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  • NAFA Administrator posted an article
    The National Aircraft Finance Association (NAFA) Celebrates 50 Years of Aviation Finance Expertise see more

     

     

     

     

     

     

     

     

     

    FOR IMMEDIATE RELEASE: February 24, 2021                      

    Contact: Tracey Cheek

                                                                                                                  TLC@NAFA.aero

                                                                                                                 405.850.1292

     

    The National Aircraft Finance Association (NAFA) Celebrates 
    50 Years of Aviation Finance Expertise 

     

    Edgewater, MD: 2021 marks the 50th anniversary of NAFA’s inception. The occasion comes at a pivotal moment in the world of aircraft financing—a time when the professional education, lender access, and networking opportunities NAFA provides are more important than ever. 

     

    The History of NAFA 

     

    NAFA was born in the late 60s when Tom Harvell, Bob Beech, Carol Davis, Jim Peters, Victor Hermey, Bob Keeling, William Staub, and other lenders who financed aircraft in large volume came together with an idea: improve and facilitate the lending process to support aircraft buyers. 

    Their first order of business? Figure out who was lending on aircraft. For that, they reached out to a local Oklahoma City title and escrow firm, which conducted research to identify this common core of entities. Over the next few years, the group began meeting in a more formal way as the Aircraft Finance Association, or AFA for short. In its early years, the AFA worked to develop a streamlined FAA escrow process to immediately secure lienholder interest in aircraft—a process that, at the time, was an uphill battle requiring much litigation. They also worked to improve the process of reporting aircraft interests, with an end goal of better grasping how exactly to value an aircraft, specifically when it comes to financing used assets.  The solution, in part, lead to the formation of the industry’s first comprehensive aircraft value guide for both business and general aviation.  

    What started as a small, scrappy group of lenders figuring out how to corral the industry grew, by the 1980s, into a network of approximately 70 member companies.  It was at this point that AFA rebranded to become the National Aircraft Finance Association, or NAFA. 

     

    NAFA Today 

     

    Fast forward to today, and the organization has grown to nearly 200 member companies, including the five largest banks in the United States. In addition to niche financiers, NAFA is home to certified appraisers, aviation attorneys, title and escrow firms, aviation tax specialists, aircraft insurance firms, aircraft manufacturers, brokers, and dealers—essentially anyone involved with the touchpoint of buying and/or financing an aircraft. This diverse representation has allowed NAFA, over the past 50 years, to successfully facilitate the exchange of ideas and capital that finance the world’s business and general aviation aircraft. 

    Key tenets of the organization include:  
     

    • A world-class network 
      NAFA hosts a complete network of lenders and product/service providers, all of whom regularly convene via in-person or live video events to discuss and resolve key, timely industry issues. 
       
    • Industry expertise and education 
      NAFA members obtain comprehensive education on the latest industry developments, laws, and regulations from a vetted group of experienced professionals. 

     

    • Unparalleled access to lenders and borrowers 
      With NAFA, all aircraft financing needs are housed in one organization, with tailored solutions for first-time and experienced buyers alike that not only support but promote aircraft finance.  

     

    The Future of NAFA 

     

    50 years in, NAFA is showing no signs of slowing down. Aircraft purchasers are leaning on financing more than ever as a way to become more liquid while maintaining their cash reserves. There is also an uptick in first-time aircraft buyers (people entering the market who haven’t owned before as well as entities who may have owned an aircraft 15-20 years ago and are now returning)—a large percentage of whom are financing their purchases.  This all coupled with historically low interest rates is fueling an increase in financing demand.

    NAFA is primed for the surge in demand with a 2021 plan that includes:
     

    • Expanding educational offerings through articles and newsletters. During COVID-19, NAFA also launched webinars, which covered topics such as best practices in aircraft lending, how to manage a loan portfolio in this unique economic environment, and impending regulatory changes in the market. 
       
    • Developing and growing NAFA as the voice of aircraft finance by closely tracking activity and changes in the market and publishing recurring market updates on the state of aircraft financing.
       
    • Collaborating with other aviation associations as a way to expand access to aviation and aircraft ownership.  

     

    • Investing in the future of aviation professionals with a newly established NAFA Foundation, and a scholarship program that supports aircraft finance students from universities across the country. 

    According to Jim Blessing, President of NAFA, “Many things may have changed over the past 50 years, but NAFA has retained the founders’ love of aviation and original purpose: to promote aircraft financing and the organizations that support it.”

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    About NAFA: The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members with the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allow member companies to provide the highest quality services the industry has to offer.

  • NAFA Administrator posted an article
    Trident Funding Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE: ​March 5, 2021 

    Contact: ​Tracey Cheek

    tlc@tlcmarketingok.com

    405.850.1292

     

    Trident Funding Joins National Aircraft Finance Association

     

    Edgewater, MD: ​National Aircraft Finance Association (NAFA) is pleased to announce that Trident Funding has recently joined its professional network of aviation lenders under the leadership of Michael Bryant (Senior Vice President, Credit Analyst) and Craig Bowers (Director, Aircraft Lending).

