of control as it diverted to and approached Bert Mooney airport (KBTM) in Butte, Montana.

Uneven Fuel Flow

Analyzing data from the PC-12’s Central Advisory and Warning System, the NTSB determined that fuel flow during the KOVE-KBZN leg also was disrupted, although the effects of apparent ice crystals forming in the Jet A were not obvious for the first hour of flight. At about 1:18 after take-off from KOVE, however, the PC12’s CAWS showed that the left boost pump was on continuously and the right boost pump was off, indicating that the operating pump was automatically attempting to correct a fuel imbalance of at least 70 pounds. Such an imbalance would have also created a two-bar difference between the aircraft’s left and right fuel indicator’s 28-bar display. As stated in the PC-12 AFM, the maximum allowable fuel imbalance as indicated by the aircraft’s two fuel gauges is three bars. According to NTSB analysts, about that time the aircraft’s sole PT6A-67B turbine engine was drawing all its fuel from the right tank. By 1:32 after departure, a fuel imbalance of 273 pounds existed and continued to increase steadily. Two hours and five minutes into the flight, the aircraft’s left fuel tank contained 1,047 more pounds of fuel than the right tank, thus causing a significantly heavier left wing and a 22-bar differential between the right and left fuel quantity gauges.

Aeronautical Decision Making

Subsequent actions of the PC-12 pilot suggest that he was aware of the aircraft’s fuel flow issue, although it is unknown when he felt the problem warranted corrective action such as diverting to an alternate airport. Approximately 1:30 after takeoff from KOVE, the aircraft’s fuel gauges indicated a three-bar differential and were rapidly diverging. Five minutes later, when the aircraft was within 28 miles of Boise, Idaho’s municipal airport (KBOI), fuel gauge differential had reached five bars and would differ by eight bars after another five minutes, when the aircraft was still within a short flight from the ample facilities of Boise’s several FBOs. Clearly, the pilot needed to make a decision regarding the indications that a fuel flow problem was occurring. Behavioral experts offer several approaches for dealing with Aeronautical Decision Making (ADM). One that is relevant is the DECIDE model, where the letters are used to prompt pilots to follow a six-step approach:

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Again in 2017, just as in the recent past, the US

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• • • • • •

D - Detect changes E - Estimate the need to counter or react to those changes C - Choose a desirable outcome for the flight in the presence of the detected change I - Identify actions that could successfully control the detected change or mitigate risk D - Do the best of the identified actions E - Evaluate the effects of the action taken.

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Fuel imbalance as indicated by the aircraft’s gauges reached 15 bars about 1:50 after takeoff from Oroville (KOVE) on the fateful last leg of the PC-12 flight, when the aircraft was within four minutes’ flying time from a suitable airport at Challis, Idaho (KLLS). At 2:05 after departing from KOVE, with another usable airport seven minutes from the aircraft’s course, the aircraft’s left tank was full and the leftwing heavy situation had reached more than 1,000 lbs and was rapidly diverging. About 100nm from his filed destination of Bozeman, Montana (KBZN), the pilot diverted to Butte (KBTM), 55nm and 13 minutes flying time from his present position, reaching the vicinity of KBTM with a fuel imbalance of 1,302 pounds. The NTSB concluded that even with the left tank full and the right tank essentially empty, the PC-12 possessed sufficient aileron control power to counter the left-wing heavy situation provided the aircraft remained in steady flight and maneuvering was kept to a minimum. Tragically, the experienced PC-12 pilot lost control of his imbalanced aircraft as he attempted to maneuver for landing at Butte. All on board perished.

Learning from Others

Reporting on the tragedy, safety experts at the NTSB concluded the pilot underestimated the seriousness of the initial fuel imbalance warnings, in part because he apparently had not experienced any adverse outcomes from ignoring similar warnings previously. Had he detected the anomalies earlier in the flight, estimated the effects of those changes and chosen the recommended course of action to avoid exceeding Pilatus’s AFM limitations of fuel imbalance, the outcome might have been different. Faced with a laterally imbalanced aircraft, the pilot might have estimated what he would encounter as he maneuvered for landing, and he might have evaluated how the approach to Butte could be flown to minimize controllability risks. The pilot had not flown into Butte previously and may not have considered the environment around KBTM, which is situated in a valley surrounded by mountainous terrain. Approaching Butte from the southwest over high ground, the pilot had limited distance between the surrounding mountain peaks and the airport for descending for his approach. The environment surrounding KBTM differed significantly from several other airport options situated in valleys and available to the pilot as the fuel imbalance situation worsened. Loss of control is a risk that all pilots face whenever an aircraft is flown under conditions that approach or exceed the vehicle’s certified flight envelop. While comprehensive planning is required at all times, special care and prudent decisions are needed when conditions are abnormal. T

