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YEARBOOK The Best IntelligenceDriven Editorial in One Volume

2017


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EDITORIAL Editorial Director J.W. (Jack) Olcott 1- 201 572 9284 Jack@avbuyer.com

Editor’s

Welcome

Commissioning Editor Matthew Harris 1- 800 620 8801 +44 (0)20 8939 7722 Editorial@avbuyer.com

A Celebration of BizAv Intelligence

Consulting Editor Sean O’Farrell 1- 800 620 8801 +44 (0)20 8939 7728 Sean@avbuyer.com Editorial Contributor (USA Office) Dave Higdon Dave@avbuyer.com ADVERTISING Linda Blackburn (USA Sales) 1- 614 418 7064 Linda@avbuyer.com Lise Margin (USA Sales) 1-703 818 1024 Lise@avbuyer.com Maria Brabec (European Sales) +420 604 224 828 Maria@avbuyer.com Karen Price 1- 800 620 8801 +44 (0)20 8255 4700 Karen@avbuyer.com STUDIO/PRODUCTION Helen Cavalli Mark Williams 1- 800 620 8801 +44 (0)20 8939 7722/7726 Helen@avbuyer.com Mark@avbuyer.com CIRCULATION Barry Carter 1- 800 620 8801 +44 (0)20 8939 7720 Barry@avbuyer.com AVBUYER.COM Jayne Jackson Jayne@avbuyer.com Emma Davey Emma@avbuyer.com MANAGING DIRECTOR John Brennan 1- 800 620 8801 +44 (0)20 8255 4229 John@avbuyer.com USA OFFICE 1210 West 11th Street, Wichita, KS 67203-3517 EUROPEAN OFFICE AvBuyer House, 34A High Street, Thames Ditton, Surrey KT7 0RY, UK +44 (0)20 8255 4000

aunched last year and now a staple in AvBuyer’s product portfolio, our 2017 Yearbook contains carefully selected articles and series published throughout 2016. While all material presented in AvBuyer magazine during the previous 12 months is available online, our readers have indicated their desire for print sources of intelligence. They value the proximity of printed material and retain the magazine for reference throughout the year. Handsomely packaged as a coffee-table sized magazine, we trust you will find AvBuyer’s 2017 Yearbook a worthy addition to your reference library. The popularity of AvBuyer’s inaugural Yearbook in 2016 made the decision to continue its publication easy. In spite of its size and weight, the Yearbook is actively sought by visitors to trade shows where AvBuyer displays its print and internet products. Without exception, our supply of Yearbooks delivered to Business Aviation events globally quickly move from our booth to the attendee’s carry bag. The fact that tradeshow visitors retain AvBuyer’s Yearbook offers us satisfaction. Such popularity also assures providers of products and services that they have chosen wisely when selecting AvBuyer as their means for communicating with the Business Aviation community. Selecting material for inclusion in the 2017 Yearbook presents a welcome challenge. We trust you will find the material we chose truly valuable. We request your feedback so that AvBuyer applies it publishing resources to fulfill your informational needs. Staying with a well-received format, the 2017 Yearbook includes ten well defined sections, beginning with a selection of Mike Chase’s ever-popular Aircraft Comparative Analysis articles. Ken Elliott’s series on Aircraft Connectivity forms the backbone of our Avionics section, and is supplemented with additional material from industry experts Brian Wilson and Conrad Thiesen on topics ranging from cabin avionics, cockpit avionics upgrades and ADS-B. Relating to Buying and Selling aircraft, Andre Fodor, Director of Aviation at Johnsonville Sausage relays some thoughts and tips gleaned from the recent purchase of a jet, while

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Pre-Purchase inspections are covered along with issues of financing older aircraft on the used aircraft market. Within our Finance and Insurance section, tips for importing a jet into the US from abroad are covered comprehensively by aviation attorney Jessica Pownell, while fellow attorney Troy Rolf offers insight into MACRS and ADS. Business Aviation insurance issues for aircraft dealers and also helicopter operators are covered by insurance broker Stuart Hope. For the Flight Department Manager, Fred Haap, Jodie Brown, David Wyndham and Andre Fodor offer perspectives on issues ranging from creating a flight department, to motivating staff, to accounting, to pilot health (and more besides). Business Aircraft Maintenance is well covered, too, with expertise from a broad panel of authors on the upkeep of the company aircraft, whether avoiding unnecessary maintenance, enrollment in a third-party maintenance plan, getting the most from a refurbishment project, or understanding the extra maintenance costs of an aircraft at the purchase stage. Aircraft lease is covered prominently within the pages of our Ownership section, along with some sample articles from Dave Higdon’s International Business Aviation Operations series. Perspectives are offered by Conklin & de Decker on measuring and benchmarking your Business Aviation operations. Another firm favorite among our readership, a selection of Case Studies from Rani Singh are included, highlighting the benefits and uses of business jets and turboprops, as told by their operators. A medley of safety articles from Mario Pierobon rounds out this year’s selection. As we are sure you’ll see, the content of AvBuyer is rich and varied, and we trust that this book will have a positive impact on serving your Business Aviation needs throughout 2017. Don’t forget, you’ll find far more Business Aviation Intelligence besides on a monthly basis in AvBuyer magazine and online at AvBuyer.com. Enjoy, and best wishes for a successful 2017. Jack Olcott Editorial Director AvBuyer - your source for Business Aviation Intelligence


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Aircraft Comparisons 8

16 24

Dassault Falcon 7X Airbus AS350-B3 Gulfstream G650

Avionics 34

36 40 46 52 58 64 70

76

84

88

92 96 98

102 104

Keeping Upgrades Simple Planning Your NextGen Upgrade From Connectivity to Entertainment Aircraft Connectivity – Pt 1 Aircraft Connectivity – Pt 2 Aircraft Connectivity – Pt 3 Aircraft Connectivity – Pt 4 Aircraft Connectivity – Pt 5

112

Buying a Jet: Extract Added Value Buying a Jet: The Need for the Long-View Pre-Purchase Inspections Old Airplanes, New Expectations Financing Older Aircraft A Discussion on Aircraft Values The Impact of Damage History

118 120 124 126 128 130

107

Managing Your Jet Engine Maintenance Tips to Minimize Engine Downtime

Finance & Insurance 116

81

Buying a Jet: Key Planning Tips

Engines 108

33

Becoming NextGen Compliant

Buying & Selling 82

7

Tips for Importing a Jet – Pt 1 Tips for Importing a Jet – Pt 2 Tips for Importing a Jet – Pt 3 Understanding MACRS & ADS – Pt 1 Understanding MACRS & ADS – Pt 2 Insurance Issues for Aircraft Dealers Facts on Insuring Helicopters

115


Flight Department Management 134 138 140 142 146 148

Creating a Flight Department Flight Department Management - Tracking KPIs The Time Value of Money Cost Accounting for BizAv Creating a More Positive Flight Department The Keys to Pilot Health

Maintenance 152 156 160 164 168

176 178 180 184 188 192

Third-Party BizAv Maintenance Plans LBAS Refurbishment Article Top Maintenance Tips when Refurbishing Business Jet Ownership - What’s The Real Cost?

200 202 206 210 213

Benchmarking for BizAv BizJet Ownership: The First 9 Months Aircraft Lease 101 Aircraft Lease Returns International Business Aviation Operations – US International Business Aviation Operations – India

220 222 224

197

How BizAv Keeps Johnsonville Sizzling Building Communities with Business Aviation High Flyer’s Interview – Apogee Physicians King Airs Deliver Care to Remote Communities High Flyer’s Interview – Embracing the Legacy 450 Aircraft Career Enrichment Profile

Safety 218

171

Value & Efficiency: MOVE Documentation

Profiles & Case Studies 198

151

Avoid Unnecessary Maintenance Costs

Ownership 172

133

Why Bother With an SMS? Assessing a Charter Operator’s Safety Culture Transitioning from Paper to Electronic Safety Reasons to Customize your Ops Manual

217

Yearbook Contents

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TWO WAYS TO CONQUER THE WORLD*.

Now you have two choices for superior, ultra-long-range capability. The 5,950 nm Falcon 7X—the fastest selling Falcon ever (and with good reason). Or the new, 6,450 nm Falcon 8X, destined to become a favorite of world travelers. Both have the awe-inspiring ability to fly long distances from short and challenging runways such as Aspen and London City. The 8X is more than three feet longer, with over 30 cabin layouts. Fly far. Fly in comfort. Achieve more.

WWW.DASSAULTFALCON.COM I FRANCE: +33 1 47 11 88 68 I USA: +1 201 541 4600


Section Contributor

Mike Chase’s analytical and consultancy services are highly valued within the Business Aviation industry. He is founder and president of Chase & Associates, and works closely with several respected sources to compile his unique Aircraft Comparative Analysis feature. Contact Mike via mike@avbuyer.com

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Aircraft Comparisons

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Aircraft Comparative Analysis: Dassault Falcon 7X

In this Aircraft Comparative Analysis, Mike Chase provides information on two popular large cabin & ultra-long-range business jets for the purpose of valuing the Dassault Falcon 7X…

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ver the following paragraphs, we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values for the Falcon 7X. The field in this comparative study includes Bombardier’s Global 5000. Can the three-engine Falcon 7X successfully compete against the twin-engine Global 5000 that offers greater cabin volume? This is one of the questions that we will seek to answer. The Falcon 7X flies faster, farther and higher than any previous Falcon business jet model. Dassault received its FAA and EASA Type Certificate for the aircraft in April 2007, and entry into service followed two months after. The Falcon 7X is the first fully fly-by-wire business

jet. It is equipped with the same Honeywell Primus EPIC EASy avionics used on the Falcon 900EX and later on the Falcon 2000EX. Worldwide, there are 250 whollyowned Falcon 7Xs in operation, three in shared ownership, and two in fractional ownership giving a total fleet size of 255. Nine percent of the Falcon 7X fleet is leased, according to JETNET. Europe has the largest fleet percentage (42%), followed by North America (30%) and Asia (17%).

US Flight Activity

Table A (overleaf) shows that the number of Falcon 7X flights within the US decreased by -2.2% in 2015 versus 2014. The distance travelled (-19.8%) and flight hours (-11.2%) also declined over that timeframe.


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Table A - US Flight Activity - Falcon 7X

Payload & Range

2014

2015

Difference

%

9,434

9,223

-211

-2.2%

Total Distance (stat miles)

13,922,511

11,162,982

-2,759,529

-19.8%

Total Time (hrs)

1,725,179

1,531,297

-193,882

-11.2%

1,475

1,210

-265

-18.0%

182

166

-16

-8.8%

Flights

Avg Airframe Distance (nm) Avg Airframe Flight Time (hrs) Source: JETNET

Cabin Cross-Sections

Table B - Payload & Range MTOW (lb)

Max Fuel (lb)

Fuel Usage (GPH)

Max Payload (lb)

Avail Payload w/Max Fuel (lb)

Max Fuel Range (nm) 4 Pax

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

Falcon 7X

70,000

31,940

350

4,400

1,660

5,870

5,000

Global 5000

92,500

38,959

455

7,139

2,930

5,350

4,920

Model

According to Conklin & de Decker, the Falcon 7X cabin volume is 1,506 cu.ft. and its cabin length is 39.1ft. The Global 5000 has a larger cabin volume (1,889 cu. ft.) and is slightly longer (42.5ft). Chart A (bottom left), courtesy of UPCAST JETBOOK, shows the cross-section comparisons.

Range Comparison

Source: Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET; ACC – Aircraft Cost Calculator; B&CA May 2016 Purchase Planning Handbook and Aug. 2015 Operations Planning Guide

Chart A - Cabin Cross-Sections Dassault Falcon 7X

The data contained in Table B (middle, left) are published in the B&CA, May 2016 issue, but are also sourced from Conklin & de Decker. A potential operator should focus on payload capability as a key factor. The Falcon 7X ‘Available payload with Maximum Fuel’ at 1,660 pounds is considerably lower than the Global 5000 (2,930 lbs). Note, too, the fuel usage of each aircraft: The Falcon 7X burns 23.1% less fuel per hour at 350 gallons per hour (GPH) compared to the Global 5000 (455 GPH), according to Aircraft Cost Calculator.

Bombardier Global 5000

Depicted in Chart B (top, right), using Luxembourg as the origin point, the Falcon 7X shows more range coverage than the Global 5000, as sourced from Aircraft Cost Calculator (ACC). Note: For jets and turboprops, ‘Seats-Full Range’ represents the maximum IFR range of the aircraft at Long-Range Cruise with all passenger seats occupied. ACC assumes NBAA IFR fuel reserve calculation for a 200nm alternate. The lines depicted do not include winds aloft or any other weather-related obstacles.

Powerplant Details

The Falcon 7X is powered by three Pratt & Whitney Canada PW307A engines, each with 6,042 lbst, while the Global 5000 is powered by two RollsRoyce BR 710-A2-20 engines, each offering 14,750 lbst.

Cost Per Mile Source: UPCAST JETBOOK

Using data published in the May 2016 B&CA Planning &


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Chart B - Range Comparison

Purchasing Handbook and the August 2015 B&CA Operations Planning Guide, we will compare our aircraft. The nationwide average Jet A fuel cost used from the August 2015 edition was $5.25 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published. Note: Fuel price used from this source does not represent an average price for the year. Chart C (middle, right) details ‘Cost per Mile’ and compares the Falcon 7X to its competition factoring direct costs and with each aircraft flying a 1,000nm mission with a 1,600 lbs (eight passengers) payload. The Global 5000 shows the highest cost per nautical mile at $6.73 compared to $5.33 for the Falcon 7X. This is a difference of $1.40 (26.3%) per nautical mile.

Dassault Falcon 7X Bombardier Global 5000

5352.75 Nm 5070.00 Nm

Total Variable Cost

The ‘Total Variable Cost’ illustrated in Chart D (bottom, right) is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Falcon 7X computes at $2,336 per hour, 23.1% less than the Global 5000 at $3,037.

Chart C - Cost Per Mile*

Global 5000

Aircraft Comparison Table

$0.00

Table C (overleaf) contains the pre-owned prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and Aircraft Cost Calculator, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET. The Falcon 7X has 10.6% of its fleet currently ‘For Sale’ and the Global 5000 has 11.4%. Note, too, the average number of new deliveries and pre-owned transactions (sold) per month for the Global 5000 is higher at four per month than the Falcon 7X (three per month).

Depreciation Schedule

Aircraft that are owned and operated by businesses are

Q$5.33 Q$6.73

Falcon 7X

$5.00

US $ per nautical mile *1,000 nm Mission costs, 1,600lbs, payload

Chart D - Variable Cost Falcon 7X Global 5000 $0

$1,000

US $ per hour



Q $2,336 Q $3,037

$2,000

$3,000


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Table C - Aircraft Comparison Long Range Speed (kts)

Cabin Volume (cu ft.)

Max P/L w/avail fuel IFR range (nm)

New Vref Price $ US Mil

In-Operation

% For Sale

Average Sold Per month*

Falcon 7X

459

1,506

5,000

$53.8

255

10.6%

3

Global 5000

471

1,889

4,920

$50.4

210

11.4%

4

Model

Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET: Vref; ACC- Aircraft Cost Calculator *Average Full Sale Transactions in the past 12 months; Source: JETNET

Table D - Part 91 & 135 MACRS Schedule 2016 Dassault Falcon 7X - PRIVATE (PART 91) Full Retail Price - Million Year

$53.800 1

2

3

4

5

6

20.00 %

32.00 %

19.2 %

11.5 %

11.5 %

5.8 %

Depreciation ($M)

$10.8

17.2

10.3

6.2

6.2

3.1

Depreciation Value ($M)

$43.0

25.8

15.5

9.3

3.1

0

Cum. Depreciation ($M)

$10.8

28.0

38.3

44.5

50.7

53.8

Full Retail Price - Million

$53.800

Rate (%)

2016 Dassault Falcon 7X - CHARTER (PART 135) Year

1

2

3

4

5

6

7

8

14.3 %

24.5 %

17.5 %

12.5 %

8.9 %

8.9 %

8.9 %

4.5 %

Depreciation ($M)

$7.69

13.18

9.41

6.72

4.80

4.80

4.80

2.40

Depreciation Value ($M)

$46.11

32.94

23.53

16.81

12.00

7.20

2.40

0.00

Cum. Depreciation ($M)

$7.7

20.9

30.3

37.0

41.8

46.6

51.4

53.8

Rate (%)

Source: Vref

Chart E - Value & Demand

A Study of Falcon 7X Compared to the Global 5000, Global 6000 & Gulfstream G550 Business Jets

often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period. In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS. There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period. Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six-year recovery period. There are certain uses of the aircraft, such as nonbusiness flights, that may have an impact on the allowable depreciation deduction available in a given year. Table D (middle, left) depicts an example of using the MACRS schedule for a 2016 Falcon 7X aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a used retail value of $53.8 million, per Vref Pricing guide.

Asking Prices vs Age, Airframe Total Time & Quantity

Chart E (left), sourced from the Multi-Dimensional Economic




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$

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Table E - Value Retention Aircraft

2007

2013

2012

2014

2015

Price (New)

Avg Sale Price $m

% Retention

Avg Sale Price $m

% Retention

Avg Sale Price $m

% Retention

Avg Sale Price $m

% Retention

Falcon 7X

$42.3

$36.0

85%

$31.0

73%

$25.0

59%

$23.2

55%

Global 5000

$34.7

$33.0

85%

$28.5

82%

$21.0

61%

$19.5

56%

Source: AircraftPost. * All Prices in $M

Chart F - Productivity Comparisons

Price (Millions)

Evaluators Inc. (www.meevaluators.com), shows a Value & Demand chart for the pre-owned Falcon 7X. The current pre-owned market for the Falcon 7X aircraft shows a total of 27 aircraft ‘For Sale’ with nine displaying an asking price, thus we have plotted them. For measure, we have added the pre-owned Global 5000, Global 6000 and Gulfstream G550 into our study group. Asking prices range from $1242.8m. The equation that we derived from these asking prices and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings, if necessary. While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price. Demand and Value are on opposite sides of the same Price axis. Thus, the market for used Falcon 7X, Global 5000, Global 6000 and G550 aircraft responds to at least four features: Years, AFTT, Quantity, and Asking Prices. Of course, the final negotiated price remains to be decided between the seller and buyer before a sale is completed.

$80.0 $60.0

Falcon 8X Falcon 7X

$40.0 $20.0 2.0000

Global 6000

Global 5000 6.0000

4.0000

8.0000

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

Value Retention/ Market Status

Table E (top, right) shows a Value Retention table for the Falcon 7X, courtesy of AircraftPost. If we view a 2007 vintage Global 5000 and Falcon 7X, the former had a price-point of ~$35m new, and the latter ~$42m new. Fast-forward to year-end 2015, a 2007 Global 5000 had a ~$19.5m value on the resale market and the 2007 Falcon 7X ~$23.2m. To convolute matters further, a 2007 Global XRS that sold new for ~$46m had an average resale in 2015 of ~$24m. As these aircraft age, the price differentials are getting smaller, which directly translate to more choice for the dollar in an already saturated marketplace. The condition of the current market for our comparative aircraft does not seem to be improving. If sales continue to

track on par with the first five months of 2016, the number sold could be down 13% over 2015. Of the 204 Global 5000s in service at year-end 2015, 36 aircraft came on the market, representing 17.6% of the available fleet. That was an increase over 2014 when 31 Global 5000s were on the market. 2013 showed 24, and 2012 just 12 aircraft on the market. The Falcon 7X fleet reached 254 in-service year-end 2015, with a total of 28 aircraft (11% of the fleet) showing on the current market. That compares to 21 aircraft on the market in 2014, 20 in 2013 and 13 in 2012.

Productivity Comparisons The points in Chart F (above) are centered on the same air-

craft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors: 1. Range with full payload and available fuel; 2. The long range cruise speed flown to achieve that range; 3. The cabin volume available for passengers and amenities. Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price,

Range, Speed and Cabin Size, we conclude that the Falcon 7X displays a high level of productivity. Popular attributes of the Falcon 7X are the lower cost per mile, lower variable costs and fuel consumption, and slightly more range compared to the Global 5000. Operators should weigh their mission requirements precisely when picking the option that is the best for them, however.

Summary

The Dassault Falcon 7X continues to be very popular in the market today. Operators should find the preceding comparison useful. Our expectations are that the Falcon 7X will continue to do well in the pre-owned markets for the foreseeable future. T


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Aircraft Comparative Analysis: Airbus AS350-B3

In this Aircraft Comparative Analysis, Mike Chase provides information on two popular Single Turbine Helicopters for the purpose of valuing the Airbus (Eurocopter) AS350-B3.

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ver the following paragraphs, we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values for Airbus AS350-B3s. The field in this comparative study includes the Bell LongRanger 206L-4.

Brief History

The AS350-B3 Ecureuil is the high performance version of the single-engine Ecureuil series. It features a more powerful engine than the AS350-B2 Ecureuil along with improved engine control via a twist grip on the collective-pitch lever. In North America, this model is commonly known as the AS350-B3 AStar, and it was later also manufactured in American Eurocopter's plant at Golden Triangle Airport in Lowndes County near Columbus, Mississippi. In 2010, a new serialization sequence was started for the

AS350-B3, beginning with serial number 7001. The AS350 B3 was produced from 1997 to 2012. The H125 (formerly the AS-350B-3e) replaced it on the market following the end of its production.

Worldwide Appeal

There are 1,023 wholly-owned AS350-B3 helicopters in operation worldwide. In addition there are seven in shared ownership and two in fractional ownership (total operational fleet of 1,032). 131 units (or 12.7% of the AS350-B3 in operation fleet) are leased, according to JETNET. By continent, North America has the largest fleet percentage (39%), followed by Europe (31%) and South America (10%), for a combined total of 80%. Additionally, 46% of the 1,032 AS350-B3 helicopters in operation today are in fleet ownership. The largest fleet operator (Air Methods in Englewood, CO, USA) has 46 helicopters.


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HOW MANY

SEATS?

AIRBUS AS350-B3

(Manufactured between 1997-2012)

5

$1.85 Million (2012 Model)

vs.

BELL 206L-4 LONGRANGER

(Manufactured between 1992-Present)

6

$1.75 Million (2012 Model)

HOW DO THESE HELICOPTERS COMPARE HEAD TO HEAD? HOW FAST

WHAT’S THE LONG RANGE

WILL I CLIMB?

CRUISING SPEED? 122 30

1500

110 90 120

60

1000

HOW MUCH

PAYLOAD

CAN WE GO?

CAN WE TAKE?

(Nautical Miles. VFR Max)

(Lbs)

500

300

1647

270 50

100

150

200

1320

150

HOW FAR

0

1959

(Rate of climb, ft per minute at MTOW)

(Knots)

0

2000

250

300

0

500

1000

1479 1500

2000 0

HOW MANY

HOW MANY

OPERATION?

EACH MONTH?

UNITS IN 587 1033

622

NEW/USED SOLD

5 (5.9%)

WHAT’S THE VARIABLE COST PER HOUR?

4 (5.5%)

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

$661 $743 Sources used: Aircraft Bluebook, Conklin & de Decker, JETNET, Aircraft Cost Calculator.




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Table A - Payload & Range

Payload & Range

MTOW (lb)

Max Fuel (lb)

Fuel Usage (GPH)

Max Payload (lb)

Avail Payload w/Max Fuel (lb)

Airbus AS350B3

4,960

939

45

1,647

708

300

359

Bell 206L4

4,450

742

37

1,479

737

270

321

Model

Max Fuel Range (nm) 4 Pax

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

Source: Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET; ACC – Aircraft Cost Calculator; B&CA May 2015 Purchase Planning Handbook and Aug. 2015 Operations Planning Guide

Chart A - Cabin Cross-Sections

The data contained in Table A are published in the B&CA, May 2015 issue, but are also sourced from Conklin & de Decker. As we’ve mentioned in past articles, a potential operator should focus on payload capability as a key factor. The AS350-B3 ‘Available Payload with Maximum Fuel’ at 708 pounds is slightly less than the Bell 206L-4 at 737 pounds. In addition, Table A shows the fuel usage by each aircraft in this field of study. The AS350-B3 burns the most fuel at 45 gallons per hour (GPH) of the two comparative helicopters. The Bell 206L-4 is the most frugal (37 GPH) according to Aircraft Cost Calculator.

Cabin Cross-Sections

According to Conklin & de Decker, the AS350-B3 cabin volume is 61 cubic feet and its cabin length is 6.56 ft. The Bell 206L-4 is larger in cabin volume - 73 cu. ft. - but shorter in length at 5 ft. Chart A (courtesy of UPCAST JETBOOK) shows the side-byside comparisons. The AS350B3 offers a significantly wider, and slightly taller cabin than the Bell 206L-4. To explain the larger cabin volume for the Bell model, Conklin & de Decker clarifies there are differences between the models. Not included in the calculation is pilot area. It should be noted that the AS350 includes the copilot as a passenger so that portion is included in the cabin volume but the Bell 206 doesn’t. The AS350 also curves while the Bell 206 cabin is square. Lots of space is therefore not countable for the AS350.

Source: UPCAST JETBOOK

Chart B - Range Comparison Airbus/Eurocopter AS350-B3 Bell 206L4

292.50 Nm 246.68 Nm

Range Comparison

Source: Aircraft Cost Calculator

As depicted by Chart B and using Centennial Airport, Colorado (home to Air Methods’ 46 unit AS350-B3 helicopter fleet) as the origin point, the AS350-B3 shows more range coverage than the Bell 206L-4, as sourced from Aircraft Cost Calculator (ACC). Note: The lines depicted do not include winds aloft or any other weather-related obstacles.


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Chart C - Variable Cost

Powerplant Details

The AS350-B3 is powered by a single Turbomeca Arriel 2B engine with the highest power rating value of 847 SHD compared to the Bell 206L-4 helicopter with 726 SHD from its single Rolls-Royce 250-C30P engine. The transmission rating is a limiting factor in the total rated and usable engine power output.

US $ per hour $0

$400

$200

$600

Airbus AS350-B3

Q $743

Q $661

Bell 206-L4

Total Variable Cost

The ‘Total Variable Cost’ illustrated in Chart C is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the AS350-B3 computes at $743 per hour, which is 12.4% more than the Bell 206L-4 ($661 per hour).

Table B - Aircraft Comparison

Aircraft Comparison Table

Table B contains the pre-owned prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and B&CA, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET. The AS350-B3 has 5.9% of its fleet currently ‘For Sale’ and the Bell 206L-4 has 5.5% for sale. The average number of preowned transactions (sold) per month for the AS350-B3 is higher at five per month than the Bell 206L-4 at four per month, as shown in the last column of the table.

Cabin Volume (cu ft.)

Max Max P/L w/avail Payload fuel w/avail VFR range fuel range (nm) (nm)

Used Used Vref Price US$m $m2012

In-Operation

% For Sale

New & Pre-owned Sold*

Gulfstream Airbus AS350-B3 GV

459 122

1595 61

5,416 359

$16.5 ‘02 $1.850

1,033 191

12.0% 5.9%

20 5

Falcon Bell 206L-4 7X

459 110

1506 73

5,000 321

$25.0 ‘07 $1.750

236 622

9.3% 5.5%

36 4

Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET; Vref; Operations Planning Guide B&CA

Table C - Part 91 & 135 MACRS Schedule

Depreciation Schedule

Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table C). In certain cases, helicopters may not qualify under the MACRS system and must be depreciated under the less favorable Alternative

Long Range Speed (kts)

Model

MACRS SCHEDULE FOR PART 91 Year Deduction

1

2

3

4

5

20.00 %

32.00 %

19.20 %

11.52 %

11.52 %

6

-

-

5.76 %

-

-

MACRS SCHEDULE FOR PART 135 Year Deduction

Source: NBAA



1

2

3

4

5

6

7

8

14.29 %

24.49 %

17.49 %

12.49 %

8.93 %

8.92 %

8.93 %

4.46 %


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Aircraft Comparisons

20

Table D - Part 91 & 135 MACRS Schedule 2012 AIRBUS AS350-B3 - PRIVATE (PART 91) Full Retail Price - Million Year

$1.850 1

2

3

4

5

6

20.00 %

32.00 %

19.2 %

11.5 %

11.5 %

5.8 %

Depreciation ($M)

$0.4

0.6

0.4

0.2

0.2

0.1

Depreciation Value ($M)

$1.5

0.9

0.5

0.3

0.1

0

Cum. Depreciation ($M)

$0.4

1.0

1.3

1.5

1.7

1.9

Full Retail Price - Million

$1.850

Rate (%)

2012 AIRBUS AS350-B3 - CHARTER (PART 135) Year Rate (%)

1

2

3

4

5

6

7

8

14.3 %

24.5 %

17.5 %

12.5 %

8.9 %

8.9 %

8.9 %

4.5 %

Depreciation ($M)

$0.26

0.45

0.32

0.23

0.17

0.17

0.17

0.08

Depreciation Value ($M)

$1.59

1.13

0.81

0.58

0.41

0.25

0.08

0.00

Cum. Depreciation ($M)

$0.3

0.7

1.0

1.3

1.4

1.6

1.8

1.9

Source: Vref

Chart D - Value & Demand The Market for a Used Airbus AS350-B3 Compared to Bell 206L-4

Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS. There are a variety of factors that taxpayers must consider in determining if a helicopter may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, helicopters used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period. Helicopters used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five-years or by using ADS with a six-year recovery period. There are certain uses of helicopters, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. Table D depicts an example of using the MACRS schedule for a 2012 model Airbus AS350-B3 helicopter in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a used retail value of $1.85m, per Vref Pricing guide.

Asking Prices vs Age, Airframe Total Time & Quantity

Chart D, sourced from the Multidimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned AS350-B3. The current pre-owned market for the AS350-B3 helicopter shows a total of 69 aircraft ‘For Sale’ with 23 displaying an asking price, thus we have plotted them. We also added the pre-owned Bell 206L-4 in our study group with asking prices ranging from $500k to $2.8m. The equation that we derived from these asking prices and other criteria used should enable sellers and buyers




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Aircraft Comparisons

22 Productivity Comparisons

The points in Chart E are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors: 1. Range with full payload and available fuel; 2. The long range cruise speed flown to achieve that range; 3. The cabin volume available for passengers and amenities. Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range,

Chart E - Productivity Price (Millions)

to compare, and perhaps adjust their offerings, if necessary. Demand and Value are on opposite sides of the same Price axis. Thus, the market for used AS350-B3 and Bell 206 L-4 helicopters responds to at least four features: Years, Useful Load, Quantity, and Asking Prices.

$3.0 $2.5

Airbus AS350B3

$2.0

Bell 206L4

$1.5 $1.0 $0.5 $0.0 0.0000

0.1000

0.2000

Index

0.3000

0.4000

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

Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Airbus AS350-B3 displays a high level of productivity. Popular attributes of the Airbus AS350-B3 are greater range and long-range cruise speed compared to the Bell 206L-4. However, price and the variable cost per hour are higher for the Airbus AS350-B3 and the available payload is lower.

Thus both helicopters are very strong competitors. Operators should weigh their mission requirements precisely when picking the option that is the best for them.

Summary

Within the preceding paragraphs we have touched upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance,

terminal area performance, and time-to-climb that might factor in a buying decision, however. The Airbus AS350-B3 continues to be very popular on today’s market. Those operators in the market should find the preceding comparison useful. Our expectations are that the Airbus AS350-B3, which started delivering in 1997, will continue to do very well in the pre-owned markets for the foreseeable future. T


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24

Aircraft Comparative Analysis: Gulfstream G650 vs Bombardier Global 6000 vs Gulfstream G550 In this Aircraft Comparative Analysis, Mike Chase provides information on three popular business jets for the purpose of valuing the Gulfstream G650.

H

ow do Bombardier’s Global 6000 and Gulfstream’s G550 compare against a clean sheet Gulfstream G650 aircraft? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed and cabin size) and cover current market values for the Gulfstream G650. The Gulfstream G650 began production in 2012 and is still being produced today. In 2014, Gulfstream launched the G650ER offering even further extended range capabilities. The Gulfstream G650 has the distinction of being a clean-sheet design aircraft, and is one of the fastest and longest-range purpose-built business jets ever manufactured.

The fuselage cross section is a unique oval shape with eight large cabin windows on each side. The wing uses greater sweep than previous Gulfstream models and no leading-edge high-lift devices. Aircraft controls are completely fly-by-wire, while the construction is metal for the wings and fuselage and composite materials for the empennage, winglets and engine cowlings. The Gulfstream G650 is powered by two Rolls-Royce BR700-725A1-12 engines each offering 16,900 lbst. The aircraft has a PlaneView II cockpit with Gulfstream Enhanced Vision System (EVS), Rockwell Collins HeadUp display, ACARS, and Enhanced GPWS with windshear protection.


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HOW MANY

GULFSTREAM G650

(Manufactured between 2012-Present)

$65.5 Million

18

(2014 Model)

vs. GULFSTREAM G550

(Manufactured between 2003-Present)

$43.0 Million

18

(2014 Model)

vs. BOMBARDIER GLOBAL 6000

(Manufactured between 2012-Present)

25

SEATS?

13

$45.0 Million (2014 Model)

WHICH OF THESE Long range JETS WILL COME OUT ON TOP 6285

HOW MUCH

RUNWAY

6170

DO I NEED?

6476

(Balanced field length, ft) 0

1000

HOW FAR

2000

3000

4000

5000

6000

7000

HOW MUCH

WHAT’S THE

CAN WE GO?

PAYLOAD

(Nautical Miles. 4 Pax)

CAN WE TAKE?

CRUISING SPEED?

(Lbs)

(Knots)

7130

1800

488 2500

6975 6080 5000

5500

459

2804

6000

6500

7000

7500

500

1000

1500

2000

HOW MANY

HOW MANY

OPERATION?

EACH MONTH?

UNITS IN 132 529

LONG RANGE

2500

NEW/USED SOLD

471 3000

50

100

150

200

250

300

350

400

500

WHAT’S THE

COST PER MILE?

5 (8.3%) 7 (6.2%)

199 5 (6.0%)

$6.45 $5.98 $5.91

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

(Direct operating costs based on 6000nm mission carrying 1,600lbs payload)




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Aircraft Comparisons

26

Table A - US Flight Activity - Gulfstream G650 Flights Total Distance (stat miles) Total Time (hrs) Avg Airframe Distance (nm) Avg Airframe Flight Time (hrs)

2014

2015

Difference

%

3,866

3,859

-7

-0.2%

5,566,765

5,052,923

-513,842

-9.2%

685,458

716,667

31,209

4.6%

1,439

1,309

-130

-9.0%

177

185

8

-4.5%

Source: FAA - ETMSC; JETNET

There are currently 131 wholly-owned G650s and one in shared ownership flying. With none fractionally owned, 132 Gulfstream G650 business jets are in operation worldwide. By continent, North America has the largest fleet percentage (52%), followed by Europe (23%) and Asia (19%) for a combined total of 94%. A total of 11 (8.3% of the Gulfstream G650 in operation fleet) are leased, according to JETNET.

US Flight Activity

Table A (top, left) shows virtually no difference in the number of US G650 flights in 2015 versus 2014. However, the distance travelled over those flights decreased -9.2%, while flight hours increased 4.6%.

Table B - Payload & Range

Payload & Range MTOW (lb)

Max Fuel (lb)

Fuel Usage (GPH)

Max Payload (lb)

Avail Payload w/Max Fuel (lb)

Max Fuel Range (nm) 4 Pax

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

Gulfstream G650

99,600

44,200

453

6,500

1,800

7,000

5,934

Global 6000

99,500

44,716

461

5,770

2,804

6,390

5,882

Gulfstream G550

91,000

41,000

402

6,600

2,500

6,820

5,767

Model

Source: Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET; ACC – Aircraft Cost Calculator; B&CA May 2016 Purchase Planning Handbook and Aug. 2015 Operations Planning Guide

Chart A - Cabin Cross-Sections Gulfstream G650

Bombardier Global 6000

Gulfstream G550

The data contained in Table B (left) are published in the B&CA, May 2016 issue but are also sourced from Conklin & de Decker. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. The Gulfstream G650 ‘Available Payload with Maximum Fuel’ at 1,800 pounds is less than the Global 6000 at 2,804 lbs and the G550 at 2,500 lbs of payload capability. In addition, Table B shows the fuel usage by each aircraft in this field of study. The Gulfstream G650 burns less fuel per hour at 453 Gallons per Hour (GPH) compared to the Global 6000 (461GPH), according to data sourced from Aircraft Cost Calculator. The Gulfstream G550 is the most frugal with 402GPH, 11.2% and 12.8% less than the G650 and Global 6000 respectively.

Cabin Cross-Sections

Source: UPCAST JETBOOK

According to Conklin & de Decker, the Gulfstream G650 cabin volume is 2,421 cubic feet and its cabin length is 53.6 ft. The Global 6000 offers less volume (2,002 cu. ft.), and length (48.35ft) while the G550 has the least volume (1,812 cu. ft.) but a length of 50.1ft.


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Chart B - Range Comparison

Chart A, bottom left (courtesy of UPCAST JETBOOK) shows the side-by-side comparisons

Gulfstream G650 Gulfstream G550 Bombardier Global 6000

Range Comparison

As depicted by Chart B (right) and using Dallas, Texas as the origin point, the Gulfstream G650 and G550 show more range coverage than the Global 6000 business jet, as sourced from Aircraft Cost Calculator (ACC). Note: For jets and turboprops, ‘Seats-Full Range’ represents the maximum IFR range of the aircraft at Long-Range Cruise with all passenger seats occupied. ACC assumes NBAA IFR fuel reserve calculation for a 200nm alternate. The lines depicted do not include winds aloft or any other weatherrelated obstacles.

6400.000 Nm 6327.750 Nm 5742.750 Nm

Powerplant Details

As mentioned, the Gulfstream G650 is powered by two RollsRoyce BR700-725A1-12 engines each offering 16,900 lbst. The Global 6000 and G550 are also powered by a pair of Rolls-Royce engines offering 14,750 lbst and 15,385 lbst each, respectively.

Chart C - Cost Per Mile*

Cost Per Mile

Using data published in the May 2016 B&CA Planning and Purchasing Handbook and the August 2016 B&CA Operations Planning Guide, we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2016 edition was $4.90 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published. Note: Fuel price used from this source does not represent an average price for the year. Chart C (right) details ‘Cost per Mile’ and compares the Gulfstream G650 to its competition, factoring direct costs and with each aircraft flying a 6,000nm mission with a 1,600 pound (eight passengers) payload. The Global 6000 shows the highest cost per nautical mile at $6.45 compared to $5.98 and $5.91 respectively for the G550 and G650. (That’s a difference of 8.4% cost per nautical mile in favor of the G650 vs the Global 6000.)

Q $6.45 Q $5.98 Q $5.91

Global 6000 Gulfstream G550 Gulfstream G650 $0.00

$2.00 $4.00

$6.00

$8.00

US $ per nautical mile *6,000 nm Mission costs, 1,600lbs, payload

Chart D - Variable Cost Global 6000

Gulfstream G650 Gulfstream G550 $0



$1,000

US $ per hour

$2,000

Q$2,945 Q $2,821 Q $2,616 $3,000


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Aircraft Comparisons

28

Table C - Aircraft Comparison

month) than either the G650 or the Global 6000 (five per month).

Long Range Speed (kts)

Cabin Volume (cu ft.)

Max P/L w/avail fuel IFR range (nm)

New Vref Price $ US Mil

In-Operation

% For Sale

Average Sold Per month*

Gulfstream G650

488

2,421

5,934

$66.80

132

8.3%

5

Global 6000

471

2,002

5,882

$62.31

199

6.0%

5

Gulfstream G550

459

1,812

5,767

$61.50

529

6.2%

7

Model

Data courtesy of Conklin & de Decker, Orleans, MA, USA; JETNET: Vref; ACC- Aircraft Cost Calculator *Average Full Sale Transactions in the past 12 months; Source: JETNET

Table D - Part 91 & 135 MACRS Schedule MACRS SCHEDULE FOR PART 91 Year Deduction

1

2

3

4

5

6

-

-

20.00 %

32.00 %

19.20 %

11.52 %

11.52 %

5.76 %

-

-

MACRS SCHEDULE FOR PART 135 Year Deduction

1

2

3

4

5

6

7

8

14.29 %

24.49 %

17.49 %

12.49 %

8.93 %

8.92 %

8.93 %

4.46 %

Source: NBAA

Table E - MACRS Depreciation Schedule 2016 Gulfstream G650 - PRIVATE (PART 91) Full Retail Price - Million Year

$66.8 1

2

3

4

5

6

20.00 %

32.00 %

19.2 %

11.5 %

11.5 %

5.8 %

Depreciation ($M)

$13.4

$21.4

$12.8

$7.7

$7.7

$3.8

Depreciation Value ($M)

$53.4

$32.1

$19.2

$11.5

$3.8

$0

Cum. Depreciation ($M)

$13.4

$34.7

$47.6

$55.3

$63.0

$66.8

Full Retail Price - Million

$66.8

Rate (%)

2016 Gulfstream G650 - CHARTER (PART 135) Year

1

2

3

4

5

6

7

8

14.3 %

24.5 %

17.5 %

12.5 %

8.9 %

8.9 %

8.9 %

4.5 %

Depreciation ($M)

$9.55

$16.36

$11.68

$8.34

$5.97

$5.96

$5.97

$2.98

Depreciation Value ($M)

$57.25

$40.89

$29.21

$20.87

$14.90

$8.94

$2.98

$0.00

Cum. Depreciation ($M)

$9.5

$25.9

$37.6

$45.9

$51.9

$57.9

$63.8

$66.8

Rate (%)

Source: Vref

Total Variable Cost

The ‘Total Variable Cost’ illustrated in Chart D is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the G650 computes at $2,821 per hour, which is 4.2% less than the Global 6000 at $2,945 per hour.

The G550 offers the lowest variable cost at $2,616.

Aircraft Comparison Table

Table C (top) contains the new prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and Aircraft Cost Calculator, while the number of

aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET. The Gulfstream G650 has 8.3% of its fleet currently ‘For Sale’ compared with the Global 6000 (6.0%) and the G550 (6.2%). Note, too, the average number of new deliveries and pre-owned transactions (sold) per month for the G550 is higher (seven per

Depreciation Schedule

Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table D, left). In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS. There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period. Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a sixyear recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. Table E (left) depicts an example of using the MACRS schedule for a 2016 Gulfstream G650 business aircraft in private (Part 91) and charter (Part 135) operations over five and sevenyear periods, assuming a new retail value of $66.8m, per Vref Pricing guide. 


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Aircraft Comparisons

30 Productivity Comparisons

The points in Chart F (right) are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors: 1. Range with full payload and available fuel; 2. The long range cruise speed flown to achieve that range; 3. The cabin volume available for passengers and amenities.

