What Is The Typical Down Payment Percentage on a Jet? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your questions about jet down payments.
Q: What is the typical down payment percentage on a jet? Possibly a CJ3+?
A: How the aircraft is being used will be a primary factor in determining the required down payment. For Part 91 personal/business use lenders typically will finance up to 85% of the purchase price or aircraft value, whichever is less. Part 135 charter or other commercial usage generally requires larger down payments. 30% down is typical for this type of usage. How the loan is structured can also play a factor in the down payment. AOPA Aviation Finance can offer solutions such as interest only, asset based, or longer fixed term structures. Larger down payments are typically required for these types of loan structures. Please give us a call, we’d be happy to discuss your situation in further detail.
This article was originally published by AOPA Aviation Finance Company on September 18, 2019.
The Closing: The Final Step to Completing the Aircraft Acquisition! see more
NAFA member, Amanda Applegate, Partner with Aerlex Law Group, shares what you need to know when it's time to close on your aircraft.
At long last, you have found the aircraft that fits your needs, the pre-purchase inspection is complete and the discrepancies have been remedied. It is now time for the closing. What does this mean and what needs to be done? For many first-time aircraft buyers, they think the closing will be a long drawn out event. However, I tell all of my clients that the closing should be a non-event and if all of the work has been done in advance, the actual closing should take less than 10 minutes. Once the purchase agreement is executed, a closing checklist should be developed to track all of the deliverables needed through closing. Here is a list of the important items that need to be accomplished shortly before closing:
1. Aircraft Positioning –
The purchase agreement should identify the delivery location and who is required to pay the movement costs, if any. The closing cannot occur until the aircraft arrives at the delivery location and in the required delivery condition.
2. Closing Documents –
There is an actual filing window at the Federal Aviation Administration (“FAA”) registry in Oklahoma City, OK. All of the closing documents should be pre-positioned with the escrow agent in Oklahoma City, as the escrow agent will be responsible for filing the applicable documents with the FAA. As the buyer, the required FAA closing documents are a registration application FAA Form 8050-1, a statement in support of registration if the purchasing entity is a limited liability company, lender documents if applicable, and a declaration of international operations if there is an upcoming international trip. As the seller, the required FAA closing documents are a bill of sale FAA Form 8050-2, as well as any lien releases if necessary. Additionally, the buyer and seller will each need an active transacting user entity account with the international registry in order to register the contract of sale at closing. Further, the purchase agreement more than likely requires other non-FAA closing documents, such as a delivery receipt and warranty bill of sale.
3. Insurance –
During the purchase process an insurance carrier should have been selected and a determination on the amount of coverage required. Shortly before closing, insurance should be bound and the buyer should receive and review the certificate of insurance. If the aircraft is financed or managed by a third party, these parties will have specific insurance requirements which need to be evidenced on separate insurance certificates.
4. Maintenance Programs and subscriptions –
If the aircraft is enrolled in any maintenance programs or subscription services, the third party providers must be contacted to confirm the account is in good standing, paid in full and transferrable upon closing.
5. Closing Statement –
The escrow agent will prepare a final accounting statement based on the terms of the purchase agreement and information provided by the parties. The statement will usually include the purchase price and any other fees due under the purchase agreement or to third parties, such as brokers. Any movement costs or similar expenses should be calculated a few days prior to closing and agreed upon by the parties prior to the day of closing.
6. Inspection Facility Invoice –
Oddly this is an item that can often cause a delay in closing. The aircraft cannot depart the inspection facility for the delivery location until all invoices are paid. However, invoices can’t be paid until they are final. The invoices from the inspection facility are very detailed and often take a long time to get into final form. Once received they must be reviewed in detail since certain costs are buyer costs and other costs are seller costs as dictated by the purchase agreement.
7. Tax plan –
The tax planning at the federal and state level for the acquisition should have been completed while the pre-purchase inspection was occurring. At closing, the tax plan should be implemented.
All of the items above can be accomplished in the days leading up to closing. If done properly the actual closing is a series of emails or a conference call with all parties lasting less than 10 minutes!
Refurbish Your Jet With Maximum Appeal - Part 2 see more
NAFA member, Gary Crichlow, Director of Aviation Finance with Arc & Co., discusses aircraft refurbishment investments.
Any investment into private aircraft needs to be looked at from the point of view of slowing the aircraft’s inherent depreciation as much as possible and extracting maximum utility, rather than expecting a positive financial return.
The most effective way to slow value loss is to make sure the aircraft is desirable to the market so that it sells quickly when you decide that it’s time to upgrade or generate some cash. Previously we discussed the impact that a well-executed interior, in top condition, can have on a sale.
Here, we consider the value of cabin refits from the perspectives of utility, history and transferability. Note: With our use of the term ‘value’, we encompass not only the actual return by way of an increased selling price (which tends to be the exception rather than the rule), but also we mean the impact on the time it takes to sell the aircraft, thereby minimizing the detrimental effects of depreciation and time on the market.
Refurbishing With Utility in Mind
The first consideration is, of course, to have an aircraft that does what you want it to do in terms of the cabin layout, amenities, entertainment, connectivity, privacy, etc. However, it’s also important to think about the end-buyer. How likely is it that your aircraft will be able to meet their needs as well?
The most value-enhancing upgrade options tend to be the ones that result in a demonstrable enhancement to utility. They will, for example:
• Enable the aircraft to fly longer distances;
• Certify the aircraft to land at certain airports, in certain countries or on more efficient routings;
• Allow full in-flight connectivity for all users including streaming live; or
• Have different zones for privacy/rest/work for principals, entourage and crew.
According to Celia Sawyer, who runs her own interior architecture and design firm and provides private and commercial clients with bespoke, luxury interiors for private jets and helicopters, the things that clients typically look for can differ significantly.
“It is different with every client,” she notes. “I had a Middle Eastern client who wanted a lot of gold inside and also wanted the interior to be very opulent, with only the best Italian leathers, a good boudoir to sleep in and a large shower room.