    Trident Funding is a nationwide broker specializing in both consumer and commercial lending solutions for Aircraft, Marine, and RV since 1996. Founded by industry veterans Michael Bryant, Bob Dunford, and Jim Foley, Trident now has offices conveniently located through the US. They have developed more than 20 different institutional partners to ensure a funding solution across a wide variety of general aviation use profiles, providing lending solutions from as low as $25K to more than $10M in both Part 91 and 135 operations.

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Trident Funding to our growing organization as we celebrate our 50th anniversary,” said Jim Blessing, president of NAFA.

    About Michael Bryant:

    As the founder of Trident Funding Corp, Michael has been in consumer financing for over 45 years, specializing in the larger vessel and aircraft space. He now serves as Senior Credit Analyst for Trident Funding LLC’s aircraft division and works closely with Craig Bowers to supply the best financing solutions for consumer, charter, and light commercial aircraft markets.

    About Craig Bowers:

    Craig has been actively involved in aviation for over 40 years. Learning to fly in high school, he went on to become a Marine Corps pilot, finishing his military career as an instructor at the US Navy Test Pilot School. An active pilot, he is currently qualified as an international captain in the Gulfstream G550 aircraft. Craig has been involved in the active selling and financing of corporate aircraft for the past 20 years and currently sits on the Board of the Northern California Business Aviation Association.

    For more information about Trident Funding, visit https://www.nafa.aero/companies/trident-funding.

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    About NAFA: ​The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members with the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allows member companies to provide the highest quality services the industry has to offer.

  • NAFA Administrator posted an article
    Texas Partners Bank Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE: March 5, 2021 

    Contact: Tracey Cheek

    tlc@tlcmarketingok.com

    405.850.1292

    Texas Partners Bank Joins National Aircraft Finance Association

    Edgewater, MD: National Aircraft Finance Association (NAFA) is pleased to announce that Texas Partners Bank has recently joined its professional network of aviation lenders under the leadership of Alan Smith (Executive Vice President, Specialty Finance Group) and Sam Marshall (Vice President, Specialty Finance Group).

    Established in 2020, Texas Partners Bank is comprised of three independent banks that merged under a new charter: The Bank of San Antonio, The Bank of Austin, and Texas Hill Country Bank. Under this new alliance, Texas Partners Bank has deep resources and strong local ownership to provide greater accessibility and enhanced service opportunities for Central Texas businesses.

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Texas Partners Bank to our growing organization as we celebrate our 50th anniversary,” said Jim Blessing, president of NAFA.

    About Alan Smith:

    Alan has more than 34 years of banking experience with a majority of those spent in San Antonio, Texas. He currently runs the specialty finance group at Texas Partners Bank, which focuses on lending in niche sectors, specifically aircraft finance. Before joining Texas Partners Bank, Alan was VP of Private Client Services at Compass Bank, where he focused on providing trust, investment, banking, and insurance services to business and private clients. Alan holds an M.S. in Finance from Texas A&M University and is a general aviation enthusiast who currently has his private pilot’s license (PPL).

    About Sam Marshall:

    Sam has 8 years of banking experience, with 7 of those spent in commercial lending. He currently manages the specialty finance loan portfolio at Texas Partners Bank, which consists of an eclectic mix of niche business sectors, including aircraft loans. Before joining Texas Partners Bank, Sam held commercial lending positions with Intrust Bank and Iberia Bank. He holds a BBA in Finance from the University of Mississippi and is a general aviation enthusiast who is currently working towards his private pilot’s license (PPL).

    For more information about Texas Partners Bank, visit https://www.nafa.aero/companies/texas-partners-bank.

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    About NAFA: The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members with the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allows member companies to provide the highest quality services the industry has to offer.

  • NAFA Administrator posted an article
    Can You Finance An Aircraft With Over 10,000 Hours on the Airframe? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your aircraft finance questions.

    Question: I am trying to buy this Piper Arrow IV 1979 with only around 450 total time on engine . But the airframe has 15425 total hours on it and the finance company I was going with called and said they could not finance the plane because it has over ten thousand on the airframe. I am trying to see if AOPA or any other companies will finance with that time on the airframe.

    Answer: Thank you for reaching out. We tend to get asked this question a lot by our members. All of our lenders have a 10,000-hour maximum limit on airframes as well. The reason for this is high airframe times reduce the value and make it harder to resell in the event of default. Lenders mitigate their exposure by limiting AFTT.

    Question: We have a 1979 Navajo Chieftain, N27888.   We have recently upgraded all of the avionics for ADSB compliance and repainted and completed a complete interior replacement. We are going to repower and will need to replace both engines. Do you finance a transaction such as this or just complete airframes? 

    Answer: Yes we can certainly finance the engine replacements. The entire aircraft will be held as collateral. Lenders will finance up to 80% of the cost of the replacement or the total upgraded value of the aircraft, whichever is less. Please give us a call at 800.627.5263 and one of my team members can get you started with an application.

    This article was originally published by AOPA Aviation Finance Company on January 7, 2021.