A Study of Gulfstream G650 Compared to the Bombardier G6000, and Gulfstream G650ER and G550 Business Jets Market for: G550s (Pink Spheres) G650s (Blue Cubes) G650ER (Salmon Octahedron) Global 6000 (Brown Sphere)

$70M $60M $50M $40M $30M

Asking Prices

Chart E (right), sourced from the Multi-Dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned Gulfstream G650. The current pre-owned market for the Gulfstream G650 aircraft shows a total of 11 aircraft ‘For Sale’ with only five displaying an asking price, thus we have plotted them. We also added the Gulfstream G650ER, G550 and Bombardier Global 6000 into our study group, with asking prices ranging from $17.95m to $68.95m. The equation that we derived from these and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings, if necessary. While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price. Demand and Value are on opposite sides of the same Price axis. Thus, the market for used Gulfstream G650 and others respond to at least four features: Months from first delivery, cabin volume, quantity and asking prices. Of course, the final negotiated price remains to be decided between the seller and buyer before the sale is completed.

Chart E - Value Retention

$20M

Global 6000 6K nm

$10M

The red line is very well correlated with an adjusted R2 of 91.5%.

Chart F - Productivity Comparisons $100.0

Price (Millions)

Asking Prices vs Age, Airframe Total Time and Quantity

$80.0

Global 6000

$60.0

Gulfstream G650

Gulfstream G550

$40.0 $20.0 $0.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

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

Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Gulfstream G650 displays a high level of productivity. The high level of productivity is largely due to the fact that the Gulfstream G650 offers a larger cabin, longer range and lower cost per mile compared to the other study aircraft in our

comparative analysis. However, the Gulfstream G650 ‘Available Payload with Maximum Fuel’ at 1,800 lbs is considerably lower, while the purchase price is higher than that of the Global 6000 and G550 aircraft. Operators should weigh up their mission requirements precisely when picking which option is the best for them.

Summary

Within the preceding paragraphs we have touched

upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance, terminal area performance, and time to climb that might factor in a buying decision, however. The Gulfstream G650 continues to be very popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Gulfstream will continue to do well in the pre-owned markets for the foreseeable future. T


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T H E P E R S O N AL J E T. DEFINED.

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Section Contributors

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

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

Conrad Theisen is Director of Avionics Sales for Elliott Aviation, having been with Elliott since 1996. He started his career as an Avionics Installer and was promoted to Avionics Manager in 2001. In 2009, he led the Customer Service and Project Management teams for all in-house aircraft. He joined the Avionics Sales team in 2012. www.elliottaviation.com

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

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Tips to Planning NextGen Compliancy

Tackling the Roadblocks of Cockpit Upgrades

Aviation Director Andre Fodor relays his experiences of the roadblocks to implementing Service Bulletins and Airworthiness Directives in the

cockpit, with a nod to the NextGen upgrades many airplane operators face in the coming years. What should you expect?

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ruising at FL450 over Central Africa, I’m amazed at the way technology has changed from twenty years ago when I was a newly-minted commercial pilot stationed there, flying relief missions for the UN. Back then, GPS was considered new technology; we had just obtained portable units that mounted in the windshield and provided navigation accuracy that had, until then, been unimaginable. Fast-forward into today. As I sit comfortably, cruising at FL450, the triple IRS and GPS Flight Management System accurately navigates our path. Our FANS 1/A equipped aircraft, using CPDLC transmits our position to ATC, while

TCAS and ADS-B provide superb situational awareness. It’s still a long 11 hours of flying, but the routine is broken up by the occasional text message from family as they wake up at home and are reading the aircraft’s position report on their iPads, or a satellite call from our Director of Maintenance who has been reviewing the automated aircraft maintenance downloads received back in the office. It’s extraordinary how connected we have become in the cockpit. Yet, such connectivity did not come easily, and making sure that all of the avionics will interface seamlessly was a challenge in itself.


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Mandatory Upgrades: Facing the Roadblocks

When we began upgrading the cockpit, our focus was to comply with upcoming airspace requirements in the regions where we fly. For example, operations without ADS-B Out capabilities in Asia will be faced with re-routes, lower assigned altitudes, delays and even denial of access. And CPDLC is needed by those desiring the best routings while flying over the Atlantic. As we acquired the new technologies for the aircraft, however, I learned that interfacing equipment causes roadblocks that require cooperation between different suppliers and precise ‘hand shaking’ of avionics using different data protocols to overcome problems. Thus, getting your aircraft compliant with new technologies for NextGen, for example, will take careful consideration and pre-planning. This is not a short-term project! Cost aside, the roadblocks you will encounter range from technology fitting your aircraft’s avionics suite; parts procurement; downtime and regulatory compliance. Many of these upgrades will require new Letters of Authorization (LOA), which in itself may require many months before issuance. Let me elaborate on some of my experiences… Anticipating some Asia-based operations in one of our large jets, we decided to have ADS-B installed as soon as the relevant Service Bulletin (SB) was published. I called the service center to schedule the upgrade and was intrigued to learn that the first step was to have our serial number included in the SB, which required a fee and research of our aircraft’s systems and wiring by the OEM’s engineering personnel. The timeline for this initial process alone took four months, owing to a backlog. My goal had been to minimize downtime, thus I’d planned to apply the ADS-B SB during a scheduled maintenance inspection. Unfortunately, the avionics manufacturer and the aircraft OEM had not worked out an expeditious process for the equipment upgrade. It would take at least 25 days just to get our software upgraded and returned; a delay representing a grounded airplane with an additional 10% loss in its annual dispatch availability, which was unacceptable to us. Since we were the first aircraft of this model applying this SB, we took the high-ground in trying to help refine the process and bring operational logic to the upgrade. We hoped that these improvements would benefit other operators – but the challenges still remain a reality today. As someone who participates in various advisory boards, I have discussed the importance of beta testing new SBs to assure that they will work in practice and that roadblocks are foreseen and avoided both for the OEM and the operator. In addition, we carefully monitor the issuance of Airworthiness Directives (ADs). I am committed to having a fully compliant aircraft, giving us the assurance that we are operating at the highest level of safety and keeping our airplane’s residual value at its highest. Experience has taught me not to expect that just because an AD has been published there is a process for its application. For

“Experience has taught me not to expect that just because an AD has been published there is a process for its application”

example, just recently, we discovered the issuance of a FADEC AD for a software upgrade in our engine platform. Our Director of Maintenance tried to arrange the logistics for compliance only to learn that there were no parts or tooling available. We would have to wait at least seven months before they would become available. I’m not one to complain, but I want to prepare you for challenges as you forge ahead to upgrade your aircraft for NextGen compliance. As a community, we need to identify the road blocks and work out solutions that will reflect on future upgrades and processes. Engineers need our help to identify how solutions fit in the business of flying people. As pilots and Flight Department Managers, our involvement is important and will benefit the industry for years to come. But we must take responsibility to improve efficiencies that will make maintenance predictable, streamline upgrades, and lower the overall costs. If we’re successful, we’ll improve global fleet reliability, its longevity, and shore up our industry (users and suppliers) to overcome tough times in this ever more complex business that we call Business Aviation. T


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Business Aviation Avionics Upgrades

Five Practical Tips to Keeping Avionics Upgrades Simple There are so many different systems, components and airframes flying today that finding answers to what is the best avionics upgrade for you can be incredibly difficult, notes Conrad Theisen, Elliott Aviation. Here are some pointersâ&#x20AC;Ś

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here are about 30,000 turbine-powered aircraft in the US that have been manufactured during the past 50 years. Within that timeframe there have been many major advances in technology and government regulations. These developments, along with parts obsolescence, all impact the components in the cockpit. Significantly complicating the situation, many of these airplanes have had avionics upgrades over the years, whether to improve safety or to take advantage of new features that became available.

With so many systems being built over the past half-century, the only easy part to understand is that there is no simple, â&#x20AC;&#x2DC;one-size-fits-allâ&#x20AC;&#x2122; solution to the operator looking to upgrade their cockpit avionics. While many operators see value in a complete avionics retrofit, for many that option is neither practical nor cost effective. Thus, understanding your options and knowing the right questions to ask your service provider will be critical to making the right decision for what will be the best solution for your aircraft and mission.


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1. Understand Integrated vs. Non-Integrated Systems

An integrated avionics system is one in which all of the components are made together as a group in one system, including the autopilot system. A nonintegrated avionics system, on the other hand, is one that has newer components working with older ones. This may be displays, transponders, flight management systems or other components. Keep in mind that a non-integrated system is just that: it involves the replacement of components. The new components weren’t originally engineered to pair with your system as one fully-integrated package. To illustrate, imagine trying to hook up a VCR to an HD smart television at home…you’re likely to find the right parts to make it work, but you will not realize its entire value without streaming in HD, or hooking up to a Blu-ray player. Many times, these non-integrated systems include equipment from two or more OEMs. Nonintegrated systems can seem an attractive option because they can initially cost less, but it can be a very expensive and time consuming process to engineer the interface with a new autopilot. Thus you should approach a cockpit upgrade understanding the full extent of any non-integrated system upgrades.

2. Understand Upcoming FAA Regulations

The FAA’s upcoming mandate requiring all aircraft flying in controlled US airspace to be Automatic Dependent Surveillance–Broadcast (ADS-B) compliant draws ever closer. ADS-B Out will essentially eliminate the need for old, unreliable

radar systems by using GPS technology, allowing air traffic controllers to safely reduce separation minimums. While ADS-B Out does not give aircraft operators any direct benefit, ADS-B In will. When choosing an ADS-B Out solution, there are some that offer you ADS-B In benefits of getting graphical traffic and weather either on your primary flight displays or on a Bluetooth connected mobile device. Thus, an operator - while seeking to comply with the FAA’s NextGen mandate ahead of the 2020 deadline—may find it well worth their while to fully-explore the options available to them, along with the cost for any added benefit.

3. Understand Avionics Obsolescence

Similar to consumer technology, avionics technology becomes outdated. New FAA mandates are passed, safer ways of operating aircraft are introduced, better ways of communicating with the ground and other aircraft are available, and better, easier ways of displaying your information are developed. Ways to fly airplanes with the latest avionics are continually evolving to make air transportation safer, easier and more efficient. As with advances in consumer technology, advances in avionics eventually leads to obsolescence. In fact, many of the items that are in airplanes have been driven by consumer technology. Take Cathode Ray Tubes (CRTs) as an example. A CRT is a vacuum tube that uses phosphor to display an image on a screen. Every television manufactured since the 1930s had a CRT display

“While you are not going to see a 100% return on your investment, we have seen major value increases.”




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â&#x20AC;&#x153;Thus, an operator might consider having a full set of spare equipment on hand at their facility in case one of their components fails.â&#x20AC;?

until plasma and LCD (and now LED) displays began to be made. As interest in new televisions began to rise, the demand for CRT declined to the point of obsolescence. During their peak, CRT displays were used as primary flight displays. Now that there is no consumer demand, there are no factories willing to manufacture new CRT displays, making locating a replacement incredibly difficult and expensive. This situation can be particularly concerning for aircraft operators since primary flight displays experience long periods where they present a static image. That constant presentation causes a CRT to experience phosphor burn on its screen. A primary flight display that shows phosphor burn beyond tolerances can essentially ground an airplane until a replacement unit can be located and installed. Thus an operator using obsolete avionics equipment should shop around for the many alternatives, understanding their related benefits.

4. Understand Yearly Avionics Maintenance Costs

With factors such as meeting mandates, upgrading software and keeping older technology from failing, it can be very expensive to maintain an aging avionics system. In many cases, it can cost about $30,000 per year. If you run into an issue where one of your more expensive components (a radar, for example) malfunctions, the cost of repair or replacement could be more than $50,000. OEMs do offer avionics programs that cover a portion of yearly avionics maintenance costs, for a fee, which may or may not suit your own operating needs. You do have an alternative to signing up for an OEM avionics program, however: A good

aftermarket avionics supplier will give you trade-in credit on old parts that are in working order, potentially making for an extremely competitive price on replacement equipment purchased from them. With the success of the Garmin G1000 system as a retrofit for older aircraft panels, for example, there is now a thriving market for aftermarket equipment; particularly for high-fail items such as tube-driven primary flight displays. Thus, an operator might consider having a full set of spare equipment on hand at their facility in case one of their components fails.

5. Understand the Value an Upgrade Can Bring

Maintaining your current avionics will not increase aircraft value, but upgrading to a fully integrated avionics system can increase the value of your airplane when it comes time to sell. While you are not going to see a 100% return on your investment, we have seen major value increases. For example, having installed over 200 Garmin G1000 systems in King Airs, Elliott Aviation has seen increases in value to a retrofitted aircraft of close to an 80% return on the investment.

Whatâ&#x20AC;&#x2122;s Best for You?

Understanding what to do when faced with the decision of upgrading your avionics can be tough. Ultimately, you have to make the decision that will be best for you. Do your research, talk to reputable shops and talk to other operators. Never feel pressured into making a decision without fully understanding all of your available options. Weigh the pros and cons and when you come to your conclusion, you will know that you made the right call! T


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ADS-B Compliance

There’s No Time Like the Present…


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ffective January 1, 2020 in the US and June 7, 2020 in Europe, operators of aircraft that currently require a ModeC or Mode-S transponder must be ADS-B compliant. Many countries in Southeast Asia and the entire country of Australia already require aircraft to be outfitted with ADS-B Out capabilities. The capacity of avionics installation facilities, engineering firms and certification agencies to complete ADS-B Out installations theoretically has been surpassed. To gauge the seriousness of the situation, let us draw a comparison with aircraft in the US that were affected by RVSM compliance in 2005. •

Approximately 6,500 aircraft required RVSM upgrades… o Over the three-year timeframe between enactment of the rule and its compliance date, approximately 180 aircraft were needing to be equipped per month. o Since a majority of aircraft were slow to respond, many operators were forced to fly below 29,000 feet until they were equipped, since many upgrade shops were fully booked. Approximately 18,500 aircraft require ADS-B upgrades… o At the same 180 monthly aircraft upgrade rate we outlined for RVSM above, ADS-B installations should have started in early 2011. o Doubling the installations per month moves the needed start date only to late 2015. o Consequently, a substantial backlog is building, and operators who wait until nearer the deadline will find themselves significantly hampered in their flight operations for many months after the 2020 deadline.

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The clock keeps ticking towards 2020, and time is not on the side of thousands of aircraft operators worldwide that have not performed the ADS-B upgrade, warns Brian Wilson…

“If your aircraft is not in compliance by the deadline, you will be grounded.”

Although EASA delayed its mandate deadline in 2014, neither the FAA nor EASA has shown any sign of wavering from their proposed deadlines. Instead their messages are clear: “If your aircraft is not in compliance by the deadline, you will be grounded.” If you are one of the many operators yet to respond to the ADS-B mandate, you need to familiarize yourself immediately with what your aircraft needs to comply with the standard. • •

Research which shops are suitable to support your needs and have experience with ADS-B installations Contact an appropriate avionics facility for answers to your questions and for a quote.




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Basics for Your NextGen Upgrade

“It’s important to note that up to 20% of early adopters have failed the flight test evaluation.”

EXTENDED SQUITTER UNIT

Step 1: To begin with, you will need to upgrade your Flight Management System (FMS) to one that supports Satellite-Based Augmentation Systems (SBAS). North America has the Wide Area Augmentation System (WAAS) while Europe uses the European Geostationary Navigation Overlay Service (EGNOS). The FMS computes the aircraft position, desired track, airspeed and altitude. Other aircraft configurations use a remote GPS sensor that will require the same upgrade path for SBAS. In both cases the antenna will probably need to be changed, but most are “Form—Fit” replacements that allow you to use the same cabling and require no sheet metal work. Step 2: Next you will need a way to “Broadcast” this information down to the ground stations. If your aircraft currently flies above FL180 over the US, or anywhere internationally, you will need a Mode-S transponder with Extended Squitter (ES). The equipment must meet the requirements of Technical Standard Order TSO-C166b. Aircraft flying below FL180 can use a dedicated Universal Access Transceiver (UAT). The UAT equipment must meet the requirements of TSOC154c. This standalone option allows you to keep your existing Mode-C or Mode-S transponder.

STCs and Field Approvals

The downtime to perform ADS-B Out upgrades is not significant, and utilizing equipment exchange programs is recommended. There will be minor wiring modifications that require removal of some of the interior, so planning the upgrade during a maintenance inspection is a great idea. In most cases the upgrades will be performed under a Supplemental Type Certificate (STC), although the FAA is allowing Field Approvals under very restrictive rules. In this scenario, if the ADS-B transmitter and GPS source in your aircraft match perfectly with a previously STC’d configuration, a field approval is obtainable even if your aircraft model is of a different type. However, any wiring changes must also match the STC configuration, and you will need approval from the STC holder.

Obtaining Certification

Once the installation has been accomplished, the regulations require both a ground and flight test of the system. It’s important to note that up to 20% of early adopters have failed the flight test evaluation. Position accuracy and Integrity Performance errors are prone to system latency issues. Latency is the difference from the time when the system determines the aircraft’s geometric position and the time it takes for a ground receiver to process that 


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AVIDYNE ADS-B IN RECEIVER

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to fly a north/south course that crosses a known waypoint and an east/west course that intercepts the same waypoint. All these flight profile characteristics should be explained and covered by the installation facility prior to the flight. Operators can obtain their own copy of AC20165B covering both the installation, airworthiness approval process and testing parameters for ADS-B Out systems.

When ADS-B In Makes Sense

“Operators should start to plan for upgrades in the next year or two to avoid facing installation delays caused by facility capacity issues...”

information. Research has found that installing ADSB equipment that meets the TSOs listed above vastly reduces the failure rate. A thorough ground test should be performed and any resulting discrepancies corrected before coordinating the flight test with the local regulatory agency. Around one hour should be allotted for the flight test, which will require the aircraft to fly within the ADS-B coverage area. The majority of flight tests will be those of previously certified systems—one that already falls under a TC, STC or AML. Operators in this category should follow the standard process for requesting a flight test followed by a request to receive the Aircraft Operation Compliance Report (ACR) from the regulatory agency. Systems not already approved will fall under the First-of-Kind category and require a more regimented coordination with the FAA. The agency will require a 48- to 72-hour notice period before the actual flight, and you will need to fill out a flight test request sheet. It is recommended that you copy any other District offices you are working with to obtain the certification. Flight test data are usually provided to the operator within 48 hours after the flight. The flight profile requires flying the aircraft at multiple altitudes and performing at least two left and two right 360-degree turns at bank angles up to 30 degrees. Climb and descent speeds as well as durations are also defined. To confirm position accuracy, the aircraft will have

Most of us are aware of the touted benefits of ADS-B Out, including more efficient routing; reduced congestion and fuel consumption; non-reliance on decades-old Radar technology; enhanced safety and pilot situational awareness; and reduction of risks associated with runway incursions (crew are able to see ground-equipped vehicles on the airport surface). The greater accuracy and information connectivity of ADS-B enable such benefits. For operators of aircraft that have neither a Traffic Collison Avoidance System (TCAS) nor a Traffic Advisory System (TAS), ADS-B In provides additional functionality provided the aircraft is fitted with an appropriate ADS-B In receiver and cockpit display. In addition to other aircraft and ATC controllers seeing your ADS-B Out ‘broadcasts’, you will see other aircraft in the vicinity on your cockpit display. For the minimal investment of an ADS-B In receiver and compatible display, US-based operators receive Traffic Information Service-Broadcast (TIS-B) and Flight Information Service-Broadcast (FIS-B) information at no cost. Thus, the operator gains valuable situational awareness and safety.

In Summary

Operators should start to plan for upgrades in the next year or two to avoid facing installation delays caused by facility capacity issues as January 1, 2020 draws near. ADS-B upgrades will become a commodity based on supply and demand, thereby allowing shops to charge a premium for late adopters. There also could be a backlog for required equipment, especially the Extended Squitter (ES) transponders. One manufacturer estimates over 25,000 of their units will need to be upgraded. Both manufacturers and installation facilities are offering early adopters financial incentives for ADS-B packages that are scheduled in the near future. Even the FAA is chipping in with a $500 rebate (although that is for single engine operators, and specifics are still forthcoming). Right now, in the current buyer’s market, operators can save money and start enjoying the immediate benefits of ADS-B. Consider using operational efficiencies and incentives to offset the costs of adding ADS-B In functionality for your aircraft. Getting a good deal and having the peace of mind that you are flying with the latest technology are surely reasons to act now! T


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From Connectivity to Entertainment Keeping Up With Trends to Enhance the Passenger Experience Aircraft Connectivity is no longer a novelty, notes Brian Wilson. So how do you maximise passenger satisfaction?

raditional cable and satellite providers continue to lose subscribers to streaming service companies. Today’s consumer is opting for cheaper, on-demand, on-line, streaming services that deliver content when they want and where they want it – including in the back of the aircraft… The industry term for this is ‘cord-cutting’, and streaming is doing to traditional media services what Wi-Fi has already done to the wired Local Area Network (LAN). Content streaming is now ready to board your aircraft and entertain your passengers with a new ‘visual’ experience. Connectivity has been the buzz-word for the past several years, but it’s become an accepted standard; it is no longer a differentiator! Let us take a few quick moments to familiarize ourselves with normal video distribution on board many of today’s business aircraft: a single monitor on the forward, right-hand bulkhead and one on

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the aft. The media content is usually a single or dual DVD player and a moving map. This configuration allows for a proper viewing experience for 2-3 people while everyone else has to stare over the top of another passenger or be content with an acute viewing angle to see the screen. Either way, if you’re not one of the select people with the controls, you’re going to be watching what someone else chooses or just defer back to the Wi-Fi to surf the web… Now that same Wi-Fi experience can be enhanced by streaming movies, TV shows, news, weather and a moving map to personal electronic devices (PEDs) whether a laptop, tablet or smartphone. Content can also be viewed on existing cabin monitors and be integrated directly with many compatible Cabin Management Systems (CMS). To obtain this level of connectivity, the media server is installed aboard the aircraft with an




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“Offering a new experience, however – one that should absorb passenger attention for longer – results in less time surfing the web. ”

internal memory storage capable of holding hundreds of TV shows and movies. Thus, watching a show is as easy as: • • • • •

Switching your device into Airplane mode; Connecting to the Wi-Fi; Opening your web browser, which will display the splash page; Select the IFE tile and download the App stored on the server; Open the App and begin to enjoy your viewing experience!

News feeds and weather are downloaded via a Terrestrial Modem when the aircraft is on the ground. Having the content pre-loaded on the media server and utilizing the modem means that no data will be consumed. In contrast, even if you were able to stream content from off the aircraft through your internet connection, this would result in connectivity service charges of $250-$300 per hour. There’s also a compelling selling-point for those chartering their aircraft that leverages the cost of installing the media server against the possibility that passengers will use less data consumption. Think of it this way: Onboard amenities could include complimentary Wi-Fi with ancillary costs

absorbed by the operator. The trend seems clear: passengers are using more data; data are getting more expensive; and charter operators seem reluctant to be the first company to charge consumption to the client. Offering a new experience, however – one that should absorb passenger attention for longer – results in less time surfing the web.

Getting Fresh Content

Even though the media server can hold hundreds of movies and TV shows, once you spread those out over ten genre groups the need for fresh content will arise often. The movie studios hold the rights to their movies, and to achieve their approval to use the content costs lots of money. That’s why a lot of the first generation media servers came without any loaded content; they expected the customer to duplicate their movies and load the content themselves. I can attest through my own experience that none of these products were successful, and they fell victim to the next generation of pre-loaded devices. We live in a world where people have very busy lives and are willing to pay for convenience. Some of the next-generation media suppliers seem to avoid creating ways to make the lives of


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their customers easier. They offer ‘dual’ hard drive solutions that require the client to access the unit onboard and swap out their hard-drive with one loaded with new content. The consumer has to repeat this task every time they want a new catalog. Another vendor offers a cloud-based media store that you can access via a customer portal (i.e., manually downloading the content to a USB storage device whenever you want it). I believe the winner in this category requires the operator to do absolutely nothing but park their aircraft and leave the power turned on. That’s because the loading is done automatically via a Wi-Fi bridge at participating FBOs, or from your own hangar. The Wi-Fi on board the aircraft connects to the corresponding FBO or hangar Wi-Fi and ‘Sync Happens’.

Customize That Dashboard

Charter and Fractional providers have a captive audience when passengers fly on their aircraft. If you charter your aircraft, or transport prospective customers often, why not take advantage of this to showcase the latest promotions and news about your company? Unlike push notifications that could annoy your passengers, this information would have to

be selected by them from the IFE landing page. As I mentioned above, one of the steps to viewing the content is to download the IFE application. This procedure only has to be done once for each device, and almost anyone who has a smartphone or tablet is familiar with this simple task. The landing page could be designed to look and feel as if your company created this experience exclusively for your passengers/clients by incorporating your own brand, color palette and logo. The information you provide could be refreshed every time the aircraft lands. Let me explain. • • • •

First, you must select a media server that incorporates a Terrestrial Modem (TM); The TM will then connect to any 3G/4G connection while on the ground; Custom content is loaded from your company’s secure server; The content can be Blogs, Videos, PDF and/or other files.

The technology that allows this to happen is called RSS feed. RSS stands for Rich Site Summary, but is often referred to as Really Simple Syndication because it allows publishers to ‘syndicate’ data automatically.

“The landing page could be designed to look and feel as if your company created this experience exclusively for your passengers/ clients...”




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“This latest application has done to embedded handsets onboard the aircraft what cell phones have done to phone receivers in your home... ”

Your passengers don’t have to search for information about your company; it’s all delivered directly to them. The best part is they will see what you want them to see!

Enriching the Passenger Experience

Imagine your passengers settling into their seats and connecting to one Wi-Fi source for all their necessities during the flight. No matter where the aircraft is flying in the world, they’re connected to the best internet-based solution available. After reviewing emails, sending documents and researching work-related subjects on the internet, it’s time to relax and watch a new movie release or TV show. A quick review of the moving map and time-to-destination helps avoid choosing a movie with a duration longer than the remaining flight time. Watching a movie on a tablet may suffice, but the passenger may select a monitor better suited for their viewing pleasure. The final touch enables the passenger to lower the ambient lighting and adjust the cabin temperature, thereby giving the passenger the ultimate passenger experience… with every detail achieved via a single application! This latest application has done to embedded handsets onboard the aircraft what cell phones have done to phone receivers in your home; it’s keeping them in the cradle. Passengers can use their own smartphones to make calls and send text

messages to and from the aircraft. These text-andtalk applications allow you to use your own number, calling lists and caller ID settings just like you were on the ground. Technology advances have reduced existing latency times—giving your passengers a clearer, crisper voice connection at 35,000 feet. The program is software-based, so no new hardware has to be installed. The operator merely purchases a software key and chooses a voice plan to cover the minutes. Each phone requires a loading of the text and talk application and a one-time registration on the ground prior to the flight. Just 7-8 years ago charter and fractional companies were reluctant to install connectivity onboard their fleets. There was the usual pushback from finance who wanted to know, “How are we going to pay for this?” I believe it’s safe to say for those companies that were one of the last to join the Wi-Fi craze they wish they would have done it sooner. Fast-forward to the present day and I am hearing the same financial concerns, although a few companies have already moved aggressively. For those companies that are hesitant to commit, or those who charter their aircraft via a management program, don’t underestimate the need to be entertained. For those companies that are hesitant, they need to understand that the paradigm shift from connectivity to entertainment is here! T


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Aircraft Connectivity (Part 1) Introduction & Overview

AIRCRAFT CONNECT EXTERNAL Satellites

AIRCRAFT CONNECT INTERNAL

Ground Facilities

External Transfer Platforms

Service Providers

Onboard Platforms

Onboard Services

Trip Plan (Sub-tier)

Data (Sub-tier)

Convert Onboard Platforms

Satellite & Ground Services

Trip Plan & Data Services

Onboard Convert Services

HOW AN AIRCRAFT CONNECTS TO THE OUTSIDE WORLD AND TO ITS ONBOARD SYSTEMS

Audio & Display Platforms

Helping you understand the technology, integration and advances of aircraft

avionics and equipage, Ken Elliott begins a five-part series on aircraft connectivity, starting with an introduction and overview of this vast subject.

or the last several years, designers, developers, providers and integrators have each contributed enormously to a revolution in aircraft connectivity, both internal to the fuselage and externally to destinations throughout the world. We are: • Less reliant on voice communication; • More able to monitor other aircraft and receive detailed performance of our own machine; and • We can operate offices in the sky using high speed data, watch HD videos, track real time movement over distant oceans and send social media messages to our loved ones from all corners of the planet. Over the next five articles, AvBuyer will review how we accomplish these marvels of our time, addressing both Networks and Providers, and the services they offer. We will cover equipment, integration and options available to business aircraft operators. Above all, we’ll attempt to demonstrate the wider aircraft connectivity of today and tomorrow, enabling operators to see the benefits of integrated systems and make wise economic choices for their investments going forward.

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Note that connectivity is used in place of communication. Communication, by definition, implies voice and data streams but connectivity goes much further, as will be revealed.

A High Level Introduction & Overview

An aircraft connects externally to the outside world and internally to its onboard systems. The complexity of this connectivity is so vast that Figure 1 (above) can only represent a simplistic overview. This overall series, however, will mirror this functional block representation and the sub-sections of this introduction will do the same.

Satellite Networks

Ground-based facilities are adequate for most external connectivity, providing an aircraft is well within range, and the technology bandwidth and frequency are appropriate for the task. More significantly satellite networks have evolved to replace the old High Frequency (HF) services, filling in the oceanic and polar airspaces. They also supplant some of the ground VHF-based services and are on the way to doing more.




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Figure 2: Most of the Satellite Providers

54 Figure 3: Sub-Tier Trip Plan Service Providers

Aviation today is very dependent on satellites that provide voice, text, data, internet and video services to fleets of aircraft or single operators via Service Providers. Inmarsat offers operator, passenger and safety services via its legacy Aero, Swift 64 and Broadband programs. During 2015, it commenced Ka Band platform coverage with the launch of a new range of satellites, and in partnership with Cisco, for gateway applications, offering 50Mb per second. Ka band, branded as Global Express (Aviation), uses Inmarsat I-5 supplied satellites, of which there will be three, while L band is available from three earlier generation I-4 satellites, offering 3G service, and five legacy I-3 satellites also providing L band service. Iridium also offers operator, passenger and safety services from its 66 low earth orbit (LEO) satellites. It enables broadband services for laptops and tablets. In 2016, as new satellites come on line, Iridium will begin to offer faster broadband with speeds of 1.4Mb per second. Both satellite networks offer smartphone capability, including optimized applications that may be used on board the business aircraft. A third network, ViaSat, offers Business Aviation in-flight Ka and Ku band internet. Services include video teleconferencing and this year speeds will double and coverage will increase up to seven times using a new second satellite. ViaSat has made significant inroads into Business Aviation, where existing aircraft OEM standardized platforms are not the only option. Their recent collaboration with Jet Aviation, on a 2016 Global Express program, is an example of this development.

Ground-Based Facilities

Figure 4: Sub-Tier Data Service Providers (inc. flight tracking)

Still very much a part of the aviation infrastructure, ground-based services include voice, text and data, mostly over VHF. Aircraft communicate with Air Traffic Control Centers (ATCC), Terminal Radar Approach Controllers (TRACONs), and Air Route Control Centers (ARCC). Very High Frequency (VHF) sits further along in the frequency spectrum than its longer range companion, HF. It is, primarily, a continental land-based communication system. VHF, as line-of-sight communication, has limited range. It uses a carrier modulated at much lower frequency rates with voice or data. Still using VHF, but as a short-range capability, data services are also provided in different regions throughout the world. VDL Mode 2 (VDLM2), used for digital datalink, is 10 times faster than traditional VHF analogue datalink (VDL Mode 0). Traditional aircraft equipment can be replaced or upgraded to include VDLM2 capability. VDLM2 supports the Controller Pilot DataLink Communications (CPDLC) requirement of Data Comm and is required for European and ICAO mandates. For the US, initial applications of datalink use both VDLM2 and allow continued use of VDL Mode 0. These form part of the overall adoption of FANS 1/A, extending to include North Atlantic Tracks System (NATS) that eventually will evolve into a wider data capability under the banner of ATN-B2. At a lower frequency and using repeater ground


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Figure 5: Services Offered by Satellite Providers

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stations, polar coverage of data can still be served by High Frequency Data Link (HFDL). Although Iridium satellite polar coverage (part of FANS over Iridium â&#x20AC;&#x201C; FOI) is now available, HFDL remains an integral capability in the FANS 1/A toolkit. Data shared between users includes operational, weather and engine reporting. Clearances, runway conditions and text messages are part of ATC data that will increase under NextGen/SES2+/ICAO Block programs as they move away from voice methods of communication.

Service Providers

While satellite networks and ground facilities provide the link between users, service providers offer the method to use those links. Providers support multiple applications and aggressively compete for the business (see Figure 2 top left). Ground facility providers are primarily ARINC (a division of Rockwell Collins) and SITA (a consortium owned by European airlines). Other VHF datalink services include ADCC China, DECEA Brazil, AVICOM Japan and Aero Thai. These service providers and others that specialize at a sub-tier level, offer a potpourri of satellite- and groundbased tools for pilots and operators. Most services involving the use of data can be grouped into two primary categories. One is trip plan and the other flight data, and these include aircraft performance and flight tracking. Beyond the satellite and ground facility service providers are sub-tier suppliers of specialized data tools that support the provider platforms. These data tools, however, are also offered or bundled by the primary service providers themselves. Figures 3 and 4 (left) provide comprehensive but not complete groupings of these sub-tier providers. Bear in mind that all service providers have multiple capabilities. It would therefore be prudent to contact each directly, including researching their websites. Lists in this article show where service providers tend to focus their resources. Within each data grouping are the types of services being offered. Figures 5 and 6 (right) begin with services provided from satellite and ground facility providers. Figures 7 and 8 (right & overleaf) represent the specialized operation services from sub-tier service providers. These tools can be tabled under two major groups, trip planning and flight data. It is worth mentioning that included in the services provided are several additional tools. These are acceleration and filtering of data, mobile applications, medical aids and member services such as NBAA Air Traffic Services (NBAA ATS).

Figure 6: Services Provided by Ground Facility Providers

Figure 7: Examples of Trip Planning Tools

Connecting Onboard with External Transfer Platforms

Think of external transfer platforms as the means of moving internal voice and digital data to satellite networks and ground facilities, via service providers. Also these platforms receive and process data from outside. These platforms are on-board aircraft equipment transforming and transferring external and internal derived




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Figure 8: Examples of Flight Data Tools

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electronic information, in and out of the aircraft. External transfer platforms include complex Satcom and VHF equipment from avionics suppliers.

Connecting Internally via Onboard Platforms

External transfer platforms process and pass on voice, video and data to onboard cabin system platforms having topical brand names such as Smart Link, Venue and Ovation Select.

Connecting Internally with Onboard Services

Figure 9: Suppliers with a Far Reach in the Industry Note: Rockwell Collins now has both its long-standing, Inmarsat-based, and the recently acquired ICG Iridium-based range of equipment. Honeywell already has Inmarsat- and Iridium-based equipment (the Iridium Aspire originating from ICG in 2013).

From video to text messages, passenger address to lighting control, aircraft onboard services are as broad in their ability to control anything in the cabin as they are complex. Subsequent articles in this series will address these and other topics in much greater detail, informing readers of capabilities and choices available to operators. Fully integrated platforms provide many services throughout both the cockpit and the cabin. Figures 10 (bottom left) and 11 (top, right) offer just some of the platforms and associated services. One such internal service on Figure 11 – ‘Provider Services’ – offers a wealth of information to both the cabin and the cockpit, including weather, moving maps, flight plans and company message transfer.

Converting Onboard

Figure 10: Aircraft Onboard Platforms

Think of these onboard platforms as a means of transposing physical things into digital things. Later these digital things are transformed into terabytes of data sent onward, via external transfer platforms, over superhighways forming an oceanic-capable internet. Deep within an aircraft are sensors and converters that provide masses of data to both onboard and external transfer platforms. Most sensors are an integral part of the aircraft build, unless part of an aftermarket modification. On the other hand, many converters are added to facilitate the conversion of one kind of data to another. Examples include analogue-to-digital conversions and router-to-Wi-Fi connections, used when complex cockpit or cabin systems are added. Aircraft manufacturers with the luxury of designing fully integrated avionics from scratch, can largely avoid conversion of signals and data. So expect to see conversion more in aftermarket solutions. Note that proposals from MROs focusing on aftermarket upgrades will often include conversion equipment, so do not be surprised when it appears on bids and proposals. A common and emerging need for both sensors and converters is to enable the transfer of aircraft performance data to on-board tablets and devices or to external transfer systems for sending real-time data to the ground.

Displaying Onboard

Specifically, displaying of data and video onboard aircraft has become something of a separate area of connectivity. We listen to voice either in real time or animated, but the reliance on sound is becoming less for flight crews.


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Figure 12: Some Aircraft Converter Supplies

With broadband, display methods are critical to passengers. Data as imagery, and data as visual script, are presented to flight crews on primary and multifunction flight displays, back up displays, FMS control display units, electronic flight bags, tablets and so many other forms of image presentation, such as HUDs with EVS. Data as imagery, visual script and video are presented to passengers on seat controls, seat monitors, group monitors and via cabin Wi-Fi on tablets, smart phones and other devices. There is even now the product that covers sidewalls and bulkheads, thereby allowing full size display of images for the benefit (or possibly dread) of passengers. It’s worth noting that many displays are hosted and branded by big name avionics manufacturers, forming subparts of complex systems, but the displays themselves are often made by other specialized suppliers, such as Barco.

Figure 13: Conversion Methods Onboard Aircraft Today

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Figure 11: Aircraft Onboard Services

A Future Vision

Aircraft devices connect and convert physical things into digital things. Onboard platforms scale and combine digital things, as data streams, to external reaching platforms. Later, terabytes of data are transmitted externally. As aviation integrates into the Internet of Things (IoT) with its vast future ‘data lakes’, the road ahead offers endless possibilities, restricted only by the availability of storage and transfer technology, and the security of data, protected from both intentional and unintended consequences.

In 2016, Bombardier launched its new Inmarsat-based WAVE (Wireless Access Virtually Everywhere). With such smart branding alone, the smell of future possibilities already permeates the airspace in which we fly. T Are you looking for more articles on Avionics? Visit www.avbuyer.com/articles/category/businessaviation-avionics

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(Part 2) Providers & Service

Helping you understand the technology, integration and advances of

aircraft avionics and equipage, Ken Elliott continues a five-part series on aircraft connectivity with a review of providers and service…

Figure 1: Outline of Aircraft External Communications Connectivity n our introduction to aircraft connectivity, we began by showing how aircraft connect inbound and outbound to the external aviation community. For aircraft, connectivity may mean data associated with communication, navigation or surveillance. For example, the data shared with GPS positioning as navigation and ADS for surveillance can be considered as connectivity. For the purpose of this series we’ll focus on communication, with both the voice and data that it carries. So keep in mind that, in reality, total aircraft connectivity is a very broad subject. Service providers are the link between networks and customers. They may be offering turnkey solutions to operators as primary providers or specialized solutions as secondary. The networks are actually platforms that connect sources to destinations. For example, a satellite receives data from a source and relays the information to a destination. To understand why platforms such as satellites and ground facilities are necessary, we begin with a quick physics review of wavelength and frequency.

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Basic Physics of Aircraft Communication

The electromagnetic spectrum (EM) is a fascinating area of physics that forms the background for many aspects of our lives. Consisting of an electric component and - at 90° - a magnetic component, a sine wave oscillates between positive and negative cycles so many times per second. The rate of oscillation is termed frequency and the higher the frequency, the more cycles of EM energy occur within each second of time. Imagine a fixed oscillation of 125m cycles per second… that is a Very High Frequency (VHF) waveform oscillating either side of a zero energy level 125m times during one second, or Mega Hertz (MHz). By modulating the peaks of this wave (defined as the carrier wave) at the rate of our speech, 85–255 cycles per second, messages can be sent over long distances. ATC towers and avionics equipment create these carrier waves, modulate them with the voice from the pilot’s microphone and then transmit them over the airspace. Once received by antennas placed on each aircraft, onboard avionics  remove the modulation from the carrier and


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Figure 2: Amplitude Modulation

Figure 3: Frequency Modulation

process the signal into audio for the pilot’s headset. Equally, superimposed modulation frequencies can be data (images, text, etc.) for other onboard display devices. This method of communicating is termed Amplitude Modulation (AM, see Figure 2, left). Another method, known as Frequency Modulation (FM, see Figure 2, bottom left), varies the whole carrier waveform at a rate that produces audio or data. The range of carrier frequencies that we call VHF are only capable of radiating as line of sight, so VHF signals do not follow the Earth’s curvature. Therefore they have limited range but still project information much further than we can ‘throw our voices’. Other frequency ranges behave differently: High Frequency (HF) signals, which cycles at a rate of 2-30 MHz, do follow the Earth’s curvature. Despite the fact HF has served communications on long haul flights for many years, it is subject to all sorts of signal variation. The ionosphere, impervious to HF signals, drifts up and down in relation to the Earth’s surface. This characteristic causes the deflected HF radiated beam to be shifted as it circumvents the planet due to the whimsical activity of the Sun, causing the HF frequency to drift around and the demodulated signal to fade in and out of reception. Some time ago satellites became the answer to longrange communication, additionally offering the capability to handle significant amounts of data at very high speeds. Some satellite networks, such as Iridium, use a greater number of satellites (66) in low earth orbits to provide worldwide coverage throughout the entire globe. Others, such as those provided by Inmarsat, use geostationary satellites fixed in space and offer coverage to within about 15 degrees latitude of the North and South Poles. Using different ground and airborne equipment, ATC and aircraft transmit carrier waves, modulated by voice and data, to satellites operating at frequencies between 1 and 40 Giga Hertz (GHz). More or less, this translates to communication rates a million times faster than existing terrestrial rates.

Communication Networks and Platforms

There are several major and minor satellite networks offering platforms as a means of bi-directional international connectivity between ATC, entertainment and information services for the aircraft customers they serve, Figure 5, opposite. Meanwhile, there are three major (and several partner) ground facility networks offering platforms as a means of bi-directional regional connectivity between ATC, data services and aircraft. Also, multiple aircraft communicate between themselves on similar frequencies and modes to those used by ground stations. The three major ground based network providers are Rockwell Collins ARINC using ‘Direct’ services for Business Aviation, Honeywell’s Global Data Center (GDC) and SITA. For these ground-based communications, SITA and ARINC work together with respect to VHF and HF frequency allocation and usage. These major network providers use regional partners to help bring services online and then operate regional


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ground facilities. Beside satellite communication, and as voice communication transitions into digital data, High Frequency DataLink (HFDL) and VHF DataLink Mode 2 (VDLM2) are taking over as the preferred technology platforms for relaying instructions and messages across the planet. In 2016, SmartSky Networks plans to emerge as a major phone and 4G LTE wireless network provider for aircraft operators. SmartSky, teaming with Satcom Direct as the service provider, will offer service above 10,000ft using a terrestrial network of air-to-ground (ATG) cell towers, initially within the US, but with an eye on international coverage later. GoGo Biz is an existing ATG provider, in addition to its Iridium services. It offers US coverage and broadband capability for Business and General Aviation aircraft.