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Learning from Others: Learning from Saving Lives Through Others: Detailed Analyses of Aviation Saving Lives Accidents Through Detailed Analyses of Aviation Accidents

Digging deeply into the tragic aborted landing of a Hawker 125-800A, professionals at the NTSB provided meaningful insight that enhanced Business Aviation’s outstanding safety record. Jack Olcott reviews the circumstances and the findings. win-engine, turbine-powered General Aviation aircraft flown by two-person salaried crews—the segment of transportation typically identified with Business Aviation—has an impressive safety record that is on a par with (and occasionally exceeds) the excellent safety statistics of the largest Scheduled Airlines. In fact, when all forms of transportation are considered, Business Aviation and the Scheduled Airlines are clearly the safest forms of travel, in large part because great care is taken to understand what factors contributed to an unsuccessful flight. In the US, the government’s National Transportation Safety Board (NTSB) is mandated by federal law to conduct objective, precise investigations of all aviation mishaps that involve loss of life or serious injury, and to report and promote its findings in safety recommendations. The Board identifies a Probable Cause strictly

to inform so that others—aviators and well as manufacturers—can learn from the accident. NTSB findings are not to be used to assign blame or liability. (It is the FAA’s responsibility to accept and codify into FARs those recommendations the FAA believes are appropriate.)

The Flight

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Flown by a qualified crew, the fully equipped and airworthy Hawker 125-800A crashed when its captain attempted to abort his landing at Owatonna Degner Regional Airport (KOWA) in Minnesota at the completion of a 2.5 hour charter flight from Atlantic City International Airport (KACY) with six passengers. The Hawker was cleared to descend to FL240 as it neared KOWA, an uncontrolled facility with an un-grooved concrete runway 5,500 feet long as well as 100 feet wide, 1,000 feet long grasscovered safety areas at each runway end. Weather surrounding the airport was unsettled, with stratified rain and imbedded thunderstorms. Approximately an hour before the Hawker’s approach, KOWA had experienced heavy rains and strong winds but conditions as the aircraft was being vectored for the approach

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NTSB Analysis

Safety Board investigators focused on the captain’s minimal use of Crew Resource Management (CRM) during the flight from KACK to KOWA. Their findings concluded that during the flight there was an atmosphere that did not comply with well-designed Standard Operating Procedures (SOP) intended to minimize operational errors, including adherence to a sterile cockpit as the aircraft descended below 10,000ft. and prepared for the landing. The lack of SOPs led to inadequate briefing for the approach, insufficient monitoring of current wind conditions, failure to use wind data available from cockpit instrumentation (the Hawker’s dual FMS displayed current wind direction and speed for each pilot), inappropriate conversations between pilots, non-standard

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were deceptively benign, with the airport’s Automated Weather Observation System (AWOS) reporting winds from 180-degree at 3 knots, visibility 10 miles, and thunderstorms and light rain nearby. In the 30 minutes prior to the Hawker’s approach, 0.05 inches of rain had fallen. Approximately 10 minutes prior to landing, the co-pilot (serving as pilot monitoring) attempted to contact the FBO at KOWA and the captain began handling radio communications. Unable to raise the FBO, the co-pilot refocused his duties on contacting approach control and acknowledging a clearance to be vectored to the airport. At this point, the captain called for a quick review of the approach checklist, to which the co-pilot responded seven seconds later “approach briefing” and the captain replied “it’s gonna be an ILS to three zero”. On vectors to the Runway 30 ILS and continuing to execute the approach checklist, the crew discussed the surrounding weather displayed on the aircraft’s radar but there was no specific mention of the conditions that existed at KOWA at the time of anticipated landing. Rochester Approach Control, serving the area surrounding KOWA, reported that light precipitation existed along the remaining route to the final approach fix for Runway 30 ILS and that heavy storm cells were located about five miles north and northeast of the airport. With the approach check list completed by the captain and acknowledged by his crewmate, the co-pilot again

