Appraising the Truth - Why Business Aviation Needs Accurate Aircraft Valuations and Appraisals

NAFA member, Jason Zilberbrand, President of Vref, writes about why business aviation needs accurate aircraft valuations and appraisals. 

Q: How did Vref get started down the road of providing prices and supporting data on aircraft?

A:  The Vref story began roughly 25 years ago. The first Vref guide was published in January 1994. Vref was first published by Fletcher Aldredge, a former analyst at Aircraft Blue Book. He was unhappy with how information and data were being published, collected and updated so he started his own Guide. Fletcher created a platform that was ahead of its time and has the most trusted data in the industry. Vref is used by every bank, financial 
institution, broker and aviation professional as one of the trusted resources they can depend on for accurate information on aircraft. By providing up to date real time values for helicopters, all fixed wing aircraft, and now engines and commercial narrow bodies; Vref is the predominant force in aircraft value data. 

Q: So how did you and Ken Dufour, the CEO of Vref, get involved? 

A: Ken and I were brought in to oversee the day-to-day business operations,  run  the  company  and  implement  new  services.  Ken and I have very different skill sets and backgrounds. I have spent the better part of my life in aviation, having come into the business when I  was  still in  college,  when  my  father  started  Jet  Support Services Inc. (JSSI), which we sold in 2008. For the last 15 years I ran an international aircraft dealership and brokerage. 
My time at JSSI was invaluable in preparing me for what I now do at Vref, in that we were myopically focused on maintenance events and costs, and I was introduced to an amazingly diverse network of people in the MRO shops, the OEM community and in the aircraft financing and banking sectors.  Buying and selling aircraft further honed my skills, and by applying my maintenance and engine knowledge base to brokerage it created opportunities 
that I might not have ever been able to identify. However, when the crash hit on 29 September 2008, a day I will remember forever since it was also the day my eldest daughter was born, we were holding some $320 million in aircraft inventory, in the form of 23 aircraft that we suddenly had no buyers for those were harsh times for many in the sector as deals dried up all over the place. We were able to reach fair solutions to those positions and moved on. However, what happened over the next few years as companies started shedding jobs was that large numbers of people decided to reinvent themselves as aircraft brokers. Simply by selling one aircraft a year they found they were doubling whatever they had been paid in their old jobs. What was once a career that you were lucky enough to get into or in most cases born into, was now nothing more then a cell phone, website and access to classifieds.  In that environment, being a broker no longer held out much interest for me. I was much more interested in the challenge of how one could go about gathering the data required to put a realistic and accurate value on particular aircraft. I was spending more and more of my time trying to determine where forecasts of values were going and appraising aircraft. It was apparent when I started doing more aircraft appraisals that Vref would be the perfect company for me to grow my career.  

Q: I believe Ken came into it from an entirely different route?

A: Absolutely. Ken is without question the foremost expert appraiser of aircraft in the US. He is a Accredited Senior Appraiser with the ASA and he has appeared as an expert witness in over fifty cases and has helped his side to win them all. I should mention that he has been mentoring me as far as becoming an expert witness is concerned, and I have now appeared as an expert witness in two cases, both of which we won. We now offer expert witness services as part of the Vref portfolio of services, be it via actual court appearances and testimony, or via deposition. 

Q: Can you give us something of a flavour of the kinds of cases involving business aviation aircraft that call for expert witness testimony?

A: A very common scenario is where you are acting either for the owner of an aircraft that has sustained damage, or for the insurance company or OEM. What you are trying to determine is what the value of the undamaged aircraft would have been at that point in time, and what its value is now that the damage has been sustained. It is a hugely complicated calculation, with a lot of moving parts. Ken is an absolute master at producing an evidence-based appraisal and his work has never been successfully challenged. That is part of the skill we bring to Vref.

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This article was originally published in Business Aviation Magazine, Summer 2018, p. 78.