Satellite Network Services for Aviation •

• • • • • •

Eutelsat: In-flight Ka Band connectivity partnered with ViaSat. Iridium: Operational, passenger and safety services from cockpit to cabin. Specific programs for Business Aviation. Inmarsat: Operational, passenger and safety services from cockpit to cabin. Specific programs for Business Aviation. Intelsat: C and Ku Band broadband. SES: Full range of services supporting cockpit to cabin requirements. Telesat: C and Ku Band broadband, with Panasonic and ViaSat. Thuraya: L Band and mobile communications services. ViaSat: Ku and Ka Band broadband. XTAR: X Band services mainly for government use.

Service Providers

While Rockwell’s ARINC, Honeywell’s GDC and SITA are, in themselves, major ground and space-based service providers, others have emerged to offer a broad range of services. Several providers focus on niche services. For example, ViaSat, with its fast broadband video/internet service, operates a satellite of its own and leases bandwidth from others. This company works directly with business jet operators via its Yonder program. Remarkably, ViaSat provides the satellite, aircraft avionics and ground network

Figure 4: Aircraft Communication Connectivity

Figure 5: Satellite Network Platforms

for its fast and reliable internet broadband services broadcast via Ku and Ka band carrier frequencies. Voice and data may be routed through outside service providers such as Satcom Direct. While some companies own the satellites and provide a partial service, others just offer turnkey solutions. Companies like Rockwell Collins and Honeywell that do not own satellites engage with operators on many levels, providing the avionics and acting as a service provider. They utilize satellite networks owned and operated by established space technolo-

gy companies such as Inmarsat or Iridium. For simplicity, service providers may be split into two main groups. The first group - focused on trip planning - concentrates on providing a variety of services to the aircraft and its crew, both prior to flight and in real time during the flight. The second group covers flight data that address aircraft performance, location, route tracking and recording. In our previous article we listed no fewer than 18 trip planning service providers. Some of these are well known

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Figure 6: Comprehensive Network Platforms for DataLink

By using high speeds and broadbands, they relay images and video using the internet and private intranets.

Ground Facility Services • Apart from the traditional Aircraft Communication & Addressing System (ACARS) service to air carriers, ground facilities provide analogue and digital terminal information (ATIS & D-ATIS). Further services include ADS-B and emergency location over land. • Ground facility operating platforms include CPDLC and HFDL for continental pre-departure clearance and messaging, while providing terminal weather, alerts and other important information to pilots.

Figure 7: Popular Service Providers and their Websites

to all, such as Universal and Boeing’s Jeppesen, offering a wide array of trip services and more. Others may be regionally specific or target their services to a particular operator group. In that article we also listed nine flight data service providers, many centered on the emerging flight tracking market. Additional providers are emerging. By visiting their competitive websites you may see for yourself the variety and extent of services on offer.

Services

Providers offer different levels of service that may be contracted. Following is an

attempt at a comprehensive summary of services by satellite, ground facilities, trip plan, flight data and a few useful tools. Satellite Services • When used for communication, satellites act as the bridge to ADS-C and conduit for voice, text, oceanic clearance & delivery and FANS. • When used for information, they provide a link to weather, flight tracking, asset monitoring and emergency locating, and allow a broad avenue for streams of useful data.

Trip Plan Services • Pilots may access a host of information from trip planning services, such as airport data, concierge and fuel arrangements, flight plans, weather and air traffic data. • Complete manuals, charts and databases can be accessed, updated or shared and notices received, all in real time. • Collaborative Decision Making (CDM) and datalink applications may also be available. Flight Data Services • For data needs, recent concern over flight tracking/monitoring triggered a revolution across this technology sector. However other data have been collected, recorded and transmitted for decades. These include; Out, Off, On, In information, maintenance, safety and overall aircraft performance. Health & usage monitoring (HUMS) and engine trend monitoring (ETM) are typical examples of performance data. • Specific to the recording of data, modern aircraft recorders (including Quick Access Recorders, i.e., QARs) monitor voice and store hundreds of aircraft flight parameters. Tools • Data tools are designed to optimize data communication. These include acceleration and data filtering. There


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are other tools, available for mobile applications and tools for accessing services, such as the NBAA’s ATS information as well as certain medical aids provided by commercial firms.

Additional Summary Comments

Satellite communication (satcom) has three components: Ground Earth Station - GES (using parabolic dishes); Space Segment (satellite); Air Earth Station – AES (aircraft). The space portion uses geostationary satellites positioned, for example, 22,300 miles away from Earth, or low earth orbit satellites at only around 485 miles away. The three primary satellite operators for Business Aviation are Iridium, Inmarsat and ViaSat. Iridium covers the whole earth, including all oceans and both poles, while Inmarsat does not cover the poles. Iridium and Inmarsat own their satellites, but ViaSat owns one and leases bandwidth on others. The performance of aircraft equipment connecting to the satellites reflects the network’s limitations. For example, Iridium-based GoGo Broadband is currently US domestic and partial Canada, operating at and above 10,000ft AGL, whereas Inmarsat’s Swift Broadband can operate below 10,000ft AGL, including

on the ground, and covers a large portion of the planet. ViaSat operates like Inmarsat but with less overall coverage. Other performance connectivity considerations may introduce limitations for operators, including: • Weather over ground stations impacting data transfer rates; • Antenna angles and elevations acting as a physical limitation; • Transitioning between satellite coverage regions; and • Scheduled and unscheduled maintenance. Some services such as GoGo Biz include ATG ground-based domestic capability, as well as satellite coverage. The ground based coverage can provide reliable internet capability at a low cost. Data speeds are typically lower than what terrestrial-based users experience, but are catching up fast. One means of allowing broader bandwidth and higher data rates is to operate at different carrier frequencies. For satellites, the options are: • X band (8-12 GHz) • Ku band (12-18 GHz) • K band (18-26 GHz) • Ka band (26-40 GHz)

The use of the Ka band is relatively new and, going forward, appears to be the carrier frequency band of choice. Airborne systems, using this frequency band, are able to stream videos, download large data files and provide video conferencing across multiple onboard devices. Bandwidth can control the speed of data. For ATG ground-based networks, moving the carrier from 3-4 MHz to 60 MHz reduces data package download time. Latency reduction techniques, meanwhile, reduce the time it takes for any single data byte to go back and forth between the aircraft and ground towers. It should be noted that with all the commercial airline users and increasing number of business jet users, expanded coverage is still a significant challenge for infrastructure developers trying to maintain a reliable and continuous service worldwide. Over subsequent articles, we will address how networks and service providers transfer connectivity data into the aircraft, how data are processed, and then how information is presented on board. T Are you looking for more articles on Avionics? Visit www.avbuyer.com/articles/ category/business-aviation-avionics


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Aircraft Connectivity (Part 3)

Connecting On Board - 1 of 2

Helping you understand the technology, integration and advances of

aircraft avionics and equipage, Ken Elliott continues a five-part series on aircraft connectivity with a review of on-board connectivity.

n our previous aircraft connectivity article we reviewed providers of communication and data as well as a breakdown of the services they offer. Moving to the aircraft this month, we will see how on-board connectivity is associated with a multitude of external resources, many with minimal pilot intervention. In fact, while the pilot(s) concentrate on flight plan execution, a whole other spectrum of activity may be unfolding between cabin and cockpit systems and the world outside. Today, a number of flight departments are able to provide a ‘company in the sky’ experience to their corporate teams, enabling minimal interruption to time-critical business activity and all taking place aft

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of the cockpit door. Meanwhile the pilot(s) can run a real-time travel management and operations business up front, with an aviation department flight attendant also playing an important role. On the aircraft itself, there are systems that can ‘see’ and select from the broader information traversing the ocean of airspace. These same systems as well as others provide the means of communication to the crew, passengers and directly to aircraft avionics. Some communication components, often as single ‘boxes’, focus on conversion, and others simply display the information provided to them. Part 2 of ‘Connecting on Board’ will concentrate on conversion and display of information within aircraft.




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Figure 1: An outline of the primary aircraft sub-systems that connect it to the external airspace and in turn to its internal work space

“An aircraft may have a significant number of antennas, each looking for and radiating at a specific atmosphericpenetrating frequency.”

In order to see external information, an aircraft uses antennas tuned to seek out minute signal levels of information carrying waves radiated at different frequencies. These carrier frequencies carry information modulated as voice, data and video. For efficiency, the modulation signals are sometimes compressed and scrambled. An aircraft may have a significant number of antennas, each looking for and radiating at a specific atmospheric-penetrating frequency. Those that need to communicate with satellites look for, lock on and then track the satellites’ movement, executing exotic hand-offs as the earth rotates below the satellites’ stationary or orbital flight paths. Satellites often perform multiple tasks, one of which may be acting as a transponder. In this manner the satellite receives ground-sourced information, boosts it and then resends amplified signals to aircraft satellite antennas. Cables within the aircraft route the carrier signal to and from transceivers that access and process the audio, data or video information being transported by its carrier. Typically airborne systems have a control, processor and an output. The control may be automatic or via human interface. The processor, in essence, is directed to perform its specific function. Then selected and processed information is provided as an output in digital (data), audio or video form.

Onboard Information Seeking/ Providing External Information

Weather: For an aircraft, weather is derived several different ways. Instruments using atmospheric probes detect the atmospheric conditions. A weather radar, mounted in the nose, provides

real-time precipitation and (by analogy) turbulence, albeit with limited range and field. Satellites, via Satcom, provide detailed nearterm weather, and ADS-B In provides the same. Sirius/XM, using a dedicated antenna, may also be providing weather. Even stand-alone lightning sensors are installed in some aircraft. Traditionally, and still available, is weather information at airports and elsewhere, provided via VHF and HF. Satcom, FANS & Data: Primarily focused on oceanic operations, where satellites boost and relay service-provider information, aircraft Satcom serves as the transceiving device for communications and digital data to and from the aircraft. Future Air Navigation System (FANS) uses the Satcom and includes aircraft surveillance via ADSC. High rates of bi-directional digital data may be transferred between aircraft and the orbiting or geostationary satellites. Passenger and some crew voice communication is also routed through the Satcom. Companies such as FLYHT Aerospace Solutions, Ltd. offer streaming data capability using their stand-alone onboard AFIRS and ACARS-overIridium service. These onboard processors also connect to portable devices used by the flight crew. However, data can be shared via the internet to corporate VPNs. Examples of aircraft and fleet performance data are Health & Usage Monitoring Systems (HUMS) and Engine Trend Monitoring (ETM). Streams of real-time aircraft diagnostic and performance data can be sent via the same Satcom used for voice. In fact, we live in the age of the Internet of Things (IoT), where for example, an


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Figure 2: How the aircraft interacts with external technologies

aircraft on an average flight can now produce performance data measured in Terabytes, (e.g., the new Bombardier C-Series). Transferring all these data, in real time, to the ground becomes ever more an issue of bandwidth, where all the technology involved must have the capacity to handle the volume of information. Below is additional guidance with respect to Satcom’s satellites, and the frequency of the carrier waves used: • L-Band uses frequencies between 1 to 2GHz. L-Band provides narrower bandwidth and is used to meet light business jet requirements. • Ku-Band utilizes approximately 12-18GHz range. The legacy Ku-Band is still widely used and has a medium bandwidth adequate for most applications where data capacity requirements are not so critical. • Ka-Band services operate between 26.540GHz. Ka-Band is being used by newer satellites and has very high data capacity and transfer rates, due to greater bandwidth.

VHF & HF Communications/Data: Traditionally and yet still in use, lower frequency transmission activity takes place over land and sea using VHF and HF. Controller Pilot Data Link Communication (CPDLC) is one current use of data over VHF. For HF this is known as High Frequency Data Link (HFDL). Popular for flight clearances, these legacy technologies will be around for some time to come.

Broadband: Speaking of bandwidth and the need to connect via the internet, OEMs and operators are equipping their aircraft more and more with dedicated systems that link to broadband services. Viasat, with its high capacity satellites, is just one of the broadband providers. Its use of both Ka- and Ku-Band satellites, along with its aircraft equipment and service plan, provides flexibility and single source accountability for operators. With broadband capability, operators can easily conduct high-definition video conferences, stream music and video, connect live to their corporate VPNs and do much more while airborne.

Emergency & Tracking: This is an information area that is truly booming, especially with air carriers and for aircraft operating in remote regions. Emergency equipment has been around for many years, but new to the market is equipment that tracks, monitors and frequently relays the aircraft flight status, for real-time use by a variety of interested parties. Many traditional service providers, including wellknown names, have added dedicated flight tracking service to their portfolios. Some examples of companies that specialize in flight tracking are; Spidertracks, Skytrac, Flightaware and Blue Sky Network.

ADS-B Out/In & Transponders: Leaping to the present, bi-directional and automated aircraft flight surveillance data flow between different aircraft and air traffic control facilities. The ADS-B technology includes the use of updated Transponders, Flight Management Systems (FMS) and other onboard equipment to facilitate this capability. Weather, for display and useful en route flight information, is further provided when aircraft are ADS-B In equipped. For those with Satcom, ADS-C provides for similar ADS-B Out capability in Oceanic regions.

“With broadband capability, operators can easily conduct high-definition video conferences, stream music and video... and do much more while airborne. ”



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Figure 3: Summary of the typical ‘externally-focused’ information systems found onboard today’s business jet

“Advancements such as highdefinition video and low-noise digital audio are only limited by the capacity of both external and internal systems to handle bandwidth requirements.”

Emergency Locator Transmitters (ELTs), located in the rear of the aircraft and near the tail, are activated by excessive G forces, or may be switched to transmit, manually. Operating at 121.50, 234.00 and 406.00 MHz, they provide aircraft location and identification. 406 MHz ELTs can also provide the aircraft location via internal GPS.

Onboard Information Systems Primarily For Aircraft/Crew

Video & Audio: Once demodulated from the antenna signal by the system processor, video and audio can be distributed across both the cockpit and cabin. Advancements, such as high-definition video and low-noise digital audio, are only limited by the capacity of both external and internal systems to handle bandwidth requirements. As more automated data information is visually displayed to flight crews, there is less reliance on audio. Voice & Data Recording: Currently on many business aircraft a history of each flight is being recorded. Today voice and data are combined in single recorders. Flight Data Acquisition Units (FDAUs) collect thousands of data parameters representing the aircraft’s in-flight performance and interfacing those quantities of information to the Digital Flight Data Recorder (DFDR), as well as Quick Access Recorders (QARs). QARs speedily access raw flight data and downlink them, via Satcom, to flight departments and operations centers. Sampling and refresh rates of QARs are different than FDRs because, although they are systems using similar technology, they perform different functions.

Cockpit Voice Recorders (CVR), designed or upgraded for FANS, need to be data capable to enable the recording of data link and digital messages in flight. Because these CVRs and FDRs (or CFDRs) are designed for survivability, they include emergency location transmitters. While not operating during flight, beacons on recorders are very much communicating devices when the situation dictates. Deployable DFDRs, equipped with GPS and activated upon deployment, may be located more quickly; even if they cannot be immediately recovered, they will transmit recent flight data, recorded prior to activation. Wi-Fi: Often Wi-Fi is a subset of a broader Satcom system working with either Inmarsat or Iridium satellites and associated on-board equipment. So either as a subset or a stand-alone system capability, the processor output for Wi-Fi will go to a routing system for the aircraft. When the aircraft is on the ground, routers may also connect directly to cellular systems, enabling even ground maintenance operations that require connectivity. Routers provide a method for passengers and crews to connect via Wi-Fi and Ethernet for laptops, smartphones, personal electronic devices and electronic flight bags. Live Communications & Data: As opposed to recording of voice and data, existing radios, ACARS, VHF data link (VDL) or HFDL and the use of Satcom are employed primarily for live communication and transfer of information data. Several independent systems, each with their own antennas, fulfill this role. Communication and flight management devices are often on dual


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Figure 4: Summarizes the typical ‘internally-focused’ information systems found onboard today’s business jet

configuration. Data are transferred between devices, as well as to outside the aircraft. As a reliance on HF slowly fades into the sunset, so may the use of VHF. This is in line with a more automated and direct data (or digitized voice) approach to communications. Of course, as unmanned aircraft migrate into the NAS, communication will become digital and automated, machine to machine.

of many mobile applications—all being additional and useful tools in the technician’s tool kit. Systems on board may be connected via modems, USBs or dedicated ports, to portable devices. iPads, Androids and Laptops are used in most flight departments and hangar operations today, reducing downtime, cost and misdiagnosed faults.

Crew Information: For crews, there is the need to provide information in a number of different ways. The most immediate form is alerting and advisory information, provided both aurally and visually. Important notifications can originate from outside the aircraft. An example of this will be weather and flight information alerts for the flight plan in use. Crews need to know the status of their systems and be able to react to any abnormal conditions. Cabin crews and passengers need to connect to the cockpit and vice-versa. The flight crew are able to control to some degree what is shared within the cabin. Flight departments and others may communicate directly with the crew via messages and voice, while service providers continuously update the trip planning and arrival services. Flight crews are reliably connected to other aircraft and the ground via today’s cockpit technology. Clearances, passenger plan changes, route amendments, and so much more can be accommodated in the modern connected cockpit.

Summary

Other Aircraft Systems: For maintenance personnel and flight crew on the ground, having connectivity enables the downloading of performance data, virtual live troubleshooting by remote field service representatives, uploading of databases and the use

Across the preceding paragraphs, we have outlined the layer of ‘information-platforms’ communicating in and out of the aircraft. Between the information that satellite and ground networks transfer and what is managed for operators by service providers, it is clear there is an ever expanding amount of data going back and forth. The next article in this series will drill down even further within the aircraft to address onboard services. It will focus on how information is transferred, converted and displayed within both the cabin and the cockpit. There are different protocols and specialists in this area. Above all there is a lot to consider, because free enterprise and competition have provided us with many choices and, therefore, the potential for many issues. While a good thing, the expansion of choices opens up opportunities for different technology integrations, each with a unique path and a potential risk of incompatibility. Equally, aircraft OEMs increasingly favor single avionic suites and branded cabin management systems, presumably safe from these integration risks, secured by their proprietary software networks. As you may discover your aircraft may be designed and outfitted either way. T

“Cabin crews and passengers need to connect to the cockpit and vice-versa.”

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(Part 4)

Connecting Onboard 2 of 2 Helping you understand the technology, integration and advances of aircraft avionics and equipage, Ken Elliott continues a five-part series on aircraft connectivity, here concluding his review of onboard connectivity.

n the previous article on this subject we reviewed an aircraftâ&#x20AC;&#x2122;s means of connecting, externally, to the outside world via the use of installed aircraft equipment. In this article we focus on how that same equipment turns its attention to internal connectivity. We cover how information is transferred, converted, interfaced and displayed to both passengers and crew. Once received via a designated antenna, content is down-converted to video, voice and data. However this information needs further adapting in order to ensure compatibility with onboard devices. Included in this extra step is the need for human interface, allowing the selection of audio and visual components.

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Emergence of PEDs

One area of in-cabin connectivity that has been brewing for years, and is now maturing is an ability for passengers to use their personal walk-on devices as a means of utilizing the aircraftâ&#x20AC;&#x2122;s inflight

entertainment and more. We all recall the days when even the largest of business jets relied on a few bulkhead monitors, speakers and headsets. One monitor always portrayed Airshow and the other relied on Video Cassette Recorder (VCR) input. Now jump forward, past the evolution of in-seat monitors and CD players, to the expectations of today. Envision an aircraft maintaining an option to use aircraft mounted monitors, but a preference to use what you own and are familiar with; the  walk-on personal device. Figure 2: Modern passenger interface devices and fixed terminal displays


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Figure 3: Highlights of some cabin features a walk-on PED may control

Platforms

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Some of the major onboard connectivity providers are: Cobham Gogo Honeywell Rockwell Collins* Thales True North VIASAT *Note the recent acquisition of ICG.

COURTESY JETCRAFT CORPORATION

Figure 4: A clean cabin, with the potential to use only PED devices. Note the need for a bulkhead monitor may be necessary for safety-related and other essential passenger video-based briefings, or data.

Enabling this capability is not easy as there are Apple’s iOS and Google’s Android to deal with, including different versions thereof. There is also the extent to which you may want to use a Personal Electronic Device (PED), such as an ability to control many of the aircraft cabin features, thereby reducing the need for switches, controls and wiring. PEDs may connect the passenger into their home-office Virtual Private Network (VPN), allow video conferencing and enable streaming of TV or movies. The range limitation of the information media is set by the capability of the satellite and aircraft satcom, bandwidth and baud rate. Today, via a satcom service provider, customers may select information speeds from Kilobits per second (Kbps) to multiples of Megabits per second (Mbps). Meanwhile using 4G ‘air to ground’ (ATG) both on the ground and during flights over terrain, bit rates of 2-12 Mbps may soon be expected.

The above connectivity provider platforms can be exotic, covering most aspects of cabin functionality. Aircraft OEMs will typically embrace these integrated platforms and, in collaboration with the equipment supplier provide brand identifiers such as Venue, Ovation or AeroWave. In those cases, the system is usually holistic, extending throughout the cabin, and even reaching into the cockpit with some of its features. Companies like VIASAT have moved into the aircraft itself, having originated from the satellite end of things. VIASAT’s VIP Inflight Internet includes most of the aircraft equipment required, and the company can also provide both Ku- and Ka-band services on the same aircraft. Passengers can expect somewhere near 12 Mbps speeds on their individual devices whenever the Kaband is in use, allowing for intensive applications such as teleconferencing or video streaming.

Security, Interference & Vulnerability

Security: Security, via encryption and other means, is essential when using the more accessible connectivity that is available today. Manufacturers are hard at work, continuously improving their protections to stay one step ahead of the hackers and intruders. Some new onboard routers can automatically alert users when flying in certain airspaces where it is required for data to go via ground stations. This requirement increases the ability of foreign agencies to ‘see’ sensitive information. Interference: Interference is another concern, where onboard systems must not interfere with primary aircraft operating systems. Integrators of inflight systems are subject to rigorous controls, via the Type Certificate (TC) and Supplemental Type Certificate (STC) process of certification. New systems are flown and aircraft avionics monitored for interference, both from the inflight system to avionics and the other way around. Vulnerability: It must be understood that increasingly, we are becoming reliant on the use of satellites and they are vulnerable to meddling from unfriendly sources. As with the GPS constellation and its use for Performance Based Navigation (PBN), concerns over reliance on satellite technology for


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Presentation

Assuming that we have the downloaded information processed, an aircraft’s inflight system then needs to present to, and interact with, the passengers and crew both visually and aurally. A plethora of devices and techniques are utilized to this end. More adapting of the audio-visual signals may be found on legacy aircraft than with new machines. Typically, the broader a single manufacturer’s technology reach is across the cabin, the more seamless the integration may actually be. A list of aircraft system and cabin devices that record, adapt, define and convert voice, video and data follows: • • • • • • • • • • • •

Cockpit Voice Recorders (CVR): Network devices Flight Data Recorders (FDR): Blue Tooth devices Flight Data Acquisition Units (FDAU): Engine trend monitoring units Quick Access Recorders (QAR): Bus & signal converters Data Adapters: Data Acquisition Units (DAU) Terminals: Mechanical adapting devices Routers: Signal conditioning units USB Ports: Analogue to digital converters Configuration Modules: Health & usage monitoring units Data Bus Converters: Data devices for flight tracking Data Filters: Serial to parallel converters Satcom Interface Devices: Cell phone interface devices.

The following list of some of the major suppliers of recording, adapting, defining and converting equipment focuses on those companies that specialize in these fields. Many of the major avionics manufacturers include these processes in their mainline products and systems: • • • • •

Cobham (Spirent) Teledyne (Avionica) Harbert Flight Display Systems (Alto) Thales (Astronics) DPI (Blue Avionics)

• • •

Lufthansa Technik (DAC International) Nexsys (Skylight Avionics) Shadin (Satcom Direct).

Note: Many of the Electronic Flight Bag and cabin & cockpit display manufacturers, also produce adapting and converting devices for their own product lines.

Some Interface Considerations

While there are data speeds to consider, also there is bandwidth and the ability of a system to work with multiple devices. Techniques such as data compression can allow more users to benefit from increased available bandwidth. Another consideration is the ability to connect and remain on line, even though the aircraft is moving. That concern is centered on the antenna gain, the frequency band in use and the system functionality. However, the ability of personal devices to stay connected remotely, via Wi-Fi for example, is another aspect of maintaining a connection. For some operators, such as those using GlobalVT from Satcom Direct, or Simphone Mobile GSM from True North Corporation, it is possible to use personal mobile phone numbers, and by default personal address books, connecting callers using an onboard router. Satcom Direct users do not incur roaming charges. More and more the means of interface is becoming Application (App) based. The use of PEDs permits more App-based programs, including ones that control the various cabin systems. Gulfstream has three Apps that interface users with their aircraft: Cabin Control allows users to adjust cabin comfort, entertainment and lights.

“Typically, the broader a single manufacturer’s technology reach is across the cabin, the more seamless the integration may actually be.”

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Figure 5: A Falcon 7X cockpit with dual mounted Electronic Flight Bags (EFBs) COURTESY JETCRAFT CORPORATION

communications and connectivity are valid. Operators acquiring aircraft that are intended for use over a number of years should include alternative equipment, such as the new SmartSky Networks 4G solution that connects via air to ground (ATG), and not via a satellite, when operating over the US. It may sound like paranoia but a divided world still exists and a less direct-confrontational means of waging ones battles is becoming more popular. It is not such an unimaginable stretch to move from the current practice of hacking into remote computer servers, to taking control of, or altering the operation of satellites. Few wish to admit or face this daunting possibility.


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Figure 6: Current fixed adjustable seat displays and a bulkhead monitor in a Gulfstream G650 aircraft

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“For the cabin a designer can be creative, but there is still a need, and desire for, hard mounted displays in cabin bulkheads and discretely stowed monitors in the individual seat armrests.”

PlaneBook permits a paperless cockpit. Satellite Voice acts as an SIP-based phone for Apple iOS devices on Gulfstream aircraft, enabling customers to use an in-cabin Wi-Fi Internet connection to make and receive calls with Apple devices. Aircraft builders are now seeing the advantage of extending the onboard use of PEDs, negating the need for wiring and interface equipment, commonly known to avionic buffs as ‘Happy Boxes’. There may be multiple satellite or ATG systems operating on a single aircraft, but users wish to use only one handset, or headset. Equally, if there is a complex cabin Inflight Entertainment (IFE) system, consisting of different sub-assemblies, operators want to use a single remote device or have the ability to control all from a single (and personal) PED. Using a ‘single service set identifier’ (SSID), for a wireless area network (WAN), it is possible to rely on the router to select the most capable and fastest available service. Onboard services can connect outside the aircraft using multiple frequency-band methods such as Ka-, Ku- and L-Bands as well as via air-to-ground. Newer routers can smartly allocate bandwidths to users, so VIPs may be provided with more and pilots less, bandwidth. These same routers, using SIM cards, can select GSM (3G-4G) services and save costs to the user. When selecting cabin routers, ensure they can auto-select communication services agnostically and not be forced to go to a preferred provider. Staying with routers, ensure the router that you select can be set to prevent automatic background

downloads. This common activity uses up bandwidth and ties up the PED. Most of these updates are not pre-requested and may be downloaded on the ground.

Displays

PEDs aside, there are many ways to display data in an aircraft. For the cockpit, and those aircraft not able to display paperless cockpit information on their primary displays, there are both Multi-Function Displays (MFDs) and Electronic Flight Bags (EFBs). EFBs come in three classifications, depending upon the extent to which each is mounted and then interfaces to the aircraft’s primary systems. In fact, EFBs must not connect directly to primary aircraft systems, unless the means of installation has been specifically approved, such as with some Class 3 applications. To cover EFBs will take a complete article on its own, but relevant to this article is that EFBs mostly connect via a firewall unit to an aircraft’s avionics systems. An example of this is when EFBs are used to access aircraft performance data. CMC, a popular supplier of EFBs, uses an Aircraft Information Server (AIS) and apart from its ability to connect for data, it connects to satcoms and Wi-Fi, for weather, tech logs and other pilot applications. The EFB, however, never electronically connects directly to the aircraft systems for this purpose. For the cabin a designer can be creative, but there is still a need, and desire for, hard mounted displays in cabin bulkheads and discretely stowed monitors in the individual seat armrests. Also whereas in the past monitors were controlled by a remote controller and external


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Figure 7: The simplicity of the early aircraft cabin has evolved into today’s complex intercontinental business travel experience

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switch-controls, today they are touch screen with a remote option. Some of the more popular display suppliers are: Harbert (Flight Display Systems) Rosen Barco Aircraft Cabin Systems Spirent EFB suppliers - as a separate and large group, providing all classes of EFBs, including ‘Commercial Off The Shelf’ (COTS), as carry-on devices.

Summary

Unseen in our modern aircraft cabin image (Figure 7, above) are the many connectivity devices, installed behind side walls, under the floor and above the headliner. However, the more we are able to walk onto the aircraft with personal electronic devices, the less there is a need for onboard interface equipment. Equally the use of hard-mounted handsets and seat displays will decrease. When selecting your cabin and cockpit electronics consider the following: Forward-thinking flight departments want data to inform them of the aircraft’s trip performance. They desire an ability to communicate flight and fault data to their maintenance personnel, and directly to equipment manufacturers, for immediate support. They also want the aircraft’s position known, in case of an incident, and they understand it takes additional technology to

migrate all these data out of the aircraft in real time. Savvy flight departments specify communications and high speed data equipment so it provides the coverage, speeds and bandwidth they and their owners need, at the right rates per minute. This may mean equipping with a combination of Iridium and Swift Broadband, as well as the use of new AirTo-Ground 4G. Pilots, however, do not want to confuse their passengers with multiple user interface devices. Knowledgeable, but wise flight departments do their homework on capability and equipage options, while consulting with OEMs and preferred MROs, to ensure their desired selection will actually perform. Operational limitations, nuances of interface and software issues have plagued the industry for many years, but there are reliable and cost effective solutions out there. Wise flight departments do not venture alone. All of the above concepts and systems involve some form of interaction and human interface inside the aircraft cabin. The purpose of this article was to make readers aware of these internal devices and methods used for voice, video and data, bearing in mind it would take more than a book to fully explain. Finally remember that whatever you select for equipage, it must be certified on the aircraft, it may be obsolete or morph into another product within a few years and most important of all, it must not take away from an ability to resell the aircraft later. T

“Equally the use of hard-mounted handsets and seat displays will decrease.”


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Aircraft Connectivity (Part 5)

The Next Aircraft Connect Helping you understand the technology, integration and advances of aircraft avionics and equipage, Ken Elliott concludes a five-part series on aircraft

connectivity with a brief history followed by an insightful look to the future. ast time we addressed the expanding use of walk-on Personal Electronic Devices (PEDs) on board aircraft, and how they reduce the need for permanently installed equipment. PEDs also allow the user to seamlessly function with the same device and familiarity as experienced on the ground. While this capability is profound in itself, let us take a step back and look at the wider aspect of future aircraft connectivity.

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First, a Short History

Many years ago, I recall a customer requested cabin entertainment that was beyond a cassette deck and cabin speaker(s), the standard at the time. Satisfying his requests was more involved than simply adding essential passenger address (PA) override, or a headset provision at the CEO chair. We had to call in the big guns from the local car audio shop… The expert they sent had never seen the inside of

a Gulfstream II (or even a Cessna 172), but his contribution to our ‘modern’ audio-visual system, with its sub-woofers and multiple input sources, was an eye opener to us seasoned avionic gurus. Somewhere in the 1990s, cabins became more than airborne passenger-lounges and began to move into zoned, functional work spaces for the busy executive. Technologically inclined and enlightened aircraft owners elevated expectations, and bigger long-range jets provided the capable platform for the new ‘office in the sky’. Later, our avionics shop made another quantum leap when approached by an aftermarket Gulfstream owner who ran one of America’s leading home entertainment businesses. The owner’s knowledge of system control caused us to pause and reflect on aircraft cabin control in a way that was far beyond the audio visual. (Meanwhile, and in parallel to our own efforts, avionic suppliers were finding ways to remotely control cabin lights, cabin environment,

Figure 1: Discussions over a nice hot meal was the first form of cabin connectivity. Then emerged the portable walk-on devices, with no installation required and conversation no longer necessary (the meals went the same way as the conservation).


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audio-visual and much more, all from single touch screen armrest controls.) Aside from the cabin, aircraft connectivity reached to the outside world. Before satellites were available for commercial aviation use, aircraft relied on other means to transmit messages, and in some cases data, across continents and oceans. Aircraft, weighed down with bulky high-frequency communication systems, struggled to make contact and stay on frequency. Selcal (selective calling) enabled enroute air traffic control to stay in touch with aircraft, even when the HF frequency was not being monitored by the pilot. Volmets provided audio weather information as an added feature. I recall, as an avionics technician, the woes of tuning Sunair HF radios to long wire antennas, enabling aircraft to stay in touch while flying over the endless untapped forests of central Africa. About the same time as satellite technology was first making its way into aircraft, companies like Aircell (now GoGo) were ‘experimenting’ with analog voice, air to ground, telephone systems. Those early days of aircraft ‘telephones’ were marked by serious hand-off problems related to ground stations and their line of sight relationship to aircraft position and altitude. When Magnastar products entered the market and competition increased, phone and corresponding early data systems multiplied, with increased sophistication and reliability. A true revolution occurred with the onset of Iridium satellites with their low earth orbits and low ‘by the minute’ call costs, all with seamless hand-off coverage. This allowed Aircell and others to take off in the world of cabin connectivity. Communication was now expanding into digital data, visual and the internet, all in line with developments back in the home and the office. I was fortunate to be one of the first to install the Iridium broadband and see the excitement of an aircraft operator able to function, like we still do today, in the local coffee shop with our portable devices, at relatively affordable rates (…well, maybe not quite such low cost, so fast or as much data…!) Some incidental side benefits of the new affordable satellite communication were the ability to receive weather, to share real time aircraft performance and to track the aircraft’s position.

Aircraft Connectivity: A Future Imagined

Step forward, past the present that we have covered over the previous four articles, and join us on a magical journey into tomorrow… To begin with, the reader must face the long-term reality of widespread autonomous flight, with less use of ‘humans in the loop’ and without reliance on a two or three-person crew, or eventually any pilot onboard. Initially, of course, unmanned will still require a ground pilot, but eventually that need will expire. As the use of wireless, satellite and air-to-ground technologies expands into the cockpit, the reliance

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Figure 2: An early Global Wulfsberg FliteFone VI air to ground phone system

on ‘humans in the loop’ will cautiously fade away, but not without resistance. In essence, the two connectivity advances will merge over time. Also they will merge with a similar transition taking place on the ground and centered on Air Traffic Control. The Internet of Things (IoT) covers a virtual universe of wireless activity, one part of which is transport and a sub part of transport is aviation. The Internet of Aviation Things (IoAT) is the world of tomorrow for our industry. Because of the limits of data storage at end nodes (such as your aircraft), imagine instead that your aircraft is connected, real time, 24 hours a day, to its own personal cloud. A cloud that streams back and forth all the data it, and the world it connects to, will need. Our future Cloud may have 4 partitioned areas (Cloud 1, 2, 3 and 4). Let’s deal with each in turn...

Cloud 1: Essential Data (Trajectory)

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“This is what we call a virtual airspace, a central place that mimics the real world ‘almost live’ and where all aircraft connect.”

needs to know where to go and what is its optimum trajectory along the way. That, for convenience, will be provided by a Predictive Trajectory Cloud. The aircraft’s performance will be dictated by this predictive trajectory. The predictive information from the cloud mimics 4D Performance Based Navigation (PBN), but includes all aspects of weather and all phases of flight, from taxi-out to taxi-in. It accounts for the flight plan, air traffic control, other aircraft, incidents, NOTAMS, runway conditions, aircraft weight and balance, pilot inputs, and so on. The flight is time-based, so there will exist a continual loop of data streaming from the aircraft to the cloud regarding its performance, thus the cloud can accurately predict, and then advise the future trajectory back to the aircraft. Aircraft will be projected to arrive at specific 3D sky points at fixed times. The jewel in the crown of the predictive trajectory will be the avoidance of weather. The IoAT will have enabled, and weather-sensing technologies will have evolved, to allow a subset of predictive weather to the trajectory formula. The technologies now emerging for seeing the runway surface during all low visibility conditions will ensure VFR-like activity in and around the airport, at all times. Extreme storm, snow and ice weather will be sufficiently predicted to allow a proper assessment of route and trajectory, prior to taxi out. If already enroute, adequate predictions will also provide for a new route and trajectory. Despite what we hear, weather is the most significant disrupter in our national airspaces, and weather prediction still requires significant ‘off-aircraft’ technology innovation.

Cloud 2: Secondary Data (Surveillance)

While the aircraft can perform and project on its trajectory, it still needs to be tracked and monitored. Imagine a cloud that streams the aircraft’s status 24 hours a day, in the air and on the ground. Tiny RFID-like devices will be embedded

throughout the fuselage, monitoring the performance and status of thousands of components. Streaming data will morph into ‘data on demand’ where, autonomously, data will be streamed in either direction, only when demanded. This will free-up valuable bandwidth for even more IoAT functionality. The aircraft will be tracked along its route, and the cloud will retain all recorded data for any emergency that could arise. Meanwhile, company headquarters, operations and maintenance will all have valuable access, in real time, to the same Tera or even Peta Bytes of data. Because the surveillance of aircraft performance and component level systems is continuous and deeply diagnostic, maintenance tasks such as RVSM and Pitot Static recertification will take place during every trip, without the need for on-ground validation. Systems such as navigation will be constantly tracked for signal reliability and accuracy at the Cloud 2 level. Cloud 2 will, in essence, be a virtual aircraft in itself. The existing flight data recorder, cockpit voice recorder, emergency locator and other devices, will exist in the cloud and not be physical on-board equipment. Search and Rescue and NTSB personnel will access all the data they need from this ‘live cloud’. Subject to de-identification, Cloud 2 data will be shared with those who wish to improve airspace efficiency. Branches within the FAA NextGen office, for example, are currently taking that approach; a quick look at the FAA ‘Performance Snapshots’ website will reveal how far they have progressed to date. The emergence of system-wide performance monitoring and, for operators, the tracking of an aircraft’s annual performance, is about to bloom into a whole new industry, as everyone catches up and realizes the ROI benefits. As the airspace becomes increasingly populated with unmanned autonomous flight platforms, the need to see and avoid will increase and the ability for conflict being predicted and resolved in the cloud will also be required. Equipment such as TCAS, ADSB and TAWS will disappear as predictions of trajectory take over. The cloud, in concert with other clouds, will have been tracking all the aircraft in the neighborhood. Furthermore, the cloud will have access to a virtual 3D world updated every hour or so to account for obstacle changes. This ability of the cloud to see and avoid will be built into the final trajectory data, streamed to the aircraft. Hence, the system will provide real-time Collision Avoidance. Importantly, the Four Clouds will all be connected as one and then in turn, connected to other systems of information. Data such as all aircraft movements, 3D terrain, live weather, live airport and runway conditions, and many other common data streams will be the same and available to all aircraft. This is what we call a virtual airspace, a central place that mimics the real world ‘almost live’ and where all aircraft connect.


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You will be able to walk on your aircraft with your personal device and continue what you were doing on the ground, whatever it may be. Connect your PED to approved on-board resources and discover everything you need to know about the trip. Conference in to your company’s survey team in the remote islands of Indonesia, then relax with a full length 3D movie played on your virtual reality goggles: Cloud 3 will provide all of this capability, as well as activities we have not yet even imagined. Pilots, using a plethora of applications, will have the capability to enhance their flight with nondistracting activities. Predictive trajectory options may be explored, useful destination data reviewed, in-flight purchase transactions completed, predictive weather analyzed and airport-runway status reviewed. Non-essential voice, as audio, will be digitized and streamed, as data, in the continuum of system-wide information. Pilots will conduct real-time telephony over the same data stream, not as separate voice calling. CPDLC and FANS are early steps toward this architecture. Furthermore, through voice recognition technology, pilot communications will be recognized and digitized at the source. Finally, Cloud 3 will accommodate the demands of social media networking. Today professionals struggle with the role of social networking in the world of business. As we watch the two merging, it becomes apparent that the word ‘social’ no longer implies a casual chat between friends. The whole world is becoming interactive, and the role of social media in aviation operations is still in its infancy.

Cloud 4: Critical Data (Security/Back-Up)

There is no point in the existence of Clouds 1-3 without proper security and privacy. Intertwined, these two aspects of protection will always be considered critical to overall connectivity. Company operations will determine what is private and needs to be protected—or if shared, deidentified. Sharing will occur at greater frequency, but flight departments will be very cautious and conservative as they move into this area. Protection from hackers and scammers will continue to grow exponentially, and firewalls of layered protection will grow to isolate critical aircraft systems from any outside interference. Equally, everything needs to be backed up and partitioned. Cloud 4 will be a semi-permanent virtual aircraft, able to replace any data lost and impossible to be tampered with or damaged. Clouds will back up Clouds to ensure the continuous availability of service, providing the confidence and assurance needed for the IoAT to develop.

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Cloud 3: Non-Essential Data

Summary

Connectivity, as seamless wireless data, will transform aviation. Far into the future, it will depopulate the aircraft of redundant on-board equipment and eventually make way for unmanned ATC as well as the need for a pilot (or at least as we understand those needs today). Much of the aircraft’s equipment and functionality will be virtual in a cloud, or ‘cloud of clouds’. Smart ‘on demand’ streaming will maximize data use and speeds. The IoAT will stream so much data in multiple directions to multiple destinations, it will be the equivalent of a permanently connected highway, steering truck-loads of packaged data, via hubs and connectors. This creates a virtual aircraft, as well as another virtual back-up aircraft. The ‘virtual aircraft’ will control the performance and 4D trajectory of the physical aircraft and its payload. The virtual aircraft will host the lifetime memory of the physical aircraft’s experience and allow the instantaneous connectivity of its passengers to their office, home or anywhere else. T


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Section Contributors

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

Robert Drover is Director Sales & Marketing at Lufthansa Bombardier Aviation Services (LBAS) in Berlin, with 25+ years of experience in Business Aviation. LBAS offers more than 210 MRO specialists, all experts in their field. Visit www.lbas.de

Dave Higdon is a highly respected aviation journalist who has covered all aspects of civil aviation over the past 36 years. Based in Wichita, he has several thousand flight hours, and has piloted pretty much everything from foot-launched wings to combat jets. Contact him via Dave@avbuyer.com

Jay Mesinger is the CEO and Founder of Mesinger Jet Sales. Jay serves on the Jet Aviation Customer and Airbus Corporate Jets Business Aviation Advisory Boards (BAAB). Contact Jay via jay@jetsales.com

Chris Younger is a partner at GKG Law, P.C. practicing in the firmâ&#x20AC;&#x2122;s Business Aircraft Group. He focuses his legal practice on business aircraft transactions and issues relating to federal and state taxation and regulation of business aircraft ownership and operations. Contact him via cyounger@gkglaw.com

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Buying a Jet? Key Tips on Planning

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Fresh from accepting a new jet for Johnsonville Sausage, the company’s Director of Aviation, Andre Fodor, highlights the need for planning when handling the many facets of a business aircraft purchase… xciting times ahead! It starts when the principal announces the intention to buy a new airplane. Hopefully, this decision resulted from an on-going discussion and you have most of your homework done. The final choice of aircraft is narrowed to two models and you’ve had a chance to research both, talk to other operators and build your cost analysis spreadsheet… In my experience as an aircraft manager and previously as a demonstration pilot for an OEM, more often than not buying a business jet is a year-end decision, predicated on strong business earnings and positive future forecasts, good buying opportunities and the advantage of bonus depreciation. In essence, time is short!