“Another client wanted no frills — just a contemporary, functional interior with good technology on board, more like a flying boardroom with a living area next to it that he could work from. So, it really is dependent on the client’s needs and their priorities.”
And yet there is more than just catering for the principal’s needs at play when considering the upgrade and refurbishment options for a private jet. Just how much of a selling point are amenities appealing to the buyer’s family or entourage?
These items might include private family suites on the much larger jets, catering facilities, showers, broadband allowing for the streaming of videos/gaming and additional baggage/stowage space.
According to Sawyer, “They all want the highest level of technology. That’s something that is always requested, whatever the size of the aircraft.” Having other amenities on board are very important to some clients. “If they have a family they travel with, they need to have everything available,” Sawyer adds.
“Of course, it will depend on the size of the aircraft as to whether they can have a shower, or what sort of catering facilities and how much additional baggage space is possible.
These design requirements will in turn be driven by what sort of trips they intend to make.” So, what are the top design trends that aircraft owners are choosing to help to maximize the appeal of their aircraft’s interior? “I am pleased that my clients are thinking of the environment,” Sawyer observes. “Many are requesting more fuel-efficient aircraft with lower emissions. New and upgraded engine and aerodynamic technology is key in this respect.
In keeping with this ‘green’ trend, on the aesthetic side Sawyer’s clients are insisting on lighter-weight interior furnishings and fittings than they may have done previously, “but they’re still choosing materials and designs that deliver on comfort, quality and style.”
The Role of History in an Attractive Aircraft Refurb
Ultimately, buyers prefer to purchase aircraft where the history of ownership, operation and maintenance is simple, well-documented and clear.
All the records – including the installation and certification of the interior, right down to the last detail – should be organized in such a way that a buyer can immediately see and take comfort that everything is in order.
According to Iain Houseman of Elit’Avia, “In an ideal world, all aircraft purchases would come with the correct documents, such as a comprehensive history of ownership and maintenance.” Interior installs from the factory are usually well documented, but problems can occur in service when an aircraft’s owner decides to change something and does it at their local facility for no other reason than that facility is the more convenient option.
“I’ve seen a number of aircraft that had work done where the paperwork wasn’t in order,” Houseman reflects. “This has meant the aircraft couldn’t be moved on to a different registry because you cannot show the history of modifications.
“That’s why it’s so important for the owner to have an approved operator with quality maintenance and care processes in place to ensure paperwork is properly kept.”
Elaborating further on the owner who was unable to move their airplane to a different registry, Houseman adds, “When the owner wanted to put it on an EASA registration, he couldn’t because the EASA approval for the modifications was not complete. He had to put the aircraft on the Isle of Man registry (which accepts both FAA and EASA certifications) and wait a further six months for the EASA approvals to come through.
“In another situation, a client decided to replace the carpet. It sounds easy, but the carpet was also attached to the seat bases. Burn certification paperwork is required, not only for the carpet, but also for the glue to attach it to the seat base and approval is needed from the seat manufacturer.
In total, it took eight weeks for a one-week install!” So, what are the lessons learned for interiors being installed on new aircraft? “You can usually pay the manufacturer to provide EASA certification alongside the FAA’s, because pretty much all the aircraft being built will come with FAA approval on the interior in the form of an STC,” Houseman explains.
“There is usually an upcharge for EASA, but from a seller’s perspective, it could make sense to get this for resale purposes,” he suggests. “It also depends on the model: larger aircraft with an international market would more obviously benefit from more certification to help with resale.
However, for smaller aircraft that are predominantly sold in the US, foreign certification may be a ‘nice-to-have’ rather than a ‘must-have’. “Multiple certification can be important in older aircraft, too. If an aircraft has spent its entire life in the US and has had modifications done under FAA STCs that are not EASA-approved, then all of the STCs would need EASA approval to import the aircraft onto an EASA registry.
It’s also important to make the distinction between private or commercial use, Houseman notes.
The requirements for commercial use vary between countries, so an aircraft that has EASA-only approved modifications could still go on the US registry for Part 91 private operations, but if it’s missing certain equipment mandated specifically by the FAA, it cannot do Part 135 commercial operations.
Upgrading and refurbishing an aircraft is a significant investment that can strongly enhance your experience whilst on board. But it’s vital, when planning for the investment, to have a realistic view of the value it creates and the other challenges that could arise.
A well-executed cabin refit should meet your needs in terms of space, aesthetics, utility and connectivity, and have the added benefit of appealing to the broadest possible range of potential buyers when the time comes to move the aircraft on.
As established at the start of this article, a well- executed cabin refit will not generally result in a positive financial return outside of a very narrow and oft-unpredictable set of market circumstances.
Doing your homework and enlisting competent expertise is key: an interior refit is a complex project that requires detailed planning and oversight, and strict adherence to a plethora of regulations. Delays and mistakes can be costly and time- consuming. You should keep potential future buyers for your aircraft in mind; not just in terms of aesthetics and technology, but also in terms of certification, with the aim being to ensure maximum transferability with minimum headache.
Finally, a reminder that investing in a quality operator is crucial to make sure that paperwork is properly organized and maintained.
This article was originally published by AvBuyer on September 27, 2019.
GAMA Publishes 2019 Third Quarter Aircraft Shipment and Billings Report see more
NAFA member, GAMA, releases Third Quarter Aircraft Shipment and Billings Report.
Washington, DC — The General Aviation Manufacturers Association (GAMA) today published a nine-month industry update with the release of its third quarter general aviation aircraft shipments and billings report. Aggregate business jet and piston airplane deliveries continued experiencing increases through the first nine months of 2019 compared to last year, whereas the number of turboprops and rotorcraft deliveries declined.
"The first nine months of 2019 show positive results for business jets and piston airplanes,“ said GAMA President & CEO Pete Bunce. “Turboprops and rotorcraft, however, continued to encounter headwinds. Despite these mixed results, our manufacturers continue their investments in advanced factory machinery, design software, and associated processes that keep product development cycles robust and in-turn bring advances in fuel efficiency, capability, and safety to the global fleet."