  • NAFA Administrator posted an article
    Used Aircraft Maintenance & Marketability Analysis – January 2021 see more

    NAFA member, Tony Kioussis, President & CEO of Asset Insight, LLC, shares the Used Aircraft Maintenance & Marketability Analysis for January 2021.

    January revealed that strong sales continued into the New Year, leading to another sizeable inventory reduction. Ask Prices also decreased for the third consecutive month to post a 12-month low figure – but which models were impacted the most? Tony Kioussis explores.

    Asset Insight’s January 29, 2021 market analysis covering 134 fixed-wing models, and 1,146 aircraft listed for sale exposed the seventh consecutive monthly contraction (8.7%) of Asset Insight’s tracked inventory fleet.

    At the same time, the high transaction level led to a significant inventory mix change, but the Quality Rating changed very little, improving from December’s 5.348 to 5.351, thereby remaining within the ‘Excellent’ range (per Asset Insight’s scale of -2.5 to 10). It has been in the ‘Excellent’ range since January 2020.

    January’s Aircraft Value Trends

    The tracked fleet’s average Ask Price decreased for the third consecutive month, and January’s 2.1% reduction created a 12-month low figure, with all four groups losing ground. Specifically:

    • Large Jet average Ask Prices fell 2.0% to a 12-month low after increasing 0.8% in December.
    • Mid-Size Jet prices lost 1.8% to post a 12-month low, in addition to their 8.4% drop in December.
    • Light Jet ask prices decreased 2.4% to a 12-month low, after falling 1.5% in December.
    • Turboprop ask prices dropped 1.1%, after losing 0.7% in December.

    January’s Fleet for Sale Trends

    Asset Insight’s tracked fleet has now posted seven consecutive monthly availability decreases, and inventory was down by 8.7% (166 units) during the month of January.

    • Large Jets: Inventory decreased 8.1% (35 units), and 6.9% of the active fleet is listed for sale.
    • Mid-Size Jets: Recorded a 9.2% decrease (48 units), with inventory at 10.1% of the active fleet.
    • Light Jets: Inventory decreased 8.1% (45 units), the group’s seventh consecutive monthly decline, and active fleet availability now stands at 8.9%.
    • Turboprop: The group’s sixth consecutive monthly decrease, this time 9.3% (38 units), resulted in just 6.3% of the active fleet seeking buyers.

    January’s Maintenance Exposure Trends

    Similar to the Quality Rating, Maintenance Exposure (an aircraft’s accumulated/embedded maintenance expense) saw surprisingly little change considering the high number of January transactions, worsening only 0.3%. By group, the figures were as follows…

    • Large Jets: Worsened/increased another 1.6%, following December’s 1.2% rise.
    • Mid-Size Jets: Rose a nominal 0.2% thereby adding to December’s 0.5% increase (deterioration).
    • Light Jets: Improved/decreased 3.9%, after worsening/increasing 2.5% in December to post the group’s 12-month worst/highest value.
    • Turboprops: Decreased/improved another 0.7% to post the group’s fourth consecutive 12-month low/best figure.

    January’s ETP Ratio Trend

    The overall tracked inventory’s ETP Ratio improved/decreased to 71.6%, but remains between the 12-month high/worst and average figures. The ETP Ratio calculates an aircraft's Maintenance Exposure as it relates to the Ask Price. This is achieved by dividing an aircraft's Maintenance Exposure (the financial liability accrued with respect to future scheduled maintenance events) by the aircraft's Ask Price.

    As the ETP Ratio decreases, the asset's value increases (in relation to the aircraft's price). ‘Days on Market’ analysis has shown that when the ETP Ratio is greater than 40%, a listed aircraft’s Days on the Market (DoM) increases, in many cases by more than 30%.

    During Q4 2020, aircraft whose ETP Ratio was 40% or greater were listed for sale 64% longer than assets with an ETP Ratio below 40% (277 days versus 454 days). How did each group fare during January?

    • Turboprops: For the fourteenth consecutive month, Turboprops registered the best/lowest ETP Ratio. January’s 39.8% was only marginally higher/worse than December’s 39.5%, and represented the group’s second consecutive month below the 40% excessive Maintenance Exposure point.
    • Large Jets: At 59.7%, the group maintained second position, and the figure was only 0.3% higher/worse than the 12-month low figure.
    • Mid-Size Jets: While better-than-average, and an improvement from December’s 71.8%, the group’s 70.9% ETP Ratio will create challenges for many sellers.
    • Light Jets: By posting a Ratio of 104.3% the group improved over December’s 106.8% record high figure. But that will not help most sellers.

    Excluding models whose ETP Ratio was over 200% during one of the previous two months (considered outliers), following is a breakdown of the business jet and turboprop models that fared the best and worst during January 2021.

    Click here to view the full report.

    This report was originally published in AvBuyer on February 18, 2021. 

  • NAFA Administrator posted an article
    Operational Control And Aircraft Leasing: What’s The Big Deal? see more

    NAFA member, Greg Reigel, Partner at Shackelford, Bowen, McKinley & Norton, LLP., discusses operational control and aircraft leasing.

    From the FAA’s perspective, operational control in aircraft leasing transactions is not just a “big deal”, it is “the” deal.