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What’s Required?

Structuring the purchase of a corporate jet requires an understanding of market conditions, management experience and a strong stomach for negotiations. The inherent complexity of airplanes, added to new technologies that are still maturing, complicated by obscure taxation and purchase incentive laws, hidden costs associated with aircraft inception and certification and compliance requirements can surely create stress and anxiety. These many factors challenge relationships, create buyer’s remorse and even negatively affect the OEM (if buying new). There’s pressure to sign the Letter of Intent (LoI). What you’re buying may be considered a special deal or a one-of-akind opportunity which, although true, still merits thoughtful consideration. It is in the purchase agreement where you


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and the seller will delineate the terms of the transaction; this is a living document that, once signed, will provide both parties with a playbook for the purchase process. Operational Life: While structuring the deal, you must plan the operational life of your airplane. The purchase should not be focused only on low price. An aircraft may be discounted considerably to attract your business, but value-added benefits that last over the life of the aircraft may be more important than purchase price. Maintenance Program: No aircraft should be bought new without a comprehensive manufacturer’s maintenance program that together with a strong warranty will provide nearly fixed maintenance costs. The possibility of having pre-paid maintenance added to your aircraft purchase may require paying more than sticker price, but being able to depreciate maintenance as part of the aircraft purchase offers an advantage (check with your tax advisor). Negotiating the cost of technical publications, on-line record keeping and training as part of the purchase agreement will create significant cost benefits to ownership. If buying pre-owned, is the aircraft registered on a tip-to-tail/power-by-the-hour maintenance plan, and is it fully transferrable to you as the new owner? This should be a minimum expectation. The sophisticated buyer focuses on the benefits that may be obtained by aggregating operational items into the purchase price. To top it off, you must consider an engine and APU care program carefully negotiated to address expected annual hours flown, loaner engine agreement, FOD ingestion insurance and supplemental lift during scheduled and unscheduled maintenance events.

Protect the Investment

You will need to put together an experienced delivery team starting with a professional who has intimate knowledge of the aircraft being purchased and who will lead the pre-purchase and acceptance inspections. Also seek the assistance of a capable legal and financial team that will navigate the transaction process leading to closing, acceptance and delivery. As you execute the purchase, you must make critical decisions that, unaddressed, could delay operational start and cost your employer dearly. It isn’t rare to see an aircraft fully paid-up and delivered sitting on a ramp for weeks for the lack of its required operational permits or crew training. There are cases where serious money is lost because the aircraft failed to be placed in operation during the fiscal year, preventing depreciation and taxation advantages from being taken as planned. Letters of Authorizations: RVSM, MNPS, RNP, BRNAV, P-RNAV, ADS-B and CPDLC are all required to make your airplane fully operational. These

essential documents can take many months to be issued after submitting requests to the appropriate authorities. Advance preparation of all documentation and close conference with the issuing agency will eliminate roadblocks. Residence: Although the first thought may be to house the aircraft at the nearest airport, it may not be the best arrangement. Here’s why… • Does the state and county offer tax breaks for a corporate aircraft? Is it advantageous to have it registered somewhere else under a different company structure? • Does the principal reside part of the year in a more tax friendly state where aircraft ownership is of a lesser tax burden? (Obviously, to answer the above questions, check with your legal team and tax advisors.) • How much does the principal value privacy and is it beneficial to the owner for the airplane to be less visible, further away from company HQ and prying eyes? • Are there hangars available for your aircraft that will provide the protection and storage that you require? The above are all questions needing to be answered to assess the benefits that may be associated with each decision. There are, however, other questions to resolve that will strengthen the deal. Fuel Purchase: In a typical aircraft operation, fuel represents 50% of the annual budget and if efficiently managed will reduce total annual costs. Consider negotiating a long-term fuel contact at discount prices where possible. Staffing Costs: Selecting capable personnel for your aviation effort is essential, since salaries impact the Flight Department’s bottom line. But beware of being penny wise and pound foolish. To obtain and retain the best talent, be willing to exceed industry norms. A capable maintenance program, either in-house or via contract, is a good investment that can pay dividends by avoiding untoward events.

In Summary…

Clearly this discussion only skimmed through the basics of an aircraft purchase. Building long-term relationships is key to transitioning from buyer to operator. With many purchases behind me, I always start the process by saying “I am a qualified buyer and you are here to sell. We have common goals - let’s make this a good deal and a pleasurable experience for all of us!” Have you any experiences or suggestions on how we can improve this process? Please share your insights and experiences with AvBuyer. T Are you looking for more articles on Business Aircraft Ownership? Visit www.avbuyer.com/ articles/category/business-aircraft-ownership

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“Advance preparation of all documentation and close conference with the issuing agency will eliminate roadblocks.”


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Buying a Jet? Extract Added Value 84

How To Get The Most From Your Company Jet Purchase, Longer Term. With the variety of aircraft available in the Business Aviation market, it’s safe to say there are almost always several options for meeting a buyer’s needs, notes Andre Fodor, Johnsonville Sausage. How do you create added value? usiness Aviation’s OEMs have contributed to a fine array of jets for sale on today’s market. Competing aircraft can appear to offer similar operational capabilities, technology and pricing. The factor swaying the decision in favor of one offering over another often comes down to the ‘Added Value’. Added Value is fairly subjective, so feel free to add your thoughts by contacting us via editorial@avbuyer.com. Personally speaking, the key factor boils down a simple proposition—with whom I’ll build a long-term aircraft ownership and management experience. Let me illustrate… During the recent procurement of a large jet for my flight department, the final decision was made after evaluating the longevity of the sales and support team working for the chosen OEM. I did some research to check how regularly the OEM changed its field service representatives

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and sales staff. I needed certainty that I’d receive consistent support before jumping head-long into a multi-million dollar deal! Professional aviation managers know that there’s a maturing process for every new aircraft. The first year of ownership may be challenging, and many potential problems might need to be overcome to maintain the high dispatch reliability required to meet a demanding flight schedule. Support, expertise and action are essential. Committed and supportive relationships ensure you’ll know who to call late in the evening to obtain approval for immediate shipment of a part, or for a technician to arrive on-scene. Effective customer support must come before the OEM handles its internal red tape for managing warranty and post-sale support. There’s much that can happen on your behalf by taking the time to make lasting connections as a part of the aircraft purchase process.




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86 Location, Location, Location

“ In exchange, I gained a trained service team right in my hangar.”

Value Added includes considering how far you are from a service center and a mobile service team. In the case of our aircraft, we’re 30 minutes flying time from an authorized service center that can handle any maintenance in our airplane and cover all our warranties. In the case of one of our aircraft, I approached a known service center and suggested that they had an opportunity to have a mobile service team in our geographic location. I offered them space and support to set up a truck at our airport. I helped them validate that there was a market to serve and reasons to extend their territory. In exchange, I gained a trained service team right in my hangar. I created mutual value, and strengthened a long-term relationship and increased good will.

Upgrade Planning

Another example of Value Added was highlighted in a discussion I had with a prospective aircraft buyer. His expectation from his aircraft purchase was to stay connected to his three children (and future grand-children) across three states. His aircraft of choice, which would only allow for eight

passengers with limited baggage space, could quickly become operationally obsolete. Resources were available to afford a larger aircraft, so we discussed a plan where he would start with the smaller airplane and then transition to something larger as his family grew. With a pre-agreed, structured purchase and upgrade plan using the same OEM, he was able to make a Value Added choice that fit his plans both now and in the future. In summary, ‘Value Added’ comes with strengthening relationships. Business should benefit all involved parties; it can’t be only about me. I try to provide value beyond just being a buyer by asking how I can benefit my business partners through my good will and interest in their success. After all, once the purchase is complete, we are vested in a long-term partnership that requires loyalty and trust. Come to think of it, it’s not unlike the formula for a successful marriage! Are you looking for more articles on Business Aircraft Ownership? Visit www.avbuyer.com/ articles/category/business-aircraft-ownership


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Buying a Jet? The Need for the Long View

When investing in a new business aircraft, experience and long-term commitment matters â&#x20AC;&#x201C; both from you and from those you deal with on the transaction, notes Andre Fodor, Director Aviation, Johnsonville Sausage. A recent experience highlights whyâ&#x20AC;Ś ollowing a splurge of orders from China, and the hunger of wealthy Russians and Middle Easterners for fast moving jets over recent years, the United States is back on top as the most viable global market for business aircraft sales. The sharp fall in oil prices slowed new aircraft deliveries and caused used airplanes to flood into the market, which in turn forced residual values down. I suspect time and creativity will be needed to bring new traction to previously hot markets such as China. Ultimately, itâ&#x20AC;&#x2122;s going to take more than incentivized pricing from OEMs to move

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airplanes. Creative thinking, value added and solid relationships will be ever more important in getting deals moving along an upward trajectory. In particular, I believe in long-term relationships and a service-oriented approach that adds value, synergy and robustness to the aircraft ownership process. If we look creatively, in just about all business models there are golden crumbs; opportunities to make small changes that aggregate quality. Often these are perceived as insignificant, but when added together they create a polished, sophisticated product that brings enhanced value to the ownership experience.




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90 Long-Term Relationships…

“He also will be a main contender in future aircraft ownership deals where I am involved!”

More than ever, the long-term relationships built over years of presence in the industry will differentiate who makes the sales. Other flight department managers and aircraft owners will, like me, pause over an aircraft purchase if the sales and technical team have little or no history with an OEM or within the industry. When there are tough issues to be resolved – and there always are – the buyer needs assurance that someone with influence, staying power and deep rooted connections will get answers and actions for the purchaser. Having someone with many years of experience with a company or market adds the necessary comfort layer to the transaction and post-sale relationship. Let me illustrate the role trust plays in this business. Not long ago, I was involved in the purchase of a large business jet that would operate primarily from one airport. We were looking at long-range jets from several OEMs and favoured one aircraft that had all the amenities that our principal wanted. The lead salesperson was a veteran of the market with over 25 years at the same OEM. His team understood that their good name was worth much more than a single sale at any cost. Nevertheless, this transaction would represent a major score for their territory if successful. One afternoon, after fielding a torrent of calls and emails that typically come when you’re

approaching the final stage of an aircraft deal, my phone rang… It was the lead salesperson, and he’d called to tell me that he’d noticed the airport where we were intending to operate had a weight restriction that would seriously hinder the airplane’s range and operational envelope... Together with his performance and flight operations team, he had researched possible solutions and concluded that this aircraft would not be best suited in the case of our operations; that another brand would be the better choice. Essentially, the salesperson was prepared to cut from a $50m deal, prioritizing honesty and integrity as being more important. He gained my loyalty, appreciation and respect that will generate him years’ worth of referrals and the highest praise. He also will be a main contender in future aircraft ownership deals where I am involved!

A Moral Story…

I will never forget what I learned from an established real-estate agent many years ago. When emerging markets are hot, anyone can sell. When making a major purchase decision, find those individuals who have been around through the down cycles and you’ll find proven commitment and endurance to produce value and quality. T Are you looking for more articles on Business Aircraft Ownership? Visit www.avbuyer.com/ articles/category/business-aircraft-ownership


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Pre-Purchase Aircraft Inspections Anticipating and Navigating a Complex Process Successfully The pre-purchase inspection: It’s an essential part of any used aircraft transaction, meaning it’s vital to understand both from the perspective of the buyer and the seller, says Lufthansa Bombardier Aircraft Services’ Robert Drover... hen considering the Pre-Purchase Inspection (PPI) it makes sense to begin early, preferably at the Aircraft Purchase Agreement (APA) stage of the transaction. After all, it is the APA that will specify the scope of the PPI, as well as the conditions under which the buyer can cancel the transaction if discrepancies are revealed as a result of the PPI.

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There are various matters to resolve between buyer and seller before a successful PPI can take place. For example, they must agree on a facility to conduct the inspection. To avoid a conflict of interest, the aircraft buyer should always select a neutral facility that has not undertaken the regular, scheduled maintenance for the aircraft previously or had any other pre-existing relationship with the seller. The reason for this is


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undertaken than the seller is happy to include in the PPI. For example, a buyer might require a highly comprehensive inspection on an older aircraft (common practice), or one that has been exposed to more adverse climates (salt air or dusty environment). Perhaps the aircraft in question has damage history that the buyer wants checked carefully, or was operated in a part of the world whose infrastructure does not support the same standard of maintenance as is common in the buyer’s region. While the seller may be concerned that any corrective action required as a result of the more comprehensive inspection would eat into the value of the transaction to them, the buyer naturally does not want to pay for an unseen airworthiness issue that could have been identified by a more thorough inspection. A good inspection shop will help clarify the scope of inspection available to both buyer and seller. For example, LBAS offers its inspections at Levels 1-3 - Level 3 being the most detailed inspection - but with each level being clearly defined and based on the MRO’s experience with the specific aircraft type. The buyer and seller, together with their representatives, must work together to iron out their differences and mutually agree on the scope that the chosen shop will perform. Once an agreement is reached, the APA can then define the delivery conditions between the aircraft buyer and seller, and the PPI can proceed.

“A good inspection shop will help clarify the scope of

What Happens in a PPI?

simple - an ‘independent’ facility is best-placed to provide an independent, non-biased inspection report. It is also important that the independent facility is able to demonstrate experience with the aircraft type being inspected. The buyer should be able to obtain previous customer references to confirm the experience, and offer insight on the quality of the work previously undertaken. Furthermore, beware the price that seems too good to be true! Never choose a less experienced facility because its price is lower. Remember, you are dealing with a multi-million dollar transaction in most cases, and you can be sure you will ultimately get what you pay for! The PPI is not something that should be shortchanged.

Other Bones of Contention

An additional area that occasionally arises, and needs resolving at the APA stage of the transaction is the scope of the inspection. Perhaps the aircraft buyer wants more inspection tasks to be

PPIs are a complex business with the various interests involved. An experienced facility will help manage the complexities, and LBAS aims to be a pivotal point in the transaction, seeking to help manage the process and ensure that both buyer and seller are happy with the outcome. But what, typically, can each party expect from the PPI process? Typically at LBAS, once the aircraft buyer has initiated the process and requested a PPI, they will receive a proposal from the facility with the options available (Level 1-3 in LBAS’ case), with each level being clearly defined. Alternatively, the buyer may choose to define their own inspection scope in addition to the facility’s recommendations. Once selected, the scope of the PPI will be clearly defined, leaving no room for misunderstanding from any of the parties, and when the seller agrees to the scope and nature of the PPI, the buyer will pay for the inspection up-front. The buyer, seller and facility should then seek to execute a three-party agreement that governs individual responsibilities, and establishes the lines of communication for the duration of the PPI – all of which are essential to prevent the process from becoming more complicated than it needs to be.

inspection available...”




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“In most instances, the PPI will be completed before any discrepancies are rectified.”

The aircraft and its records are then delivered to the facility and the inspection can begin. Ideally, both buyer and seller will have representatives on site throughout the inspection process. In most instances, the PPI will be completed before any discrepancies are rectified. In any case all discrepancies found are communicated to both buyer and seller for them to agree and approve before any action is taken. Furthermore, at LBAS, no action to rectify a discrepancy will ensue without individual snag approval. A final report will be generated, providing a summary of the aircraft condition and status of airworthiness related items – this is provided initially to the buyer and (if the buyer agrees) also to the seller upon request.

PPI Over, What Next?

Typically a PPI will identify two categories of discrepancy: airworthiness limiting and nonairworthiness-limiting. •

As a matter of course, the seller will always pay for the airworthiness-limiting items as they’re obliged to deliver a fully airworthy aircraft to the buyer.

Other, non-airworthiness items are presented to both buyer and seller for them to agree between themselves regarding cost of corrective actions.

Once one of the two parties approves the individual items, the facility will proceed with rectification. If neither party agrees to take responsibility for an item, that item remains ‘open’. Once all approved items are corrected, the work order is closed, the respective invoices are billed, and the transaction can move towards completion. Thus you can see that close lines of communication are required for an aircraft transaction before, during and after the pre-purchase inspection. This is no time to try and cut costs, and both parties will need a full complement of aviation professionals and a knowledgeable, experienced PPI facility to help them navigate the process and come away from the transaction feeling as though they each got a great deal! T

Are you looking for more articles on Ownership? Visit www.avbuyer.com/articles/category/ business-aircraft-ownership


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Old Airplanes, New Expectations Understanding the Cost of a Great Price As he watches our industry recover, Jay Mesinger ponders how much life is left in the older segment of the Business Aviation fleet – for those buyers who are both realistic and careful…

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hen I refer to the older segment of the business jet fleet, I include the older Learjet, Hawker and Falcon models and the like. While the operating costs might be higher than for newer jets due to age of the aircraft as well as the time on the engines and airframes, who could argue with the purchase prices for these aircraft? Irrespective of the operating costs, a prospective buyer of older equipment can still potentially secure “a lot of airplane for their money”, and this still holds true today. Under certain conditions and applications, older airplanes have life left inside of them, and we have had the privilege in recent months to represent several for sale. Moreover, in every case we’ve been successful in selling our listings. But there is one factor that has been essential in every instance: product support is rapidly disappearing within this sector. When we consider product support, we are not just talking about the manufacturer of the airframe, but of equal importance the OEMs of the aircraft’s systems and components. When you own an airplane and have no plan to sell it, you learn to live with some inoperable systems (and by that, I mean systems non-essential to the legal operation of the aircraft, i.e. the flight phone, DVD player, coffee maker, etc.). The rubber meets the road when you plan to sell, however…

The Cost of a Great Price

Even as we have done a few times lately, you can carve certain systems out of a requirement of a delivery condition. For example, it may be noted that all systems will function except the two installed DVD Players. This can work if everyone is in agreement, but do try to be very specific in the Purchase Agreement. Beware, also, that some buyers will use that knowledge to try to repurpose the price of the aircraft. They do not give any value to the already low price they are paying, or the courtesy of the seller letting the buyer know well in advance what is and isn’t functional. By way of a cautionary tale regarding buying/selling older aircraft, let me offer the example of a recent pre-buy inspection of an older Falcon model. We had previously carved out the two flight phone system handsets in the cabin area that were nonfunctional from the Purchase Agreement, but when we got to the pre-buy inspection we realized the cockpit handset did not work either. Suddenly we weren’t just dealing with a handset issue, but a bigger system issue. You’ve guessed it - once we identified the problem we discovered the vendor no longer made the parts to rectify the problem. The only alternative was to replace the sys-

tem with one that was supported by the OEM at a cost of approximately $150,000. The buyer’s glance at the seller told it all: “How are you going to handle this one?” Of course, the buyer knew that the seller was neither going to reduce the price by that amount or replace the system with the new, supported one. Nevertheless, this scenario reminded me of the famous saying that ‘Price is a onetime thing, but Cost is a lifetime thing’. There is a motivating price to buying older aircraft that can also come with a less than motivating cost. I am sure each of you who buy and sell aircraft can add your own stories of the cost of a great price.

Managing Expectations

This article is not intended to suggest that these older airplanes do not have a long life. It’s meant to set an expectation more in line with the reality of the ownership lifecycle. Buyers: do not approach these ‘great buys’ as though there’s no collateral cost associated. Very often the net effect is still in favor of the buyer, but be very careful to understand each and every system in the aircraft. Understand as you weigh the benefit of the purchase against the cost to maintain non-essential systems that may be important to you and your operation. Sellers: you can help the process by heeding the following advice… • Know that when you seek to sell the aircraft, the buyer may set expectations for his own operation that may be different than yours. • Always represent the aircraft from the very first day with the non-functioning items you want to ‘carve out’ of the Purchase Agreement. • Price the airplane accordingly, and then focus on all of the great things about the listing. • Let a potential buyer know that additional expenses may occur if those items are mandatory for their operation. In summary, I do not see the emerging markets rebounding during 2016, meaning continued pressure on North America to whittle away the high levels of aircraft inventory available on the market. This continued pricing pressure will produce ongoing opportunity for buyers. Frankly, whether you like the prices or not, the fact that transactions are occurring brings even greater opportunity for the seller. First time buyers will be rewarded with a lower cost-of-entry to the market. Be vigilant, be aware, and be ready to pounce. T


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Financing Older Aircraft: Lessons from a Company Bucking BizAv Lending Trends

Martin Ormon, founder of Aircraft Finance Corp, has been financing older aircraft for clients since before the 2008 recession. Dave Higdon discusses his successful business model centered on a niche few other lenders will considerâ&#x20AC;Ś

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hose with memories of the business aircraft market in 2007-2008 will remember one of the factors that undercut residual values: A steep decline in financing options for aircraft aged 1014 years, and the near-total collapse in loan opportunities for aircraft aged 15-plus. Loans on aircraft older than 10 years required significantly higher down-payments, came with shorter terms, and commanded higher interest rates. For aircraft older than 20 the bar rose even higher. Overall, money to finance anything but factory-new was scarce. For those who found any options, they were expensive. While conditions in the business aircraft market have improved markedly in the years that followed, loans on older business aircraft didn't

return to the levels and terms before the current market glut brought a slowdown in pre-owned aircraft transactions. Meanwhile, beginning before the downturn, through the slump and into better times, one company has been offering terms and rates on older jets and propjets. Aircraft aged 10, 20 even almost 30 years old are all part of its loan portfolio. Martin Ormon, Founder of Californiabased Aircraft Finance Corporation, is committed to providing clients with highly competitive rates, with highly competitive loan programs and a highly personalized service.

The Accidental Banker

At age 27, Ormon founded a successful hedge fund in 1992 after getting started in the field


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MARTIN ORMON

working for other people. “I went to work on Wall Street but didn't really like the people,” he told AvBuyer in a recent interview. But those times opened doors, helped his practical education, and put him in the company of business aircraft operators. One of his hedge-fund clients owned a relatively new Hawker 800; they needed financing for a piece of property on which they wanted to build a dealership. “They got in touch with me about some land they wanted. I saw what they wanted – they didn't want to tap their credit line. So we used the Hawker as collateral on a short-term loan,” he recalled. But after 15 months, he recalled, they still couldn’t get their act together. “The deal fell apart and I wound up taking the Hawker. My partners looked at me and said, ‘Ok, smart guy, what now?’” He told them they were going into the aircraft business…! So in 2000 Ormon started Aircraft Finance Corp. Ormon found a client who leased the Hawker 800 for three years, which almost paid off the note. “I leased it again for a while, and then sold it to a buyer for zero down - and we made money. It turns out that the residual value of an aircraft holds well long after it's been fully depreciated for tax purposes.” That difference in approach works for the buyers he finances, for the sellers able to move their old aircraft, and for Aircraft Finance Corporation. In August 2000 Ormon started his small aircraft finance bank and let it make money for him. “I didn't think much more about the

small amount of business we were doing...until the downturn,” he recalls.

Opportunity from Adversity

“It was in 2006-2007 that pre-owned business aircraft sales started dropping,” he recalls. “Everybody was leaving the market, with thousands of aircraft out there and available. I saw it as a great time to get in.” With investment funds from some of his hedge fund clients, he ramped up Aircraft Finance Corp to a higher level, taking an approach nearly completely the opposite to the conventional banks. So far, he's been profitable on his terms. “So many financing companies don't want an older airplane on their balance sheet,” Ormon reflects. “They get rid of them if they're 12-14 years old - but they're still viable! I based my amortization on 20 years. And that's why I’ve created this niche. It works. “The bankers all laughed while I took on such loans during the downturn, but throughout the slump I had no defaults. Many of the bigger banks suffered multiple defaults.” Part of Ormon's success grew out of his achievements as an investment banker consequently, Aircraft Finance Corp uses relatively little outside money to underwrite its deals. “We are our own bank,” Ormon stresses. “Eighty-five percent of our money is our own through our partnership with two federally chartered banks. We guarantee our clients loans. We write the deal.” The other 15 percent comes from private-equity financing Aircraft Finance Corp arranges. 

“Everybody was leaving the market, with thousands of aircraft out there and available. I saw it as a great time to get in.”


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“If you’re in this market for financing older aircraft, you need to want to keep your customer flying and keep your margin of financial safety there.”

Asked whether the difference in practices stems from failing to appreciate the difference between residual value and depreciated value, Ormon nearly leaps off his feet. “Exactly! You can buy a Hawker 800 for $4m that was $17m new. If the airplane’s enrolled on an engine program, we’re comfortable to write the loan for 20 years. The owner won’t usually keep it for the 20 years (the average is 4.5 years). “They sell it, pay us off, and get another airplane that we can lend on. “Some of the bigger banks might give that owner 5-7 years, and if the market goes south or fuel costs spike, the owner will walk away leaving the bank with an expensive, inactive asset that’s costing them money...”

The Aviation Rollercoaster

In a recent press release Business Aviation analyst Rolland Vincent noted, “These are dynamic times for our industry. What had seemed a steady march toward recovery these last several years, has now taken a bit of a stumble. This is evident in OEM deliveries and operator sentiment.” He also notes that deliveries of new business aircraft are declining and future growth forecasts have been dialed back multiple times. This reversal is also evident in a growing inventory of unsold pre-owned business aircraft. “We are tremendously oversupplied in this industry. That oversupply is probably the biggest factor driving prices down.” Vincent's calculation of the US market estimates that approximately 3,800 business jets remain idle. A large portion of them are older than 10 years, meaning there's plenty of potential for the financing of older business aircraft. For his part, Ormon doesn't agree that

the aviation market is “lousy” as one analyst recently told AvBuyer. In 2015, Aircraft Finance Corp wrote almost $150m in conventional aircraft loans and another $30m in unconventional aircraft loans, Ormon revealed. Both numbers are well above the $2030m in business that Aircraft Finance Corp was writing during its early years. “The average loan last year was about $3.1m on approximately 50 conventional loans. If you add the hard money, we financed about 67 aircraft.” In 2016, business has been even better, he highlights. “I feel we're probably up by 6-7% year-over-year.”

Lessons in Flexible Lending

There is a lesson, Ormon acknowledged, in the problems mortgage companies, homeowners and finance firms faced as they struggled through the Great Recession: It pays to keep the asset in use. “If you’re in this market for financing older aircraft, you need to want to keep your customer flying and keep your margin of financial safety there,” he said. Keeping older aircraft financed, flying and financially viable is largely a matter of flexibility and sensibility. “When you're focused on non-performing assets you don't repossess,” he explained. “When you repossess, you're left with an empty house or an inactive, underused, expensive asset like an aircraft sitting in a hangar...and it’s costing you money. “It’s better to renegotiate the note,” he offers. “Help the customer through the rough spot so that when they sell everyone comes out whole. After all, in the event of repossession, everybody loses…”  More information from www.aircraftbanker.com


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A Discussion On Aircraft Values: 102

How and Why They are Vastly Different

Jeremy R.C. Cox, Senior Certified Aircraft Appraiser and professional aircraft broker, offers his perspectives on valuing business aircraft for resale.

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he market value of a specific aircraft is affected by a multitude of variables, which include but are not limited to: Total-Time in-service/Landings/Cycles; Modification and Upgrades Status; Inspection and Maintenance Status; Configuration/Desirability; Design/Finishes; Condition; Location/Ease of Purchase/Registration Transfer.

To begin our journey through the land of Aircraft Values, it’s important to define and understand various Value Terms, many of which come from the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP), produced by the Appraisal Standards Board of the Appraisal Foundation. The Definition of VALUE is “The monetary relationship between properties, and those who buy, sell, or use those properties.”

Value expresses an economic concept. As such, it is never a fact but always an opinion of the worth of a property at a given time in accordance with a specific definition of value. In appraisal practice, value must always be qualified (for example market value, liquidation value or investment value). Market Value: A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership, or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Forming an opinion of market value is the purpose of many property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion.


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These conditions may vary from definition to definition but generally fall into three categories:

2. 3.

The relationship, knowledge and motivation of the parties (i.e., seller and buyer) The terms of sale (e.g., cash, cash equivalent or other terms); and The conditions of sale (e.g., exposure in a competitive market for a reasonable time prior to sale).

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1.

Appraisers are cautioned to identify the exact definition of market value as well as its applicability in each appraisal completed for the purpose of determining market value. Average Retail: As defined by the Aircraft Bluebook, “this…is the retail market price for an average (mid-time) used aircraft. This price is not a forecast. It is a report from the end of the previous quarter. Use the Bluebook as a guide, then check the current market.” Wholesale: Again from the Bluebook this is a “component of Average Retail resulting in lower value. Prices and other data in the Aircraft Bluebook are editor opinions, which are based on information derived from sources that our editorial staff believes to be reliable. The publisher and editors do not assume any responsibilities for the accuracy of the source material.” Standard Price: This ‘Factory New List Price’ assumes an aircraft with the minimum equipment as specified by the manufacturer. This price for most aircraft includes paint, interior and minimal VFR instruments. Average Equipped: The second ‘Factory New List Price’ reflects the way most aircraft of a particular type left the manufacturer or completion center. It generally includes the equipment listed in the ‘BASE AVG’. Before completing our lesson in definitions, we will quickly return to USPAP for our last two… Personal Property: Identifiable tangible objects that are considered by the general public as being “personal” - for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery, and equipment; all tangible property that is not classified as real estate. Real Property: The interests, benefits and rights inherent in the ownership of real estate. (As you see, the USPAP considers all aircraft as ‘Personal Property.’)

Digging Deeper

It is widely accepted that Market Values are consumer-driven, while Appraised Values are

driven by experts. Unlike Market Value, Appraised Value is not necessarily the sale or purchase price of an aircraft. Rather, it is a guideline in the selling or buying process. Generally, an aircraft will not be sold for more than the Appraised Value, especially if a lender is financing the purchase. Yet the aircraft may actually be worth more than the Appraised Value to a Buyer, and a Seller, based upon their own unique circumstances. Today’s struggling “Post Global Financial Crisis” economy appears to still be in the doldrums as it struggles to re-energize amidst random acts of terrorism, war-torn refugees, company mergers, uncomfortably high unemployment figures abroad, political embezzlement, uncooperative opposing government factions, and an intensely wasteful US Presidential election (two years!). I would argue that there really is no such thing as stable Retail and Wholesale Values anymore. Today’s market most definitely favors the buyer. The majority of sales transactions that I see going through other brokerage firms appear to be priced at or below the quoted Wholesale book value, rather than anything close to quoted Retail. This situation supports my argument that Retail and Wholesale have merged into one Lower-Value, which I now prefer to call “Base Merged Value.” T

“ I would argue that there really is no such thing as stable Retail and Wholesale Values anymore.”


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What’s the Impact of Damage History on Aircraft Value? 104

Using the criteria set forth by the National Aircraft Appraisal Association (NAAA), Certified Appraiser Jeremy Cox discusses the ramification of damage history on his assessment of aircraft evaluation… business aircraft can experience damage ranging from a simple dent resulting from hangar rash to a major mishap requiring extensive restoration. Some repairs require only replacement of specific components while others necessitate extensive labor and possible engineering expertise to make the aircraft airworthy again. Thus we will start this examination of the relationship between damage and value with definitions and descriptions.

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history section of the report should state that no deduction is required for this category of damage and that the entry is informational only.

Non-Deductible Damage: This category is used when a removable item, such as a control surface, was replaced due to an incident but there was no other damage. In other words, all of the damage has been removed from the aircraft and there is no reason to make a deduction in its value. Nevertheless, such a situation is still considered ‘damage history’ and should be reported and documented in the aircraft’s logbooks. The damage

Minor Damage: Ostensibly this category includes minor damage or heavy wear to leading edges of the wing, wing-tip, cowling etc. that have been repaired in a manner consistent with manufacturer’s recommended procedures. No major structural components were involved. For example, a gear up landing where only skin changes were made and no structural damage occurred could be considered here.

Superficial Damage: This category includes slight ‘dings’ generally associated with hangar rash, etc. that have been repaired by replacing damaged areas with new/used serviceable components (wing-tip caps, wheel pants, plastic etc.). Superficial damage may also include a skin change where, for example, an outer rib was slightly bent and repaired or replaced.


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Moderate Damage: Extensive damage to components not affecting major structural components fall within this category.

Extensive Major Damage: Major structural components that have been extensively damaged but repaired in accordance with manufacturers recommended procedures are listed in this category.

The Subjectivity of ‘Damage’

Damage history is very subjective. I have seen some MROs as well as individual mechanics try to gloss over, in their logbook entry, just how extensive the repairs were that they performed on an aircraft. In fact, it is actually acceptable per FAR 145 for a Repair Station to merely quote a Work-Order Reference Number in their logbook entry and after 24 months have elapsed, the work order file that was referenced can be discarded. As an appraiser, if I can’t understand and rationalize damage history because of a cryptic logbook entry or an entry with brevity, I will rate the damage higher by default. The NAAA has taught me, “What you think is minor damage, someone else might call moderate and a third party might call superficial. That is why we (NAAA) have grading instructions for damage history.”

How Price Guides Handle ‘Damage’

The two major aircraft value sources - Vref and Aircraft Bluebook - each try to offer loose guidance on aircraft damage. The Damage Table from the Vref Guide diminishes the value reduction over time because the repair work becomes less questionable as more hours are put on the aircraft post-repair. The Aircraft Bluebook User’s Handbook offers the following advice, meanwhile: “An aircraft that has sustained damage in its lifetime has diminished value. It’s difficult to assess the extent of the diminished value because so many variables must be considered, the most important of which is the type of damage – obviously, a grazed wing tip is less serious than a gear-up landing. Also to be considered are the number of years the airplane has been

105

Major Damage: This category encompasses major structural component damage that is replaced with new/used serviceable components and repaired in accordance with manufacturer recommended procedures, (i.e. wing spar, fire-wall & engine mounts etc.).

successfully flying since the damage was repaired, the reputation of the repair shop, and whether repairs were made with factory new or overhauled parts.” Although the Aircraft Bluebook doesn’t provide a percentage guideline to apply against ‘damage history’, I recommend we use its statement regarding ‘missing log books’: “Research indicates that missing log books could diminish the value of an aircraft by as little as 10% or as much as 25%.”

Bottom-Line of Damage History

Market conditions fluctuate. The used aircraft marketplace is a fluid entity governed by multiple outside forces that include, but are not limited to: The Dow Jones Industrial Average, Unemployment Figures, Inflation, the Dollar Foreign Exchange Rate, Libor, Commodities Values, Political Rhetoric, and more. Damage, however, does not fluctuate. What I mean by this statement is that Damage never goes away. It will always be there unless the effected components are replaced with new components without the need for a ‘Major Repair’. Based upon my experience at JetBrokers, Inc., at least 20% of potential Buyers are put-off by any kind of Damage History, including what many might conclude to be trifling matters like lightning strikes, engine times not matching airframe times, and any reference to the aircraft being a guinea pig for an avionics systems manufacturer by temporarily operating with an Experimental Certificate of Airworthiness. Thus, any damage history will affect future marketability of an aircraft and have an economic impact on its value. T Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/ articles/category/business-aircraft-ownership

“ ...if I can’t understand and rationalize damage history because of a cryptic logbook entry or an entry with brevity, I will rate the damage higher by default.”


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Section Contributors

Timothy Ferrell is Senior Director of Engine Services for JSSI where he manages a global team of Engine Product Line Specialists. He is a licensed Airframe & Powerplant mechanic and can be reached via: tferrell@jetsupport.com

Dave Higdon is a highly respected aviation journalist who has covered all aspects of civil aviation over the past 36 years. Based in Wichita, he has several thousand flight hours, and has piloted pretty much everything from foot-launched wings to combat jets. Contact him via Dave@avbuyer.com


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Managing Your Jet Engine Maintenance 109

An Introduction to Hot-Section Inspections, Overhauls & Downtime How can you manage the cost and downtime of a business aircraft engine overhaul or inspection, asks Dave Higdon? ome basic maintenance occurs on virtually every flight – when the flight crew visually checks the engine condition, lubricant levels and various points designed to highlight an anomaly – such as a dysfunctional low-oil level indicator or any other component indicating something out of specification. Other powerplant maintenance items arrive largely on an hours- or cycles-based schedule, and include the two major events in the life of any turbine engine: The hot-section inspection (HSI) and engine overhaul. While some overhauls are proscribed as ‘on-condition’ events, the HSI generally arrives at a set time period. For engines with a proscribed TBO (Time Between Overhaul), HSI events tend to arrive at the mid-point between zero hours and the TBO limit. For engines with an on-condition TBO cycle, however, HSI times are typically set on a firm schedule, whether 1,500 hours, 1,800 hours, 2,000 hours, or more. The downtimes vary and costs vary accordingly, but anticipate a low six-figure fee to be a starting point for engines that cost in the high six-figures new. Anticipate seven-figure fees for powerplants with new-production prices well into eight-figure sums. One engine-shop operator uses a rule of thumb that overhauls will cost one-third to one-half of the engine's cost when new. Regardless of the renewal costs, the necessity remains to help engines reach their limits, remain cost-effective and, most importantly, reliable and safe. Let's first look at the two different cyclical events.

S

Hot-Section Inspections (HSI)

Here's a relative rarity among aviation acronyms – one that means exactly what it says: An inspection of

the components subjected to the pressures and heat of fuel combustion – the hot section. HSIs help verify that all hot-section elements of an engine remain capable of producing rated power, and they assure efficient and safe performance until the time comes due for the next HSI or overhaul. Turbine engines, whether jet or propjet, share several components: air compressors; combustion chambers and liners; and the turbine wheels turned by the blast of hot air exiting nozzles on the combustion chamber. Inspections generally cover the blades of power and compressor turbines, stationary vane rings, turbine-shroud segments, temperature sensors and connections, and compressor inlet. Components found to be short of standard may need to be replaced or repaired – a step that may entail further disassembly of the engine. Conversely, other items in the hot section may only be flagged for future attention, but will be left in the engine as long as they won't impact the powerplant's integrity. Take, for example, tiny cracks in stationary parts that may be kept in operation; as can rotating components showing minimal erosion and/or corrosion, or wear of ceramic coatings. An HSI is generally the lowest-cost major maintenance event in an engine's life and the shortest, with some engines down for only a couple of days for an uneventful HSI. The flip side comes when an inspection shows more-significant deterioration of those hot-section components (in which case partial or full overhaul may be required). And we can't forget about life-limited parts (LLPs), as set by the engine OEM. Whether cycles or hours define the life-limits, LLPs typically determine the outside limit for how long an engine can stay on the aircraft. The good news is that an overhaul can renew that powerplant's useful life and send it back to work.

“The flip side comes when an inspection shows moresignificant deterioration of those hot-section components...”




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110 The Full Overhaul

“Of course, whether down for an HSI or a complete overhaul, the work will interfere with the aircraft's availability for its primary mission...”

Whether an engine achieves TBO, exceeds TBO, or comes up short as discovered by a hot-section inspection; an overhaul significantly raises the bar on complexity, cost and downtime. Some engines can be overhauled ‘on-wing’ – as most HSIs occur. But many overhauls of jets and propjets entail removal of the powerplant from the aircraft. The first step after removal is the disassembly and item-by-item inspection of components to determine their level of wear, and whether they remain within specified limits and can thus continue working or whether the wear exceeds limits and requires replacement. Modern turbine engines consist of several modules, each of which serves a specific purpose – whether the inlet section with the large fan, the compressor section that follows, the fuel-control components, the hot-section components and others. As each module comes off the engine its components undergo detailed cleaning prior to inspection to compare their condition to the manufacturer's specifications and limits. In general, rotating parts undergo inspections to monitor wear, as well as detailed non-destructive testing in search of tiny cracks that can propagate and ultimately lead to a failure of that component. Among the non-destructive testing available for components are dye-penetration tests, eddy current electronic inspections, or x-ray inspections that reveal details about the insides of metal parts. Inspecting all the components of a high-bypass jet turbine engine can take several days before work begins on replacing and reassembling the engine for a test run and installation back on the aircraft. The time can vary widely depending on the size of the engine and the number of components that require replacement to bring the engine back to factory specification. But at the end of the process the engine should be in like-new condition and ready to make another

run for TBO. Of course, whether down for an HSI or a complete overhaul, the work will interfere with the aircraft's availability for its primary mission: moving you and your people to meet the needs of your business.

Continuing Business During HSI/Overhaul

Depending on the engine, the job and other elements of aircraft maintenance, an engine overhaul or HSI may be scheduled in proximity with other major maintenance, as determined by the airframe OEM, and the type of operation. Remember, the maintenance requirements vary significantly between private operations flying Part 91 missions, and on-demand, charter or leaseback flying Part 135. To keep the business flying, operators often arrange for temporary lift through a leased aircraft, or, depending on demand, charter solutions. For some airframes temporary engine replacements are an option that keeps the owned aircraft working on the thrust of loaned engines. This option, where available, still incurs some downtime. While newer model engines may allow for easier removal and replacement processes requiring fewer hours, such a swap with its post-work checks and return-to-service flights can still take a week or more. But the operator retains access to the familiar aircraft and its cabin accouterments. Scheduling an overhaul to coincide with another major maintenance job helps minimize downtime – not to mention provide an opportunity to accomplish more (such as an ADS-B Out upgrade). Some operators choose to schedule an overhaul for a time when the airframe itself faces a lengthy inspection process, say a C-Check or D-Check period. HSIs can often be accomplished simultaneously with an annual or 100-hour inspection. Making the timing work may enable performance of some work to become a little earlier than might otherwise happen, or conversely a little later (where regulations and conditions allow). The rule of thumb,


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however, is that the greater the job – or the greater the need – the longer the process takes. Consequently, an overhaul for which everything checks out in spec and the removal, tear down, reconditioning and replacement processes for a pair of powerplants proceeds predictably and smoothly, can see the aircraft out of action for several weeks. But the end product is an aircraft with a renewed residual value, as well as a restored level of owner confidence in the safety and efficiency of the engines. Savvy operators and flight departments begin preparing for the dual eventualities of HSIs and full overhauls even before taking delivery of the aircraft. Some handle the advance preparations in-house by regularly making deposits into an engine or powerplant escrow account. Regardless of the deposit cycles (weekly, monthly, quarterly), the amounts should reflect an overhaul-cost estimate divided by the hours between overhaul. If overhaul costs are $200,000 and the TBO is 4,000 hours, the deposits should at a minimum reflect $50 for every hour the engines ran since the previous deposit. Some operators suggest upping that formula by 25 percent to cover any unplanned maintenance and/or to bank extra funds for the hotsection inspection costs. As one operator told AvBuyer, there’s no sense in robbing the overhaul account for the HSI when you can also prepare a cushion for both needs. The other option used by many savvy operators and owners takes the form of a pre-paid hourly-based program like the ones offered by Rolls-Royce CorporateCare and independent providers such as Jet Support Services Inc. (JSSI). The advantage of a pre-paid approach is the delivery through renewal management of an operator's engine maintenance and powerplant overhaul needs, charged at a convenient perhour basis. Some tip-to-tail programs may even include alternative lift for the downtime when an overhaul or hot-section inspection comes due.