Business jet deliveries rose by 15.4% in the first nine months of 2019 from 447 in 2018 to 516 in 2019. Piston airplane deliveries also experienced double-digit growth of 12.3% from 781 units in 2018 to 877 in 2019. The number of turboprop deliveries declined from 395 to 349 airplanes.
The number of rotorcraft delivered during the first nine months of 2019 was down compared to 2018. In the first nine months of the year, 434 turbine powered rotorcraft were delivered and 136 piston engine powered rotorcraft. The value of rotorcraft shipments was $2.2 billion compared to $2.7 billion, a 17.3% reduction.
This press release was originally released by GAMA on November 15, 2019.
The Aircraft Buyer’s Guide to Private Jet Financing see more
NAFA member, H. Lee Rohde, III, founder, President and CEO of Essex Aviation Group, Inc., shares tips on private jet financing.
Even for high-net-worth individuals, whether to purchase a private aircraft might rank as one of the most expensive — and, potentially, lifestyle-changing — decisions they’ll ever make. From upfront costs to the ongoing costs of maintenance, hangarage and direct operating costs, private aircraft ownership requires a significant capital investment but, for those who frequently fly for business or personal reasons, it provides unparalleled travel experiences.
The fact of the matter is that the comfort, convenience, luxury and freedom that private aviation offers would be compelling to just about anyone and considered well worth the cost by those who can afford it — so let’s talk about the options to best structure it through private jet financing.
Let’s Talk Costs
Before a buyer kickstarts their search for a private aviation lender, they’ll first want to thoroughly consider the costs of purchasing a private jet. Conservative estimates place the cost of a brand-new private jet between $7 million and $75 million, while the most expensive private aircraft in the world — those of commercial size but modified for private use — cost well above that range.
For those buyers hoping to minimize their capital investment in an aircraft, acquiring a pre-owned aircraft can offer many of the same benefits as a new model with a reduced capital cost. However, for the following new aircraft, current industry data included in the VREF Aircraft Value Reference Guide offers some perspective on pricing and just how expansive the private jet financing industry is.
Bombardier • Lear 75: $13.8m
• Challenger 650: $32.4m
• Global 5000: $50.4m
• Global 6000: $62.3m
• Global 7500: $72.8m
Cessna • Citation M2: $5m
• Citation CJ3+: $8.6m
• Citation CJ4: $9.6m
• Citation XLS+: $13.6m
• Citation Latitude: $17.3m
• Citation Sovereign 680+: $18.8m
Embraer • Phenom 100 EV: $4.5m
• Phenom 300: $9m
• Legacy 450: $16.6m
• Praetor 500: $17m
• Praetor 600: $21m
• Legacy 650E: $26m
• Lineage: $50m
Dassault • Falcon 2000S: $30m
• Falcon 2000LXS: $35.1m
• Falcon 900LX: $44.8m
• Falcon 7X: $53.8m
• Falcon 8X: $59.3m
Gulfstream • G500: $46.5m
• G600: $57.9m
• G650: $69.5m
Pilatus • PC-24: $9.5m
Choosing the Right Lender
The road to private aircraft ownership should begin with the decision to retain the services of an aviation consultant or a jet financing broker. It is the responsibility of an aviation consultant to understand the buyer’s needs and situation to direct them to an appropriate tax attorney and, ultimately viable lenders and financing structures. Once the consultant has completed these steps, the process of researching lenders, requesting and reviewing lender proposals and working with the client or the client’s team is fairly straightforward. A consultant’s primary contribution is to apply their knowledge and considerable network of industry connections to facilitate the financing solution that best serves the client’s unique needs and requirements.
High-net-worth individuals often partner with aviation consultants and finance brokers through their private wealth advisors or in-house finance team in order to identify the best options available. Clients in different segments of the market who might not have the same level of in-house financing staff to support their needs can also benefit from assembling a team of third-party experts within the private aviation industry. Whether they’re working with an in-house finance team, a third-party private aviation consultant or an aircraft finance broker to evaluate lenders, buyers have three private jet financing options from which to choose:
- Traditional Banks: For most buyers, utilizing their current bank can be the most efficient choice for jet financing due to their existing relationship. The bank already has a complete portfolio of the buyer’s finances, which can make the loan process that much more efficient.
- Banks With Aircraft Finance Groups: In the event that a buyer’s current bank cannot provide jet financing, it may still be able to use its industry connections to put the buyer in touch with a different bank that has a dedicated aircraft finance group. These institutions specifically have a vested interest in private jet financing and already manage a large aircraft portfolio and would therefore be more inclined to offer private jet financing to a buyer without an existing relationship.
- Private Lending Groups: This type of lender is able to provide private jet financing by raising capital within equity markets to support their portfolio growth. Though private aircraft lenders are less common than their traditional banking counterparts, they are a viable option for buyers who, for whatever reason, wish to avoid securing a loan with their primary bank or a traditional bank. Buyers who choose to pursue this private jet financing option are still advised to work with a private aviation consultant and tax attorney to confirm the lender’s position in the market and whether it’s a suitable option for the buyer in question.
Criteria for Private Jet Financing Evaluation
It is, understandably, in a lender’s best interest to be highly discerning about who it grants private jet financing to and how much it lends. Therefore, similar to home mortgage lenders, private aircraft lenders have strict criteria for evaluating potential borrowers, as well as additional portfolio parameters based on the age and models of aircraft they’re able to finance.
For buyers who want a better understanding of this criteria, look no further than the “5 Cs” of credit: character, capital, capacity, collateral and conditions.
- Character refers to the borrower’s reputation and the stability of their credit.
- Capital refers to the borrower’s net worth and the types of capital assets they currently own.
- Capacity refers to the borrower’s ability to pay on the loan, as well as their current debt-to-income ratio.
- Collateral refers to the assets that the borrower is able to pledge to secure the loan.
- And, finally, conditions refer to how the borrower intends to use the aircraft, as well as external factors such as pending legislation that could affect the loan and the current state of the economy.
Buyers should be aware that most lenders have specific loan covenants, and that their lender of choice might require periodic reviews of the aircraft’s market value and also organize third-party inspections to determine whether the aircraft is being kept in the proper condition.