    What Is Operational Control?

    14 C.F.R §1.1 defines operational control as “the exercise of authority over initiating, conducting or terminating a flight.”  In a “wet” lease situation, since the lessor is providing both aircraft and crew, the lessor maintains operational control of all flights.  And in the absence of a specific exemption (such as under 14 C.F.R. § 91.501(c) the lessor who is operating an aircraft under a wet lease will need to have an air carrier certificate to legally operate the aircraft.

    In a “dry” lease situation, the lessee provides its own flight crew, and the lessee exercises operational control over its flights.  The lessee’s operations may be conducted legally under 14 C.F.R. Part 91 without an air carrier certificate.

    It is important to keep in mind that the FAA will look beyond the actual written agreements to determine who has operational control.  Although a lease may be written as a dry lease and says “Dry Lease” at the top of the agreement, for example, that does not mean the FAA cannot take the position that the arrangement is really being conducted as a wet lease.  And if the FAA takes that position when the lessor who is actually operating the aircraft for the lessee does not have an air carrier certificate, then that will be a problem for the lessor, and potentially for the lessee as well.

    Why Does It Matter?

    If the lessor is exercising operational control, then the flight must be conducted in compliance with regulations that are stricter than Part 91 (i.e. Parts 121 or 135). Those regulations limit the types of airports the lessor may utilize, crew qualifications, crew rest and duty times, maintenance requirements etc.  Additionally, the lessor under a wet lease arrangement is required to remit federal excise tax on the amount charged to the lessee.

    Alternatively, if the lessee has operational control under a dry lease the lessee is permitted to operate under the less restrictive and less costly requirements of Part 91.  And federal excise tax is not due on the amounts paid by the lessee to the lessor, although sales tax is often assessed on the lease rate.

    How Do You Determine Who Has Operational Control?

    The FAA has issued guidance for determining which party has operational control in a leasing arrangement.  Advisory Circular 91.37B Truth in Leasing provides FAA inspectors with an explanation of leasing structures and how they may or may not be compliant with the regulations.  Although AC 91.37B only applies to aircraft subject to the requirements of 14 C.F.R. § 91.23, and it is not regulatory in nature, FAA inspectors also use this guidance when reviewing leasing structures that are not subject to truth-in-leasing requirements.

    Here are the types of questions an FAA inspector will ask when the inspector is trying to determine which party has operational control in an aircraft leasing situation:

    • Who decides crewmember and aircraft assignments?
    • Who accept flight requests?
    • Who actually initiates, conducts, and terminates flights?
    • Are the pilots direct employees or agents for the lessor, the lessee, or someone else?
    • Who is responsible for aircraft maintenance and where is that maintenance performed?
    • Who decides when/where maintenance is accomplished, and who pays the maintenance provider for that service?
    • Prior to departure, who ensures the flight, aircraft, and crew comply with regulations?
    • Who determines weather/fuel requirements, and who pays for the fuel at the pump?
    • Who directly pays for the airport fees, parking/hangar costs, food service, and/or rental cars?

    If properly drafted, an aircraft dry lease agreement should answer these questions and, to the extent the answer for any item is “the lessor”, then the lease should explain that answer and how it does not negate lessee’s exercise of operational control.

    For example, if the aircraft is leased to more than one lessee, it may make more sense for the lessor to retain responsibility for maintenance to ensure that the aircraft is consistently maintained in an airworthy condition.  Similarly, lessor maintaining an insurance policy insuring the aircraft and the various lessees may be necessary to make certain the aircraft is insured appropriately.

    However, responsibility for maintenance or insurance are just two indicia of operational control.  And the lessor’s responsibility for maintenance or insurance does not negate the lessee’s responsibility for ensuring that the aircraft is in an airworthy condition and the lessee’s is properly insured prior to any operations conducted under a lease.  Appropriate language in the lease can explain these issues so an FAA inspector reviewing the lease does not misunderstand and draw the wrong conclusion.

    Also be aware that some FAA inspectors rely upon AC 91.37B but do not fully or properly understand its guidance.  For example, in one instance AC 91.37B states “[t]he FAA has taken the position that if a person leases an aircraft to another and also provides the flightcrew, fuel, and maintenance, the lessor of the aircraft is the operator.”

    This language is sometimes misunderstood by inspectors to mean that a lessee does not have operational control when the lessor is responsible for maintenance.  But that is incorrect.

    The key indicia in the language above is lessor’s providing the flightcrew.  However, lessor’s responsibility for maintenance by itself does not indicate that lessor is improperly exercising operational control over lessee flights.  Although it may indicate that lessor is exercising some operational control, without other indicia of operational control by the lessor, performance of maintenance alone is not conclusive.

    Conclusion

    Operational control in aircraft leasing arrangements is, and will continue to be, an area of special emphasis for the FAA.  Although the terms of the lease and other transaction documents are important, the FAA is not bound by those terms when it is making an operational control determination.  Rather, it will also look at the actual arrangements between the parties, as well as the responsibilities of each party, especially if they are inconsistent with the lease.