A Healthy Aircraft Heart Means Flying...

Just like those of their passengers, the heart of every aircraft stays healthiest when regularly, vigorously exercised. Every aircraft and powerplant technician broached, every planemaker and powerplant producer, offers the same message. Powerplants – the systems on which we depend to power our flights and drive the support systems integral to aircraft use – respond best when flown well and flown often. And like the human heart, confirming the results of that exercise regimen with regular scheduled hotsection exams can help assure that the need to overhaul doesn't arrive prematurely. T

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Preparing for the Day...

Hourly Maintenance Programs Just as foot soldiers are advised to take great care of their feet, aircraft operators should pay particular attention to the wellbeing of their aircraft’s engines. Careful attention to powerplant maintenance protects an aircraft’s value and contributes measurably to safety. An hourly cost maintenance program offers the added advantage by removing much of the unpredictability of the costs associated with aircraft engine upkeep. JSSI, the world’s largest independent provider of hourly cost maintenance programs for aircraft engines and airframes, for example, offers programs tailored to a highly extensive range of airframes and powerplants. An aircraft owner pays an amount of money per hour flown, which provides them with coverage for maintenance needs along with the technical expertise from a company with over 25 years’ experience in the market. Discover more at www.jetsupport.com. Some operators prefer a program provided by the powerplant’s OEM, and Rolls-Royce (among others), provides just such a solution through its CorporateCare engine management program. The concept is the same – pay a per-flight-hour amount, and receive complete engine management, from linemaintenance parts to full engine overhauls. Find out more at: www.rolls-royce.com/civil/services/corporatecare/


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Five Tips to Minimize Engine Downtime & Expense

Understanding the intricate details of maintaining the engines powering business jets today is complex, to say the least, notes JSSI’s Timothy Ferrell. Following are five key areas to help minimize avoidable downtime and expense… here are so many important details to engine maintenance that, if ignored, even the savviest maintenance professional can be sent down a road filled with delays and added costs. The following five tips are suggestions that should help you navigate the turbine engine maintenance process more efficiently…

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1. Plan Ahead

Proper planning for any major aircraft maintenance event is crucial for staying on budget and making sure the work is done in a timely manner. For most turbine engine overhauls, preparation should start 6-12 months in advance. For some larger engines, however, planning should begin no less than 14 months in advance to avoid problems relating to the coordination of engine shop slots and rental

engine availability. JSSI works with customers on a rolling 2-year maintenance forecast. When managing the scheduled maintenance for a fleet of business jets in such a way, the need to plan ahead intensifies. Securing slot times at a facility for an overhaul that accommodates an owner’s schedule and coincides with rental engine availability, can be a challenge. Thus, starting the process at least six (or more) months in advance is important. I have worked with operators that have waited until the engines are almost out of time before starting the overhaul planning process. The task of finding shop availability and rental engines on short notice can get ugly, quickly. And the hope of continuing to fly the aircraft without interruption gets replaced with delays and possible grounding because of the lack of forward planning.


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2. Pre-Sourcing Materials/Supply Chain

…and Accurate Logbooks

Unorganized and incomplete logbooks can create processing delays for the maintenance facility. It takes significantly more time to research the life-limited component and service bulletin status when the historical service records are not tidy. Believe it or not, engines and many accessories are sometimes overhauled or replaced when they still have several hundred hours of time remaining on them. This can come from errors in flight log entries that lead to errors in maintenance records and maintenance tracking programs. Proper documentation that matches what is installed on the engine is essential to avoid any unpleasant surprises.

3. Rental Engines – The Devil’s in the Detail

Rental engine availability can be another big challenge, especially with newer, larger business jets that have limited engine inventory. And there are other details to attend to before the rental engine is ready to fly. Prior to receiving the engine, there needs to be a bailment agreement, as well as proof of hull insurance and listing the lessor as a beneficiary on the hull policy for the time the engine is installed on the aircraft. This can take much longer than expected, especially when companies’ legal departments get involved. The lessor usually expects the underwriter policy to have up to $50m in liability. A rental engine deposit may also be required and is usually 50% to 100% of what the expected charges will be during the term. Shipping an engine also requires insurance, whether it’s your engine or the rental engine. It should not be assumed that the facility or the lessor has it covered. If the engines being overhauled are enrolled onto a maintence program, many of these details may be included in the services provided, or they may be available as an added option to the program contract.

4. Desalination and Sulphidation

There are good reasons that engine manufacturers have desalination and compressor wash recommendations with detailed procedures in their maintenance manuals. Figure A (above) indicates the four stages of sulphidation that can occur to CT blades. The desalination process is a prevention technique that can result in limited discrepancy parts when the scheduled overhaul is conducted. Most washes with water-only are considered ‘desalination’ washes and are recommended for engines with minor sulphidation problems or those not operating in an environment where sulphidation can be extreme. Operating an aircraft within 150 miles of a coastline, will increase the risk for sulphidation and may require more frequent washes with a soap mixture. Periodic borescope inspections may help evaluate the effectiveness of an engine washing program. All of these recommendations can be found in the applicable maintenance manual and are important to minimizing additional expense during the next scheduled event.

5. Scrap Material Approval/Losing Your Place

Once your scheduled maintenance event is underway, the shop facility will request a site visit to review all the rejected parts and material. As mentioned above, these shops run on a tight schedule, so the scrap material reviews must happen in a timely manner to assure the production line is moving and on schedule. If your designated technician cannot be at the shop when requested, then most likely you will lose your place and have to go to the end of the line. This could mean a two-week delay or more, depending on the shop and engine type.

Summary

All of the above tips are important, but there are many more that can improve maintenance efficiency beyond the scope of this article. For example, a few years ago I probably would have replaced one of the above tips with engine preservation protocol. When the economy collapsed, it drove many owners to park their aircraft without the proper OEM recommended preservation process. Today, we rarely see this happening because not only have OEMs reinforced the importance of preservation, but our industry has improved and most owners are flying more and utilizing their aircraft as the business tool they purchased them to be. More information at www.jetsupport.com T

Figure A

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Knowing what life-limited components require replacement at the time of the hot section inspection or overhaul will be invaluable because it allows for pre-sourcing of material that will save time and money. It’s critical to define the list of Service Bulletins to be covered during the visit, not only for cost estimates but also to allow the facility to pre-order the materials needed to perform these tasks. In certain circumstances, there could be a supply issue for a particular part, so securing a supplier for high demand materials is crucial. The maintenance facility can assist with this process by performing a logbook review in advance of the engine induction, which brings me to the second half of this tip, logbooks…

“...engines and many accessories are sometimes overhauled or replaced when they still have several hundred hours of time remaining.”


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Section Contributors

Stuart Hope, co-owner of Hope Aviation, is a licensed Airline Transport Pilot and a frequent NBAA speaker and industry authority on insurance and risk management topics. Contact him via shope@hopeaviation.com

Jessica L. Pownell is an attorney with Cooling & Herbers, P.C., representing and advising aircraft owners and operators, corporate flight departments, Fortune 500 companies, and other aviation-related businesses worldwide. Contact Jessica via jpownell@coolinglaw.com

Troy Rolf manages the Minnesota office of GKG Law P.C., and concentrates his practice in the areas of business aircraft transactions and operations. He is a qualified Commercial Pilot and Advanced Ground Instructor. Contact him at Trolf@gkglaw.com

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Tips for Importing a Jet A Guide to the US Importation of Foreign-Registered Business Aircraft (Part 1 of 3)

Market dynamics globally have created opportunities for US buyers provided they understand what’s required, notes Jessica L. Pownell, attorney with Cooling & Herbers, P.C. he strength of the US dollar has created an excellent opportunity for US buyers of business aircraft, allowing them to acquire quality pre-owned, foreignregistered aircraft at attractive prices. Importing an aircraft into the US can, however, be a complicated process with various pitfalls for the unwary. As outlined in this three-part series, with the right planning an aircraft can be properly and efficiently imported into the US.

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Selecting the Right Inspection Facility

Inspection of a foreign business aircraft can be extensive. Many issues need to be addressed and

resolved to the buyer’s satisfaction. A buyer should evaluate not only the aircraft’s general condition, but also the extent of work necessary to make the aircraft comply with US operational requirements. Thus the selection of the right inspection facility is particularly important. The seller will likely prefer an inspection facility near the aircraft’s home base, but a buyer should insist upon an inspection facility that is qualified and experienced in both the type of aircraft involved and in FAA airworthiness requirements. Since managing the logistics of a foreign inspection is difficult, a buyer will want technical representatives dedicated to the buyer’s interests


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on the ground at the inspection facility. It is also advantageous to find an inspection facility located in a tax-friendly location, as parties frequently elect to close transactions at the inspection facility. However, we recommend that a buyer prioritize inspection facility qualifications over location. A second chance to ‘test fly’ an aircraft on a delivery ferry flight is generally beneficial to a buyer in any event. A key aspect of a foreign-registered aircraft inspection is evaluating the aircraft’s airworthiness, which for the US buyer means first confirming it is eligible for an FAA Standard Airworthiness Certificate. To be eligible, the aircraft must be a production aircraft (i.e., manufactured by a company with a production certificate) with an FAA type-certified design. Almost all US-manufactured aircraft and many foreign-manufactured aircraft are FAA type-certified, production aircraft. The second, more challenging step is to determine whether the aircraft actually complies with FAA airworthiness requirements. The difficulty with which foreign aircraft clear this hurdle can vary considerably. Thus, having the aircraft evaluated by a qualified inspection facility is key. In an attempt to streamline the import and export of aircraft, the FAA has entered into Bilateral Airworthiness Agreements (BAA) and Bilateral Aviation Safety Agreements (BASA) with certain countries whose airworthiness standards are considered equivalent to the FAA’s. While a current airworthiness certificate from a BAA or BASA country does not automatically equate to an FAA Standard Airworthiness Certificate, it does indicate that the aircraft should not require much additional work to comply. A buyer should factor the potential cost of bringing a foreign-registered aircraft into compliance into the overall price of the acquisition and may want to ask the seller to accept responsibility for some (or even all) of such costs. A common strategy is to include a requirement in the Purchase Agreement that the seller pay for all costs to obtain an Export Certificate of Airworthiness from the exporting country. Depending on the aircraft, such Export Certificate of Airworthiness may be required for import of the aircraft into the US. In any event, an Export Certificate of Airworthiness will both accelerate the FAA airworthiness certification process and effectively pass some of the cost on to the seller (as any issues identified in the Export Certificate of Airworthiness inspections will be the seller’s responsibility to resolve). Finally, it is often cost- and time-effective to have a buyer-selected US Designated Airworthiness Representative (DAR) begin the aircraft and records inspection concurrently with the buyer’s pre-buy inspection (more on this matter in Part 2).

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Evaluating Airworthiness

Title Considerations

Receiving clear title is essential to virtually every aircraft buyer. While confirming the title status of a US-registered aircraft is typically straightforward, confirming a foreign aircraft’s title can be more complicated. Broadly speaking, we recommend that a buyer of a foreign aircraft: i)

Ask its US escrow agent to confirm clear title on the FAA Registry if the aircraft was ever USregistered; ii) Confirm clear title on the International Registry of Mobile Assets; and (perhaps most importantly) iii) Confirm clear title on applicable foreign registries. More specifically, each country has its own system for recording aircraft title and liens; for instance, a registry may record title in the name of the aircraft owner or operator, and a country’s protocol may require that liens be filed with the aviation authority, on a separate personal property securities register, or with another governmental body. The most efficient and reliable way to confirm clear title on a foreign registry is often to hire foreign counsel to provide a title opinion. Once a US buyer has selected and evaluated a foreign aircraft, the buyer must plan for the closing, importation, and post-closing operations. Parts 2 and 3 of this series will detail key closing and postclosing considerations and will, hopefully, help make your US importation straightforward and successful. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

“More specifically, each country has its own system for recording aircraft title and liens...”


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Tips for Importing a Jet A Guide to the US Importation of Foreign-Registered Business Aircraft (Part 2 of 3)

Attorney Jessica Pownell continues her discussion of unique contractual issues involved when importing a business aircraft for inclusion on the US registry. hough no two aircraft transactions are alike, there are particular issues that Buyers intending to import aircraft into the US should consider. In addition to the typical terms and conditions, there are several additional Buyer protections to be addressed in the Sales Agreement. In addition to requiring that the Seller provide an Export Certificate of Airworthiness from its foreign registry (as discussed in Part 1), a Buyer may want to further require in the Sales Agreement that the Seller correct any FAA airworthiness items. Nonetheless, even if the Buyer agrees to correct such items, a Buyer may want to consider including a right for Buyer to terminate if the aircraft requires significant work in order to receive an FAA Airworthiness Certificate, or if the Designated Airworthiness Representative (or “DAR”, as

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described below) advises that the aircraft’s FAA Airworthiness Certificate will require exceptions, restrictions or limitations beyond those typically noted for that aircraft model. A Buyer will likely want to ensure that the Seller accepts responsibility in the Agreement for the proper export of the Aircraft from its current country and for any fees or penalties assessed on the aircraft upon its importation into the US (at least to the extent that such fees or penalties relate to Seller’s operations). Although Buyers are generally responsible for the sales taxes imposed on an aircraft acquisition (because it will likely be difficult for a US Buyer to determine without investigation whether any foreign taxes are due), a Buyer may also want to require that Seller be responsible – and indemnify Buyer – for any such foreign taxes (sales or


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Applying for an FAA Registration Certificate

Though the Seller will likely be responsible for deregistration of the aircraft from its current registry, the Buyer is obliged to complete the proper registry documentation and must be eligible to register the aircraft in its name on the FAA Registry at closing. That is, in order to become the registered owner of the aircraft on the FAA registry, a Buyer must complete and file with the FAA at closing an FAA Registration Application (AC Form 8050-1), and, more importantly, such Buyer must meet the FAA citizenship test. Whether a potential registered owner meets the FAA’s citizenship test can sometimes require a detailed examination of factors. Generally speaking, the test requires that a registered owner be one of the following classifications: • (i) An individual US citizen, • (ii) A partnership each of whose partners is an individual US citizen, or • (iii) A corporation or association organized under the laws of the US of which o the president and at least two-thirds of the Board of Directors and other managing officers are US citizens o The corporation or association is “actually controlled” by US citizens, and o At least 75% of the voting interest is owned or controlled by US citizens. If a Buyer cannot meet the citizenship test, the FAA does allow for several alternative routes to registration, including registration (i) in the name of an owner trust or (ii) by a non-citizen corporation if such corporation is organized and doing business under US laws and so long as the aircraft is “based and primarily used” in the US (meaning at least 60% of the total flight hours in each 6-month period following registration are flown in the US).

The FAA Registration Application includes a certification whereby the registered owner certifies its compliance with the citizenship test or the “based and primarily used” test. However, if the registered owner is a limited liability company, the company will also need to complete and file with the FAA a Limited Liability Company Statement detailing its organization and certifying its citizenship status.

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otherwise) imposed on the sale by the Seller’s country. Finally, most, if not all, US Buyers will want the Seller to be responsible under the Agreement for deregistering the aircraft. Furthermore, some Buyers may require in the Agreement that the Deregistration Application be released and filed, and that the Deregistration Confirmation be received, prior to Buyer’s release of the purchase price. However, if the Seller will not agree to deregister prior to release of funds, a Buyer may consider agreeing to the simultaneous release of funds and documents (or another, unique arrangement). In any event, clearly describing the agreed deregistration process in the Sales Agreement not only protects the Buyer but also helps ensure a smooth closing.

Acquiring an FAA Airworthiness Certificate

As mentioned in Part 1, in order to register and operate an aircraft in the US, the aircraft must receive not only an FAA Registration Certificate, but also an FAA Airworthiness Certificate. In order to receive the FAA Airworthiness Certificate, the aircraft must have an airworthiness conformity inspection conducted by an FAA airworthiness inspector or a DAR (such an inspection is typically completed concurrently with the Buyer’s prepurchase inspection). A DAR is someone who has been appointed to examine and inspect (and issue certificates for) airworthiness of aircraft. It is often more efficient to hire a DAR than obtain the services of an FAA airworthiness inspector, and, though the DAR cannot actually issue the FAA Airworthiness Certificate until the aircraft is deregistered from its current registry and placed on the FAA registry, the DAR can confirm whether the aircraft meets all requirements for the Airworthiness Certificate and whether any exceptions, restrictions or limitations must be listed on the Certificate. Once a US buyer has selected and evaluated a foreign aircraft, the Sales Agreement is in place and the buyer is prepared for US registration, the buyer must coordinate the final closing, foreign export, US customs import, and, ultimately, commencement of US operations of the aircraft. Part 3 of this series will outline considerations for the closing date and beyond. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

“ It is often more efficient to hire a DAR than obtain the services of an FAA airworthiness inspector...”


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Tips for Importing a Jet A Guide to the US Importation of Foreign-Registered Business Aircraft (Part 3 of 3)

US importations involve special considerations, and it is vital that a Buyer coordinate the aircraft export, import and closing procedures to properly conclude the transaction and commence US operations, and even to plan for future sale of the aircraft, advises attorney Jessica L. Pownell.

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hough a Seller will likely not complete the customs export of the aircraft from its foreign country until after closing, it is usually advisable for the parties to review applicable export requirements and begin export preparations prior to closing. In particular, if the aircraft will be ferried to the US prior to closing, the Seller may need to comply with various outbound customs procedures before departing for the US (such as a touchdown in, or other export flight out of, the exporting country). Thus, the parties may need to consider such requirements when preparing the ferry flight plan. Similarly, if the parties agree to close in the US, the parties will likely begin US importation procedures prior to closing and upon entry of the aircraft into the US. It is often helpful to hire a customs broker to assist with the importation planning and requisite documentation and inspections. As well, regardless of the selected US delivery location (as discussed further below), the

parties should be aware that the aircraft will likely have to first enter the US and go through US Customs at a specified airport of entry. Further, if the Buyer desires to assign a particular FAA registration number to the aircraft at closing, so long as the number is available or is reserved in the Buyer’s name, the Buyer can file an affidavit with the FAA requesting that such number be assigned to the aircraft upon importation into the US.

Closing Logistics & Final Delivery

The closings of US importations often involve unique factors for which the parties must prepare. For instance, selecting the right delivery location is key, and the best location from a Buyer’s perspective is often the US for several reasons other than convenience. For instance, as the jurisdiction in which the aircraft is located at closing may impose taxes on the aircraft sale, the Buyer will want to review the tax law of any potential delivery location. Many US states have “fly-away” or other sales tax


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exemptions for aircraft transactions (provided the parties comply with the particular law’s requirements). Reviewing the tax law of a foreign closing jurisdiction can be more burdensome for a US Buyer, and a Buyer will likely want to obtain a tax opinion from counsel in the foreign closing jurisdiction (and, perhaps, as noted in Part 2, an indemnity from the Seller against any foreign taxes) before agreeing to close in a foreign locale. As well, in order for the Buyer’s crew to remove the aircraft from a foreign delivery location after closing, a US Buyer will need to ensure that it is familiar with foreign operating procedures and may have to obtain additional flight permits and pilot certifications not required for a US delivery (all of which can be potentially difficult and time consuming). Thus, the simplest arrangement for the Buyer is to have the Seller transport the aircraft to, and deliver the aircraft in, the US. Proper planning of other closing logistics is equally important. Placing all closing documents and funds with a mutually agreeable escrow agent – which agent can file all documentation and release funds at closing in the agreed sequence – minimizes risk for all parties. Even if, as detailed in Part 1, the Buyer confirmed that the aircraft’s title was clear on all applicable registries prior to closing, such registries should be checked again on the day of closing for any new liens. Indeed, in addition to the future title issues posed by outstanding liens on any registry, liens on the current foreign registry can also have an immediate impact, as the foreign registry may reject the Deregistration Application until either all liens are released or all lenders consent to deregistration. The escrow agent can examine the FAA and International Registries on the closing date, and a Buyer can ask the counsel who provided the foreign registry title searches to similarly confirm clear title on the foreign registries. As noted in Part 2, a Buyer in a US importation may want to require that the Seller agree to certain closing procedures, including receipt of a Deregistration Confirmation prior to the Buyer’s release of funds. Further, when choosing the actual closing time, the parties should consider the time zones involved, the expected deregistration processing time, and any nuances (such as an informal cut-off time for same-day deregistrations) of the foreign registry.

In particular, as the FAA will not accept the title transfer and registration documents until deregistration is confirmed, the Buyer will likely not want to be in a position where it releases funds and then must wait overnight for the deregistration request to be processed. Thus, it is usually best that the closing occur during the business hours of the foreign and US registries and the escrow agent’s bank (and the Seller’s bank, if the parties have agreed that Seller’s confirmation of receipt of funds is a prerequisite to other closing actions). Once the closing is complete and the Buyer’s Registration Application has been filed with the FAA, a previously-engaged DAR or FAA airworthiness inspector (as detailed in Part 2) will likely be able to promptly issue an FAA Airworthiness Certificate. Then, if the aircraft was delivered in the US, when the Aircraft’s registration mark is physically changed to the applicable FAA registration number, the Buyer can commence US operations under the Registration Application’s temporary authority; upon receipt from the FAA of either a “fly wire” or the aircraft’s permanent Certificate of Registration, the Buyer can also operate internationally. However, if the aircraft is delivered outside of the US, the Buyer cannot fly under such temporary authority and, as noted above, will likely have to obtain additional permits and certifications before operating the aircraft.

Post-Closing Considerations

A proper importation will likely be important during any future aircraft resale. That is, the new Buyer will likely scrutinize all aircraft documentation, certificates and the chain of title. Thus, the importing Buyer should ensure that all aircraft and importation documents are accurate and complete and that any title or other issues are addressed prior to closing, as correcting such years later can prove challenging. Although US importations can involve unique issues, with thorough preparation a US Buyer can take advantage of the international aircraft market while also protecting against pitfalls. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

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Business Aircraft Federal Tax Depreciation Basics (Part 1) Attorney Troy Rolf dissects the details of depreciation and describes how this accounting principle can benefit owners of business aircraft.

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he US Government allows owners of equipment used for generating income or otherwise ordinary and necessary for the conduct of business, such as a business aircraft, to depreciate the original purchase price of the hardware and deduct the amount eligible for depreciation from revenues. The equipment owner has two basic means for calculating depreciation: Modified Accelerated Cost Recovery System (MACRS) and the Alternate Depreciation System (ADS). Furthermore, depreciation is subject to the use of eligible equipment and to special rules the US Congress enacts from time to time to encourage the purchase of a business asset. Many aircraft owned and operated for business

use are depreciable for federal income tax purposes under the MACRS of Section 168(b) of the Internal Revenue Code, which permits taxpayers to accelerate tax depreciation by allowing a greater percentage of the deductions to be taken during the first few years of the applicable recovery period, compared with using a straight-line depreciation method (i.e., ADS). Of course, the tradeoff is that less depreciation will be available to offset income in later years. Some aircraft are depreciable for income tax purposes but do not qualify for accelerated depreciation under the MACRS system. In that case, the aircraft may be depreciated under the ADS of Section 168(g) of the Code, which allows depreciation on a straight-line basis and thus results


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in equal deductions each year during the recovery period. Recovery periods under the ADS system are typically longer than recovery periods under MACRS for the same property. Whether or not a taxpayer may depreciate an aircraft, and if so, the appropriate depreciation method and recovery period, depends on several factors. These include the category of aircraft (e.g., airplane or helicopter), and the type of use to which the aircraft is put (e.g., personal, business, or commercial charter). Aircraft, other than helicopters, used in commercial activities or contract carrying of passengers and freight by air (e.g., typical Part 135 operations) may be depreciated under MACRS over seven years, or under ADS over twelve years. Aircraft used for qualified business purposes or for the production of income (e.g., typical business-use Part 91 operations), and all depreciable helicopters, may be depreciated under MACRS over five years, or under ADS over six years.

Qualified Business Use

If an aircraft is used part of the time for a qualified business and/or commercial purpose, or for the production of income, and part of the time for personal, non-business purposes, the depreciation deduction allowable for the taxable year will be limited to a fraction of the depreciation deduction that would have been allowed had the aircraft been used solely for business purposes. (As a general rule, a qualified business purpose is any use in a trade or business for which a deduction would be allowed under Section 162 of the Code, which defines deductible trade or business expenses.) The depreciable basis of the aircraft will nevertheless be reduced by the entire amount of depreciation that would have been allowed had all the use of the aircraft during the year constituted Business Use. In addition, whether the depreciable portion of the aircraft may be depreciated under MACRS, or will be required to be depreciated under ADS will depend on which use predominates. If more than 50% of the use of the aircraft during each taxable year constitutes Business Use, the predominantly business use test is satisfied and the depreciable portion of the cost basis of the aircraft generally may be depreciated under MACRS. However, if 50% or less of the use of the aircraft during each taxable year constitutes Business Use, ADS will apply. The predominant business use test must be met during every taxable year that the aircraft is in service. The consequences of failing the test in even a single taxable year can be severe. If the test is failed during any taxable year that the aircraft is in service, the aircraft must be depreciated under the ADS system during such taxable year and all subsequent taxable

â&#x20AC;&#x153;Certain uses of an aircraft by a business entity that arguably may be considered qualified business uses nevertheless will not qualify under certain circumstances.â&#x20AC;?

years. In addition, if the aircraft had been depreciated under MACRS during any prior taxable year, the taxpayer must recapture prior depreciation to the extent that depreciation deductions taken during prior years exceed the deductions that would have been allowed under the ADS system. Certain uses of an aircraft by a business entity that arguably may be considered qualified business uses nevertheless will not qualify under certain circumstances. Specifically, any use of a business aircraft falling within any one of the following three categories will not be treated as a qualified business use for depreciation purposes unless all other qualified business uses (i.e., all qualified business uses excluding any use falling within one of the three categories) comprise at least 25% of the total utilization of the aircraft during the applicable taxable year: 1. The leasing of the aircraft by a company to any person who owns 5% or more of the company, or to any person who is related (within the meaning of Section 267(b) of the Internal Revenue Code) to a person who owns 5% or more of the company. 2. Use of the aircraft to provide compensation (i.e., to provide personal, non-business-use flights without reimbursement at fair market rates) to any person who owns 5% or more of the company, or to any person who is related (within the meaning of Section 267(b) of the Internal Revenue Code) to a person who owns 5% or more of the company. 3. Use of the aircraft to provide compensation to any other person unless an amount is included in the gross income of such person with respect to such use of the aircraft, and any required income tax was withheld (e.g., income is imputed under the Standard Industry Fare Level (SIFL) formula). T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax

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“But the rules are involved,

any companies that own and operate business aircraft attempt to offset some costs by holding the aircraft out for charter at times when it is not otherwise being utilized by the owner. Such mixed utilization of aircraft can affect the depreciation schedule of the asset. As previously mentioned, aircraft other than helicopters, used in commercial activities or contract carrying of passengers and freight by air generally may be depreciated under MACRS over seven years, and aircraft used for qualified business purposes or for the production of income, and all depreciable helicopters, may be depreciated under MACRS over a recovery period of five years. Consequently, when a fixed-wing aircraft (i.e., other than a helicopter) is used part of the time in commercial or contract carrying of passengers and freight by air, and part of the time for other qualified business purposes or for the production of income, questions concerning the appropriate MACRS recovery period are likely to arise.

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‘Primarily Used’ Standard

Treasury regulations specify that when property is used for different purposes at various times in such a manner that the property could potentially be classified into more than one asset class, the property shall be included in the asset class for the activity in which the property is primarily used. Property is to be classified according to the primary use to which the property is put, even though the activity in which the property is used is insubstantial in relation to all of the activities of the taxpayer. In addition, the asset class of an aircraft that is subject to a lease is determined as if the aircraft were owned by the lessee. Although not further defined in the regulations, the “primarily used” standard appears to suggest that a fixed-wing aircraft will be depreciated under MACRS over a seven-year recovery period if the proportion of the time it is used in commercial activities exceeds the proportion of time that it is used for other qualified business purposes or for the production of income. Conversely the same aircraft will be depreciated under MACRS over a five year recovery period if the proportion of the time it is used for other qualified business purposes or for the production of income exceeds the proportion of time that it is used in commercial or contract carrying of passengers and freight by air.

and care must be taken to

eliminate the consequences of improper filings.” Partial Recapture

For purposes of determining the appropriate asset class for a mixed-use aircraft, it is necessary to determine the primary use of the aircraft during each taxable year that the aircraft is in service. If at any time the primary use of the aircraft changes, it may be necessary to convert from one depreciation schedule to another. This can result in a partial recapture event if, for example, an aircraft is used primarily for business purposes in the first year or so after being placed in service (and is therefore depreciated under MACRS over a five year recovery period), but in later years is used primarily in commercial or contract carrying of passengers and freight by air (and therefore must be depreciated under MACRS over a seven year recovery period). Depreciation is highly useful in reducing the taxes resulting from income generation. But the rules are involved, and care must be taken to minimize or eliminate the consequences of improper filings. The Internal Revenue Service expects filings that involve depreciation to comply with all applicable tax codes. Thus the reader is advised to seek qualified council in all matters related to taxes associated with the use of a business aircraft. T Are you looking for more Business Aviation Tax articles? Visit www.avbuyer.com/articles/category/business-aviation-tax/

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It’s Not as Simple as it May Seem…! Dealers should take the time to understand and address insurance issues before adding a client’s aircraft to their fleet coverage, warns Stuart Hope. Owners seeking to sell their aircraft also should pay heed… onsider the following scenario: An aircraft dealer has an exclusive sales agreement with an aircraft owner to market and sell their aircraft. Upon learning the aircraft will be sold, the owner’s pilots take positions flying for another company. Since the owner’s current insurance policy is due to expire soon, the client asks the dealer to insure the aircraft under its fleet policy, which seems like a reasonable request. Firstly, the dealer’s insurance program was written on a monthly basis, so the aircraft owner would pay a monthly premium to the dealer rather than the full annual premium in advance if the owner renewed their own policy. Second, the owner’s insurance policy required all pilots who flew the aircraft to complete simulatorbased recurrent training for that make/model aircraft within the preceding 12 months of flight. The

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dealer’s fleet insurance policy, however, allows them to approve any pilot at their discretion without the training requirement. Last, once the aircraft is sold, the aircraft can simply be deleted from the dealer’s reporting-form insurance. This arrangement allows the aircraft owner to avoid incurring a short-rate cancellation penalty that they would have paid had they renewed their own insurance policy. From the dealer’s perspective, this scenario can sound very reasonable. It helps to “sign the prospect” by apparently solving their insurance problem. At the same time, it solves the age-old problem of finding pilots who have completed simulator-based training in the seller’s make and model aircraft within the preceding 12 months of flight (often a tough task made more difficult if the seller happens to reside in a smaller rural town).


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The dealer’s insurance allows them the flexibility (and responsibility) to approve any pilot they choose whether training is current or not. On the surface, the arrangement seems straightforward and beneficial for both the client and the dealer. But what happens if a loss occurs?

Read the Fine Print!

When dealers add a consigned/For Sale aircraft to their fleet insurance policies, those vehicles are treated no differently than an aircraft the dealer owns and insures. Let’s say the dealer arranges a “demo flight” for a prospective buyer and the pilot approved by the dealer to fly the aircraft has an accident (e.g., a gear up landing). The dealer’s insurance policy will pay for the resulting direct physical damage to the aircraft but will NOT pay for any diminution in value or loss of use. Furthermore, since the aircraft dealer is a commercial operator, they may carry substantially lower liability limits than the seller had carried with their own insurance policy, thereby increasing the exposure for the owner. Unless issues such as the one described have been previously addressed by the client and the dealer (generally via the sales agreement), subsequent actions most certainly will result in more than hurt feelings for both parties. The dealer probably will have a very dissatisfied client (or ex-client), and the owner will have a substantially devalued aircraft.

What Should Be Done?

As a general rule, it is normally best that each party be responsible for their own insurance. In our example, if the aircraft owner had continued carrying their own insurance protection (rather than go under the dealer’s insurance policy) and the aircraft dealer carried liability coverage for their use of non-owned aircraft, the claims process would have proceeded much more smoothly for both client and dealer. The aircraft owner would have turned in the insurance claim to their insurer, who in turn would pay for the direct physical damage. If the owner’s insurer felt the damage had been caused by the negligence of the dealer’s pilot, they would subrogate against the dealer’s insurer to be reimbursed for the dollar amount of the damages paid. The owner could also seek payment from the dealer’s insurer for diminution in value and loss of use since the damage was caused by a third party (i.e., the dealer). Occasionally there are circumstances when it makes sense to insure a seller’s aircraft under the dealer’s insurance policy. If the aircraft owner and the dealer are going to take that route, both parties must understand the insurance ramifications clearly to avoid an unpleasant conversation after a loss. T Are you looking for more Business Aviation Insurance articles? Visit www.avbuyer.com/articles/category/ business-aviation-insurance

“On the surface, the arrangement seems straightforward and beneficial for both the client and the dealer. But what happens if a loss occurs?”


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Facts on Insuring Helicopters

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The Whys and Wherefores of a More Expensive Coverage Although both seem to defy gravity, rotary-wing and fixed-wing aircraft are completely different – as is insuring them, notes Stuart Hope... n January 2016, a tour helicopter in Hawaii carrying six passengers experienced an engine failure near Kauai’s north shore, forcing the pilot to make an emergency landing on the beach. The helicopter sustained substantial damage to the airframe and tail boom, and four passengers were seriously injured. While appearing to be a routine accident covered by insurance, this incident illustrates the difficulties that helicopter operations present for the aviation insurance underwriter when compared with their fixed-wing cousins. A rather straight-forward powerplant problem resulted in an off-field landing with significant repair and medical bills. Oh how helicopters differ… let me count the ways! Helicopters are among the most epic flying machines ever created. Their versatility is simply unmatched. They can take-off and land from airports, rooftops, yachts, oil rigs, backyards, riverbeds, or basically anywhere there is enough room to accommodate the helicopter’s overall footprint - including rotor diameter.

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These unique vehicles are used for electronic news gathering, medevac flights, sightseeing rides, slung loads, firefighting, search and rescue, hunting, tree trimming powerline right of ways, crop spraying, or… simply as executive transport. Fixed-wing aircraft take off and climb to cruising altitude, where they remain until it is time to descend and land. Conversely, helicopters fly low where they are exposed to the perils of hitting trees, powerlines, guide wires, towers, drones and other obstacles. Often the ingress and egress into a particular landing zone is being performed by the pilot for the first time, unlike accessing an airport that has published vertical descent and obstacle clearance information.

Underwriting Challenges

From an underwriting perspective, the helicopter is a totally different beast. Because they face unique exposures and because their accident rate per 100,000 flight hours is significantly higher than fixed-wing aircraft, helicopter premiums are 3-4 times more expensive than a similarly valued fixed-wing aircraft.


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Deductibles are also much higher—typically 10% of the insured value of the aircraft but negotiable (up or down) depending on the use, pilots, home base, etc. Furthermore, it is difficult to screen for the best rotary-wing pilots. A 20,000 hour fixed-wing airline captain seeking helicopter endorsement would be considered a 0-hour student pilot for helicopter transition training; little credit would be given for the applicant’s fixed-wing experience. Judgment is paramount for any pilot operating helicopters, yet the only way an underwriter discovers if a pilot has good judgment or not is after a loss. Thus specific rotary-wing training is crucial. For example, if the aircraft is used for external load/slung cargo operations, there are additional training facilities that specialize in preparing helicopter pilots for those specific operations. Many helicopters carry special equipment that needs to be considered when determining premium costs. A Wescam image-stabilized camera with track beam technology can add six to seven figures in insured exposure, for example. Some of these units can be moved from one helicopter to another. If the helicopter is operated over water, the value of floats (if installed) must be considered in the insurance evaluation. There are rotary-wing operators that use multiple in-line saws arranged vertically to cut powerline right-of-ways. These highly specialized saws and their supporting apparatus are very expensive to replace.

over water, what distances are involved—to oil rigs far at sea or just over small bodies of water? Will they be operated to the local country club to pick up the owner’s daughter and new husband after their wedding? If the occasion is ad hoc, who will provide crowd control, secure the landing zone, evaluate potential obstructions such as powerlines, etc. If roof-top landing pads will be used, is the helipad FAA approved? If the helicopter is operating at racetracks or other sporting events, proximity to crowds or people is a huge exposure and must be addressed. Many injuries are caused because persons external to the helicopter misjudge the height or length of a revolving rotor blades (particularly if the helicopter is on a sloped surface). Many victims fail to account for the tail rotor. Rotary-wing aircraft are much most complex with far more moving parts than the typical business jet. An engine or part failure in a helicopter will likely necessitate an immediately autorotation if the vehicle has a single powerplant or a diversionary landing if a twin is involved. Once an emergency starts in a helicopter, it usually develops very quickly with limited time for the pilot to react. Helicopters can be, and are operated safely and efficiently, but their operating regime presents a much larger exposure for insurance underwriters—a fact that is reflected in much higher premiums and deductibles. T

Location, Location, Location…

Are you looking for more Business Aviation Insurance articles? Visit www.avbuyer.com/articles/category/ business-aviation-insurance

Where helicopters are operated plays a tremendous role in determining premiums. If they will be flown

“Helicopters can be, and are operated safely and efficiently, but their operating regime presents a much larger exposure for insurance underwriters.”


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Section Contributors

Jodie Brown has over 20 yearsâ&#x20AC;&#x2122; Business Aviation experience, and more than 25 years of leadership and teaching experience. A consultant and executive coach to C-Suite executives, owners and directors of aviation companies and Flight Departments, she is founder and president of Summit Solutions. Email: Jodie@summit-solutions.com

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

Fred Haap is an IS-BAO accredited auditor and past Chairman of NBAA. During his distinguished career in aviation, Mr. Haap also spent nearly 30 years as a corporate aviation department manager & pilot, logging more than 13,000 flight hours in a variety of aircraft. Email: fhaap3@aol.com

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

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Creating a Flight Department Presenting a Compelling Plan & Asking for the Order Fred Haap and Jack Olcott summarize the elements addressed in a Flight Department Business Plan. 134 reating a Flight Department requires approval by a firm’s top management or owner. The key to securing approval is presenting a convincing business plan that addresses the issues and concerns management might have regarding operation of a company aircraft and also embraces the advantage of Business Aviation. Most company executives and entrepreneurs, even those seriously considering the acquisition of a business aircraft and the formation of a flight department, have limited knowledge of Business Aviation. Perhaps they have flown on a customer’s aircraft, or they serve on the Board of firms that operate a business aircraft. But their detailed understanding often is minimal and their concern is huge, and what they think they know often is negative. They know, for example, that an aircraft represents a significant capital commitment and if operated improperly the safety and security of the firm’s top people could be at risk. Directors and executives asked to approve the creation of a Flight Department also assume that they will be criticized by shareholders if the acquired aircraft is poorly managed. A prime objective of the business plan, therefore, is reducing management’s anxiety about aircraft acquisition and operation. A secondary objective is providing a reference point for promoting the creation of a Flight

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Department. A new business unit needs a champion. Presumably the senior officer seeking approval for the department will be that champion, advocating the value of Business Aviation, socializing the concept among key decision makers within the company and lobbying for implementation. Executives in favor of obtaining a business aircraft require a solid plan to understand and eventually support creation of a Flight Department. In this summary, we fold the essence of creating a Flight Department into the outline of a complete plan to be presented to top management.

Cover and Contents

The FDBP is a formal document with a Title Page, identification of the plan’s author and a Table of Contents that lists each subject addressed in the presentation. Hard copies should be available for all executives who will participate in the go/no-go decision, and a digital version of the Plan is recommended.

Executive Summary

While it’s tempting to write the Executive Summary first, it should be generated only after all elements of the FDBP have been prepared. As the name implies, the Executive Summary captures the essence of why the company needs a business aircraft and distills how it will be managed to assure safe and efficient operations.


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This element of the Plan is concise—no more than half a page, if possible—and leaves the specifics of implementation to subsequent elements contained in the body of the Plan. This is the place to emphasize that Business Aviation will support the overall objectives of the company and should be included as a business unit within the firm’s organizational structure.

General Description of the Flight Department

This element of the Business Plan presents the Flight Department’s Vision Statement—namely the benefit that Business Aviation will bring to the company when the department is fully functional—as well as the department’s Mission Statement, which is more focused and less conceptual than the overarching Statement of Vision but is highly useful in guiding day-by-day operations. Governing Principles (also known as ‘Values’) are presented in this section. These three concepts—Vision, Mission and Governing Principles—shape how Business Aviation will serve the company and its shareholders. Applying Vision, Mission and Governing Principles as the guide, the Department’s structure and its place within the corporation’s overall organization is presented within the General Description section. The proposed aircraft is identified (if not by specific make and model, at least by category such as light jet), its primary base of operations is specified, and the Flight Department’s personnel complement and organization are shown in sufficient detail to leave no doubt regarding the unit’s size and position within the corporation. Departmental specifics are used subsequently in the Business Plan to budget funds for creating and implementing the Flight

Department. This section describes how the business aircraft will be scheduled, including the identification of users who can be transported (preferably by job classification), who can request trips, and who has the authority to approve or deny such requests. Procedures for booking trips (i.e., how users communicate with the Flight Department) as well as resolving scheduling conflicts are presented. The mechanics of scheduling are described in detail, stating clearly how the company aircraft will be booked for flights.

Department Deliverables

In the words of the late business guru Peter Drucker, “What’s measured improves”. From the onset, a Flight Department needs a means for measuring its output, which basically is transportation that benefits the corporation. The Flight Department Business Plan describes a system for measuring what the Flight Department produces and assigns a value to that product. For example, in addition to tracking classic measures such a passenger miles traveled, the value related to what is accomplished as a result of travel on the company aircraft is documented. When a series of customer visits results in a contract being awarded, the value of that contact is a measure of value for the Flight Department’s deliverable. Similarly, the Flight Department delivers value when it transports the firm’s service specialists to a customer’s factory to address an emergency breakdown. Placing the right person or team at the right spot and at the right time has great value. Performance measures of such value should be established, recorded for each flight, reviewed by the Flight Department Manager and included in ad hoc or annual reviews of the department. 


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Each company will have its own rules for tracking the productivity of aircraft activity, and those rules should be included in the Flight Department Business Plan. Although somewhat controversial, establishing measures of value and efficiency demonstrate insightful management.