Alternatives to Private Jet Ownership
For individuals who want to replicate the experience of owning their own aircraft without having to worry about securing private jet financing, there are multiple alternatives to outright ownership:
- Private Jet Lease: The individual leases an aircraft from the owner for a specified period of time and assumes full operational control — similar to direct ownership — without transferring the aircraft title. Private jet leasing offers similar operational benefits, which can make it a viable option for buyers who are not able to take advantage of the tax benefits that direct ownership can provide. In some cases, however, private jet leasing agreements preclude the lessee from using the aircraft for third-party charter (FAR Part 135).
- Fractional Aircraft Ownership: The individual invests in partial ownership by purchasing a share of a specific aircraft type and agrees to an annual amount of flight hours depending on their specific travel needs. Fractional ownership often comes with significant upfront acquisition and monthly operational costs, but fractional owners save on deadhead costs.
- Private Jet Membership: The individual agrees to a fixed cost per hour at the start of the contract and is billed after each flight. Members are also expected to pay monthly management or annual membership fees.
- Jet Card Program: The individual either agrees to a predetermined number of hours on a specific aircraft type or size category (dedicated service) or funds an established travel account and chooses the aircraft category on a trip-by-trip basis, after which the cost of trip is calculated and deducted from the account’s balance (debit card service).
- Private Jet Charter: The individual charters — that is, rents — an aircraft for each specific trip they wish to take. Private jet chartering can be well-suited for individuals with relatively low annual travel requirements, but who fly to areas that cannot be easily reached by scheduled airline service.
A Final Note
Buyers interested in purchasing a private jet should assemble a team of professionals to assist them at every step of the process. From sorting out aircraft-specific tax considerationsto hiring an aircraft management company to handle day-to-day operations and support once the purchase is complete, buyers will want to have qualified and capable industry experts on their side — starting with a private aviation consultant.
At Essex Aviation, we have a combined 70 years of aviation experience; in that time, we’ve had the opportunity to learn the ins and outs of the private aviation industry, as well as develop strong relationships with service providers and other vendors. We’re able to leverage this knowledge and our vast network of industry connections in order to ensure that our clients’ unique private aviation requirements are met with unbiased guidance and that they have a quality client experience, from start to finish.
This article was originally published by Essex Aviation Group, Inc.
How to Build a Business Aircraft Acquisition Plan see more
NAFA member, David Wyndham, Vice President with Conklin & de Decker, discusses the importance of developing a thorough aircraft acquisition plan.
With a sense of urgency and a large sum of cash, an aircraft acquisition can be completed rather quickly. However, without a plan or the right team in place, these types of scrambles typically result in the wrong aircraft for the job, or just simply picking the wrong aircraft. To avoid the headache from an impulse purchase, you need to build a business aircraft acquisition plan.
To begin, there are two fundamental reasons for acquiring new or different aircraft:
- The current aircraft can no longer perform the mission, or
- The current aircraft is no longer the most cost-effective solution.
Changes in mission need to be quantified. As an example, one client in the Eastern US started flying shorter trips with fewer people. Their eight-passenger jet, with a 1,800nm range, was more than they needed.
Instead, they found that a five-passenger airplane that’s more efficient on short trips might be the next aircraft for them.
But how can you quantify what it is that you need and want? Economics are critical. The cost of an aircraft is more than the acquisition price alone. It encompasses the total costs needed to operate the aircraft and allow for a future residual value.
As an example, a single aircraft that meets 98% of usage requirements may cost far more than an aircraft that meets 85% of your needs with a supplemental jet card, charter or fractional solution in place for the remaining 15%.
What Should Your Acquisition Plan Include?
It is important for you to understand what it costs to own and operate the aircraft – and this will all come into your acquisition plan. So, what should your acquisition plan include?
An aircraft acquisition plan must (at a minimum):
- Identify, quantify and differentiate your needs and wants;
- Identify and rank the possible aircraft types by mission capability; and
- Analyze all the costs involved with the aircraft.
Your plan should be void of emotional issues and stay as far from subjective criteria as possible. To help in this respect, you will need someone who can ask the tough questions and assist with an unbiased analysis of the candidate aircraft.
Consultants may offer the unbiased review that you initially need, and their feedback will need to cover both technical and financial aspects of the aircraft acquisition.
Who Should be on Your Acquisition Team?
As you proceed with the acquisition you need to add expertise across several fields to your team. Tax planning should begin well before the purchase, not after the closing, meaning that you will need to hire someone familiar with taxes as they apply to aviation.
You will also need to consult a qualified aviation attorney to ensure that the contracts are appropriate and that the various regulatory issues are addressed. A document that looks good from a basic business perspective may not be legal in the eyes of the FAA or other aviation authority.
Don't overlook the insurance broker, who will need to be kept informed as to when and how the aircraft is to be used. (For example, if the aircraft is to be placed on a management agreement, who and how are each of the parties to that agreement going to be covered?)
You will also need an aircraft sales professional, who will ideally have an excellent understanding of the aircraft sales market — what the availability is; lead times for various models; who to contact about pre-buy inspections and appraisals; and how long it could take to dispose of your current aircraft.
Moreover, the aircraft sales professional you hire will need all the qualities required to be an excellent facilitator, since their job will also be to make sure the deal closes and that all parties are happy.
Additional Planning When Buying New…
Moreover, if you are buying a new aircraft, specifying all the options, picking out paint, and choosing an interior may take a minimum of six months and may well require the services of additional advisors.
Think of your business aircraft acquisition as a “time-is-money” deal. That is, if you don’t have much time, you’ll probably spend even more money! If you are looking to close a deal by the end of this year, you need to be looking seriously right now, and investing in all of the right areas to ensure your acquisition plan results in the right aircraft, at the right cost, at the right time.
This article was originally published by AvBuyer on October 25, 2019.
A-OK When AOG see more
NAFA member, Anthony Kioussis, President of Asset Insight, LLC, shares tips on how to get the best aircraft help when you're on the ground.
