Essex Aviation Group

  • Tracey Cheek posted an article
    How to Simplify Aircraft Lease Return see more

    NAFA member, Essex Aviation Group, discusses how to simplify aircraft lease return.

    As the global finance industry evolves, more and more banks are turning to corporate aircraft leasing to create new financial opportunities and expand profit margins.

    The concept is simple enough: Similar to a leasing a car, a bank owns the aircraft and leases it for a predetermined period of time (typically anywhere from 5 to 15 years). During lease agreement negotiations, the parties define the various lease terms — specifically, the length of the lease and terms regarding the intended use and operation of the aircraft.  One of the most important matters that the lease should cover is within the return conditions expected of the aircraft and the definition of any maintenance activities or inspections that the lessee needs to complete prior to returning the aircraft. The lease should also define the aircraft specifications, loose equipment and any additional items that were with the aircraft at the time the lease began and must be returned to the lessor.

    Overseeing a Lease Return

    If you are a lender or the asset manager of an organization that is in the business of leasing aircraft, consider working with a qualified aviation advisor to manage the asset’s return requirements and ensure that the aircraft meets the terms and conditions as defined in the lease agreement.

    In doing so, your advisor will carefully review the lease agreement and evaluate the asset against the terms of the agreement. Evaluation is typically a four-part process, during which the advisor should do the following:

    • Re-review the aircraft records for continuity and completeness (gaps or missing records will affect the value of the asset).
    • Ensure that the aircraft conforms to how it was originally certified or has subsequently been modified.
    • Review any damage history, out of sequence maintenance activities or major repairs.
    • Assist the lessor in the lease return inspection discussions with the lessee.

    Even a minor issue with the asset — say, for example, a malfunctioning galley appliance — being necessary to function and as part of the aircraft’s certification can cost your organization thousands of dollars to repair or replace if this item is not identified during the lease return inspection. It is your advisor’s job to flag any of these types of items or other potential issues and work with the lessee concerning the necessary maintenance work and or repairs that need to be completed to meet the return requirements.

    An aviation advisor can be particularly helpful to small banks that do not have in-house staff with the available time and (potentially) expertise to conduct a thorough review.  Lessors that have older lease agreements will likely need additional guidance prior to the aircraft return to address potential issues that may not be covered. The language used in older lease agreements often tends to be vague compared to newer agreements, which leaves room for interpretation. Often, the two parties will need to negotiate the lease return requirements well in advance of the start of the lease return inspection process. Fortunately, an aviation advisor can work with your asset management team to identify and clarify these terms with the lessee and ensure that your organization maximizes the value of the aircraft upon its return.

    The Importance of Continued Support

    For some aviation advisors, their work ends once the inspection and lease return process are complete. Other aviation advisors, however, will continue to provide quality support and service well after the asset is returned.

    Once the aircraft has been returned, banks and lenders will either re-lease the aircraft or choose to sell that aircraft out of their portfolio. If your organization intends to re-lease or sell an asset, consider working with an aviation advisor who can work with you and other industry service providers to re-market the aircraft. Certain aviation advisors go the extra mile and provide continued on-site support, such as securing a location to safely store the aircraft and manage the necessary maintenance support to keep the aircraft in flight ready condition.

    The key to finding the right aviation advisor is to look for one backed by a team with years of industry experience and proven dedication to its clients. If you would like to speak to an experienced aviation advisor who can provide unbiased advice and assist your organization with lease return management, contact the experts at Essex Aviation today.

    Essex Aviation Group, Inc. was founded in 2013 with the primary goal of providing clients with the most current industry knowledge and experience, a vital component in evaluating business and private aviation transportation needs.

    Representing clients in a wide range of services, Essex builds client relationships through dedication to trust, integrity and a level of responsiveness not found anywhere else. Services include new or pre-owned aircraft acquisitions, new aircraft completion management, pre-owned aircraft refurbishment and upgrade management, block and ad hoc charter service and much more.

    This article was originally posted on the Essex Aviation Group blog.

  • Tracey Cheek posted an article
    What You Should Know Before Purchasing a New Aircraft see more

    NAFA member, Essex Aviation Group shares what you should know before purchasing a new aircraft.

    Whether it’s for business or personal use, there are many benefits to private aviation. However, there are several factors to take into consideration as you evaluate your options.

    New vs. pre-owned

    There are benefits to purchasing both a new or pre-owned aircraft. A pre-owned aircraft can be more affordable while offering you the option of refurbishing, upgrading or customizing certain parts to fit your needs. If you’re acquiring a new aircraft, it can also be fully customized but the delivery could take anywhere from 12 to 18 months longer than if you purchased a pre-owned aircraft.

    Start the financing process early

    If you choose to finance your aircraft, beginning the process early will leave yourself enough time to compare rates and request proposals from potential lenders. It’s important to understand that getting a loan or lease for an aircraft is a complex process, so researching your financing options sooner rather than later is advised.

    How will you be using the aircraft?

    Are you going to be using the aircraft for business or pleasure? If it’s for business, you may be able to receive certain tax benefits. An aviation advisor will be able to recommend a legal or tax advisor who can work with you to maximize any possible benefits. 

    Determine which features are important to you

    It’s easy to say, “I want it all” but this isn’t always feasible. Most aircraft can meet many needs and desires of the purchaser but some may not be able to meet all of your necessities. An aviation advisor can help you evaluate your aircraft model options and assist you in finding one that meets your requirements. They will also be available to help you navigate all of the available information so that you can fully understand the pros and cons of each option. 

    The 80/20 rule

    Overbuying can be tempting when shopping for an aircraft. It’s important to consider exactly how you will be using the aircraft to avoid purchasing one that includes more than you need. Will you only be traveling for meetings a few states away? Or will you need the aircraft for international, monthly trips? Your aircraft should meet your requirements 80 percent of the time. If you will only be traveling overseas occasionally but will have monthly business trips, an aircraft for business trips will be most ideal. 

    Bring your aviation advisor on demo flights

    There are often many opportunities for demo flights on different types of aircraft to help you make a purchase decision. Bringing your aviation advisor along for the flight can help you make a decision, as long as they are professional and unbiased. 

    The process of acquiring a new aircraft 

    When purchasing a new aircraft, the process typically involves:

    The initial evaluation 

    When purchasing a new aircraft, you’ll have many decisions to make. These can include selecting the floorplan and any specifications or materials that are also needed. You can also choose a “white-tale” aircraft, which is one that has already been produced but gives you very limited opportunities to change things. 

    Design

    When you’ve selected an aircraft for purchase, you will enter the layout and design phase. An aviation advisor can help you through the series of specification meetings. 

    Production

    Aircraft production begins once there is a final and approved design in place. Production can take up to a year or longer, depending on several variables. 

    Delivery

    Once the aircraft is ready for final delivery, your aviation advisor and the existing flight crew will work through a formal delivery and acceptance process. 

    Acquiring an aircraft can become complicated since there are several parties involved. Working with an unbiased aviation advisor will offer value and comfort throughout the process, and will help you find the aircraft that’s right for you.

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    Essex Aviation Group, Inc. was founded in 2013 with the primary goal of providing clients with the most current industry knowledge and experience, a vital component in evaluating business and private aviation transportation needs.

    Representing clients in a wide range of services, Essex builds client relationships through dedication to trust, integrity and a level of responsiveness not found anywhere else. Services include new or pre-owned aircraft acquisitions, new aircraft completion management, pre-owned aircraft refurbishment and upgrade management, block and ad hoc charter services, and much more.

    This article was originally published by Essex Aviation Group.