Operational Plan and Adherence to Industry Standards

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The purpose of the Flight Department Business Plan is to convince top management that a Flight Department should be formed, and that once created it will be well managed. Management should understand that an Operations Manual specifying day-to-day flight and maintenance procedures will be prepared and will be followed by department personnel. Details of how the company aircraft will be operated are not necessary or appropriate for the FDBP. It is sufficient to state that the department’s Ops Manual will be written and in use prior to an aircraft being placed in service, and that procedures presented in the Ops Manual will adhere to the regulations of the aviation authority where the aircraft is registered. Furthermore, industry best practices—such as those specified in International Standards—Business Aircraft Operations (IS-BAO)— will be incorporated in the department’s Ops Manual and will be followed without fail. The business plan should state, however, how the Ops Manual will be generated—either by the Aviation Manager/Chief Pilot or by engaging specialists in generating Ops Manuals.

Safety & Security

Top management expects—indeed demands—that operation of the company aircraft will be safe and secure. The department’s Ops Manual addresses those concerns with detailed prescriptions of how flight and maintenance procedures will be handled. Nevertheless, it is wise to reference the role that safety and security of a company’s most valuable assets—its employees—play in the Flight Department’s daily operations. Whether expressed or simply lingering in the background, the topic of safety and security is an ever-present issue on the mind of executives who are asked to approve creation of a Flight Department. Leave no doubt that the wellbeing of passengers will always be priority number one.

Management Plan

Describe how the Flight Department will be integrated into the overall management structure of the company in a manner similar to other business units. This section of the Flight Department Business Plan describes the reporting structure of the Aviation Manager to his or her direct supervisor, be that person the CEO,

CFO, head of corporate transportation or other responsible party within the company’s hierarchy. Human Resources and Personnel protocols that apply to other employees must be applicable to Flight Department staff, even though they work away from the firm’s headquarters or major facilities.

Financial Plan

While providing great value, Business Aviation requires a significant investment. The Flight Department Business Plan must identify acquisition and operational costs, and outline a system for departmental cost accounting that is consistent with the company’s system of financial management. For example, because the useful life of a business aircraft usually is longer than the limited time allowed to depreciate that type of capital asset, care must be taken to convey how the unique aspects of aircraft finance fit within the firm’s overall systems for valuing its assets. Hence the importance of having a system for measuring the benefits that accrue from using a business aircraft, such as covered in the section above dealing with Department Deliverables. It is wise to consult with specialists in the CFO’s office when preparing the financial aspects of the business plan.

Launch Plan

A well-presented Flight Department Business Plan expresses the benefits that will accrue to the company by acquiring a business aircraft. Be positive. Assume that top management will say yes. Convey that when they do give the go-ahead, the personnel tasked with implementing the Plan are ready and fully able to proceed. Describe how an aircraft would be acquired and placed into service. Show that the newly formed Flight Department has a clear path to follow once top management makes the decision to proceed.

Appendix & Supporting Documentation

Even the best business plan will be challenged—such is the nature of launching something new within a company. Thus statements of fact should be supported by credible references.

Final Thought

A well-crafted Business Plan for the Flight Department addresses each element of the operation and leaves nothing to chance — a concept that is well understood by the experienced aviator. T Are you looking for more articles on Flight Department Management? Visit www.avbuyer.com/articles/flight-department-management/


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The Benefits of Establishing & Tracking Key Performance Indicators (KPIs) Goals must be set for all business units within a corporation, including the Flight Department. To be effective, however, the aviation manager must be prepared to embrace the need for KPIs, notes David Wyndham. ne very important part of leading a company as well as managing an individual business unit is setting and achieving goals. Visionary goals such as ‘being a product leader’ in a certain field or providing the industry’s ‘best customer service’ should be matched by key performance indicators (KPIs). These measurement tools are critical to the success of the organization. They also need to be applicable to each business unit. For example, if a retailer’s strategic goal is doubling the number of retail locations in the Northeast US, a KPI for sales would be very

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different than a KPI for Legal or HR, although sales and other business units would be aligned to support the retailer’s overall program. For a KPI to be valuable, it must be understandable, meaningful and measurable. It also must help determine progress for the overall success of the company as well as establish measures of effectiveness for business units or teams supporting the program. KPI fulfillment also needs to be (mostly) within the control of the business unit using the indicator. A good idea is for the KPI approach to follow the S.M.A.R.T. criteria...


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Specific: The KPI should be specifically related to the business purpose being pursued and not just a general data point. Measurable: The KPI must have a clearly assigned value. Achievable: KPIs relate to achievements the organization thinks it can meet. They can’t be too easy, but also they cannot rely on perfect conditions to fulfill. Relevancy: This characteristic is often overlooked. As mentioned above, a KPI that works for Sales won’t work for the Legal department. Timelines: KPIs should be time-based, with a defined period of performance.

Having ‘aviation’ KPIs attached to goals is necessary for the aviation department to be managed effectively. For the Flight Department (FD) to contribute to the corporation’s success, it must have the measures in place to support corporate as well as departmental activities. Regarding the example above of a company expanding its retail outlets, the FD manager must decide where the department can provide the most effective support.

Supporting Corporate Expansion

Transportation of development and specialty teams, such as engineering, sales, marketing and HR, typically is a necessity for companies expanding into new locations. Relevant KPIs for the Flight Department may be passengers transported or trips flown to the Northeast in support of the expansion effort. Another KPI can be the ratio of travel time to ‘productive’ time. With the Northeast Expansion goal, productive time is the time spent on site or meeting with the entities needed to launch the new operation. Using the company’s business aircraft reduces travel time and allows for more time on-site for face-toface meetings. A 12-hour travel day probably results in an overnight stay to accommodate an 8-hour meeting, followed by another 12-hours returning home, which is far less productive than a five-hour trip each way during the same day utilizing the aviation department. Flight Department KPIs have a specific value to the company and are within the control of the aviation department. For our example of

regional expansion, they are easily measured, achievable, relevant and timely. In addition to facilitating more productive business hours, the Flight Department Manager in our example can assign values to the time saved. An engineer may be valued to the company at one salary while a senior executive may be valued much higher. This metric is intrinsic when discussing who has access to the business aircraft, but putting measurable values on time can be a difficult exercise. Furthermore, value of a person’s time is above the Flight Department Manager’s pay grade. Nevertheless, an attempt at valuation is worthwhile.

Caution

Be wary of unintended consequences with KPIs. For aviation, focusing on a cost per hour KPI can lead to ignoring productivity of the aircraft. It can also lead to measures being taken to underutilize the aircraft in order to delay major maintenance into another fiscal year. Cost per hour can also avoid looking at aircraft productivity per se. If aircraft A costs $6,000 per hour and Aircraft B costs $5,000, the cost per hour clearly favors Aircraft B. But what if Aircraft A cruses at 460 knots while Aircraft B flies at 400 knots (see Table A, below)? Thus Aircraft A costs $13.04 per mile while Aircraft B costs $12.50 per mile. Let’s assume Aircraft A carries nine passengers and Aircraft B carries seven, the true cost per passenger, per mile for Aircraft A is $1.45 and $1.79 for Aircraft B. Clearly, Aircraft A is about 20% more efficient to operate than Aircraft B, assuming all seats are occupied.

Summary

People are a company’s most valuable asset. Time is a non-renewable resource. Thus, the company aircraft transports the firm’s most valued asset and allows the most productive use of their limiting resource, time. The use of time needs to be directed to areas that create value and support the strategic goals of the company. KPIs are useful in keeping the focus on plan execution. Aviation needs useful KPIs that can help managers achieve superior results for the corporation. T Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/articles/ category/business-aviation-ownership

“ For aviation, focusing on a cost per hour KPI can lead to ignoring productivity of the aircraft.”

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Time Value of Money

A Common Tool for Making Financial Decisions The Chief Pilot and CFO need to speak the same language when discussing aircraft transactions, suggests David Wyndham. Here are a few practical steps to doing so… here are two reasons to replace a business aircraft. Either the aircraft is no longer capable of performing the critical missions assigned to it, or the economics of owning and operating the aircraft are no longer suitable. The Aviation Department Manager is very adept at identifying and discussing Reason One. With respect to Reason Two, aviators certainly are capable of identifying major cost issues. For example, they know or can determine the market value of the company’s aircraft compared with a new model. They know that the current aircraft has a higher fuel burn, higher maintenance costs and will need an engine overhaul within a certain number of hours from the present. And they certainly have opinions regarding alternative aircraft that are new, have warranties, free training for two pilots and a mechanic, and greatly reduced operating costs compared with an aging model. Where Aviation Managers tend to need additional

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education is in how the corporation uses accounting concepts in making the aircraft acquisition decision. The company CFO and his staff would be making the calculations, but it would be helpful if the Aviation Manager had sufficient familiarity with the concepts used by the CFO to understand the issue and communicate knowledgeably with the company’s financial team. Working together, the Aviation Manager and CFO’s financial team will make certain that corporate funds are spent wisely with respect to the business aircraft.

Tools of the Trade

There are two financial concepts the Aviation Department Manager needs to understand: Life Cycle Costing and Time Value of Money. Life Cycle Costing takes into account all the costs associated with owning and operating the aircraft during the period in which the company owns the equipment.


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NPV Explained

With little training, the Aviation Department Manager can use the NPV concept to compare different aircraft options. In explaining the NPV concept to non-financial individuals, I use a pretty simple example. Let's say you owe me $1,000. If you paid me today, you need to hand over $1,000. But, if you can wait a year to pay me and can invest the money to pay the debt at (for example) 6%, you can take $926 today and have the money grow to $1,000 in one year. Then you can clear your debt for $73 less than you owed. Even better, if you can wait two years to pay me, then you need only $857 today invested at 6% interest. So the value of $1,000 two years from now at a 6% return on investment is $857. (Accountants say the NPV of a $1,000 expense paid two years in the future when money can earn 6% interest is $857!) You don’t need an accounting degree to know it makes good sense to have income sooner and pay bills later. If you do this analysis on an investment with expenses and revenues occurring at various times along the period when the aircraft is operated, and sum everything, you end up with a Net Present Value analysis. Companies do NPV calculations all the time, and the analysis helps decide between two or more possible options. The NPV concept enables our clients to evaluate the complex costs of owning and operating high value assets like aircraft, and provides a tool for making financial judgments in a language everyone understands. T

“Life Cycle Costing looks at total costs over time, but which aircraft has a better financial value?”

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Residual Value’s Impact on NPV Calculations Since about 2008, market depreciation of used business aircraft have been in the range of 6-10% per year on average. This percentage change in residual value creates a significant difference when comparing new versus used aircraft. For example, a popular business jet that currently sells for $27m is available as a 10-year old model for about $9m. The 10-year old aircraft has maintenance costs about $500 per hour higher than the new model. But,

the $18m price difference buys a lot of maintenance! What is not shown is the time the older aircraft spends in the shop to have the added maintenance accomplished, and the opportunities that are lost by being unable to fly. Correspondingly, what are the costs of chartering lift when the company aircraft is not available? Companies have business aircraft to capitalize on marketing opportunities and to manage their activities in a timely fashion—in other words to have a high degree of

certainty when fulfilling travel needs. Unscheduled maintenance is a wildcard in that scenario. While a NPV analysis can’t fix the uncertainty of aircraft availability, it can provide a common language for communications between CFO and Aviation Department Manager. If a company operates a lot of hours, new or nearly new models may seem very attractive. But high value decisions such as acquiring business aircraft require careful analysis.

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The acquisition cost for a turbine aircraft tends to be significant, but over time the operating costs can exceed the acquisition cost. Lastly, the Life Cycle Cost model also recognizes the market value of the aircraft as it ages. Comparing the Life Cycle Costs of two different aircraft, maybe one costs less to acquire but costs a lot more to operate. Conversely, maybe one aircraft has a high acquisition cost but low operating expenses. Life Cycle Costing looks at total costs over time, but which aircraft has a better financial value? The answer depends upon when costs are incurred as the aircraft ages. To answer the “when costs are incurred” question, the CFO uses an additional tool, known as Net Present Value (NPV) analysis, that compares the amount and timing of cash flows to arrive at the value of each option. Net Present Value takes into account the initial investment as well as the size and timing of all expenses and revenues during the period of operation. Included in those costs is interest the company pays if money is borrowed to cover aircraft expenses. If the company uses its internal funds to cover aircraft cost, the CFO considers the income that might have been earned if company money had been invested in other activities. Typically, spending company funds is considered an “opportunity cost” (i.e., the earning that might have been generated if the company’s money were spent for another use). Companies typically have an “internal rate of return”, which is the percentage the firm expects to earn when investing its internal funds for equipment or expenses. NPV analysis looks at the amount and timing of all costs from the viewpoint of the present time, calculating what amount of present money would be equivalent to the funds spent as the aircraft ages.


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Cost Accounting for Business Aviation Is Your Company’s Flight Department Being Measured Effectively? You can’t manage what you can’t measure. Flight Department managers need the financial analysis tools and training to manage and control their costs, as David Wyndham explores below.

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ne Fortune 100 client uses three cost categories for its flight department: facilities, travel and personnel. While sufficient for reporting at the executive level, such trifurcation is far too broad for management of Business Aviation costs. In less than five years, a firm typically will spend about as much owning and operating an aircraft as the cost of acquisition—more if purchased on the pre-owned market. Except for overhauls and refurbishments, most of the operating costs go out the door in small enough increments that managers don't realize their total magnitude unless the company has a specific way to measure them. First, let's review the predisposed views that

some managers have when talking about aircraft costs: • A company’s executive leadership, Board and CFO tend to focus on asset management, and their review may only consider a few major categories. The aviation management team, however, needs much more detail to effectively manage its costs. •

The Aviation Department Manager is concerned with all the operating costs of the aircraft, plus the fixed overhead items such as hangar, training, insurance and aviation salaries. Those items need to be separated so that the manager can see the differences between actual and budgeted costs, and explain why those variances exist.




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The Maintenance Manager looks at what it takes to maintain the aircraft to an airworthy condition. That individual needs to know overhaul costs, part costs, shipping costs, labor for required inspections, and more. A high-dollar expense like an engine overhaul gets everyone’s attention, but routine functions also must be closely monitored. The Maintenance Manager needs to know the aircraft’s highest cost systems and most frequently replaced parts. Maintenance labor should be tracked in a similar way. Much of the variability in the Flight Department budget is under the purview of this person.

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Flight Department Managers should collect and track the costs for each aircraft tail number and for each location if there are multiple bases. This information is vital in deciding when to replace an aircraft due to increasing costs. While the maintenance team will know which aircraft is the ‘maintenance hog’, supporting documentation is essential. What if one aircraft has higher costs than all the others? What if one location has issues managing their costs? If all aircraft are grouped together under one cost account, you may never know what is happening until costs are out of control. The basic minimum requirement for cost accounting is that it must collect and organize the costs in a way that is useful to the Flight Department Manager and Maintenance Manager. Remember, you can’t manage what you can’t, or don’t, measure. The measurement system should be flexible enough to allow differentiation in costs between aircraft tail numbers and, if needed, operating locations. Your maintenance tracking software should include cost tracking. If not, hopefully the controller’s office can set up something specific for the Flight Department.

“ If all aircraft are grouped together under one cost account, you may never know what is happening until costs are out of control.”

Detailed costs at the Flight Department level must roll up into the reporting categories needed by the CFO. Aviation and maintenance managers need to understand how costs behave and how to use the company’s cost tools to manage their use of funds. For aviation-specific cost management, I recommend looking at courses offered by NBAA’s Certified Aviation Manager program.

Additional Benefits of Cost Accounting

In addition to managing the aviation budget, detailed cost measurements are needed in benchmarking/metrics and in allocating costs for internal charge-backs. When comparing costs between different Flight Departments, it is important to understand what the costs include. This sounds self-evident, but when a company reports that its aircraft costs $5,000 per hour, the information is ambiguous. What went into that cost? Whether for internal metrics or external benchmarks, the Flight Department Manager must know what costs are included and how they are computed. Many Flight Departments ‘charge’ other business units for use of the aircraft. This procedure allows for allocating the cost of the aircraft to business units that use the department’s product (air transportation). While relatively straightforward for a small company, the process becomes complex when allocating costs among multiple aircraft. While the Flight Department isn’t generating a profit via the sale of a widget, the transportation service it provides is a valuable business asset that needs proper detail in order to be effectively managed. T Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/articles/ category/business-aviation-ownership


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Creating a More Positive Flight Department

Five Steps to Take Before Chaos Happens… Jodie Brown applies her specialized education and many years of experience working with teams to address issues facing Flight Departments…

ummertime and the living is easy (so says the song). But what happens when summer heats up team troubles? It began with a phone call, “Do you have time for a visit? Our Flight Department is becoming unraveled. “Two members of the maintenance crew are yelling at each other in the hangar. One of the pilots is creating his own faction to undermine the Aviation Director’s leadership. Corporate just cut back on contractors due to budget constraints. Everyone is overworked, tired and bored with shuttle operations. On top of it all, we’ve got training and summer vacations, and the demand isn’t letting

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up. I’m being squeezed from all directions!” When personalities from diverse backgrounds and skillsets spend hours together in cockpits and hangars as individuals but little time all together, it’s very hard to address relationship challenges. Within this scenario, departments start to split into tribal wars with splintered groups grasping for gossip and hearsay to justify their perceptions.

Where to Start

Begin by setting a few boundaries. Although we seem to fight against imposed fences, the human mind is more comfortable knowing and respecting your department’s parameters.


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Step 2: A high-performing team holds itself collectively and its members individually accountable. • Respect other’s time by keeping promises, deadlines and time commitments; • Do not offer or accept excuses; others have responsibilities on par with your own; • Hold yourselves accountable for your moods and fix them when they aren’t positive. A cancerous attitude sickens a team-body very quickly. If this should happen, get help immediately from a team-building expert. Step 3: Demonstrate your professionalism and respect of others. • People’s behavior tends to be influenced by the demands of their roles within an environment. We often don’t know our colleagues in depth; only the characteristics they show at work. To convey respect for the position and the person in a given role, we should address them professionally through our choice of words, tone of voice and respectful behavior; • Do not use energy to build separate tribes within the team to support our own agenda or crusade; • Realize that most people would rather avoid conflict. Learn to accept well-intended feedback and coaching without being defensive. Don’t kill the messenger;

Make decisions based on factual data, not on feelings or hearsay.

Step 4: To become a positive and high performance team, communication is critical. It takes effort to communicate. • Accept that we may not get all the information in a timely manner. As an Aviation Director, you walk a thin line between being loyal to the department while being part of the corporate management team. Use all methods of communication to keep everyone up-to-date as much as you can; • Make decisions collaboratively when they have serious consequences. Accept, however, that some decisions are not democratic and not easily explained. A mature person learns to live with disappointments; • Communicate time constraints or limitations and provide options. Options are good. Step 5: Build confidence within and among team members. Confidence is contagious. • Confidence is a feeling that regardless of what happens-good or bad—enables the team to work together to create success. Help people build confidence by seeking positive feedback; • Some people are inherently more fearful of the unknown than others. That awful emotion of anxiety appears when we are uncertain and feel like we have no control. When we’re asked to perform out of our comfort zone, a little support goes a long way. At some point in a team’s growth pattern, someone realizes that team members need to re-calibrate and level-set their behavior and focus. Good leaders know that the time and cost of hiring a specialist to facilitate group dynamics and interpersonal communication is worthwhile. An organizational behavior coach can teach and enhance communication tools to team members. A professionally trained facilitator can navigate through a tough conversation to find positive outcomes while keeping relationships intact. An investment such as this guidance can only make the team more effective and provide a satisfying place to work. T

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Step 1: Demonstrate respect for the position and the role. People are hired for their skillset and their valuable knowledge. When individual egos create a “better than thou” environment, trouble is sure to follow. Leaders sometimes need to say what they expect from others. • Do not talk negatively about team members behind their backs; • Give the benefit of the doubt when it is unclear why someone does or says something. Find out what troubles them; • Apologize when needed and accept apologies when appropriate. Use “please” and “thank you” freely; • Address each person with respect. Use last names if necessary: “Ms. Dolan, would you...” (the word “girls” is never appropriate for professional women, and our use of words displays our values.)


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The Keys to Pilot Health

Tips for Staying Healthy and Productive in the Flight Department Corporate pilots realize that their personal life is shaped by the

company’s flight schedule, notes Andre Fodor, Aviation Director,

Johnsonville Sausage. Acceptance of this reality will require lifestyle adjustments to help maintain a productive, healthy balance…

lexibility that enables a good work-life balance is essential to all corporate pilots. It is the key to maintaining positive mental attitudes and “workstyle” that deliver the very best service Business Aviation has to offer. As a coach to my staff, I encourage everyone within my flight department to maximize

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opportunities, to be flexible in their lifestyles and to prioritize quality of life. These attributes stimulate personnel to excel and shine at their jobs. Following are some examples of lessons I’ve learned over the years in staying healthy and happy within my flying job…


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Just recently while sitting on standby in a hotel in France, I was mulling over my upcoming three months’ flying schedule. There were some grueling long-range trips that would keep me away from home for a long period of time. In all honesty, the prospect invoked sadness at being disconnected from my family for the entirety of the summer. Sure, we are all grown-up professionals and we often ‘tough out’ the worst of our flying schedules, but as I began to apply flexible thinking to the situation I realized that we were about to park our aircraft in Europe for twelve days while our principal traveled by sea. We always keep our airplane fullystaffed, so I put together a plan to have my wife and children join me in Italy at short notice. The flexibility I had worked hard to instill into my personal life enabled the plan to succeed, transforming a grueling schedule into a memorable opportunity. Once all of the risks of schedule changes were considered and accepted, my family took advantage of an opportunity that will be remembered by us all for years to come! We want our principals to think of us as embodying the utmost in efficiency and always being prepared professionally. As I shared my plans with the Chairman of the Board, he acknowledged my good time-management to make the most of a priceless opportunity. The great value to both me and the company were not lost on that seasoned business leader!

Case Study in Fitness

Mental and physical health of personnel is an integral part of the flight department. Without due care and attention in this area of management, we may suffer setbacks that can impair safety and productivity. When I approached age 40, I visited my physician for an annual check-up. At that time, I was a flight operations manager for a major fractional ownership company and my phone rang constantly. It was an exciting, busy and intense job, but it was also an unforgiving, punishing lifestyle. The role brought high stress along with bad eating and resting habits. After reading my lab reports and examining me, the doctor prescribed medication for my blood pressure, sugar and cholesterol. His prognosis scared me, and I decided to make changes. A nutritionist taught me to make good choices. I learned how to navigate cravings for junk food and combat the energy lows that come from long days in the cockpit without regular nourishment and rest. For example, a handful of peanuts and a small protein bar, washed down with water, produced increased physical and mental energy throughout the day.

As I got back into shape, I found that healthy, moderate eating and exercise made me physically and mentally fitter in the cockpit environment.

Case Study in Rest

Many studies claim that most adults have a nightly sleep deficit of at least two hours. There are no prizes for guessing that, with the nature of the corporate pilot’s professional lifestyle, we are often chronically fatigued and suffering from jet lag. Thus, it is crucial to develop a rest schedule. This is one area where flexibility is not a virtue: sticking to the rest plan requires dedication, conviction and some “me-first” thinking. We need to educate our family and friends that after a long trip, we might be jaded and in need of restful recovery before jumping straight in to a flurry of domestic or social activity.

Summary

A balanced lifestyle promoting emotional (personal), mental and physical health is essential. How best to achieve that balance should be an essential discussion within your flight department. Over time, better time management and prioritization will reduce budget costs, enhance operational safety and increase productivity. As a by-product you will have a firm and fit body on which to hang those hard-earned pilot epaulets! T

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Work-Life Flexibility


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Section Contributors

RenĂŠ Banglesdorf, is co-founder and CEO of Charlie Bravo Aviation, a Texas-based company that buys and sells corporate jets, helicopters and turboprops worldwide. More information on Charlie Bravo at www.wepushtin.com

Waleed Muhiddin is VP Strat. Ops & Business Dev. at AMAC Aerospace, which is a market leader in Completions, Maintenance, Charter & Brokering, located at Basel Euro Airport, Switzerland. AMAC caters to every level of Aviation enquiry and/or consultancy. Email: info@amacaerospace.com

Dennis Neumann is Chief Commercial Officer at OHS Aviation Services, boasting more than a decade in Business Aviation & aircraft refurbishment with Jet Aviation Basel, Lufthansa Bombardier Aviation Services (LBAS) and Altenrhein Aviation. www.ohs.aero

Donald Ridge is a Senior Analyst for JSSI, the worldâ&#x20AC;&#x2122;s largest independent provider of hourly cost maintenance programs. He began as a Gulfstream technician, working his way to Director of Maintenance 121/135 Air Carrier. Contact him via www.jetsupport.com

Marek-Sebastian Rinke coordinates all engineering activities, as Senior Engineer, Lufthansa Bombardier Aviation Services. He joined LBAS in 2009, and specializes in in-flight entertainment and satcom modifications on Bombardier business jets. www.lbas.de


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Aircraft Maintenance Issues:

Be Diligent to Avoid Unnecessary Maintenance Costs 152

It’s no secret that aircraft maintenance can be an expensive business. But some associated costs can be avoided if correct upkeep procedures are followed. Waleed Muhiddin highlights five of the most common but preventable parts failures encountered in aircraft that AMAC Aerospace maintains… o gain a good understanding of maintenance costs in relation to the aircraft type flown, an owner needs to consider various factors including where they base their aircraft, how they use their aircraft, where they typically fly – and how regularly they are using it. Depending to the answer to such questions, reasonable maintenance costs will vary. The owner’s understanding of these questions and their answers will be further improved if they commit to using the same MRO facility during their ownership period – i.e. select a maintenance ‘home’ for the airplane. This helps the owner become increasingly accustomed to their aircraft’s needs over time as more facility inputs occur. A relationship of trust also forms, allowing the owner to benefit from the expertise of the facility and (hopefully) avoid unnecessary cost as procedures and advice are followed.

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An aircraft owner needs a good understanding of the potential problem areas in their particular aircraft type, and act accordingly to help protect parts and extend their useful lifespan. Different aircraft have different problem areas, and the chosen facility needs to be experienced in that aircraft type to be a viable maintenance home. Based on its experience of defects on other aircraft using the same maintenance facility, for example, AMAC is in a position to offer its accumulated fleet knowledge to recommend and undertake preventative maintenance for an aircraft owner. Nevertheless, we do see some common but preventable problem areas in the aircraft maintained, and to help raise awareness to some of these, following is a list of our top-five preventable maintenance issues along with what can be done to avoid them occurring in your aircraft.




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AMONG OTHER THINGS, OWNERS MUST REGULARLY MONITOR AIR CONDITIONING HEAT EXCHANGERS FOR CONTAMINATION (ABOVE) AND CONDITION AND CLEANLINESS OF FAN BLADES (BELOW) WITH REGULAR INSPECTIONS TO AVOID UNNECESSARY COST AND FAILURES.

Worn Engine Fan Blades

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“We recommend that owners take the trouble to drain their fuel more frequently and undertake fuel sampling checks for fuel tank contamination more frequently...”

An aircraft’s home base, the regular missions undertaken, and exposure to harsh weather conditions, sand and/or humidity can be powerful agents working against the overall condition of the fan blades. Fan blades are an integral part of the engine, so keeping them in good condition via regular inspections is essential and saves significant cost that could otherwise be avoided. In addition, every 12 months fan blade lubrication should ensure longer lives for each single blade. Believe it or not, some aircraft owners face the cost of fan blade replacement unnecessarily early because they didn’t give due diligence to their upkeep and maintenance obligations.

Contaminated Air Conditioning Heat Exchangers

Another area of unnecessary cost we see concerns contamination to air conditioning heat exchangers. Whether the aircraft is based in the Middle East or Northern Europe, the air conditioning heat exchangers are an essential piece of equipment that influences cabin temperature. In Europe, air conditioning heat exchangers generally require fewer inspections and repairs compared to those installed on aircraft based in the Middle East. Nevertheless, heat exchangers should be inspected and cleaned at least once a

year (irrespective of how regularly they are used or where the aircraft is based) to ensure that there are no failures attributed to contaminated heat exchangers.

Abnormal Fuel Tank Contamination

Owing to where the home base is located and the mission types performed by VIP aircraft, we have experienced a lot of badly contaminated fuel tanks particularly those belonging to aircraft based in hot and humid environments. We recommend that owners take the trouble to drain their fuel more frequently and undertake fuel sampling checks for fuel tank contamination more frequently, which for some operators have reduced the internal fuel tank inspections undertaken on their aircraft by AMAC.

Aircraft Parking Procedures

Furthermore, experience has shown obstructed/ blocked pitot and static ports to be a common problem - a finding that could potentially lead to extensive maintenance and costs. Those costs could be easily avoided by installing all required pitot static and engine covers whilst the aircraft is parked, regardless of whether the aircraft is in or outside a hangar. By way of reiterating the above, it is incredible that so many owners ignore adequate protection


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for their parked aircraft’s engines. For aircraft parked in harsh environments with sand or other airborne particles, we’ve found numerous engines that have been contaminated inside the core resulting in engine vibration, higher fuel consumption, higher EGT (Engine Gas Temperature) and clogging of cooling hoses of turbine blades – all of which could be avoided with the use of engine covers.

Water Draining in Winter Operations

A further common example of an avoidable maintenance problem occurs when the aircraft’s water system has not been drained sufficiently and/or the owner has not been following the draining procedures correctly. This results in water system leakage because of cracked components (pipes, heaters, fittings and taps). As you can probably imagine, such findings can result in un-planned, extended and extensive ground time for the aircraft. Follow the water draining procedures during winter operations meticulously to avoid a maintenance headache later.

Replacement Parts

With our five common areas of avoidable maintenance cost established (there are plenty more that could have been discussed had scope allowed), hopefully the above pointers highlight the part an owner plays in the responsible upkeep of their aircraft. Nevertheless, parts will inevitably fail from time to time, and in that event, like all good maintenance shops we use a variety of highly reputable spare parts stockists – including Airbus,

Boeing, Gamit Ltd. and Trade Air - and are active on a 24/7 basis to respond to an urgent need for a quick turnaround (AOG, for example). An excellent pool of parts providers can enable the required part to be on-site within 24 hours (or less). Naturally, a standard ‘O’ ring with a relatively low cost (a few cents), can be sourced from various suppliers from around the world and can be on site within a very short time. On the other end of the spectrum, an Integrated Drive Generator (IDG) which can cost several hundred thousand dollars - is a much more difficult proposition, with limited vendors and suppliers who would have one in stock. Weight and size of such parts is also a major consideration, and special freight conditions will often apply. Finally, either the deficient ‘O’ ring or the failed IDG can potentially ground an aircraft. For peace of mind, your chosen maintenance home should demonstrate that it has low cost standard parts within its own stock for all the aircraft it maintains and quick access to those components it does not stock. Ultimately, choose a maintenance home demonstrating experience in your aircraft type, build a relationship of trust with that shop, and follow their tips and advice. Accept no half-measures while maintaining the aircraft on its daily operations, and you will avoid a variety of unnecessary costs for replacement parts. T More information from www.amacaerospace.com Are you looking for more articles on Maintenance? Visit www.avbuyer.com/articles/category/businessaviation-maintenance

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Third-Party Business Aviation Maintenance Plans An Operator's Powerful

Ally When AOG Strikesâ&#x20AC;Ś

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The quantifiable value third-party aircraft maintenance plans bring to their subscribers covers multiple areas, notes Dave Higdon. If financial predictability, higher residual value for a covered aircraft and, in times of need, expert maintenance assistance appeal to you, read on... t is well documented that aircraft covered by maintenance programs typically command higher prices when sold. Records of work undertaken and the knowledge of vendors all factor. But it's the here-and-now reality of an AOG situation that shows the real worth of such programs to owners of aircraft out of OEM warranty. Third-party providers such as Jet Support Services Inc. (JSSI), and factory-supported programs such as Rolls-Royce CorporateCare, Honeywell's avionics, mechanical and maintenance plans, or the per-hour plans of many other airframe, avionics and engine makers deliver their

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protection based on a set hourly fee. It's the ability of tapping their expertise and maintenance contacts that offers subscribers peace of mind at having expert help standing-by for when the airplane breaks. Previously we examined the value of keeping the contact information to hand for OEM mobilemaintenance providers. For subscribers to maintenance plans with AOG services, preparing for the possibility of an AOG can distill down to just one point of contact â&#x20AC;&#x201C; the 24-hour phone number for that aircraft's third-party maintenance coverage firm.


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nance program, but third-party programs from independent vendors like JSSI are also available – even for new model aircraft, avionics and engines. And it's by hedging against those unplanned maintenance events that these plans win their greatest praise – typically for being the one number to call for any and all AOG situations.

Hourly Plans

From the people who bring their experience and collective knowledge comes access to a deep institutional memory and list of contacts. They apply their knowledge and expertise for the benefit of their clients – and in turn, operators appreciate the comfort of knowing a human will respond to their problems on the other end of the line anytime help is required. Enrollment in such a program can cover anything from engines alone, airframe, avionics and mechanical systems. The top coverage, while not always available for every aircraft model and powerplant combination, is the tip-to-tail plan (like that offered by JSSI). The gold-standard level coverage insulates the operator from the financial shocks of both pre-budgeted, planned maintenance needs and blue-sky budget hopes for covering unplanned events. Virtually every engine and airframe-maker offers its own variation on a per-hour mainte-

While some operators grumble about the costs of these per-hour maintenance-coverage programs, most enrolled recognize them for what they are: Insurance against budget swings and a defense against being stranded with no help close by. Firms like JSSI and Rolls-Royce offer their programs at various levels, and for a large segment of the fleet. The most-valued plans for pre-owned aircraft operators remain engine coverage. If enrollment starts when the engine is new or fresh from an overhaul, the per-hour costs tend to be lower because of the longer period over which those costs can be spread. For a 20-year-old jet with engine overhauls looming at a total cost of $2m (for example), selling that jet can be more problematic without the coverage of an hourly maintenance plan. If the aircraft value at sale is $4m, a buyer is really looking at a $6m investment (i.e. the cost of the aircraft plus the cost of the overhauls, which account for half the aircraft's value). For that same jet enrolled in a plan with full coverage, the cost of overhaul is already covered. Even if other, non-covered maintenance looms which way would you prefer to buy the airplane - with, or without the hourly plan in place? The same theory works for avionics and airframe plans, too. Yes, these plans add to the perhour operating costs – but no more than what a savvy operator would need to budget as a reserve against future maintenance needs. But they save elsewhere, too, setting up the reserve for overhauling engines, as well as providing coverage for unplanned maintenance.

“Yes, these plans add to the per-hour operating costs – but no more than what a savvy operator would need to budget as a reserve...”

Part of the Asset

Generally speaking, these plans provide some degree of portability; the plan attaches to the aircraft, not the operator. But it's a point to check if you are considering enrollment in a per-hour maintenance-coverage program. Portability will typically affect the rate, and may hinge on the third-party people assuring completion of all routine and preventive maintenance on time and to factory standards. But assuring portability also helps boost the aircraft's value when time comes to sell.

AOG Expert on the Line...

The comfort of knowing the flight crew doesn't need a maintenance-resource reference guide comes in particularly useful when the crew faces



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Picking a Provider...


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“...nothing short of carrying a maintenance mechanic and spare parts can match the flexibility and responsiveness these programs provide.”

one of those unpredictable events that grounds the aircraft. “When we had a landing-gear system breakdown at a small Georgia airport last year we felt grateful for three things: That the failure happened while we were on the ground; that we caught it before taxiing; and that we needed only to call our maintenance plan's AOG line to start things moving,” one operator told AvBuyer recently. This chief pilot elaborated that calling the plan's AOG line wasn't like calling for warranty service for his smartphone, notebook computer or home cable television service. “We'd used this once before, but we were still somewhat surprised that an actual human answered. No trip through the 'Voice Mail Maze' to get to a person that could help us.” The maintenance plan's staffer took the account information, the airplane's location, a description of the problem, and within minutes was able to tell the captain what to expect. “Ninety minutes after we hung up, a remotemaintenance crew arrived, taxied to the ramp next to us and the maintenance team began

work almost before the chocks were in place,” the captain related. “Enrollment in that hourly maintenance plan not only got us on our way within four hours, but also helped convince the new owner of the value of our airplane when he bought it.” The combination of a per-hour or pre-paid maintenance program and AOG remote-repair services provide a powerful solution to those problems that keep the airplane from moving. Whether the coverage comes from a factorysupported plan – such as Rolls-Royce's CorporateCare, or from a third-party powerhouse like Jet Support Services Inc., nothing short of carrying a maintenance mechanic and spare parts can match the flexibility and responsiveness these programs provide. T

Find out more at JSSI: www.jetsupport.com; Rolls-Royce Corporate Care: www.rolls-royce.com/customers/civil-aerospace/ services/corporatecare.aspx#overview


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Tips to Maximize a Cabin Refurbishment Project 160

What Aircraft Owners Should Consider to get the Most from Refurbishment. Every aircraft owner eventually needs to consider a cabin refurbishment. It’s an

involved, often highly-personalized process - but what are the governing principles for a successful outcome and how can you really maximize the downtime? LBAS’ Marek Rinke & OHS Aviation Services’ Dennis Neumann offer perspectives…

here are so many options available to the owner of a business aircraft seeking a cabin refurbishment. With hundreds – if not thousands – of colors, textures, layouts and products to choose from there are literally millions of possible permutations for the look and feel of a newly-refurbished cabin. Each and every cabin refurbishment project is essentially bespoke. From all of the options available, an aircraft

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owner could be forgiven for believing that literally anything is possible as they seek an MRO center that can bring their dreams into reality. Despite the plethora of choice, however, an owner must be prepared to work with the facility they select to understand the finer details of the project, and realize that compromise may be necessary. They should also work closely with the facility regarding any other maintenance work they will need if they are to make the best use of the


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the aircraft. The facility will want to understand the aircraft’s current lay-out and its look and feel (i.e., what materials are installed, and what are the possibilities regarding the use of new materials).

downtime. Perhaps an upgrade to the cabin avionics is desired, requiring re-routing of wires or installation of routers (or other components) that can only be accessed with the interior removed? Without such planning, owners will not only face further, disruptive downtime for their business jets as those projects are undertaken separately, but they risk damaging their new interior when parts of it are removed to gain access as required for the additional modification. As unique as each cabin refurbishment project is and as varied as maintenance requirements can be, the same basic question remains primary as you funnel them into a single project: what needs to be achieved? When that answer is defined the chosen MRO center can begin to advise, helping manage the expectations of its client regarding the best materials and solutions for the budget and need, and how to implement the process to produce the best results. Once the aircraft owner has selected the facility that will manage the project, the chosen shop should seek to undertake a detailed cabin inspection to establish more about the status of

To assess what type of refurbishment will be possible, the service provider needs to consider weight factors, seat design and general cabin structure, all of which could impact the types and quantities of materials used in the project going forwards. Indeed, having established all of the possibilities and challenges relating to the cabin and matched these against the budget, available downtime and various other wishes of the aircraft owner, the shop can propose a realistic selection of products, materials for wall coverings (sidewalls and headliner), PSU, leather, wood veneer, carpets, stones, seatbelts, fabrics and accessories (china, crystal, tableware, pillows, etc.). OHS Aviation Services, for example, helps its clients with their decision-making by offering an online cabin configurator tool, giving a visual first impression of different material combinations available to them. Customer renderings of the materials that will be used are provided so that the aircraft owner knows exactly what his or her aircraft interior will look like. Thus OHS provides realistic expectations of the end-result from the outset of the project.

Maintenance: More than Meets the Eye…

There is often more to planning the cabin refurbishment than the visible, tactile elements. Fabrics, colors and textures may be a central focus of a finished cabin, but that is no reason to neglect electronics that enhance the flying experience of the cabin occupants. Increasingly, passengers expect to be able to use their Personal Electronic Devices (iPhones/laptops, etc.) to control the cabin environment, lighting, in-flight entertainment and email/internet/telephone. 

“...the same basic question remains primary as you funnel them into a single project: what needs to be achieved?”

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Moreover, the time to remedy that non-functioning light in the cabin closet is during refurbishment, as access to the wiring behind the paneling becomes accessible. If your aircraft doesnâ&#x20AC;&#x2122;t deliver on passenger expectations or is non-functioning in some way, this occasion is the best opportunity to incorporate it into the project planning process. Often modifications to in-flight entertainment systems (for example Satcom, wireless routers and power supply) are combined with cabin seating and furnishings, or galley remodeling. Thus the service facility you choose will need to be able to demonstrate it can offer services for a complete range of design changes and repairs for aerodynamics, avionics, electronics, flight, structural and interior work. The service facility will also need access to engineering information from the OEM and have approvals for minor and major changes in accordance with the relevant aviation authority. Be sure to check ahead of time.

Time & Compromise

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Some owners may be surprised to find their cabin options reduced significantly once the project moves forward, and this situation can be dictated by a number of factors. The amount of downtime available to undertake the project will be central to an owner maximizing their options. For example, how will the delivery times required for certain materials fall into the available timeframe? Is there a requirement to have a product or some re-wiring certified for safety purposes? A refurbishment/ maintenance project organized less than three months before the required completion date will be significantly limited in terms of options available since on-stock materials tend to be rare and certification times can be lengthy. The more costly, customized selections require additional time for burn tests and certificates to be completed and issued so that they can be legally installed in the aircraft. For an aircraft owner to maximize the available options, the top MROs recommend allowing several months before the refurbishment/maintenance project needs to be completed. To help plan well ahead of time, aircraft owners should specify when a major maintenance event is next due for the aircraft and correlate accordingly. As an example, aircraft owners commonly arrange complete cabin refurbishments to coincide with a significant event such as a 96-month inspection where the downtime offers more time for the all-important refurb project without the need to incur additional downtime on a separate occasion. In summary, the refurbishment and/or maintenance of the aircraft cabin is a very significant event for the owner and should be handled by experienced specialists knowledgeable in the aircraft type and model. Answering the one, central question of what is to be achieved by the project, and allowing plenty of time to achieve it will help ensure a satisfied aircraft owner flies away from the MRO center in a fully-functioning, bespoke cabin. T More information from www.lbas.de or www.ohs.aero


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Lower Maintenance Costs • Higher Residual Value • Global Support JSSI ® is the leading provider of hourly cost maintenance programs covering virtually all makes and models of business aircraft, engines and APUs, including helicopters. jetsupport.com/gettoknowus • +1.312.644.8810 • +44.1252.52.6588


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Maintenance Recommendations When Refurbishing Your Aircraft

A fresh new interior can be just what you need to improve the aesthetics of an aircraft and enhance its overall value, notes JSSI’s Donald Ridge. From a maintenance perspective, there are several associated concerns that you must consider… 164

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hat are the biggest maintenance issues to consider when your aircraft is scheduled for refurbishment? JSSI is involved in thousands of inspections each year, and many of these are in conjunction with a major refurbishment event. Speaking from experience, here are my top five…

1. Be Prepared for Corrosion

Corrosion happens, and depending on the age of the aircraft the odds are in favor of discovering some level of corrosion when you open it up for a complete interior refurbishment. These odds increase even more if the airplane is based in a salty environment or the majority of the missions flown happen to be to tropical destinations. When the interior is completely removed, it is a perfect opportunity to take out the insulation between the interior panels and the skin of the aircraft to perform a thorough examination of the skin and various structural components that are now exposed. Special attention should be paid to any openings in the fuselage such as antennae and emergency exits. Also, all the structure around

galleys and lavatories should be carefully inspected as these areas are known corrosion hotspots.