When traveling to a special event, whether it’s the Super Bowl in Miami this February, the World Economic Forum in Davos or the Kentucky Derby next May, the 2021 U.S. Presidential Inauguration, or other sporting, political, or worldwide business conference, you’ll have company. At these events, an extraordinary number of business aircraft will be landing and then taking off within approximately the very same time as you, vying for hangar space and landing slots at the same airports proximate to the event venue.
But you’re also not alone in that your Original Equipment Manufacturer (OEM), as well as independent maintenance service providers, will be onsite to provide you with parts and technical support should your aircraft experience a maintenance event. What should you know before you travel, what services do the various maintenance providers offer at a high-traffic special event, and how can you best take advantage of their services?
Many support organizations suggest that your head of maintenance and chief pilot contact them as part of trip planning. If your OEM or maintenance support provider offers a pay-per-hour program, consider taking advantage of it, for the highest level of customer service and support.
Support is offered in several ways. For example:
Bombardier Business Aircraft’s dedicated Customer Response Team (CRT) Learjet 45 Parts Express aircraft and CRT mobile units are on location at events, manned by a team of technicians. They carry state-of-the-art diagnostics equipment supporting Learjet, Challenger, and Global aircraft, to supplement their Field Service Representatives to provide you with full service support. They can quickly bring in parts and additional technical personnel if required for unscheduled maintenance events.
Constant Aviation provides full service onsite AOG support at special events. Dedicated technicians provide maintenance, avionics, and structure services, and can be dispatched round-the-clock. With more than 2,838 years of combined experience, Constant Aviation’s AOG service technicians have supported turboprops and business jets at more than 5,700 events at more than 464 airports. Currently, Constant’s AOG mobile units span 21 cities nationwide, offering immediate response 24/7/365.
Dassault offers on-ground services to support Falcon Jet owners with its GO Teams staffed with AOG technicians, and often additional technicians onsite. More help is available at any of the 87 Falcon Authorized Service Centers, backed up by a dedicated Falcon 900 Airborne Support aircraft that can offer alternative lift to customers.
Duncan Aviation has 184 avionics and engine technicians positioned throughout the U.S., ready to travel worldwide to support operators requiring assistance and service. Its avionics satellite shops provide service to operators at 27 shops, and work away locations and Engine Rapid Response Teams offer traveling engine technicians at 14 sites, ready to launch anywhere. Owners traveling in the U.S. are within 150 nautical miles of a Duncan Aviation AOG team.
With almost 1,000 business jets in more than 60 countries, Embraer Executive Jets is prepared to assist its customers anywhere in the world, any time of the day, from any of its 58 authorized service centers. It offers an integrated comprehensive customer support plan for major global events, including broad logistic support and special procedures, and often field service representatives positioned at major events, backed by its 24/7 Contact Center.
GE Aviation offers technical support and dedicated field service representatives for customers flying GE-powered Falcon, Challenger, and Global Jet aircraft. GE Aviation’s nineteen Authorized Service Centers offer comprehensive line maintenance, removals, and re-installations of engines and Line-Replaceable Units (LRUs) and engine spares for CF34-3 engines. GE Aviation offers service agreements through OnPoint, a long-term hourly cost maintenance program.
Gulfstream Field and Airborne Support Teams (FAST) support the full range of Gulfstream business jets, and help ensure a swift, well-coordinated response to all AOG situations. More than 20 U.S.-based pilots and technicians work in around-the-clock shifts, and are equipped with two Gulfstream G150s as their primary aircraft. The FAST1 mobile service center tractor trailer is positioned at many major events, staffed by technicians covering avionics, mechanical, and interiors.
Honeywell has both Avionics and Mechanical Technical Support Engineers (TSE) standing by to support any AOG engine or avionics service requirements. Honeywell also maintains an additional stock of the most commonly used parts in anticipation of any possible orders for such events. Honeywell’s Aerospace Technical Support (ATS) group is available via its AOG call center 24 hours/7 days a week for remote troubleshooting, and its TSE can be dispatched for onsite support.
Pratt & Whitney
Pratt & Whitney actively supports its more than 13,000 customers. At major events, they are onsite to meet customers, positioning Field Support Representatives (FSR) at strategic locations throughout the duration of the event, enabling them to provide onsite troubleshooting support services. With critical engine components on hand, Mobile Repair Teams, as well as rental engine support in-country, are on standby throughout the event.
Rolls-Royce actively supports owners of Gulfstream G350/450, G300/400, and G650, as well as Bombardier Global 5000/6000 and 5500/6500 aircraft. Its On-Wing Care (OWC) is a global in-field specialist maintenance support organization which has handled more than 6,000 field maintenance events and avoided more than 300 unplanned engine removals/shop visits since its inception in 2005. Rolls-Royce stations OWC technicians and a Regional Customer Manager onsite, supported by its 24/7 Operational Service Desk.
Textron Aviation’s 1CALL maintenance support group has a number of Textron Aviation’s 60 Mobile Service Units (MSUs) onsite at events to support Cessna Citation, Beechcraft King Air, and Hawker turbine business jet and turboprop aircraft owners. They are equipped to perform limited inspections, engine, tire and brake service, and more. Additionally, Textron’s Air Response Service has U.S.-based support aircraft available 18 hours a day, 7 days a week, to keep its owners and operators in the air.
Your OEM and maintenance support providers want to be sure that your flights to and from special events are smooth and trouble-free, even if you should experience a maintenance issue. Communicate in advance about your flight plans, so they can help ensure that they have the right number of people and parts in the region and onsite, to support any potential issues and to keep you flying and on schedule.
This article was originally published Business Aviation Advisor on November 1, 2019.
Non-Traditional vs. Traditional Aircraft Payment Methods see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses your options when it comes to aircraft payment methods.
In a seller’s market like this one, the ability to act swiftly might make all the difference. So non-traditional financing sources like a margin loan or a home equity line of credit (HELOC), used in limited scenarios, can make sense. However, there are worthwhile considerations to using them over the more traditional methods of paying for an airplane—cash or financing through an approved aircraft lender.