    When the FAA determines that lessor is exercising operational control in what is supposed to be a Part 91 dry leasing transaction, you can expect that it will act.  Depending upon the circumstances, pilots and operators could be faced with certificate action and civil penalty action.  It is important to understand the indicia of operational control and to be able to determine which party is exercising operational control in an aircraft leasing transaction.  Only then will you be able to ensure that you are operating in compliance with the regulations.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP., on Feburary 5, 2021.

  • NAFA Administrator posted an article
    Top 5 Myths About Business Aircraft Operating Leases see more

    NAFA member, Global Jet Capital, explains myths commonly associated with business aircraft operating leases.

    There are more options today for accessing a business aircraft than ever before: from charter, to fractional ownership, to operating leases, to traditional financing. When dealing with large, highly-regulated assets that could cost tens of millions—or more—to own, weighing the options to find what makes sense for your specific requirements can be difficult. To make navigating the sometimes-complex landscape of business aviation a little easier, we’re going to clear up five common myths around operating leases—and explain some of the advantages of this frequently misunderstood financing option:

    1. OPERATING LEASES ARE TOO RESTRICTIVE—IT’S BETTER TO OWN.

    Operating leases let you keep your aircraft for the duration of the lease, which means consistently using your crew, being able to leave your personal effects on board, and enjoying the experience of ownership while putting your capital to better use. Some restrictions on customization that could potentially impact residual value and other usual lease terms apply, but limitations fall within normal patterns of ownership. With the right lessor, you can expect contract terms that are flexible and fit your unique needs, which make the experience of having an operating lease feel anything but restrictive.

    Additionally, an operating lease with a predictable term makes disposition as simple as turning the aircraft back over to the lessor at end of lease—no additional planning or contingencies needed. Compare that to attempting to sell an aircraft when it’s time to upgrade or make changes to your operations. From hiring a broker, to waiting for months (or even years, in extreme cases) to find a buyer, to paying the costs of maintenance, insurance, and storage in the meantime, you may be looking at millions lost in the process.

    2. YOU’RE STUCK IN A CONTRACT WITH AN OPERATING LEASE, WHICH MAKES IT INCONVENIENT WHEN YOUR BUSINESS CHANGES.

    It’s true that operating leases are contractual, while owning a business aircraft outright is not. But, contracts can be created that adjust easily to a changing mission—including allowing for moves to larger or smaller aircraft, the option to extend, or the option to prematurely end the lease altogether. With the right financing partner, you can expect a flexible, custom-tailored contract that feels right.

    In fact, ownership may have risks and limitations that exceed the limitations of a contractual obligation in an operating lease. If a major uptick in your international markets means that your newly purchased mid-range aircraft is no longer up to the task of supporting your business goals, you bear the risk of waiting a long time to sell with capital tied up in an asset that doesn’t suit your needs. When you’re finally able to sell and need to purchase a new business aircraft with a longer range, you’re looking at a potentially lengthy process to secure traditional financing from a lender, coupled with a much larger capital outlay than the refundable security deposit for a lease.

    3. OPERATING LEASES MAKE SENSE IN BAD RESALE MARKETS OR WHEN INTEREST RATES ARE HIGH, BUT NOT WHEN RESALE VALUE IS STRONG OR WHEN INTEREST RATES ARE LOW.

    Even if there is a strong resale market or low interest rates when you choose to purchase an aircraft, consider the risk that you’re taking on with the large outlay of an aircraft purchase. Traditional financing typically requires large down payments and due to volatile geo-political situations, emerging technology, and the natural realities of market fluctuation, there’s no guarantee that a strong resale market for your aircraft will be there when you choose to sell. That low interest rate environment may be gone, which won’t help entice buyers to purchase your pre-owned aircraft. In the meantime, you may have paid more for a depreciating asset.

    Operating leases eliminate residual value risk and provide predicable costs for the duration of the lease. Budgeting stays precise, liquidity stays high, and the future becomes clearer. The resale market doesn’t come with any guarantees—an operating lease contract does.

    4. OPERATING LEASES ARE ONLY FOR CERTAIN KINDS OF AIRCRAFT. YOU CAN’T JUST GET WHATEVER YOU WANT.

    Whether you have your eye on a new or pre-owned aircraft, or if the pre-owned aircraft you’re interested in is a little older than what you would typically expect for a leasing arrangement, there are very few limitations to what can be obtained with an operating lease today.

    Specialists in business aviation financing like Global Jet Capital look to spread risk across a large portfolio, encompassing aircraft from every major manufacturer, every global market, and a variety of age ranges.

    5. YOU CAN ONLY ACHIEVE PRIVACY BY PURCHASING AN AIRCRAFT, NOT LEASING.

    If privacy is important to you, a leased aircraft may actually provide an additional layer of anonymity. An operating lease reduces visibility to an aircraft’s end user, as the public records of the FAA identify the lessor as the owner of the aircraft, giving you greater privacy.

    This article originally appeared in Business Jet Traveler, February 2021.

  • NAFA Administrator posted an article
    Impact of COVID-19 on the Business Aviation Market Part II see more

    NAFA members, General Aviation Services and AMSTAT, share their Business Aviation Market Report.