2. Timing is Everything

Once the decision is made to do an interior refurbishment and the maintenance department is informed, the next step should include looking at all the upcoming inspections and overhauls that are due around the same time as the refurbishment. (The last thing you want to do is rip out the headliner and flooring a couple of weeks after the interior was just completed, all because an inspection deadline is due but wasn’t in your refurbishment plan.) Substantial labor costs can be saved by coordinating the scheduled airframe inspection work during the refurbishment process. I suggest taking all the time you need to plan this work carefully. A good hourly maintenance program will do this for you. Planning will save a lot of time and expense, as well as limiting the wear and tear on the new interior that was just installed. Be prepared to postpone or reschedule a desired interior project to coordinate with a scheduled inspection(s).




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4. Proper Documentation is Crucial

Maintenance departments go to extremes to meet Part 135 requirements so the aircraft can be used for charter operations. There are all kinds of regulations to follow, as many of you know, to operate under this charter designation. One thing we have seen happen time and time again is that owners create a refurbishment plan without any consideration to all of these Part 135 requirements. I always recommend installing the interior that complies with Part 135 standards, including fireblocking of the interior, because you never know when a decision to put the aircraft on a charter certificate may happen even if the airplane has always operated under Part 91. Many interior finishes and materials are beautiful and will look great inside your aircraft, but if they don’t meet the required standards you will not have the proper documentation should you wish to broaden out the operations of your aircraft. Most new aircraft come from the OEM with proper documentation for meeting the stricter Part 135 regulations, but a review of the documents should be performed to be certain that any new rules that may have been introduced since the aircraft was built will be addressed at this time.

5. Finish the Planning Process Before Taking it to the Shop

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“Keep in mind that your situation could be unique if you are trying to schedule other maintenance inspection work at the same time.”

Careful consideration for other upgrades should also be integrated into the refurbishment plan. Entertainment systems and LED lighting are the more obvious upgrades and typically get included up-front with the refurbishment plan. But, new cockpit avionics - mandated or optional - should also be part of the plan because such work will most likely involve a new antenna that requires access through that freshly refurbished interior if it is not completed during the new interior refurb. The new ADS-B and FANS mandates are good examples of upgrade plans that you should include in this process.

3. Find The Right Shop For Your Aircraft

There are plenty of refurbishment shops vying for your interior project, but many of them may not be the right choice. Finding the right shop requires extensive research and should involve talking to several other aircraft operators that fly the same aircraft model as you. Getting referrals and learning about other’s experiences will help you make a final decision. Keep in mind that your situation could be unique if you are trying to schedule other maintenance inspection work at the same time, as suggested earlier. Making sure that the shop’s logistical support and technical capabilities meet your needs is crucial when selecting the right refurbishment facility.

My advice may sound strange to many readers but in my 30 years of experience, I have witnessed many operators dropping off their aircraft for refurbishment without making sure all of the materials and parts are already ordered for the interior. This one element of planning can save weeks of downtime because of the extensive lead times on some fabrics and other interior materials. You can also save plenty of time by coordinating with the maintenance team that will be doing the inspections or overhaul work to make sure all necessary parts are ordered, and the procurement process has begun before the airplane arrives. Also, once the aircraft has been dropped off at the shop, any changes to the agreed-upon plan will cause delays. Proper planning before dropping off the aircraft will not only help you receive the best outcome, but it will make it easier for the shop to deliver the right outcome.

Summary

Aircraft interior options today are amazing, and the vast number of qualified refurbishment facilities can do incredible things to make your aircraft look and feel brand new while adding to its residual value. Just keep in mind these five recommendations from your friendly maintenance side of the operation, and make sure they have plenty of time to put the best refurbishment plan together for your aircraft! T


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You asked. We acted. By the late 1970s, Duncan Aviation had hundreds of loyal customers who had purchased their aircraft from the company and liked having it maintained at the facility. They began to ask for even more capabilities, especially exterior paint and interior refurbishment. In 1979, Duncan Aviation acted, opening a new paint hangar and in 1981, the company began providing comprehensive interior completions. Decades later, Duncan Aviation still provides operators with beautiful exterior paint and custom interior completions. And we still listen to customer wishes and respond by developing and providing experience, unlike any other.

Duncan Aviationâ&#x20AC;&#x2122;s Fabrication Team created this unique airstair and entryway going on nothing but a few pictures sent by email.

www.DuncanAviation.aero/60 Experience. Unlike any other.


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Business Jet Ownership – What’s The Real Cost?

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Budgeting to Avoid the Nasty Surprises of Aircraft Ownership Many first-time buyers make the mistake of putting too much stock into a business jet or turboprop’s purchase price, not understanding that direct operating costs and ongoing maintenance will eat a lot of budget. René Banglesdorf illustrates... aintenance costs can be really painful if you’re not expecting them. Following are some common maintenance items for you to keep in mind when budgeting for your private aircraft.

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Engine Overhauls

It shouldn’t come as a surprise that the engines of a private airplane are the most expensive component to maintain. An engine overhaul is defined by the FAA as the complete disassembly of an engine, inspection, repairs as necessary,

reassembly, testing and approval for return to service within the limits specified by the manufacturer’s overhaul data. The time between turbine engine overhauls (TBO) varies from engine to engine, but typically ranges from 3,000 to 7,000 hours. The time since an engine’s last major overhaul (TSOH) or time since the midlife inspection, often called a Hot Section Inspection, can impact the aircraft’s value significantly. The higher the TSOH, the sooner the buyer will have to spend money on costly overhauls, some more than $1,000,000 each jet engine. 


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Major Periodic Inspections

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“...ramp presence plays a big part in how many aircraft owners choose their airplane.”

Every aircraft requires Major Periodic Inspections (MPIs). Depending on the aircraft, the manufacturer may recommend these inspections based on calendar time, aircraft cycles or flight hours. The scope of these inspections can range from something as minor as a fire extinguisher test to something as invasive and expensive as inspections of airframe stress and corrosion. A 48-month inspection on a Hawker jet, for example, can cost a couple hundred thousand dollars. The value of an aircraft can be greatly affected by the time since its last MPI, just like it can with an engine overhaul. The inspection itself is typically done for a set fee, but any discrepancies found will usually cost just as much as, if not more than, the inspection.

Avionics Upgrades

Another maintenance cost involves avionics upgrades. Older business aircraft for sale may seem cheaper in the short-term, but will likely need avionics upgrades at some point—either for improved safety or to comply with federal or international mandates. One of the many advantages of owning a newer aircraft is that avionics upgrades tend to be relatively simple software downloads, whereas an older aircraft will probably require more expensive, more time-consuming hardware upgrades in addition to a more complicated software upgrade. Something all aircraft owners and operators should be aware of are ADS-B Out (Automatic Dependent Surveillance-Broadcast) requirements. In the US, by January 1, 2020, all aircraft operating in airspace that requires a Mode-C transponder will also be required to have ADS-B Out capabilities. ADS-B Out refers to an aircraft broadcasting its position and other information

through GPS to aircraft-to-ground stations equipped with ADS-B In and other properly equipped aircraft nearby. The easiest way to achieve this requirement right now is to pair a TSO-C145/C146 WAAS GPS (like a Garmin GNS 430W) with an ADS-Bapproved transmitter like the FreeFlight Rangr.

Cosmetic Maintenance

You’re going to want to keep your airplane looking pretty, and to do that you’ll have to spend some money. Though perhaps not as important as engine maintenance and avionics upgrades, ramp presence plays a big part in how many aircraft owners choose their airplane. First-time buyers may not realize that stripping and painting a light jet can cost $40,000, and a larger jet can cost $150,000 or more. Interior refurbishments can be as simple as replacing carpet and side panels and re-dying leather seats, or as complicated as reconfiguring the entire interior with all new soft goods and woodwork, with costs as low as $20,000 or as high as $1,000,000. A fresh paint job and recently refurbished interior, however, can be huge for the value of an aircraft during resale, which should ease the pain a bit upon payment.

In Summary

It’s absolutely crucial that you know what you’re getting into when buying an aircraft. The purchase price is not the be-all-and-end-all. Prepare yourself for the aforementioned costs and budget appropriately so you aren’t surprised by unexpected maintenance items and required upgrades. A good maintenance shop should be able to estimate costs three years out for budgeting. T More from www.wepushtin.com


Section Contributors

Dave Higdon is a highly respected aviation journalist who has covered all aspects of civil aviation over the past 36 years. Based in Wichita, he has several thousand flight hours, and has piloted pretty much everything from foot-launched wings to combat jets. Contact him via Dave@avbuyer.com

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

Miles Birnie is the Technical Services and CAMO Manager at Gamit, which specialises in Aviation Asset Management. Specifically, Gamit is an industry leader in aircraft and engine auditing and comprehensive technical management. Visit www.gamit.co.uk

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MOVE Documentation: A System to Capture Business Aviation’s Value & Efficiency

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David Wyndham proposes measuring and documenting the benefits of operating business aircraft using a protocol he calls MOVE. light Departments are no longer just in the business of ‘safe and efficient transportation’. They need to demonstrate how well they are serving corporate goals and enhancing shareholder value. Hours flown and passengers carried are not enough. We need appropriate aviation-centric metrics, which are in fact Measures of Value and Efficiency. For the sake of identification, we will call the metric MOVE. In past articles we have discussed why the Flight Department needs to be treated like any other business unit. One of the ways we manage a business unit is to have metrics that accurately and fairly measure its effectiveness. For a business unit that produces a product or service available for

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sale, initial metrics center around the Return on Investment (ROI).

Flight Department’s ROI

The initial investment is easy - we have the asset of the aircraft, the facilities, and to those elements we must consider expenses of operating the aircraft along with salaries and overhead for relevant personnel. If we think in terms of an Income Statement, the cost of obtaining and operating the company aircraft is on the expense side of the ledger. Since the in-house Flight Department typically does not produce a product or service that is sold outside the company, what is missing is the


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using their time efficiently in support of business goals. Travelers on business aircraft use their travel time as they would use time in their office. Furthermore, they apply their talents and skills where they are most effective. The challenge is to assign realistic values to those accomplishments.

‘income’ produced by providing transportation via the company aircraft. Aviation is like many other corporate units such as Human Resources and Legal that perform critically important functions in allowing the company’s profit centers to operate successfully. The aviation department also allows the profit centers to perform efficiently by transporting the right person to the right place at the right time. Such mobility is in fact the ‘product’ of the aviation department, and the value or ‘income’ derived from that product should be measured and documented. The aviation department can develop a metric for capturing the ‘income’ it makes possible. Aviation Managers should develop a metric that assigns a value to trips where passengers use the company aircraft to build new business, renew existing contracts, solve supplier problems, keep assembly lines functioning, etc. The aircraft allows corporate passengers to generate profits for the company by

“The aviation department can develop a metric for capturing the ‘income’ it makes possible.”

Start with why: why does the company have a business aircraft? There a many reasons, and those reasons define the appropriate MOVE metrics. For a multinational company with a high-profile leadership team, the enhanced security offered by business aircraft, especially in global hotspots, is a must. The number of sensitive trips flown, the avoidance of fuel stops, and perhaps even the security rating of the various FBOs used can all be measured and come into play. Passengers carried (or passenger-miles flown) is not the most useful metric for the effectiveness of a security program. It is difficult to place a value on security, but a place to start is assessing the losses that might occur if security was breached. The company that uses the business aircraft to shuttle employees between various plants needs high passenger loads. Trip frequency, passenger loads, and passenger-miles flown are all useful MOVE metrics for a shuttle. The goal is to keep or improve load factors. And of course, cost per passenger-mile flown for a shuttle is critical. Eliminating the cost of multiple airfares, however, is only a small part of the “income” provided by a company shuttle. Time saved is the big payoff as well as allowing passengers to interface while en route without fear of disclosing company plans or trade secrets. Do you use the business aircraft to support sales and cultivate your top customers? How often do you fly these customers, what is the sales volume to your company, and does changing the number of trips impact yearly sales volume? How often is the business aircraft used to cultivate new customers or support existing clients? What is the company’s expansion (as well as the aviation department’s growth) based on how often, where, and how many passengers the aircraft transports? What does your lead passenger or authorizing executive believe is the value of a particular customer visit? Using a methodology that is accepted by the executive

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Identifying Value


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“Such success should be measured using a metric that has been vetted by the executive overseeing Business Aviation and accepted by users of the company aircraft.”

overseeing Business Aviation, document sales trips flown each year. Also, note that not all sales trips have the same value. One that is instrumental in securing a significant order should be valued higher than a routine customer visit. Flight logs, especially if digitized, can provide valuable data for a MOVE metric. In addition to the basic flight parameters of destinations and flight times, they can also collect passenger lists, business department affiliation and purpose of the trip. Depending on the length of the trip, these data can also be used to calculate overnights avoided. It may be possible to add custom fields that further define the business purpose and nature of customer-support or revenue-generating travel. The general raison d'être for air travel is to make the best use of time. A useful MOVE metric is to assign a value to the time not “wasted” versus less efficient methods of travel. The NBAA used to sell a program, Travel$ense, that allowed your travel department to compare the time and cost of the business aircraft versus the airlines. That program is no longer supported, but the methodology can be replicated. Rather than do it for every trip, do an analysis for the most frequently flown trips. Time saved via the business aircraft then needs to have a value assigned based on the value of the travelers. An employee, whether an engineer or CEO, is worth a multiple of their base salary. As-

sign values to the categories of travelers’ time along with a calculation for time not spent in travel.

Summary

The concept of MOVE is to establish a yardstick or measure for the various ways in which a business aircraft generates ‘income’ for the company. Some will simply be time saved. Greater returns flow from the business derived because passengers are more effective in accomplishing their jobs. Such success should be measured using a metric that has been vetted by the executive overseeing Business Aviation and accepted by users of the company aircraft. Just as an income statement is prepared for traditional business activity, a similar approach applying MOVE metrics should be used to demonstrate the business success of the aviation department. MOVE metrics must relate to corporate goals. The value of a business aircraft can be connected along the lines of productivity, customer service, sales growth, security, etc. Developing MOVE metrics start with the basic data all aviation departments track but need to expand to those results that connect to the corporation’s goals. T Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/articles/ category/business-aviation-ownership


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Benchmarking for Business Aviation Make Sure Youâ&#x20AC;&#x2122;re Using the Right Measuresâ&#x20AC;Ś 176

Benchmarking is much more than asking a golfing friend questions about his Flight Department, notes David Wyndham. It is a disciplined approach to measuring performance. ou cannot manage what you do not measure. Benchmarking is a measurement against a norm or set of standards. It is a management tool for assessing an organizationâ&#x20AC;&#x2122;s performance against its stated goals. Internal benchmarks relate to key performance indicators established by management. External benchmarks are measurements against the performance and norms of firms in the same or related businesses. You can benchmark against an industry standard or benchmark among peers. Benchmarking against an industry standard is

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helpful to see how your company compares to an external set of best practices or measures. You need to know the basis for the standard since measurements should compare apples with apples, not oranges (so to speak). For example, benchmarking against a standard set of aircraft operating costs is common. To be meaningful, however, you must know how the standard is calculated and what are the assumptions. When benchmarking with other Flight Departments, ask your peer to explain how his or her metrics aligned with the means you use to calculate costs.


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Four Elements of Good Benchmarking

(1) Benchmarks must be relevant. Average passengers carried is a great measure for a passenger shuttle operation - but if the business aircraft is used to carry the CEO and family as part of a security program, load factor is of little relevance. Also, what you benchmark should be impactful as it relates to your corporate goals or industry practices. Who can authorize the use of the aircraft? Do you have chargebacks for the use of the aircraft and if so, what are they based on? How your Flight Department compares to others can be insightful only if the measures and benchmarks used align with your own organization’s goals. (2) A benchmark should be simple to collect and measure. For example, you and your doctor feel that you are carrying too much body fat. You can either take a number of body measurements with calipers, do a bioelectrical impedance analysis, or you can just step on a scale. Which measurement will help you lose weight most effectively and with the least effort? Your Flight Department already counts things like hours flown, passengers carried, destinations served, etc. Comparing those figures with the performance of a Flight Department in the same region of the country and in a similar business is a simple way of assessing performance. (3) A benchmark measure also needs to be consistent. When you are benchmarking things like costs, how they are calculated and compared must be consistently measured with the same yardstick. For example, what you are paying for aviation fuel can be misleading. Operator A buys fuel at its local airport fixed base operator (FBO) at $4.50 per gallon. Operator B just installed a private fuel farm and pays wholesale $2.50 per gallon. Excluded from Operator B’s fuel figure is the cost of the fuel storage tank and fuel truck used to refuel the aircraft. Consis-

tency year-to-year is needed in order to compare performance over time. A benchmark’s definition may need to change to reflect changes in how business is done, but be careful that the usefulness of the historical trend remains intact. (4) Perhaps the most important element of effective benchmarking is what you do with the data. Benchmarking should lead to action, or at least the contemplation of action. If you benchmark salaries and find that your department wages are below the national average or below your peer group average, you may wish to look at increasing salaries and benefits (especially if you have high employee turnover). Being above or below the norm in a benchmark should lead to the question ‘why?’

WHAT IS YOUR KEY BENCHMARKING TOOL FOR MEASURING?

Aligning with Company Goals

Your company’s strategic goals and mission determine how you benchmark. A utility company with nuclear powerplants has one aircraft and crew on standby 24-hours a day in case of an emergency. They have a different requirement for how many pilots to employ versus a company that uses their business aircraft during normal business hours, five days per week. You need to determine benchmark criteria that relate to the outcomes your company wants to achieve. Benchmarking can be a powerful tool that can help your flight department stay focused on the corporation’s goals and provide feedback critical to improving the quality of the services provided. T Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/articles/ category/business-aviation-ownership

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Peer-to-peer benchmarking can be useful when the peer group is comparable. A manufacturing company benchmarking with a pharmaceutical company may not yield a fair comparison, however. What are the organizational, cultural and strategic elements of the peer group? Are they all public companies? Does everyone in the group fit in well organizationally? No two companies can compare exactly, but vast differences among peer companies can lead to misinformation or poorly stated and understood benchmarks.


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BizJet Ownership: Developing a Relationship With Your New Company Aircraft… 178

Discovering the unique characteristics of a new business jet in your operation can be similar to getting to know a new child. Each is unique and requires patience and expertise notes Aviation Director, Johnsonville Sausage, Andre Fodor... s I write, I am cruising at FL400 above the Atlantic. Europe lies three hours behind us, and I’m settling down to another seven hours of flight before we begin our descent into sunny Florida, the latest stop on a marathon of transoceanic flights. We’ve been to several European destinations and far beyond, down to South Africa and Zimbabwe. During these trips, we’re validating our new long-range jet and developing confidence and trust in its reliability and

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performance capabilities. The FMS stokes a desire in me to climb to the upper flight levels, but for now I’m holding back because of an apparent software bug. Trusting my review of the performance charts, I’m confident in my decision to stay put for another three hours before climbing. Having a greater buffet speed boundary and protection envelope at my present altitude is a good choice when high performance wings laden with fuel are trying to squeeze every bite of lift from the thin air outside.


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As I ponder our situation, I’m reminded that this is not my first carrousel ride! I have purchased and initiated operations of many airplanes before, and they all have had their challenges, learning curves and especially maintenance snags that created dispatch reliability challenges and a hefty dose of learning experiences. I call this the ‘First Nine Months’; it’s akin to when my wife and I were pregnant with any one of our three children. These were stages of anticipation, learning and wondering at what was normal or abnormal. Similarly, we read manuals, service bulletins and magazine articles – and we discuss the aircraft’s operation, performance, advantages and challenges with other owners in an attempt to become as well prepared as possible before our new ‘baby’ is delivered. But as any proud parent knows, no amount of reading or research can completely prepare you. All babies are different, and none come with a specific manual that will answer all your challenging questions. Neither do airplanes; each comes with its own characteristics! The First Nine Months can be tough; your professional experience, ability to think outside the box and the long-term relationship that you have invested and built with the OEM will now be put to the test. Your principal expects to show-up and fly on the new airplane, most likely unaware of the tribulations that are likely to appear. It falls upon the Flight Department Manager to juggle the trips and the maintenance. I’ve lost count of the times I’ve returned from a long trip on a brand new airplane, only to head directly to the service center so that ‘issues’ can be resolved ahead of the next trip. It takes years of professional experience to accept and understand why new airplanes break and malfunction regardless of who builds them.

To the uninitiated, it’s reasonable to expect that if big money has been spent, everything should work perfectly – but these are highly complex machines, often delivered in the haste of the end of a fiscal year to take advantage of tax depreciation…

Overcoming Teething Troubles

I could tell many stories of aircraft ‘teething’ issues of the past. For example on one jet I flew, every time we operated in cold weather our flight control lock system would not disengage. As troubleshooting progressed, we discovered that as the aircraft’s cockpit warmed up the system would operate correctly. Thus, a hair dryer bearing the same color as our aircraft became an integral part of our equipment, allowing us to accelerate the cockpit heating process. It took us nearly two winters and a large dose of goodwill and dedication from aircraft mechanics and engineers to single out an obscure relay. It took everything from a portable air conditioner, dry ice, freeze gas and many other ingenious devices for us to discover the problem. If it wasn’t for that mutual cooperation – a teambased approach to problem solving, goodwill, and careful prior investment into building long-term relationships—I would still be wielding a blue hairdryer on my tool belt during winter operations! As I work in maturing a new airplane, I want a high dispatch reliability that will cure my acid reflux, parts that don’t fail and that keep maintenance low and inexpensive, and high reliability that will keep me and my passengers safe, relaxed and secure as I cover the world on one of our many adventures. I nurture the jet and my professional relationships according to my desire for those outcomes! T

“...your professional experience, ability to think outside the box and the long-term relationship that you have invested and built with the OEM will now be put to the test.”

Are you looking for more Business Aviation Ownership articles? Visit www.avbuyer.com/articles/ category/business-aviation-ownership

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The ‘First Nine Months’


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The Basics of Business Aircraft Leasing To Lease, Or Not to Lease (and if so, what kind of lease)? With a wide range of types accommodating a variety of needs, aircraft lease is a highly tailored matter. Dave Higdon highlights some of the basics a prospective lessee should know before entering an agreement…

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here ownership questions come into play, the broad array of options available within Business Aviation greatly help a company fulfill its needs in line with its finances. Outright ownership doesn't work for every financial situation, and also comes with complete responsibility for airworthiness and legal issues. For many an owner, leasing the aircraft makes better sense – but again, variations exist within that solution, each with its pros and cons that can only be resolved on a company-by-company basis. This month we examine some of the basics of leasing – the variations and their advantages and limitations. Let’s begin with some definitions associated with aircraft lease to highlight some of the options available. • Lessor: The Lessor owns the aircraft and receives payment from a Lessee for use of the aircraft during the lease term.

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• Lessee: The Lessee gets to use the aircraft, subject to conditions and limitations of the lease agreement in exchange for lease payments to the aircraft Lessor. • Wet Lease: Here, the Lessor supplies the aircraft and at least one crew member (per FAA definitions and regulations). The Lessor may maintain operational control of the aircraft and, consequently, may enter into multiple agreements with Lessees who share the aircraft according to the terms of their individual agreements with the Lessor. • Dry Lease: The aircraft is leased, but no crew members are supplied. The Lessee generally has full operational control and supplies crew, covers maintenance and other non-tax expenses as stated in the lease agreement. • Capital Lease: Essentially this equates to a purchase contract that treats the Lessee as the aircraft owner for tax purposes. The Lessee can own the aircraft at the end of the term.


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agreements to be filed with the FAA Registry in Oklahoma City, Oklahoma, and upon first flight under the new lease the operator must notify the local Flight Standards District Office (FSDO). The issue of operational control deserves particular attention because of FAA's revised Operational Specification A008. This OpSpec holds that the certificate holder on an aircraft remains responsible for operational control superseding “any agreement, contract, understanding, or arrangement, either oral or written, expressed or implied, between any persons or entities.” For operators flying under Part 91, truth-inlending rules apply only to aircraft weighing more than 12,500 pounds. But they are applicable to all aircraft operated under FAR Part 135 regardless of weight. Nevertheless, the stakes for any confusion or misunderstanding here can be particularly high and can cost an operator that valuable certificate – or significant penalties.

FAA Wants to Know About Leases

An important factor to remember is that leases are subject to FAA regulations and, in particular, so-called ‘truth-in-leasing’ language. The FAA defines a lease as an “agreement to a person to furnish an aircraft to another person for compensation or hire...” The language applies regardless of whether the aircraft arrives via a wet or dry lease, a synthetic lease, capital lease or operating lease. Other rules come into play depending on whether the operator flies the aircraft under Part 91 or Part 135. The point of the truth-in-leasing language is to assure identification of the individual with operational control of the aircraft, primarily to prevent instances of operators attempting to obscure who has operational control. Additionally, the agency requires lease

Liability Concerns...

We all understand the rarity of accidents and incidents in Business Aviation – but things do happen. And when the aircraft involved is operating under a lease the question automatically arises as to who is responsible, and for what, exactly? These are questions that should be set out in the text of the lease agreement, and the answers vary with the type of lease and operation. From the FAA’s perspective, a wet lease, in which the lessor supplies the aircraft and at least one crew member – flight officer or cabin attendant – there's a presumption of operational control by the lessor. So even if flying for a lessee, the control of aircraft, crew, maintenance and upkeep can make it difficult to place liability with the lessee. Conversely, a dry lease in which the lessee controls the aircraft, provides crew and assumes responsibility for some (if not all) maintenance, may place the lessee more on the hook for the damages of an accident or incident. Having clarified who is responsible for what from an FAA perspective, there are the statutes of the states to consider. Each state and territory will have its own views on the issue and, under the US system of jurisprudence the laws of the state where the accident occurred will be the first line of action. And let's not forget the varying types of support service agreements available, depending on the lease type and operation type (Part 91, Part 135 or both).

“Nevertheless, the stakes for any confusion or misunderstanding here can be particularly high...”



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• Operating Lease: The Lessee takes possession of the aircraft but the Lessor maintains ownership and enjoys the tax benefits of ownership. • Synthetic Lease: A Capital Lease for tax purposes but an Operating Lease for accounting purposes, a Synthetic Lease is considered the best of both worlds in many instances. • Sublease: This is an aircraft lease to a Lessee that acquired the aircraft through another Lessee. • Master Lease: Controlling any number of subleases, the Master Lease is sometimes also referred to as a Head Lease.


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The Main Consideration

Now if the legal and financial considerations seem complicated, try reading the multiple pages of a lease agreement. Professional consultation is highly recommended with accountants, attorneys and aviation consultants alike for any person or entity considering leasing an aircraft. Since all the primary reasons for leasing rather than purchasing aircraft tend to involve financial considerations, the accountant is usually the best place to begin. Many knowledgeable consultants exist in the Business Aviation community who are familiar and experienced in aircraft leasing technicalities and can help you decide whether to lease of buy.

Then the contract goes through the attorney's hands to assure that the client is getting a solid, legal, well-defined lease with as little arbitrary language or confusion as possible. In terms of pure cash flow a lease may seem the most favorable at first glance. But it's the overall bottom line that counts. For that the company's tax situation and other obligations must be considered. At the end of the process the goal remains a familiar one. To provide the company with access to the aircraft it needs on terms that best fit and benefit it economically. Work with your consultant to establish your need, then build your team of experts wisely to ensure the outcome is tailored to your needs exclusively. T


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Aircraft Lease Returns

A Technical Insight into Saving Time & Money

A poorly managed lease return can only have one outcome: penalty fees to the lessee, notes Miles Birnie, Technical Services & CAMO Manager, Gamit. Planning for a successful redelivery must begin at the point of a lease agreement being signed... 184

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ll aircraft leases stipulate return conditions that must be met by the lessee upon redelivery. Typically these include:

The period of time the aircraft will be cleared from maintenance (usually satisfied by the completion of a redelivery maintenance input). Confirmation that all technical record paperwork meets the expectation of the lessor and that of the relevant regulatory authority. Physical condition and configuration of the aircraft (detailing the required standard of the interior and the exterior of the aircraft). Preparation for the issue of an Airworthiness Certificate or a Certificate of Export, which is a usual requirement at the termination of a lease.

By involving a technical consultant at all stages of a lease agreement process, you can ensure that these requirements meet the lessorâ&#x20AC;&#x2122;s expectations and negate the possibility of any future disputes. Return condition negotiations occurring at the end of the lease could potentially result in the lease period being extended reluctantly and/or result in unplanned additional costs to the lessee. Once a lease agreement has been decided, itâ&#x20AC;&#x2122;s crucial that the aircraft is managed by a suitably experienced management company that can ensure the aircraft is operated with the lease return conditions considered. Effective maintenance planning is integral to the successful redelivery of an aircraft, and this must be considered when agreeing on return terms. A suitable management company will ensure


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during the term of lease. Lessees often make the incorrect assumption that a suitable release certificate satisfies this requirement. In actual fact, a release certificate can sometimes only illustrate a partial history for a component. Having a lessor’s auditing team find a discrepancy such as this can lead to the lessee having to replace the high value part for another that does have full back-to-birth paperwork. That’s not a cost effective solution to the lessee! A suitably experienced team of auditors, however, will identify potential issues such as this and find a solution before the re-delivery process starts. The production of documentation folders containing copies of ‘dirty fingerprint’ records is the most effective method of conducting a records review. These documents can then be presented to the lessor’s auditors for review. Having worked on behalf of lessors, we can speak from experience of how this method is so successful and has two uses:

that the aircraft’s maintenance check cycle is factored into the operation of the aircraft, with the final major maintenance input under the lease term being carried out at the agreed time of redelivery. A full review of the aircraft records must also be carried out prior to lease agreement. A full audit mirrors the audit process that is to be carried out prior to redelivery, which we will discuss below.

Redelivery Preparation Schedule

Preparation for the redelivery of the aircraft should begin early; meetings between stakeholders should agree on timelines and objectives to be achieved. Ideally performed 2-3 months before the redelivery maintenance input, a full records review will help ensure that all maintenance performed during the lease term meets the return conditions. Gamit has performed full records reviews for a multitude of aircraft owners and operators, and one common occurrence that we are faced with is that of component back-to-birth traceability requirements. For example, return conditions may stipulate that full back-to-birth traceability is provided for any life limited component replaced

The first use is to satisfy the lessee’s audit process and ensure that any discrepancies are captured in good time. The discovery of the lack of life on a component at this point will enable further research to be carried out. In most cases, this will result in the retrieval of the required paperwork at no extra cost to the operator. If this discrepancy was to be identified at the time of redelivery, time may not be available to conduct adequate research, and the only feasible option is to replace the component at a cost to the lessee. Secondly, these folders can be presented to the lessor and give an excellent first impression of the records management performed by the lessee.

“...identify potential issues such as this and find a solution before the

Organizing & Categorizing Records

All technical consultants have their own method of organizing and categorizing engineering records. Gamit typically produces documentation folders segmenting each element with the aim of making the process as smooth as possible. Following is an example of primary data expected… Components (including On-Condition, Hard Time & Life Limited Parts - LLP): All components installed will be reviewed to ensure they meet the required lease return conditions. Landing gears can be particularly difficult to establish back-to-birth traceability. In some cases, pro-ration or unknown life calculations may have to be performed, thus it is important to have experts perform such calculations. Having a landing gear life incorrectly calculated could prove costly to the lessee - especially if the incorrect life calculation results in the component life expiring within the

re-delivery process starts.”



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agreed maintenance clearance period. The same applies to engines, and other high-cost items. Airworthiness Directives (AD): All ADs complied with during the lease period should be presented in a ‘Dirty Fingerprint’ (original engineer signed and stamped records) format and be accompanied by a suitably updated and verified AD compliance report. Any ADs applicable to the aircraft that falls due within the agreed maintenance clearance period will be identified and planned accordingly for compliance at this point.

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Service Bulletins (SB), Modifications & Repairs: Similarly to ADs, all SBs performed on the aircraft must be verified for paperwork completeness. It is vital to understand the lease return conditions for items such as SBs. Some agreements may dictate that all modifications, whether optional, recommended or mandatory, must be carried out. Alternatively the agreed return conditions may state that the aircraft must be returned to its original configuration. Identification of modifications to be removed from the aircraft at this point will ensure that all maintenance requirements are in place in time for the redelivery maintenance input. Having a lessor discover that a modification requires removal at the time of redelivery will undoubtedly result in high additional maintenance costs. The same applies with aircraft repairs; if the correct paperwork cannot be supplied, in most cases the repair must be removed and performed again. Researching and identifying the required paperwork at this point is far more cost effective than performing the recertification of a skin repair (for example) at the redelivery input.

“Preparing both aircraft and records to a high standard for handover to the lessor does have a positive effect...”

Interior Configuration: Dependant on the return conditions, the aircraft interior configuration will be established and verified. If any trim or seats have been replaced during the lease period, it is vital to be prepared with the associated certification paperwork, including documents such as flammability test results. The interior of the aircraft should also be thoroughly inspected to ensure it meets the return conditions. Missing trim, seat parts, cleanliness, lighting and carpet condition can be reviewed at this point with corrective actions put in place prior to redelivery. Coinciding with the records review, a physical inspection of the aircraft should also be carried out. Looking at the exterior of the aircraft, all dents and repairs should be assessed to ensure adequate records are in place. Areas of corrosion, damage to paint and fluid leaks should also be addressed prior to the lessor having access to complete their own inspection.

Saving Time & Money

Preparing both aircraft and records to a high standard for handover to the lessor does have a positive effect and fills them with confidence that they’re looking at an aircraft that meets their expectations. If a lessor is presented a returned aircraft in poor condition and an incomplete records portfolio, the resulting impression will be negative and a lengthy audit is likely. Bringing in a professional management team will save money and time when the aircraft is returned to the lessor. Preparation is the key to a successful lease return! T Are you looking for more articles on Ownership? Visit www.avbuyer.com/articles/category/ business-aircraft-ownership


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International Business Aviation Operations

There's No Place Like US Airspace 188

Flying in the United States stands alone in the world for its ease, flexibility and accessibility compared to other regions, notes Dave Higdon. art of the impression of the ease of operations within US airspace stems from the sheer size of the continent and the vast distances one can cover in even the smallest aerial conveyance. A visiting pilot, here to earn his Air Transport Pilot certificate, noted similar distances in other parts of the world can involve crossing multiple national boundaries – and in the process interaction with multiple n ational bureaucracies. Another part of it comes from the ability to fly from and over states with (under the right

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circumstances) little to no interaction with a governmental entity. One German national visited the Wichita area some years back. After checking out in his flight school's Cessna 172 he decided to follow his new instructor’s advice and spend a few hours flying the Skyhawk to become familiar with the Wichita area and its many airports – small, medium, large and military in variety. The instructor counseled him to range around, to visit some airports where they would be flying once the student started his formal instruction. “Have a little fun and fly to Ponca City


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Here versus There...

• • • • (Oklahoma) on Saturday for the monthly fly-in pancake breakfast,” the instructor suggested. The student liked the idea and asked, “Who do I check in with to fly to Oklahoma?” When the instructor heard the question he decided to hold an early impromptu lesson on flying in America. “You need no one's permission,” he explained. “No need for radio calls beyond airport UNICOM calls, unless you want to file a flight plan...which we'll be doing a lot of starting next week.” Wide-eyed with surprise, “Nobody?” echoed the student. “Welcome to flying in the United States of America, home of the freedom to fly almost anywhere, almost anytime.” It's that wide-open sky that visiting international pilots first find amazing – soon offset by the exceptions that sometimes complicate the vision of free flight in the US…

• •

Class B, surrounding the major hub airports; Class C, surrounding scores of secondary airports with radar services; Class D, surrounding many smaller airports with ILS or other instrument approaches and an operating control tower; Class E, airspace that is not one of the above classes--basically airways Class F & G, uncontrolled airspace Others, Military Operations Areas (MOAs), and a relatively few restricted-airspace zones and even fewer prohibited airspace zones.

The businessman or businesswoman flying a turbocharged piston single or twin can pick two points, possibly file a VFR flight plan – strictly at their discretion, you understand – load up, fire up, and fly. Radio contact with relevant controllers is required to fly through Class B, C and D airspace, but no advanced permission is needed before becoming airborne. While not required, a VFR flight plan is a smart option (especially at night) – but an option nonetheless. Nobody at the FAA, in D.C., or any of the state or territorial capitals can deny you access. You need no permission from the US government or the 50 states to fly – only the right to do so by being

“In fact, in the US it's airspace designations, not political boundaries or bureaucracies, that are responsible for most of the need to interact with FAA controllers.” 189

America consists of about 3.8 million square miles in the Lower 48 states alone. That doesn't count the 663,300 square miles of Alaska, and 4,000 square miles in Hawaii. By comparison, Europe collectively covers about 3.9 million square miles. But the land masses of the Middle East, China and Russia dwarf the US, and flying across those nations' borders and through their airspace requires significant amounts of government contact while exacting a variety of bureaucracies. As one businessman – NBAA Chairman Ron Duncan – noted recently, he could decide in the morning to fly his Challenger from his base in Anchorage, Alaska, to Washington, D.C., file a small amount of paperwork (an instrument flight plan and notice of transiting Canadian airspace) be airborne promptly, and on the ground in the Nation's Capitol a few hours later. No customs officials, no immigration stops, no passport, no problems – and no special fees. Within the US, put two pins on an IFR flight planning chart, check the airspace along the way (there are some tricky areas) file an instrument flight plan, and go. The IFR flight plan requirement exists regardless of weather for aircraft flying above FL180. The airspace between FL180 and FL600 is designated Class A airspace, and FAA regulations require every aircraft in Class A to fly on an IFR flight plan. In fact, in the US it's airspace designations, not political boundaries or bureaucracies, that are responsible for most of the need to interact with FAA controllers. After Class A, these are identified as follows:




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appropriately licensed. In fact, you can traverse the nation from the farthest corner to its opposite corner at will if you navigate to avoid any of those restricted airspace zones. You need only to make radio calls on the airports' UNICOM frequencies for the safety and courtesy of fellow aviators. But even then, aircraft lacking radios – usually also absent an electrical system to power them – do this regularly without violating any regulations.

On the Border

“Plan a cushion for this task, because you must wait for CBP's reply message – and the agency notes that response may take a few days.” 190

Thanks to the continued state of “heightened security” we perpetually live under, however, transiting the US border became a little more involved in the past 15 years. One of the bigger changes came via the US Customs & Border Protection agency (CBP) and the form, content and timing of notifying the government of your plans to transit the US border, outbound or inbound. The electronic Advance Passenger Information System (eAPIS) is the successor to an earlier system that could be handled by phone or with an International Flight Plan. Since implementation in May 2009, CBP – an agency of the Department of Homeland Security – has required these filings come by Internet. Pilots must notify CBP – via the internet only – at least 60 minutes before your departure from any US airport or foreign airport. It applies to any flight that departs a US airport outbound, or departs a foreign airport inbound to a US airport. The eAPIS system provides the conduit for that notification, which is unrelated to any notification possibly required by the foreign airport – either leaving or returning. While the requirement for filing is an hour before planned departure, you can't simply log into the eAPIS site without first registering with CBP (via https://eapis.cbp.dhs.gov/). Plan a cushion for this task, because you must wait for CBP's reply message – and the agency notes that response may take a few days. Once registered and equipped with your unique Sender ID and initial password, you're ready to go – for 90 days.

Before you can file a departure, you will have to log in to the same CBP site, with the ID and password sent to you, and reset your password. CBP requires password resets every 90 days – something you do not have to worry about if you use eAPISfile.com. Once logged in, establish the required ‘Crew & Pilot Information’ – and be sure you have on hand the current information on your pilot certificate and passport. A change in a mailing address not matched with an updated pilot certificate could create problems. And for anyone who hasn't updated their pilot certificate since the last decade, well, you must possess an FAA certificate that states, “English Proficient”. These requirements apply whether you're just hopping the border to Cancun, Mexico; Georgetown, Grand Cayman; or Toronto, Canada. For the record, flying within Canada and Mexico is about as easy and free as within the US – except for fees for airtraffic services (we'll address these in a later installment of this series). And flying to Grand Cayman, Cayman Brac or Little Cayman, was already allowed with an overflight of Cuba. Again, fees to the Cuban government were involved – as well as fees to the Jamaican government for merely transiting its airspace. Once in those nations, filing requirements plus notifications and such are all by their rules; those three nations mentioned above, as well as the Bahamas and other islands in the Caribbean, are fairly easy to deal with and lack the complexities of some of the regions and nations we'll discuss in upcoming articles. For those areas a wealth of varying bureaucracies, paperwork, permits, fees and inspections may apply, and no two countries seem to work things exactly the same way as neighboring countries. Learning of and preparing for operating into the international environment takes American aviators outside the familiarity and ease with which we fly here. And we'll start examining some of those areas and issues in subsequent stories on international access for Business Aviation. T


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International Business Aviation Operations

Flying to India: Permits, Complications & Closed for Weekends! 192

For flying to, over and within India the considerations are considerable and complex, notes Dave Higdon, who continues his examination of operating within the various ATC systems throughout the globe… ith any international trip, advance planning is key. Arguably that’s even more so for India than for international visitors to the US or Europe. For example, under current rules the agency with authority to issue permits in India closes over weekends – and, of course, for holidays—meaning any permits needed for a weekend flight (entering, leaving or over-flight) won't get any action between Friday evening and Monday morning. Permits can also take days, if not weeks to obtain and are difficult to impossible to change. Business

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aircraft are limited to 14 days in the country without either a new permit or a revision to the existing permit – and revisions needed to extend a visit by a day or a week may take weeks to obtain. Thus, due consideration of these requirements and limitations is essential.

Visas Before You Fly

Professional handlers and international trip planners all advise India-bound travelers to apply for, and obtain visas well in advance of departure, specifying your planned arrival date. Both passengers and crew must obtain visas for their visits.


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There are exceptions, among them to nationals of Nepal and Bhutan, while visas may be obtained after landing for nationals of Finland, Japan, Singapore, the Philippines, New Zealand, Luxembourg and Laos. And there are exceptions for other nationals that allow a visa to be obtained after landing – but that is strictly at the discretion of the immigration authorities. Even with these exceptions, obtaining visas on arrival for nationals of Pakistan, Iraq, Afghanistan and Bangladesh come with restrictions. Your best bet? Use a visa provider to be sure you are working from the latest information. In India,

visa requirements can change on little-to-no notice. Be prepared to show details of your landing clearance, since part of the process includes establishing a Minimum Holding Altitude (MHA) before the visa is granted. The requirement exists for air-traffic management purposes and to meet requirements of India's security apparatus. Trip planning professionals know that this requirement can be a hassle because of the leadtime involved. India also takes into account whether passengers are on business or holiday in their requirements with varying treatments. And most airways are closed to foreign traffic on weekends,

“Your best bet? Use a visa provider to be sure you are working from the latest information. In India, visa requirements can change on little-tono notice.”