AOPA Aviation Finance (AAF) recently negotiated a great aircraft loan with an extremely competitive financing structure for a client. The client ultimately rejected the loan in favor of using a non-traditional, margin loan to pay for his aircraft instead. A margin loan is designed to allow a stock investor to borrow money to invest in more stocks, using one’s shares as security. Using a margin loan can help a person increase one’s returns. It can also magnify one’s losses, especially if using it to pay for an airplane.
Let’s say, a sudden market correction triggers a margin call. A margin call happens when the investor's equity, as a percentage of the total market value of securities, falls below a certain percentage requirement. Having to make good on a margin call could create a disastrous situation—like selling the airplane to satisfy the margin call or liquidating the equities. Odds are also good that if the stock market falls, so too does the used aircraft market. Losses magnified.
Another client wanted to use her HELOC to pay cash for an airplane. She was tempted because the HELOC had already been approved, just waiting to be tapped. For her, the traditional aircraft financing process was taking longer than she wanted to endure.
Over five years, the average length of airplane ownership, it’s reasonable to predict a major event like roof replacement, foundation repair, or even flood damage might occur. Exhausting the HELOC as a long-term aircraft loan could leave her with zero equity to cover such emergencies. She would then be forced into borrowing against the airplane, or even selling it.
A margin loan or a HELOC used as a stop-gap, bridge loan for a short period of time—think three to six months, might be prudent only until a post-purchase, reimbursement loan is negotiated.
For all intents and purposes, non-traditional financing options are akin to the more traditional method of paying cash for an airplane. About half of all airplane owners will pay cash. Many of them do so with the intention of getting a post-sale, reimbursement loan. While cash and non-traditional financing might increase the speed of the airplane transaction, they also might increase its complexity. That’s why we advise speaking with AAF, or at least with an aircraft financier, before considering such strategies.
Lenders will stipulate certain actions occur prior to a non-traditional aircraft sale before they will even consider financing it. Stipulations like a cash sale be conducted through a third-party escrow company like AAF partner Aero-Space Reports. Lenders are legally obligated to know where all monies related to an aircraft purchase go, who the buyer is, and whether the buyer is an upstanding individual. The third-party escrow company can help verify the identity of the buyer, as well as assist in the title search. Most lenders will stipulate an aircraft have a clean title, or they won’t consider financing it.
AAF, or the lender, can also offer good counsel on the potential pitfalls of buying an “orphan” or obsolete aircraft. That’s right. Lenders are not eager to finance every type of aircraft. To a lender, number of units manufactured, parts availability, and current service availability matter. For example, finding financing for a Beechcraft Duke will typically be harder than for a Beechcraft Baron. Fewer than 600 Dukes were manufactured over a relatively short, 12-year time frame, 1968-1980. All were powered by a variant of the relatively obscure, Lycoming TIO-541-E1 engine. Compare that to the Baron’s 6,884-plus units manufactured since 1961, most of which are powered by the ubiquitous Continental IO-470 or IO-520 engines. You pay a penalty for an orphan/obsolete aircraft, assuming anybody will finance it.
A commoditized aircraft—one produced in abundance—like a Cessna 172 or a Cirrus SR22, will garner far more options for financing over a 20-year amortization than, say, a Navion. The same typically holds true for turboprops, but this rule of thumb does not apply to jets. Rapid technological advancements and limited manufacturing runs tend to render jets obsolete quickly. While there are some options for older jet aircraft, the most options are available for jets manufactured within the last 20 years.
That’s why taking the traditional aircraft financing route is often the best choice for prospective aircraft owners. AAF or the lender will give a reasonable expectation of how much of a loan, and what terms are possible, tailor-made to your situation. We know, in the end, how you pay for an aircraft affects what the aircraft will ultimately cost you.
This article was originally published by AOPA Finance on September 4, 2019.
The Value of Pre-Owned Aircraft see more
NAFA member, Chad Anderson, President of Jetcraft, discusses what you need to know about the value of pre-owned aircraft.
Gulfstream’s launch of its long-range G700 twinjet was the lead story at last week’s NBAA business aviation convention in Las Vegas and led to a buoyant mood at the show. In our more than 55-year history, we’ve discovered new aircraft announcements are always good news for the pre-owned market.
When buyers have options to upgrade to the next model, this moves young, high-quality aircraft into the pre-owned market. However, despite the surge in manufacturer announcements of late, sought-after young pre-owned jets remain in limited supply, compared to the high demand for them.
Having a minimal amount of these young aircraft for sale underpins demand for new models. If buyers miss out on the acquisition of a pre-owned Global 6000, or Gulfstream G550, they may not want to move away from that model; choosing instead to purchase a new version.
We can therefore see how the new and pre-owned markets share a valuable interrelationship, with rising activity in one spurring interest in the other.
As explained in our 2019 5-Year New & Pre-owned Market Forecast, sales of both new and pre-owned aircraft are predicted to reach $29.9bn per annum by FY2023. Although we expect to see four times more pre-owned transactions than new, we anticipate a 12.1% total growth of the business aviation fleet over the period, driven by new model sales.
Increasing attention in pre-owned aircraft is not only due to interest in younger jets. Previous buyers of new aircraft are now more willing to consider older models, due to better MRO capabilities and more accessible, rapid and cost-effective refurbishment options. As a result, we’re also seeing higher demand for out-of-production aircraft.
Purchasing a pre-owned aircraft can increase mission capabilities for a buyer. For example, our forecast demonstrates how a pre-owned midsize aircraft could be acquired for the same price or less than a new light jet; combined with ownership costs, the overall investment compares equally across a five-year period.
Despite our present period of global uncertainty, it is clear from last week’s NBAA show that the value of business aviation endures. We look forward to seeing what the next year brings ahead of the 2020 convention in Orlando.
This article was originally published by Jetcraft on October 31, 2019.
Why 'Pre-Owned' Private Jets Can Be Surprisingly New see more
NAFA member, Chad Anderson, President of Jetcraft, discusses why you should buy a pre-owned aircraft and where to find them.