attempted unsuccessfully twice to establish contact with the FBO at KOWA. Two minutes later, and only about three minutes prior to touchdown, the co-pilot reached the FBO and inquired about passenger discharge and refueling procedures. Concurrently, the captain discussed local air traffic with Rochester Approach Control. The landing check list was completed as the co-pilot finished talking with the FBO and began reviewing fueling procedures with the captain. Two minutes before touchdown the captain called “flaps two” and prompted the co-pilot to “go through the before landings, make sure you got it all…down indicating down”. The co-pilot responded that they had the “…before landing shorts to go”. At that time the aircraft was 1,000 feet above ground level and slowing to Vref in visual metrological conditions (10 miles visibility, 3,800 scattered and light rain). Just prior to touchdown, at 0944:47, the aircraft’s Cockpit Voice Recorder captured an electronic voice stating “two minimums minimums”, immediately followed by the co-pilot stating “air valves are shut, damper to go,” and then “damper”. At 0945:08, the CVR recorded the sound of tires rolling on the concrete runway, followed 2.5 seconds later by the sound of the Hawker’s airbrakes moving to the open position. (Per FARs for charter flights, the aircraft was equipped with a CVR, but a Flight Data Recorder was neither installed nor required.) Immediately at touchdown, the co-pilot stated that the lift-dump feature of the Hawker was deployed, followed quickly by the statement “we’re not dumped”. About 1.5 seconds later the captain acknowledged the situation and moved the airbrake handle to the DUMP position, thereby extending the aircraft’s flaps to the ground setting that provided maximum aerodynamic braking. Ten seconds after selecting the Lift Dump flap position and apparently sensing the aircraft was not decelerating sufficiently to stop in the remaining runway length, the captain moved the airbrakes to the SHUT position, called “flaps” and added full power to abort the landing. According to the NTSB’s analysis, the Hawker ran off the runway end at 0945:29, rolled onto the grass-covered runway safety area and was airborne just as the clear area ended. Tragically, the Hawker collided almost immediately with the Runway 30 localizer antenna and came to rest in a cornfield about 2,150 feet from the runway end. All occupants were lost due to impact forces from ground contact that the NTSB deemed were unsurvivable.

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terminology, and lack of checklist discipline throughout the descent and approach. The Board cited the co-pilot’s attempts to contact the FBO at KOWA when more attention should have been devoted to the approach checklist and preparations for landing. Furthermore, the Safety Board felt the crewmembers exhibited poor aeronautical decision-making and managed their resources poorly, which prevented them from recognizing the risks inherent with a wet runway of minimal length, particularly since Runway 30 had a downward slope of 0.7% and the winds were shifting and might be favoring Runway 12 upon arrival (which indeed they were). While the Hawker was dispatched appropriately for the flight considering factors required by FARs related to runway length for charter flights, clearly the conditions the crew faced upon reaching the KOWA area where challenging and left little margin for error. More time and attention to the actual conditions that would be experienced upon reaching KOWA might have prompted the captain to select Runway 12, which had a slight uphill slope and at the time of approach had a small headwind component of about five knots. Conditions at KOWA would have allowed either a GPS approach or a circling approach to Runway 12. Investigators reasoned that the Hawker touched down within the target touchdown zone and at the recommended touchdown speed, and that the captain likely applied sufficient braking during the initial part of the landing roll. But he failed to immediately deploy the lift-dump system after touchdown in accordance with SOPs. There was no evidence of dynamic hydroplaning. According to Safety Board analysis, had the captain continued the landing and accepted the possibility of overrunning KOWA’s concrete runway instead of attempting to execute a go-around, the Hawker would have come to a halt within the 1,000 foot grass safety area beyond the end of Runway 30. Consequently, the NTSB issued a recommendation that newly certificated and in-service turbine-powered aircraft incorporate in their Aircraft Flight Manuals a committed-to-stop point beyond which a go-around should not be attempted.

Tough but Meaningful Lessons

Flight is challenging, in part because risk is always present even when conditions seem benign. Complacency continually lurks nearby, tempting the experienced aviator to skip through Standard Operating Procedures or cut planning short. Checklist discipline is easily overlooked, and what may appear to be just another routine landing might contain the elements of mishap. Although it is painful to assign probable cause to aviators who

train thoroughly and try their best to fly all missions safely, the NTSB and its counterpart agencies in other countries provide a great service to the aviation community. No aviator ventures skyward intending to have an accident or mishap. They do their best, and nearly always achieve success. But when something does go wrong, the community is able to learn from their misfortune. Aviation’s approach to accident investigation is one its greatest virtues. Probable cause is identified solely to help others avoid repeating the tragedy. With few exceptions, US law prohibits findings of the NTSB from being used in civil lawsuits. Specifically, “No part of any report or reports of the National Transportation Safety Board relating to any accident or the investigation thereof, shall be admitted as evidence or used in any suit or action for damages growing out of any matter mentioned in such report or reports.” Perhaps if the medical profession, which often is besieged by litigation, had such an approach to errors there would not be over 100,000 deaths per year attributed to medical mistakes in US hospitals. T

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