    To view the full report, click here

    This report was originally published by AMSTAT on December 19, 2020.

  • NAFA Administrator posted an article
    Four Common Mistakes That Can Delay Your Aircraft Purchase: Ways To Keep Headaches To a Minimum see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, shares tips for making sure your aircraft purchase goes smoothly.

    You found the right airplane for your mission; you have a lender and now you are days away from your final goal—landing the aircraft of your dreams. Out of nowhere, you get a phone call from the lender. A last-minute mix-up now threatens to stall or upend the deal. What happened? Here are four common trip-ups:

    1. Last-minute ideas
    Did you change your mind midway through the deal regarding how you wish the airplane to be owned, or how the airplane will be used? One of the biggest delays comes from buyers who suddenly decide their airplane should not be personally owned but instead owned by an LLC. 

    First, you’ve now altered the financial picture from which the lender is basing the parameters of the loan. Second, you’ve just added complexity to the deal. Complexity adds time. Third, an aviation LLC is different than other LLCs. The nuances are significant enough for us to suggest you contact AOPA Legal, or an aviation attorney before initiating the paperwork.

    2. Title issues
    Did you forget to order a title search from a reputable title company? Missing logbook signatures, an unqualified person making a logbook signoff, the presence of a heretofore unseen lien are all examples of items that can put a “cloud” on a title. Before the title can be cleared, a title company must do due diligence. 

    3. Pre-buy inspection
    What could possibly go wrong with a pre-buy inspection? How about the aircraft is stuck overseas? How about a dispute between the seller and buyer as to where the pre-buy will occur? How about a pandemic that shuts down business operations and air travel for an unspecified amount of time? From the mundane to the previously unimaginable, myriad things can affect the pre-buy. That’s why a Pre-purchase Agreement is vital. In it, all the parameters of a pre-buy are codified and agreed to prior to, hopefully mitigating as many possible obstructive circumstances as possible.

    Even with that, the pre-buy inspection will invariably uncover some addressable item. That item’s resolution will then have to be negotiated into the price if it’s not an airworthy item, or fixed and inspected prior to, if it is an airworthy item.

    4. Paperwork
    Illegible logbook documentation, missing paperwork, documents missing a notary’s required imprint— are a partial list of paperwork problems that could slow the closing process. AOPA Aviation Finance can help build a paperwork checklist early that will help prevent this pitfall.

    This article was originally published by AOPA Aviation Finance Company on November 23, 2020.

  • NAFA Administrator posted an article
    JetBrokers' February 2021 Market Update see more

    NAFA member, JetBrokers, shares their recent market update showing improving trends despite the COVID pandemic.

    With the vaccine rolling out, JetBrokers forecasts 2021 will be a strong year for business aviation with ultra-high net individuals (UHNWIs) continuing to seek safer travel options to fulfill their personal travel needs in Q1. Corporate travel is expected to pick up again in Q2. 

    Jet Comparisons by JetBrokers     Jets for Sale by JetBrokers

    After increasing in 2019, overall inventories of preowned private jets and turboprops dropped in 2020, after increasing 2019. Inventories of light to medium jets are now below levels in January 2020. Inventories of heavy jets have increased. 

    Average Asking Price Trends for Jets and Turboprops

    After increasing in 2019, business aircraft sales prices dropped in 2020 while still remaining higher than 2018. The preowned jet and turboprop market will continue to improve as the vaccine continues to roll out. As ultra-high net worth individuals (UHNWIs) - who entered the market as first-time buyers in 2020 realize the value of business aviation - the market will continue to stabilize with steady growth projected for pre-owned transactions.

    Jet Comparisons by JetBrokers

    During the second half of 2020, aircraft prices for jet and turboprops trended upward despite the COVID pandemic. We expect demand for light to medium jets to remain steady and demand for heavy jets to return to previous rates in increase in 2021.

    Jet Comparisons by JetBrokers     Jets for Sale by JetBrokers

     

    The BCI (Business confidence index) for the United States is higher than the world at large, despite the COVID pandemic, with increased confidence in near future business performance.

    Pre-owned and new aircraft sales were on different trajectories in first three quarters of 2020. Sales volumes were down over the previous year with pre-owned transactions showing less impact than new aircraft deliveries. In contrast to their overall share of dollars, light jets continue to make up an important portion of the market in terms of aircraft delivered. 

    Forecast 2021 and Beyond

    In 2021, new business aircraft models in development or close to release are AirBus ACJ TwoTwenty, Dassault Falcon 6X, Gulfstream G700, SyberJetSJ30i, Beechcraft King Air 360/360ER, Beechcraft King Air 260, Cessna Citation Hemisphere, Cessna Denali and Cessna SkyCourier.

    Business aircraft asking prices are stabilizing with inventories either plateauing or falling. Demand for private jets and turboprops is expected to rise. The preowned market is improving with mostly robust demand indicators for business aircraft. Global aircraft market demand and usage varies depending on the overall needs of the region. Europe has pent up demand for light to medium jets while the Asian market has steady need for larger, long-range aircraft.