Pre-owned, vintage, used…from sports cars to designer clothes and beyond, these words don’t usually indicate ‘new’.
But, according to Jetcraft, the world’s leading aircraft sales specialist, pre-owned private jets don’t have to be ‘old’ – in fact, the savviest buyers are now picking up these airplanes after less than a year of use.
So how do buyers find an almost-new aircraft? And what’s bringing these jets to the market in the first place? We asked Chad Anderson, president of Jetcraft.
Why should I buy a pre-owned jet?
Pre-owned aircraft allow buyers to find the long-range or large-cabin model they need at the best possible price. Private jets are valuable but expensive assets, so it’s important you invest in an aircraft that suits your needs and will retain value. With the sophistication of upgrades and renovations available today, pre-owned planes are every bit as attractive as new ones.
Why are these almost-new aircraft available?
As many businesses ‘go global’, and more and more private jet owners fly greater distances for work or leisure, demand is growing for spacious, fast jets that can span half the world without stopping. The top jet manufacturers are responding to this need by releasing new large-cabin aircraft. This influx is driving some buyers to sell their airplane after only one or two years of ownership, so they can upgrade to an even newer model.
Indeed, this summer Jetcraft sold the world’s first pre-owned Gulfstream G500 – an aircraft that only came onto the market in 2018. The speed of this sale shows how demand for almost-new long-range models is at an unprecedented high.
How do I find a pre-owned jet to buy?
There’s a lot of competition for young, pre-owned jets. In fact, our recent market forecast anticipates four times more pre-owned transactions a year than new deliveries by 2023 and we’re seeing many aircraft that are correctly priced, marketed and positioned are sold before they even hit the market. If you’re planning to purchase a pre-owned aircraft, it’s important to work with a consultant you trust and who has a pulse on the market and the latest available inventory.
Which jet should I choose?
Today, most buyers are looking for an aircraft that can fly direct from London to cities such as Seoul and Singapore. If you’re regularly travelling long distances, you want a fast jet that allows you to be in the office or at home with your family as much as possible. Choosing between types at the very top of the market, such as the Gulfstream G500 and G600, the Bombardier Global 7500 and the Dassault Falcon 7X and 8X, can be difficult. Speaking with an experienced professional is invaluable in finding an aircraft that perfectly fits your needs.
This article was originally published in Luxury Lifestyle Magazine on September 24, 2019.
Adam Meredith, President of AOPA Aviation Finance Co., shares helpful steps when financing aircraft. see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, shares helpful steps when financing your aircraft.
AOPA Aviation Finance and our experienced and trusted specialists can assist you in making your purchase by offering a wide array of financing options that are tailored to your specific needs.
Here are eight steps to help you start flying:
Gather Supporting Documents
Gather your tax returns, financial statements, and personal net worth information for submission with your application to speed up the process. The fastest approvals are applications where W-2's are submitted with no business ownership, usually within 1-2 days. Additional approval time may be required for applicants with business entities.
Complete an Application
Fill out the application as completely as possible to avoid a delay in processing and remember to provide an original signature on the application before submitting it through the online portal.
Get Approved or Pre-Approved Quickly
Once your application package is complete, your account executive and analyst will identify and select the best lender based on your aircraft selection, usage, loan structure, and financial history.
A pre-approval ensures that:
- You don’t lose the aircraft of your dreams due to lack of financing.
- Your loan closes quickly.
- You have 90 days to decide on your aircraft with the rate locked for 30 days.
Negotiate a Balanced Purchase and Sales Agreement
Don’t just sign anything given to you by the seller, have someone familiar with the process review to ensure it’s balanced. The purchase and sales agreement is a binding legal document that sets the sales price and all conditions to close, including time to complete pre-buy, time to complete transaction, how and where escrow and deposit are held, and who pays to move the aircraft, etc.
Schedule a Pre-Purchase Inspection
We highly recommend a pre-buy inspection by an independent 3rd party to avoid any surprises and conflict of interest once you take ownership of the aircraft.
Typically, the prospective buyer pays to re-position the aircraft for the pre-buy, and the seller pays for correcting any maintenance issues relating to airworthiness.
Set Up Escrow and Review Fees
AOPA members pay no broker fees! Members will, however, need to open escrow with a lender approved title and escrow company to ensure proper closing and will include a title search. Normally, fees are based on the aircraft’s sales price and are split by the buyer and seller.
Lender closing costs are based on the aircraft and purchase price and are used to cover hard costs such as background checks, credit bureaus, overnight fees, loan documentation, and legal review.
Hull and liability insurance coverage is required by lenders, AOPA members can get discounted rates through AOPA Insurance. Your account executive will gladly refer you to an agent for a quote.
Prepare for Closing
Once you have selected a closing date, be prepared to find a notary to notarize documents and leave time for overnight packages to be sent back and forth as some documents require a “wet signature”.
This article was originally published by AOPA Aviation Finance Company on August 5, 2019.
Futile Search: Are You Ready to Buy But Can't Find Your Airplane? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses the futile search you may face when buying an airplane.
You are pre-approved for a loan, have a hangar secured, and now all you need is the turboprop of your dreams. You know exactly what you want. The only problem is there don’t seem to be any on the market, or at least at what you think is a reasonable price.
This is where a broker or dealer that specializes in the particular make and model your looking to purchase can be of tremendous value. Let’s say for sake of discussion you’re looking for a TBM 850. A good place to start is your local new TBM dealer. While they may not currently have an 850 available for sale, chances are they’ve sold one and may know someone looking to purchase a new TBM if they could only sell their used one. In the real estate world, agents frequently have so-called “pocket” listings where they have talked with owners who are interested in selling someday and the aircraft world is no different. Their property may not be listed on the market. If you choose an aircraft that is in high demand, it is not unusual for a broker to know about an aircraft that is not for sale…yet.
Should that approach fail, take a look at your search. What is it about your dream plane that is limiting your results? Do you need to shop for similar aircraft that nearly match, but not exactly match, your ideal model?