    Industry forecasts for new business jet deliveries are valued between $217.5bn to $236bn for the next ten years with projections of between 6584 aircraft (per JETNET iQ) and 7404 aircraft (per Aviation Week). 

    Click here to download JetBrokers February 2021 Market Update PDF.

    This report was originally published by JetBrokers in February 2021.  

  • NAFA Administrator posted an article
    The EVA Podcast: The Resilience of the Business Aviation Industry with JSSI's Neil Book see more

    NAFA member and JSSI President and CEO Neil Book joins Chris Notter to discuss JSSI and the resilience of the business aviation industry during these challenging times. HEAD OVER TO EVA for more from this series, or listen to the podcast below:

    This podcast was originally published by JSSI on November 17, 2020.

     

  • NAFA Administrator posted an article
    What Drives Private Aircraft Ownership? see more

    NAFA member, PNC Aviation Finance, shares four key factors that drive private aircraft ownership.

    Although some may consider private aircraft ownership to be a vanity asset and a mark of wealth, the truth is that private aircraft ownership is a necessity for many businesses.

    The driving factors for industry leaders and those who are charged with protecting capital to invest in private aircraft can be distilled into four key factors: Privacy, Security, Efficiency and, yes, Luxury.

    A 2017 study by Ledbury Research of London, commissioned by aircraft manufacturer Airbus1, shows that the world's billionaire population is growing.

    Most of these individuals, the study finds, are concerned with preserving wealth for the next generation or maintaining their business and family legacy. Though they do invest in comfort, convenience and luxury items, they are less likely than younger generations to spend their wealth on status items and are more concerned with discretion.

    "While the media likes to paint billionaires as exhibitionists, this is an inaccurate picture. Most are discreet individuals," Ledbury Research reports.

    Privacy

    For these individuals' enterprises, privacy can be the primary priority for buying business aircraft. Avoiding the hassles and exposure of large airport terminals, in favor of smaller, local airport terminals, can reduce stress and provides greater discretion.

    The need for privacy is a key driver of private jet use," Ledbury Research states.

    Security

    Security concerns also play an important role in the decision to buy a private aircraft. Not only do high-net-worth individuals want to keep their business dealings private, but they often travel with an entourage of family and staff, as well as security personnel.

    Efficiency

    Flying on a private aircraft can also be more efficient. Certainly, there is a shorter queue at an FBO checkpoint than an airport checkpoint, as well as other time factors to consider.

    Owning a private aircraft allows corporate executives to fly on-demand, and at short notice, instead of being locked in by airline scheduled flights.

    Private aircraft can also allow more convenient landings, with some business airports located closer to the end destination.

    One of the greatest efficiency gains come from capitalizing on flight hours for meaningful meetings and phone calls. Discussing sensitive business information in public spaces, like a commercial aircraft cabin, can be ill-advised, even if flying first class.

    For this reason, business magnates prefer to own and fly on private aircraft that include conference room settings and state-of-the-art communication facilities, including live TV and high-speed satellite-based Wi-Fi.

    Luxury

    The greatest luxury of all for high-net-worth individuals is time, which is what makes having a private aircraft on-demand so appealing.

    "The demands of business and wealth mean they have little free-time to enjoy themselves. What time they do have is often considered a luxury, and they value ways in which they can get more time, as well as great service that allows them to enjoy it more," Ledbury Research states.

    Are You Considering Private Aircraft Ownership?

    Learn more about private aircraft ownership and financing options by connecting with an experienced PNC Aviation Finance representative.

    This article was originally published by PNC Aviation Finance on January 14, 2019.

  • NAFA Administrator posted an article
    Pent-Up Travel Demand Boosts Business Aviation's Winter Resilience, Says JSSI see more

    CHICAGO, Oct. 29, 2020 – Business aviation flight hours rose 87.5% between Q2 and Q3 as flying resumed following the dramatic declines related to COVID-19, finds Jet Support Services, Inc. (JSSI), in its quarterly Business Aviation Index.

    The Index reports on the global flight activity and utilization for more than 2,000 business aircraft enrolled on JSSI hourly cost maintenance programs, including jets, turboprops and helicopters. Since average flight hours reached all-time lows in April due to the COVID-19 pandemic, business aviation activity has recovered to 78.4% of 2019 levels.

    As some of the pent-up travel demand was released, month-over-month flight activity between August and September 2020 climbed 7.1%, the first monthly increase in flying hours since Q3 2019.

    “While this quarter reflects a welcome sign for business aviation, utilization is still down 21.6% year-over-year. I think we will see elevated leisure travel during the winter months, as tighter travel restrictions coupled with the virus resurgence will continue to inhibit business-related flight hours,” said Neil Book, president and CEO of JSSI.

    JSSI’s data also reveals that several industries initially hit hardest by the coronavirus pandemic, such as business services and financial services, demonstrated the most significant recoveries in Q3, recording 84.3% and 111.4% increases in flying hours respectively, quarter-over-quarter.

    Large aircraft have taken the biggest plunge globally, with year-over-year flight hours down 30.7%. In comparison, small-cabin aircraft saw the least pronounced decrease in activity, down just 2.1% from 2019 levels, reflecting their value during the pandemic, with new customers turning to business aviation to meet their travel demands.

    “Since Q2, when the global impact of COVID-19 became clear and we saw record-breaking cuts to commercial flights, we have witnessed a staggered increase in flight hours, with North America outpacing other regions. During Q3, all geographies experienced an increase in business aviation flight hours, but the most acute rise was seen across Central and South America, with utilization up more than 169% and 146% quarter-over-quarter as travel restrictions began to ease.”

    JSSI’s utilization data provides early indicators and useful insights into the state of global economic conditions, which is particularly relevant given the continuing COVID-19 situation.

    DOWNLOAD THE FULL JSSI BUSINESS AVIATION INDEX.

    This press release was originally published by JSSI on October 29, 2020.

  • NAFA Administrator posted an article
    Aero Asset's Helicopter Market Trends Q4 2020 Report see more

    NAFA member, Aero Asset, shares key findings from their recent Heli Market Trends Q4 2020 report.

    MARKET CONTINUES TO IMPROVE Q4 

    · Retail sales volume continued to rise Q4, up 22% vs Q3 20, but still down 25% vs Q4 19 

    · Supply for sale remained stable but still 10% higher than Q4 19 

    · Absorption rate continued to improve Q4, but remained 50% higher than Q4 19 

    · Deal pipeline bounced back Q4, surpassing Q4 19 level 

     

    WEIGHT CLASS DISCORD 

    · Light Twin engine market was stable Q4 after a strong rebound the previous quarter 

    · Deterioration ended in the Medium market with a strong uptick in sales and a stable level of supply 

    · Heavy market was at a standstill Q4 after a decent Q3 

     

    VIP DOMINATES CONFIGURATION ACTIVITY 

    · VIP market segment was stable vs Q3, but sales volume remained 15% below Q4 19 

    · UTILITY & EMS represented 36% of all sales Q4, VIP configurations accounted for the rest 

     

    LIQUIDITY LINEUP 

    · The most liquid preowned markets Q4 20 were the Airbus H135 & H145 markets tied at 1st place 

    · 2 of 12 markets in the lineup saw no trades Q4, both in the heavy weight class 

    · The least liquid market with trading activity was the Bell 412EP which continued to suffer from soft demand 

     

    DEAL PIPELINE BOUNCES BACK 

    · After 4 consecutive quarters of decline in the number of deals pending at various stages of transaction, the deal pipeline grew Q4 

    · Deal pipeline bounced back 60% higher than Q2 20 level, to surpass Q4 19 level 

     

    Click here to download the full Heli Market Trends report.

     

    This report was originally published by Aero Asset in December 2020.

  • NAFA Administrator posted an article
    Five Things to do Before Buying see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, shares five quick tips to have a positive airplane buying experience.

    On the one hand, the airplane buying experience is thrilling and full of adventure. You’re embarking on an upgrade, or it’s your first-time taking control of your business or personal air travel. On the other hand, the airplane buying experience can be full of adventure and an unintentional thrill ride. You’re embarking upon a transaction process that if left to chance may reveal hidden turbulence. So how to have the best experience? Here are five quick tips:

    1. Define your mission first. How do you envision using the airplane? Are you going to travel someplace? Are you going to be using to travel someplace with other people? How long are these trips going to be? Where will they be? At what time of year will they be? These will define the type of aircraft that fits your need best. At the very least, this exercise will help you understand what airplanes you don’t want.
    2. Define your intended aircraft’s support community. Who owns the same aircraft at your local airport? Does that airplane have an associated club or online community? Tap into those human resources to get real world intelligence. Combining what they know from actual flying with your defined mission can help further narrow your choices. For instance, Find out from friends or other owners (e. g. Comanche 400 vs. Cirrus)
    3. Define the aircraft’s true cost. There is the acquisition price, yes. And you may have clear picture of fuel burn, hangar, database updating, etc. But those aren’t the only cost. What really is the reserve? How easy are parts to obtain? What’s the access like to get a good qualified mechanic who is expert on your make and model? A generalist vs. an expert means down time. What’s your airplane’s down time going to be based on mechanic and parts availability? That analysis may cause you to consider buying a new plane with a warranty on it. Which brings us to #4.
    4. Define whether a used or a new airplane is your best value. If you own your own business and you can also utilize bonus depreciation to write the purchase off as a business expense, and if your price includes a manufacturer’s warranty for a new plane, that slightly higher cost may mitigate all the issues raised in point #3. This option may also be worthwhile to non-business owners, too.
    5. Define your financing options. Pre-approval vs. paying cash. What is your opportunity cost vs. financing? How would your return compare between an all cash deal and taking a loan while investing the cash? What’s your comfort level in having cash flow and leverage vs. owning an aircraft outright? Firm knowledge in where you stand on the leverage risk tolerance scale opens or focuses how you’re willing to pay for the airplane.

    And last of all, reach out to AOPA Finance. If we don’t know the answers, through the rest of AOPA, we can help point people to other resources and get them those answers.

    This article was originally published by AOPA Aviation Finance Company on January 7, 2021.