Here’s the good news. In general, there is enough of an aircraft inventory out there that, unless you are looking for something really unique, you should be able to find what you want. If not, there is still a final plan. Find someone who has what you want but has no intention to sell, and make a generous offer, you may be surprised.
Doing so may necessitate an appraisal to justify the value of the aircraft, however, even if the appraisal comes in less than what you’re paying, most lenders are still more than willing to provide a loan. Virtually all lenders lend on the lesser of a loan to value or loan to purchase amount. You may just need to put a little more down than you were originally planning.
When the buying fever strikes, AOPA Aviation Finance is here to help you find the lender that is right for your specific purchase.
Considering aircraft ownership? AOPA Aviation Finance will make your purchase experience as smooth as possible. For information about aircraft financing, please visit the website (www.aopafinance.com) or call 1-800-62-PLANE (75263).
This article was originally published by AOPA Aviation Finance on January 4, 2019.
Optimizing Value When Selling An Aircraft see more
NAFA member, Anthony Kioussis, President of Asset Insight, shares his viewpoint on optimizing the value of your aircraft when selling it.
Not many aircraft buyers acquire an aircraft with a specific date in mind to sell or replace an asset. While a little planning could help optimize their investment value, this thought process rarely comes into play during the exciting, and sometimes less than rational, aircraft acquisition period.
In a recent Pro Pilot Viewpoint article (November 2018, page 10) we discussed the importance of distinguishing between "low price" and "good value" in an effort to optimize an aircraft investment at point of purchase. Let's have a look at the financial dynamics that come into play when selling the asset.
I have yet to speak to an owner who believes their aircraft is anything but "the best" asset available for purchase when it is listed for sale. Fortunately, Asset Insight's tools allow for logic to prevail in the form of objective analytics and a standardized grading system allowing anyone to determine how their aircraft truly compares with like models listed for sale, as well as how it rates within the model's active fleet. There are also tools that make it possible to determine exactly how any aircraft's Residual Value is affected by the estimated expense of maintenance due, as well as the appraisal value of maintenance events completed. Simply put, you may have just completed a $1 million double-engine overhaul, but it may only add $750,000 (perhaps less) based on the aircraft's age and it's "market desirability."
Some aircraft owners, as well as inexperienced brokers, believe it is not possible to predict an aircraft's Residual Value (RV) more accurately than basing the aircraft's future value trend on the model's value degradation history. Thus, traditional RV forecasts start with an estimated Current Value, usually based on aircraft prices obtained from an industry "source." The Current Value estimate is then degraded based on the aircraft model's average historical annual depreciation percentage, and the resulting RV figures are usually presented as a line graph similar to the RV Trend line shown in Table A.
To read the full article, please click here.
This article was originally published in Pro Pilot magazine, February 2019, p. 10.
Boeing, Embraer Agree To Terms on Commercial JV, Propose Second JV for KC-390 see more
Boeing and Embraer have approved the terms of a strategic partnership that will give Boeing an 80 percent stake in Embraer’s commercial aircraft and services operations through a joint venture, the companies announced through a joint press release today.
Boeing said it will pay $4.2 billion, up from $3.8 billion, for the ownership stake in the JV, which still requires approval by the Brazilian government.
“We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole,” said Embraer president and chief executive officer Paulo Cesar de Souza e Silva. “This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”
Under the agreement that values the JV at $5.25 billion—up from $4.75 billion when the JV was proposed through a memorandum of understanding on July 5, according to analysts at Bank of America Merrill Lynch—the JV will be led by management based in Brazil, including a president and chief executive officer. Boeing said it will have operational and management control of the “new company” that will report to Boeing chairman and CEO Dennis Muilenburg.
“Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year,” Muilenburg said.
Embraer will have consent rights for certain strategic decisions such as transferring operations from Brazil, the companies said.
Boeing said the proposed JV is expected to be neutral to its earnings per share in 2020 but accretive thereafter.
Embraer and Boeing also said they have agreed to terms of another JV to promote and develop new markets for Embraer’s KC-390, a multi-mission, medium-lift airplane. Terms of that JV call for 51 percent ownership by Embraer and 49 percent by Boeing.
The companies hope to close the commercial JV transaction by the end of 2019, which awaits approval from Brazil’s government, Embraer’s board of directors as well as shareholders and regulators.
The announcement comes days after a Brazilian appeals court overturned a December 5 ruling by a federal judge in São Paulo granting an injunction to block Embraer’s board of directors from approving the proposed deal.
This article was originally published on AINonline on December 17, 2018 by Jerry Siebenmark.
NAFA member, Brant Dahlfors, with Jet Transactions, shares the 2018 Q3 Bombardier Market Update. see more
NAFA member, Brant Dahlfors, with Jet Transactions, shares the 2018 Q3 Bombardier Market Update.
2018 continues to grow and show strong signs of stability. Q3 was exciting for new product certifications led by Gulfstream announcing the certification of the all new G500 and followed by Bombardier's certification of the Ultra-Long Range Global 7500. On top of new large aircraft product announcements at EBACE in May, confidence in future growth is apparent.
Overall, in the segments we track, Q3 reflected the normal seasonal variations (vacation time) and new deliveries and pre-owned transactions were down 20+% over Q2. Shops are full with pre- buys and NextGen upgrades in addition to their normal maintenance customers. The pre-owned inventory continues to fall, down another 8.1% this quarter. In many cases, popular late model aircraft are below 5% of the fleet being available for sale. Gross numbers of pre-owned transactions will continue to decline for the foreseeable future as the market is seriously supply constrained.
How does this affect the Bombardier pre-owned market? With a whirlwind of new options coming to market soon, factory new buyers should soon start the migration from the existing product line to the latest and greatest offerings. Bombardier is well positioned with three new models to discuss – all available for delivery in the next 1-2 years. Overall pre-owned transaction levels dropped significantly across the Bombardier tracked models, with a slight uptick in inventory for sale. New deliveries also edged downward, the largest drop across all three OEM’s, though not uncommon traditionally for the third quarter.
Read the full report here.
The original market update was published by Jet Transactions on October 15, 2018.