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“Further, all foreignregistered aircraft using Indian airspace need DGCA approval.”

with only one airway open – and only by an advanced permit. Indian diplomatic missions, embassies and consulates have been authorized to grant these visas – preferably within three days of applying - as part of the process established and run by the Director General of Civil Aviation (DGCA). The DGCA must provide details of the aircraft landing clearances to the Bureau of Immigration and Director General of Police well ahead of the arrival of the flight. Obtaining a visa on arrival isn't completely off the books – but limited in use. For example, at New Delhi's airport (VIDP) it's possible for crew to obtain a 72-hour crew visa on arrival; passports and crew IDs are required – but even that service isn’t guaranteed. Upon arrival, customs officials take possession of crew members' passports while issuing them a paper visa. Best practice is for crew members to obtain their visas before departing. Visa-on-arrival should be considered a last resort.

Timing Permit Applications

India wants you to obtain a permit for landing, departing and for overflights. For example, flights to an Indian airport from outside the country can be acquired on relatively short notice, according to a number of trip planners. But applying on a Friday or

the day before a holiday is an invitation to remain grounded, stranding passengers and crew until the permit arrives. Further, all foreign-registered aircraft using Indian air space need DGCA approval. Unlike scheduled carriers, business jets need permission each time they fly into, or over India as do those seeking to fly overseas from the country. Keeping front of mind the closing of DGCA operations on holidays and weekends, a flight may be forced to detour around India without the overflight permit, adding time and expense to what might have been a direct flight had the permit arrived on time. Only emergency requests have a chance to receive permission on weekends and holidays, but constraints – and permit requirements – on others remain. The weekend closure of DGCA offices impacts not only Business Aviation in India; the commercial carriers struggle under the same constraints. India's airlines that fly weekend routes obtain their approvals in advance, something possible for nonVT-registered aircraft. If the same rules applied in the US, business aircraft operators would need to obtain permits for weekend flights sometime between the start of the business day on Monday and the end of business on Friday; no pop-up trips on the weekends because the offices would be closed. But there is good news to come out of India's aviation authorities: They are working on improving access. And then there are the time limitations. Foreignregistered aircraft on the ground in India are limited to 14 days in the country; the operator may leave the country and return, however, as long as the proper permits are in-hand for the aircraft's movement. The good news is that some of the past permit problems have been resolved and involve more airports where a temporary landing permit can be issued.

Customs Clearance, Ground Handling & More...

While India works to attract Business Aviation operators, other sticking points currently remain. For example, business aircraft crew and passengers may need to visit the airport's airline terminal to clear India's customs, immigration and quarantine processes. If the airport happens to be a military airport with civilian use allowed, the requirements for obtaining permission to land and depart increase in length significantly. The window for using a permit to land at a military field allows only a one hour window; outside that, a new permit will be required – with the ensuing time delay replayed. Operators with permits to land at civil airports enjoy a much broader window for their arrival time. Landing permits for non-military fields remain valid for 48 hours. And revisions to landing permits are


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not required for non-military locations if a flight is delayed within that timeframe. But add passengers to your flight and you will need to give 24 hours’ notice to revise a landing permit. And when preparing for a flight involving a landing at a military field, consider the high degree of information required by India's bureaucracy. Military airport permits require 30 business days to arrange but handlers advise operators to apply at least 60 days prior to help cushion the time needed to coordinate required documentation. And there's more. Before granting a permit to land at a military field you'll need to submit significantly more personal information for each person on board – beyond the basic full passport information. India's military requires the name of each person’s father, all their home addresses, plus birth place, nationality, and, for crew members, the pilot license number. The level and cost of services can vary widely in India, which boasts precious few full-service airports with FBOs serving business aircraft. Not all are portof-entry airports, so a technical stop may be needed to clear customs, immigration and quarantine. Fuel prices vary widely, as does the fuel tax – and you can be taxed for fuel remaining after arriving from outside India if the next flight is to a destination within India. No sales taxes are due for fuel when departing India, however, provided you can prove you're headed to another country. Many airports within India are both uncontrolled and lacking basic fuel service, maintenance and parking. In such cases, carrying enough fuel to ferry the aircraft out is both necessary and helpful when passengers must remain in the destination city overnight. Where there is parking, you face added expense. Most airports charge by the ton of operating weight, applied per hour. This system can put parking/tie-down fees in the hundreds of dollars per day for many common aircraft types. The combination of fuel costs, parking fees, taxes and permit fees can make a trip to India very expensive.

for the personnel on the trip and ground transportation, depending on your needs. Working with a local agent well ahead of the departure date can also help you connect with the best hotels available in any given city. India's two main business destinations, Delhi and Mumbai, both boast international hotel chains and good selections of 4- and 5-star crew accommodations. But outside of the larger cities, the supply of such accommodations may be limited on a good day. Your best bet? Investigate and book hotels as early as possible.

Accommodations & Security Issues

Summary: Research, Planning & People…

India, thanks to its close proximity to Pakistan and China, stands out as a nation where foreign visitors should consider using a trip planner, expediter or ground-handling agent able to help arrange security – for both the passengers and crew, and the aircraft itself. Sadly, most of India's cities are under a moderate threat level where security is concerned. A first step widely recommended is to acquire upto-date country and city security briefings well before departing. Then, depending on the trip, the people and the time you'll be on the ground in India, you find comfort in having your ground agent or trip planner arrange for security for your aircraft,

Give yourself plenty of time to work out arrangements for your itinerary. With different airports operating under different rules, knowing the availability of fuel, services, security and hotel choices can be resolved far enough ahead that those processes don't conflict with, or complicate your plans. With the help of a ground agent, trip planner and arrangements for security for the airplane and its people, a trip to India can be as productive as any other international destination. But remember: Any changes to your travel dates, itinerary or passenger list may incur delays while waiting on updated permits. T

“The combination of fuel costs, parking fees, taxes and permit fees can make a trip to India very expensive.”

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Profiles & Case Studies

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

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

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Section Contributors


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Profiles & Case Studies

How BizAv Keeps Johnsonville Sizzling

Corporate Aviation – Providing a Business and Personal Touch Andre Fodor is Director of Aviation at Johnsonville, a high-end sausage manufacturer that trades in 40 countries. As you might expect, the company’s flight department is a busy operation, notes Rani Singh... orn in Brazil and fascinated by technology and electronics from an early age, Andre Fodor was inspired when his father took him to airports to watch the airplanes. He recalls his excitement at being taken into cockpits to see the dials and gauges, and he grew to love everything about flying. He needed to move to the US to achieve his aviation ambitions, eventually gaining a pilot’s license and ratings to become a flight instructor. Helping a former student get a job, he was quickly repaid when the student went overseas, inviting Andre to go with him. “I ended up getting a UN position in Africa and the Middle East, gaining a lot of aviation management experience quickly. I was posted to Kuwait, managing flight operations after Desert Storm.” Later flying jets for a Pepsi Co franchise, and then working for Flight Options, the US’s second biggest fractional program, Andre was invited by Embraer to help set up operations in Melbourne, Florida. When Johnsonville, a renowned sausage manufacturer serving many international markets came calling, the company was about to buy a long range aircraft to expand its global reach. Andre found that he and the Johnsonville CEO had similar

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mind-sets. “We both think outside the box; we innovate and provide an unequalled level of service and experience,” he comments.

Something Extra

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Andre refers to the ‘extra three percent’ – offering an exquisite, professional level of service within Business Aviation. Transporting passengers where productivity is of key importance requires a unique setting, he highlights. Consequently, the environment of the jets in Johnsonville’s flight department - even down to the smell, the towels and uniforms - is changed with the seasons, so that everyone on board has an unmatched sensory experience as well as efficient transportation. So why is Business Aviation so vital to a global sausage manufacturer? “Let’s suppose we have a plant with a problem with its recipe-base, and an issue with flavors,” offers Andre. “We would have to stop production due to an issue with seasoning or appearance. Would you want to stop a production line that can produce £200,000 worth of product in a day for very long? “With our business jets, we get the necessary persons aboard the airplane and transport them to the location in the shortest time possible, avoiding


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chairman said: ‘The only way to resolve this is to go there, sit down with this guy and tell him how we have a different approach to doing things’. “He went home and packed his bags as we prepared the flight. We flew through the night, landing at 10am. At 11am the Chairman was in the guy’s office, and by 1pm they were having a celebratory meeting. There’s nothing like doing business face-to-face. The two chairmen had finally seen that both of them had the same care and attention to business. That’s how we bridged the gap,” Andre concludes.

Total Service

More on Johnsonville at www.johnsonville.com

“Issues with customers from all over the nation – and indeed the globe – can be handled face-to-face with a business jet...”

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lengthy security lines, eliminating connecting flights, and preventing delays. That adds tremendous value to the company.” Andre and his team fly around 400 hours a year, 200 of which are for “global reach and philanthropy”. Johnsonville’s twoyear-old Legacy 650 has flown just under 800 hours, he notes. “It flew once around the world over 22 days. When I need supplemental lift; I complement my lift needs through our contracts with charter and fractional operators.” However, Johnsonville has also recently taken delivery of a new Global 6000 jet, meaning that company personnel can easily reach China, Singapore and Japan - countries in which Johnsonville is active. “The primary reason for acquiring the Global was to buy us the commodity of time,” Andre notes. “Chicago to Tokyo, for instance, takes 14 hours. The Legacy does not have a crew rest area. It’s a long flight, so you can’t do it in a day with the 650. You need a stop-over. The Global offers the non-stop range and also, with a crew rest area, enables transportation of an extra pilot. It’s designed for this kind of trip.” Another example of Business Aviation’s vital role was illustrated when Johnsonville was seeking to acquire a company overseas and negotiations had reached a crucial stage. “The two parties could not get to an agreement on the philosophical value of how the business was going to happen, so the

Johnsonville produces products for other major companies, and Corporate Aviation enables the necessary efficiency for Johnsonville. “If a customer anywhere around the world has a problem, we need to connect our executives, sausage makers or experts with that customer,” Andre summarizes. “Issues with customers from all over the nation – and indeed the globe – can be handled face-to-face with a business jet,” he adds. And with internet capability, telephones, printers, fax machines and great service noted above, the jets operating within Johnsonville’s flight department are essentially “an extension of the corporate office”. Corporate secrets and corporate security are maintained, too. However, the Business Aviation operations have another, more human-needs-related facet. “Flying corporate means lots of control over the safety and security of our key personnel, and they can travel at their convenience, to their schedule,” notes Andre. “Busy high-end people sacrifice a lot of personal time with families. Jets bridge that gap - the whole family can get together for weekends to recharge and refresh.” Andre concludes with a final story of personal and emotional value that rates highly with both Johnsonville and him. “We once received a call saying that the father of one of the firm’s executives was terminally ill after a major cardiac issue, and was lying in hospital. We deployed to New York immediately, collected our executive, turned south to North Carolina, picked up the gentleman’s wife and then flew Midwest to have this couple join the executive’s father in those last moments of his life,” he recalls. “That’s completely impossible with airlines, and summarizes the immense business and personal value of Business Aviation to Johnsonville.” T


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Profiles & Case Studies

Living The Dream

Building Communities with the aid of Business Aviation Roberts Resorts & Communities is expanding successfully with hands-on management able to find locations outside the limited sphere of cities served by Scheduled Airlines, observes Jack Olcott… And it’s all thanks to a Pilatus PC-12. cott Roberts is the second generation of family management to guide the progress of Roberts Resorts & Communities, a developer of properties and dwellings for families seeking the benefits of home ownership. Founded 50 years ago by his father, the firm was conceived to offer affordable homes for families of any age, with emphasis on those nearing or in retirement. The goal was facilitating “The American Dream” to a broad segment of society. From its initial effort in California focusing on parks for recreational vehicles as well as RVs for those locations, Roberts Resorts expanded its business model to include locations in Arizona, Alabama, Colorado and Texas with park models (i.e., RVs) and manufactured homes.

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The market for manufactured homes is well established, but many developers in that business concentrate on locations they can access via the Scheduled Airlines since prospecting for new sites and managing facilities requires active involvement by management. “My parents were licensed pilots, and the use of Business Aviation was an integral part of their approach to market expansion,” notes Scott. “They started with a Cessna 340 and progressed through a series of twin-engine piston aircraft from a Cessna 414 to a 421. I am second generation management and an active pilot, and I fly a pressurized Cessna 210. “Utilizing the company aircraft, my parents grew Roberts Resorts into four locations in Arizona, several


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more in Texas, an Alabama development and another near Colorado Springs, Colorado. Now we have 14 communities, and at least once per month we visit them to assure quality control and to support our customers. “With our goal being responsible development and pursuit of new opportunities such as Florida locations, we considered our need for greater speed and carrying capacity than the Cessna 421 provided,” he continues. “We knew we required more capability, but we did not wish to move into a business jet at this time or grow our aviation effort beyond the ownerflown system that had worked so well for us in the past.”

Enter the PC-12

THE SPACIOUS INTERIOR OF THE PC-12

engine aircraft, Scott finds the PC-12 quite stable and easy to fly. In particular, he feels the cockpit layout and avionics are particularly easy to manage as a non-professional pilot. FlightSafety International provided his 11-day transition training, utilizing its Level D simulator for the Pilatus. Sixty hours of mentor flying followed his checkout. Scott says that obtaining insurance for his operation of the PC-12 did not present a problem. While hiring a professional pilot dedicated to the aircraft might still be an option, he is pleased that he can continue his use of Business Aviation as an ownerpilot to manage existing properties and expand into new markets beyond the current reach of Roberts Resorts & Communities.

Expansion

“With the PC-12 we plan to travel further and grow, particularly into the Florida region. The Southeast represents great opportunities for our manufactured homes and managed communities,” Scott adds. “The Pilatus allows us to use our time quite efficiently. Although the Cessna P210 was a great aircraft, I did not feel it offered the capability we needed to capitalize on growth opportunities. The PC-12 does.” Many entrepreneurial companies such as Roberts Resorts & Communities find that Business Aviation in all forms, from professionally flown corporate jets to owner-operated singles, provides a competitive edge. Throughout the USA as well as in many areas of Europe, business aircraft are able to access more locations than can be reached quickly and efficiently by Scheduled Airlines. Companies serving customers and shareholders understand that maximizing profits is facilitated by Business Aviation. T More on Roberts Resorts & Communities at www.robertsresorts.com

SCOTT ROBERTS WITH HIS WIFE, LAUREN AND DAUGHTER BRIGHTON

“We can leave the company’s home base in Scottsdale, Arizona and do business in Austin, Texas within about three hours...”

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With the assistance of Tempus Aircraft Sales & Service, a Colorado-based aviation service organization with facilities in Arizona and California, Roberts Homes was introduced to the Pilatus PC-12 singleengine turboprop. “We found the PC-12 suited our needs particularly well,” Scott explains. “The aircraft provides more interior volume that we had previously, and it has sufficient speed to fulfill the marketing and management missions of our company. With its ability to use smaller airports coupled with its load capacity and speed, the PC-12 fits right in. “We can leave the company’s home base in Scottsdale, Arizona and do business in Austin, Texas within about three hours; then fly to Daytona Beach, Florida in another three hours, accomplishing two site visits within just a few days. Considering our mission, we feel the cost-benefits of our PC-12 solution are superior to what we would obtain from a business jet.” Scott Roberts recently transitioned from his Cessna P210 to the Pilatus turboprop. A 2,800-hour owner-pilot with 18 years’ experience in single-


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High Flyer’s Interview

Business Aviation Lifts Apogee Physicians to New Heights in Hospital Medicine For Apogee Physicians, Business Aviation plays a critical role in providing high quality care to its hospital partners and their patients, as its Founder and sole shareholder reveals to Rani Singh… n 2002, Dr. Michael Gregory founded Apogee Physicians with two doctors in a single hospital. Since that time Apogee has flourished and expanded to over 700 hospitalists, who annually manage over 1.3 million patient encounters across the United States. “Success begets success,” Dr. Gregory reflects. “The reward for a job well done is more hard work and greater opportunity. As we expand, more hospitals recognize the quality of care Apogee delivers and seek us out to care for their patients. Right now, today, Apogee is caring for 5,000 people within our partner hospitals. “Having managed over 10 million patient encounters, Apogee understands best practices and provides its hospital partners and their patients with high quality, effective care.”

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BizAv: Access All Areas

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Unsurprisingly, Apogee finds Business Aviation critical to its business model. “In many corporate flight departments, intervals are a bit of a problem,” Dr. Gregory remarks. “People change their minds, their businesses go up and down, and they open and close flight departments. That’s not our experience. In fact the first two pilots I ever hired still work for me, and our flight team has expanded to six pilots.” Initially, the group flew commercially, but many of its hospitals aren’t served by the scheduled airlines. “We were flying to commercial hubs and then driving,” Dr. Gregory recalls. “Sometimes it would take a day or two to make one visit to a hospital. With our growth trajectory and number of hospital partners, flying via the commercial airlines simply wasn’t responsive enough or effective.


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“When hospitals decide to contract for hospitalist services, it’s a very big decision for them and may require several interactions before a decision is made,” he adds. “Cultural fit is often a key factor, so for these meetings to be effective they must be done in person, conference calls simply aren’t adequate. As such, the travel schedule is pretty hectic. “Early in our company history I recognized the advantage of Business Aviation. I think our company was about two years old when we started chartering for specific trips and specific needs. We found, however, our travel needs quickly exceeded chartering responsiveness and economics, and in 2005 we made the decision to purchase an aircraft— a nine-year-old Hawker 800.” For nearly five years the Hawker put in around 400-500 hours annually. “As our team and business

grew our travel requirements expanded beyond what the Hawker could satisfy, so in 2007 we bought a Cessna Citation V. Shortly thereafter, we sold the Hawker 800 and bought a Bombardier Challenger 605. It wasn’t too long before our needs exceeded the capacity of two airplanes and we added a Hawker 850 to the fleet. “One year ago, we traded in the Challenger 605 for a Bombardier Global Express.” Today, Apogee Physicians’ fleet consists of the Citation V, Hawker 850 and Global Express.

“Early in our company history I recognized the advantage of Business Aviation. I think our company was about two years old when we started chartering...”

BizAv: Centralizing Factor

Dr. Gregory flies the Global about 200 days a year (around 450-600 hours). “I still go on most of our business development trips, meeting clients. The other two airplanes are used by my senior executives,



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DR MICHAEL GREGORY


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primarily for operational support. “A key Apogee advantage is all of my operational executives are physicians, which means physicians report to physicians who genuinely understand the requirements and pressures of being at the patient’s bedside. While we operate in 32 states, instead of having corporate offices all over the US, our aircraft allow us to centralize our offices and keep our teams together. “Instead of having my division presidents consuming a couple days navigating commercial airports and driving several hours to visit a single hospital, our guys can do more with a private airplane in a couple days than they can do in weeks flying commercially. So for us, it really is about time-saving and being responsive to our hospital-partners.” A strong testament to the validity and utility of corporate aircraft is Apogee’s status as a private company, 100% owned by Dr. Gregory. “Every dollar spent on corporate aviation by Apogee is a dollar that I don’t get,” stated Dr. Gregory. “Unlike many CEOs working for big publiclytraded companies that enjoy broad capital support, I invest my own money in Corporate Aviation because I believe it’s worth it. It’s expensive. It’s not cheap, but it’s instrumental in our success.” In addition to efficiency and responsiveness, Dr. Gregory finds that the business jets help in moving his executives and teams around so they can be where they need to be and not be perpetually exhausted. “It’s important that they have a decent work-life balance, so they can be home and involved in their families and communities. “Since we hold ourselves to a high standard and provide superior support to our hospital-partners and our program-level teams, our executives need to be in the field; as such, our aircraft allow them to do so and maintain a high quality of life at home. I always tell our clients, ‘if you need me, there’s no place I can’t be that’s more than four hours from where I am standing right now. That’s a powerful message.”

Hospitalist Benefits from BizAv

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“It’s pretty unusual for us to move physicians around to see our patients,” Dr. Gregory notes. “We have had two of our hospitals destroyed by tornadoes; one in Missouri and the other in Illinois. By the grace of God, none of our physicians were harmed. In both of those instances, within a couple hours of the tornado dissipating, we used our airplanes to bring not only additional physicians to the communities but also much needed relief supplies.” At Apogee, corporate aircraft primarily support the business and administration of providing hospitalist services and efficiently delivering Apogee’s promise of ‘Safety, Service, Quality and Value’. Dr. Gregory explained that good talent is hard to find, whether you’re Google or Apogee. He cites the example of a 350-bed hospital in a location that does not have good commercial air travel… “Just recently on a Tuesday, I got a call from the

Hospital CEO who described the problems he was having with the staff (working for different groups) at his hospital. He was afraid if he stopped using the groups the doctors would leave. I told him I would have a team there within 48 hours. “On Thursday morning, I had an entire team onsite meeting with these physicians, and analyzing the business model for the hospital. Before leaving on the same Thursday, we presented the hospital with a formal proposal and provided employment contracts to the physicians. “In less than two days from receiving the CEO’s call, we had a full team onsite, did all the analytics, analyzed the business model, met with the physicians and presented the hospital with a formal proposal. Without the airplane it simply would not have been possible. That’s corporate aircraft efficiency!” T More information from https://apogeephysicians.com/ With thanks to Yasaman Ahmadzai who helped prepare this article.

“...instead of having corporate offices all over the US, our aircraft allow us to centralize our offices and keep our teams together.”


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King Airs Deliver Care to Remote Communities

BizAv Helps Premier Bone & Joint Beat a Fractured Transport System… Diagnosing, treating and rehabilitating orthopedic conditions, Premier Bone & Joint Center’s team of board-certified physicians work with patients throughout Wyoming and surrounding states. Chief Pilot Cody Diekroeger tells Rani Singh they simply could not do their job without the use of corporate aircraft. ithout intrastate airline service in Wyoming, General Aviation serves as the most efficient mode of transportation in this vast, sparselypopulated region. “Without General Aviation we couldn’t do it, our practice would not exist as it does today,” Cody Diekroeger, Chief Pilot, Premier Bone and Joint Center highlights. Today owned by a consortium of orthopedic surgeons, the group was founded 43 years ago by Drs. David Kieffer and Robert Curnow as Gem City Bone and Joint. Eventually a decision was made to take specialized orthopedic care to the patients rather than have the patients drive hundreds of miles for treatment. Initially, before the use of a business aircraft, a limousine and driver facilitated travel to the satellite clinics. While the majority of surgeries are conducted at the Premier Bone and Joint surgery center in

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Laramie, some procedures may be accomplished at the satellite clinic locations since many are equipped with x-ray and MRI equipment and qualified technicians. “Well, after a year of driving in Wyoming – Wyoming winter weather can be terrible – [the doctors] figured there had to be an easier way to do this, and they started chartering a single engine airplane,” Cody, also director of aviation, reveals. “That soon led to the group purchasing a twin engine piston aircraft, and then, in 1985, they bought their first Beechcraft King Air turboprop airplane, which they still own. “We had one pilot and one airplane until 2001 when a second King Air was added, followed a few years later with two more King Airs joining the fleet. We fly the surgeons and their support staff across Wyoming from the home base in Laramie to each of our ten satellite clinic locations.”


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CODY DIEKROEGER & THE KING AIR FLEET AT LARAMIE

According to Cody, the airplanes transport very highly qualified surgeons to communities that are not large enough to support a medical practice with such specialized medical care. “The physicians are trained in various specialties, and they rotate through the clinics every week, treating patients according to their specific orthopedic needs,” he adds. “Premier serves approximately 75% of the state geographically— about 80% of the population. “It could take a whole day for someone to drive to a major metropolitan city such as Denver, Colorado for such medical care,” Cody muses. “Our airplanes allow our medical teams to travel to one of our satellite clinics in an hour or less, spend the day seeing patients and performing surgeries, and then fly back to Laramie.” Indeed, sometimes all four airplanes are out on the same day, heading in different directions, transporting different orthopedic specialists.

Cody spoke to AvBuyer while there was an actual procedure occurring. “Yes, we have our pain management physician here today in Casper, Wyoming,” he explained. “It’s about a 30 minute flight from Laramie. He is in an operating room administering injections to patients to address their pain issues and is our most senior physician. He’s been doing this for many years. “There are not too many pain management physicians in the country, so we feel very fortunate to have someone who is capable to do this.” Premier surgeons are flown to towns that typically have populations ranging from 5,000 residents. “The largest town population in Wyoming is 60,000 and even if it has 60,000 people, the town may not be large enough to support having an orthopedic practice with so many different specialists,” Cody says. Thus the group provides much needed specialized care by bringing surgeons to the residents. “Many of the surgeries that our doctors perform in Laramie and at some of our satellites may be considered 'elective surgery', although [our medical team] may occasionally encounter time-sensitive trauma cases. A patient may have a knee problem (a torn cartilage or ligament issue requiring attention), although it may not be a life-threatening or 

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How the Fleet is Used

“Thus the group provides much needed specialized care by bringing surgeons to the residents.”


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emergency situation. The Premier Bone and Joint physicians are also the team doctors for the University of Wyoming athletic department, traveling with the sports teams and treating the athletes. And because Wyoming is so agricultural, farmers and ranchers often require medical attention due to injuries sustained while working with livestock or machinery. In fact, a local veterinarian has been operated on by almost every one of the Premier surgeons due to injuries suffered while administering treatment to livestock!

A Day in the Life of the Flight Department

“We would depart Laramie around seven in the morning, flying to our clinic in the southwest corner of Wyoming, a town called Rock Springs,” relays Cody. “That is probably our busiest satellite clinic, and we may see upward of sixty patients a day. We may do a surgical procedure or two and then at the end of the day, fly the doctors back to Laramie. “The next day we’ll have another airplane going to Rock Springs with physicians with a different orthopedic specialty. Some of our doctors may specialize in upper extremities (hand, arm and maybe

shoulders). Others may specialize in knees, sports medicine, or spinal conditions.” Cody often has the opportunity to meet patients, relaying how the husband of one patient from Scottsbluff, Nebraska was thrilled with his wife’s progress. “He told me that his wife loved our surgeons; she loved our nursing staff and our hospital. At some point she’ll have her other knee replaced and she’s going back to the same doctor. This man was just so happy for his wife, who he said had been in pain for quite some time, but now was like a whole new person. “We hear many stories like that. Some people relay that our doctors operated on their knee, that they’ve sent their kids to us, and their grandkids. So some of our doctors have seen three generations of patients,” Cody concludes. “It looks as though Premier Bone and Joint will treat many Wyoming generations to come – but I re-iterate, it couldn’t happen as it does today without the business aircraft!” T More information from www.premierboneandjoint.com

“The next day we’ll have another airplane going to Rock Springs with physicians with a different orthopedic specialty.”

With thanks to Andra Ciupitu who helped prepare this article.

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MEDICAL STAFF AT PREMIER BONE & JOINT CENTER AWAIT EARLY MORNING DEPARTURES FROM LARAMIE TO SATELLITE CENTERS


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High-Flyer’s Interview Embracing Embraer’s Legacy 450

Captain Cédric G. of SmartAir, based in Brussels, is flying Europe’s first Embraer Legacy 450 and tells Rani Singh he’s the envy of his colleagues in other companies. Here’s why…

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iscussing SmartAir’s new Embraer Legacy 450, Captain Cédric G. smiles… “I’m happy that we convinced the owner to buy this aircraft – at the time, we used arguments that have proven correct. We could foresee that this aircraft was state of the art.” Cédric has been with SmartAir for three years, and has since persuaded the owner to replace his Cessna Citation XLS+ with the Legacy 450 midsize jet. Owned by the chairman of a private company Board of Directors (who is in his late seventies), the

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Legacy 450 has various features that are greatly appreciated by those who fly in it, including individuals who charter the aircraft. “We flew the aircraft’s owner from Brussels to Zurich, and from Brussels to Clermont-Ferrand near Riom, France. We also recently flew to Zurich because unfortunately during the terrorist attacks on Brussels airport there was no airline service available to enable him to return to Brussels. We were asked to fly and collect him.”

Enhanced Flexibility

The key advantage of Business Aviation is its


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SMARTAIR’S LEGACY 450 FLYING AT ST TROPEZ

flexibility - both in getting as close to specific locations as possible and flying on the passenger’s own schedule. According to Cédric, that flexibility has dramatically increased with the new arrival. “We can fly direct from London City to St Tropez. London City is a steep approach runway while St Tropez is short, making this city-pair impossible for many business jets,” the Captain reveals. “We’ve landed comfortably at La Mole, in St Tropez where passenger business activities might include work in tourism, real estate, marketing, local industry and hotel chains. La Mole has a

runway measuring just 3,280 ft., and the Legacy 450 is the biggest aircraft certified to land there. But our new jet [at an appropriate weight] is able to land on runways as short as 2,000 feet. “With the Legacy 450, we have been able to land at places in Europe where other jets of a comparable size and above can’t go without compromising on payload, or are restricted by conditions. We have even landed on shorter, wet runways. “One businessman took a flight from Nice to Antwerp. Antwerp also has a fairly short runway that means other aircraft of comparable size can

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“With the Legacy 450, we have been able to land at places in Europe where other jets of a comparable size and above can’t go without compromising on payload, or are restricted by conditions.”




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mostly only land there when it’s dry (which tends not to be so often in Belgium), thus they would have to divert to Brussels. “We made flights from Nice and from London to Antwerp and there’s no question we could land if it’s raining. That added assurance for clients has proven very good for our charter business.”

Silence is Golden

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One of the key drivers behind choosing a new jet for the SmartAir fleet was the passenger’s need for a productive cabin space. “We were attracted by the fact that with two seats in the middle, passengers can turn them ninety degrees to face one another, enabling passengers to speak to people to the left, right, and in front of them. Because the cabin is wide, passengers can do so without their knees touching.” Thus, the cabin area can be a productive space for meetings en route to the business destination – and users have also appreciated the silence in the cabin. “Because it is quiet they can talk quietly, or make a presentation from their iPad or their phones to the monitors. They can take advantage of the flying time to work. This is a productive space for them.” While Cédric doesn’t always get to know the industries of his passengers in detail, some recent

“So at the end of the day people are less tired flying in our jet.” - Captain Cédric G

clients were working in construction and others in finance. “It’s important for these passengers to arrive feeling alert, refreshed, and ready for business,” he outlines. “When you fly, the thing that makes you tired is the pressure inside the cabin. We understand the Legacy 450 to be better pressurised than comparable midsize jets. So at the end of the day people are less tired flying in our jet. A lot of people who flew with us recently really appreciated this,” he claims.

Summary

To SmartAir’s credit, those who were accustomed to chartering larger aircraft simply to have more space in the cabin can now right-size their aircraft choice to match their budgets in the Legacy 450. Meanwhile, customers that traditionally chartered smaller aircraft find they can enjoy more space and amenities without paying large-cabin prices. Increased cabin volume; smooth, quiet flight characteristics; the boardroom layout capability; generous baggage capacity; and access to destinations typically limited to smaller aircraft – it’s easy to see why Cédric was so keen to press the case for the addition of a Legacy 450 to the fleet. T More information from www.flysmartair.com


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The Value of Giving Back

Contributing to Aviation’s Future

erhaps the most significant intellectual of the Enlightenment era and the father of the discipline now known as physics, Sir Isaac Newton, said “If I have seen further than others, it was by standing upon the shoulders of giants”. In his recently published book, First Things First, renowned business guru and educator Stephen Covey notes that “The world we live in is the legacy of those who have gone before us.” Clearly, society builds upon the accomplishment of those who have gone before. The pace and efficacy of that growth, however, depends upon the willingness of current leaders to share their experiences and their resources with those who may choose to follow. How often have we heard of a pending pilot shortage or the disturbing prospects of fewer maintenance personnel as Business Aviation expands its role as an essential component of air transportation in the US, Europe and elsewhere? No professional within our community wants stagnation

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or decline. The key question, however, is what do we do about issues that cloud our future? It is essential that we pursue opportunities to nurture those who show an interest in flight. Thus we find the alignment of OGARAJETS and Aviation Career Enrichment, Inc., fascinating and most encouraging. These two Atlanta, Georgia-based organizations occupy prominent positions at opposite ends of the General Aviation spectrum, yet they have a common purpose—leveraging the value of aviation to society and contributing to the future of the aviation community. OGARAJETS serves the needs of corporations and entrepreneurs domestically as well as globally that use or are contemplating the use of business aircraft for company transportation. Founded in 1980 as the O’Gara Aviation Company by former US Navy F-8U pilots Ed O’Gara and John B. Foster III, the firm now is led by John B. Foster IV, known to the community as Johnny. While his father remains active day-to-day, Johnny tends to business as 

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Philosophers say that fulfilment comes from the four Ls: Living Life fully, Loving, Learning and Leaving a Legacy. For Business Aviation, the last L has particular importance, notes Jack Olcott.


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Profiles & Case Studies

REESE FOSTER WITH MR. ALEXANDER (RIGHT) AND BILL MERCURE (LEFT), REESE’S DESIGNATED PILOT EXAMINER

“ Its successful story, however, exemplifies the contributions that a talented teacher with both a love of aircraft and an uncompromised dedication to his students brings to society. ”

OGARAJETS’ president. Is this father and son team of aviators grooming a third generation to step in at some future date? Reese Foster, son of Johnny and grandson of John B. Foster, experienced aviation at an early age, albeit with no awareness of the family’s involvement as he attended his first NBAA convention at age one month. By age 5, he had been present at the NBAA Annual Meeting and Convention six times! Familiarity, however, did not breed contempt as Reese’s interest continued in spite of his family’s profession. At age 10, he and his father planned a trip from Florida to Oshkosh, Wisconsin in Johnny’s 100HP Legend Cub to attend AirVenture, the annual gathering of the EAA faithful at Wittman Field. While too young to seek a student certificate, Reese nevertheless often handled the controls from the rear seat of the updated design based upon the venerable Piper Cub.

Aviation Career Enrichment, Inc.

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As Reese approached age 17, Johnny sought the best school for his son’s pursuit of a Private Pilot’s certificate. Enter Julius J. Alexander, Jr., former educator in the Atlanta Public School system, retired PR specialist from Lockheed (Marietta division), experienced flight instructor and founder of Aviation Career Enrichment (ACE), a program Julius created in 1980 using aviation to motivate at-risk and economically disadvantaged youth in need of selfesteem and confidence. By no means is ACE the only organization to employ aviation and flight training as a stabilizing force for challenged inner-city youngsters. Its successful story, however, exemplifies the contributions that a talented teacher with both a

love of aircraft and an uncompromised dedication to his students brings to society. Born in the same Alabama city that lent its name to the famed Tuskegee Airmen, the WWII squadron of AfricanAmerican fighter pilots, Julius Alexander enrolled in the USAF Reserve Officers Training Corp (ROTC) as a college student and soloed in a J-3 Cub in the 1950s. But Air Force flight training was not in his future, and he graduated from Georgia’s Morehouse College (Dr. Martin Luther King, Jr.’s alma mater and the only all-male school of higher learning in the USA historically for blacks) in 1959 to become a teacher in the Atlanta public school system. Five years later he earned his Private Pilot’s certificate, and the following year was selected to be one of three teachers for an innovative aviation program offered to Atlanta high school students. An essay by Alexander about aviation as a stimulus for education attracted the attention of Cessna Aircraft, which invited him to be one of 10 educators to attend a special aviation education workshop in Wichita. Other articles followed, and by the early 1970s Alexander was gaining traction for the concept that aviation was a particularly effective tool for influencing inner-city youth. For other students who were not able to enroll in one of his aviation programs within Atlanta’s school system, Alexander formed a cadet squadron of the Civil Air Patrol and thereby expanded his aeronautical outreach. During his tenure as a public school teacher, he earned his FAA certificates as a commercial pilot, ground instructor and CFI for singles and twins. Although Alexander’s aviation program was popular and apparently effective, a new Superintendent of Schools in the Atlanta area


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Youth Program Continued

Tending to his day job with Lockheed but spending weekends with his passion, Alexander encouraged youngsters through several aviation enrichment programs. He led a team that designed Aviation Career Education, a concept that was eventually embraced by several aviation organizations in the form of ACE Camps. By 1980, his core efforts morphed into what became Aviation Career Enrichment, Inc., whereby any youth who demonstrated an interest could learn about flying by spending three hours each Saturday morning with Alexander, attending ground school and relating aeronautics to math and physics. Tuition, so to speak, was $12/month, and students often found sponsors to cover their cost of participation. In addition to attending ground school, many teenagers also took flying lessons from Alexander, and his Aviation Career Enrichment activities at Atlanta’s Fulton County Airport grew. Since its formation 35 years ago, the program has reached over 1,000 individuals, and Alexander has logged well over 11,000 flight hours. Over 180 young aviators undertook their

first solo under his supervision and several are now employed with the Scheduled Airlines.

Giving Back; Building Forward

Johnny Foster selected Julius Alexander to be Reese’s flight instructor out of respect for the educator’s aviation skills and admiration for the mentoring role Julius plays within the aviation community surrounding Fulton County Airport. His belief in ACE extended beyond Reese’s immediate needs, however. OGARAJETS created a significant endowment that provides scholarship funding for ACE students who show passion and commitment for aviation as a career. It is from those students that future aviators will surface. Still serving as a motivating force for inner city youth, Alexander’s Aviation Career Enrichment program has expanded and is active today, open to anyone who wishes to pursue flying as a career or avocation. The school operates four aircraft—two Cessna 172s, a Piper Comanche and a donated Cessna 310 currently undergoing refurbishment— two simulators and a flight training device. Most of the teachers and mentors are volunteers, although a small number of independent CFIs are modestly compensated for their activities. While ACE focuses on Atlanta youth from ages 9 through 18, adults are welcome to participate in the ACE Adult Flying Club. The appeal of aviation knows no age limit, offering fulfilment to all who seek the benefits of flight. OGARAJETS’ support of ACE is a worthy example of creating a legacy that adds value to all who participate in aviation, now and in the future. T www.myflyace.org

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decided that the district’s limited funds were better spent on other subjects. Thus in 1974 Alexander resigned his role in public education and joined the Lockheed Corporation at its Marietta, Georgia facility, nearby Atlanta, in its PR department. He continued there until retiring in 1997 as a Senior Public Relations Representative. While at Lockheed and subsequently following retirement, he continued his dedication to youth aviation education.


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Safety

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

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Section Contributor


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Safety

Assessing Safety Risksâ&#x20AC;Ś Why Bother with a Safety Management System? A 2014 accident report reveals lack of risk planning as a basic issue, notes Mario Pierobon. Does your flight departmentâ&#x20AC;&#x2122;s SMS give you the best

means to anticipate and reduce the safety threats within your operation?

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Safety Risk Assessments

While the accident scenario of this mid-air collision may not be representative of any typical corporate flight department’s operational context, the dynamics of the cause of the accident almost certainly will be. While corporate flight departments rarely perform aerial target demonstrations, there is a much higher likelihood

that they have not performed a thorough safety risk assessment of many potential scenarios. According to the accident report the Learjet 35A operator stated that until the time of the accident a concrete hazard and risk analysis had not been conducted within the company. The accident occurred only four months before the deadline for establishing full compliance with safety management system (SMS) implementation by European commercial air operators (AOC holders). The SMS should have reached a good level of maturity by then. As of this writing, operators within EASA member states (NCC Operators) only have a few months left before full compliance must be established with regard to SMS implementation by non-commercial operators of complex motorpowered aircraft. NCC operators that are lagging behind in terms of SMS implementation would do better to avoid a “tick box” exercise, merely copypasting documentation. Among the key requirements of the new provisions are that operators equip themselves with a safety management manual (SMM) and an operations manual (OM). The two documents are mutually supportive, and the authoring of the two should guide the development and establishment of safe operating practices within the company. Irrespective of whether your flight department is an NCC Operator, it’s a good template for operators worldwide to follow in their safety practices. By institutionalizing safety management practices in the SMM, the operator has the opportunity to develop the know-how for appreciating the safety risks that are inherent to its operations. By developing operating procedures within the OM, the operator can embed safety measures into their procedures and communicate them to all flight crew to follow the same, inherently safe standard. While establishing compliance with SMS requires significant effort, the benefits of improved control over operations are tangible. As outlined by the BFU, until the accident above happened, a risk analysis of flight operations had not been conducted in all areas that contributed significantly to a fatal outcome. An aircraft accident never results from trivial factors; it’s the outcome of multiple dysfunctionalities in the system. SMS implementation offers the opportunity to look – in depth – at the system of flight operations and allows managers to know better what they are controlling and how to improve on it. T Are you looking for more articles on Safety? Visit www.avbuyer.com/articles-guides/business-aviation-safety

“...there is a much higher likelihood that they have not performed a thorough safety risk assessment of many potential scenarios.”

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n June 23, 2014 a Bombardier Learjet 35A flown by a civil operator specializing in manned aerial target demonstrations took off from the Hohn air base in Northern Germany and initially flew with a southern heading in accordance with Instrument Flight Rules (IFR). Later into the flight a formation consisting of two Eurofighters took off from the Nörvenich air base with the instruction to conduct a ‘renegade mission’. The civil aircraft had to be intercepted, identified and accompanied to a military airport. Events didn’t go as planned and the Learjet instead had a mid-air collision with one of the Eurofighters and crashed. The pilots of the Learjet suffered fatal injuries and the aircraft was destroyed. The pilot of the Eurofighter was able to land his severely damaged airplane at the Nörvenich air base. At the time of impact the Learjet had changed to Visual Flight Rules (VFR) and was flying in airspace ‘E’ on a northerly heading. The report of the accident investigation conducted by the German Federal Bureau of Aircraft Accident Investigation (BFU) attributes among the immediate causes the fact that during positioning for the intervention, the collision risk of unexpected manoeuvres by the intercepted airplane was not given sufficient consideration. Another immediate cause identified by BFU was that the Learjet crew failed to account for the risk of collision, possibly due to a limited field of vision and the distraction of using a computer as an EFB while making decisions about the flight. “Due to insufficient situational awareness during the intervention, the Learjet crew continued the turn with an excessive bank angle despite the loss of visual contact with the Eurofighter flying at the inside of the turn,” noted the BFU. On top of the immediate causes, the accident report focuses on two very peculiar systemic causes – namely that the operator had not specified in detail how the crew should distribute their tasks during the Renegade exercise. Neither the operator nor the Air Force had sufficiently described the Renegade training. Furthermore, a commensurate risk analysis had not been undertaken.


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Safety

Chartering a Business Aircraft?

Assessing an Operatorâ&#x20AC;&#x2122;s Safety Culture

To reflect on the importance of safety culture in aircraft charter, Mario Pierobon recalls the circumstances surrounding a tragic accident involving a hired helicopter and poor visibility. 220


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Pressure to Perform

After departing Redhill, the pilot elected to divert to London Heliport, possibly to position his aircraft closer to the client’s pick-up point while waiting for more favourable weather conditions. Commercial pressure likely had an influence with regard to the pilot’s decision to divert to the London Heliport: “The flying time from Redhill Aerodrome to London Heliport is short, so the operational advantage of waiting at the heliport rather than the aerodrome is not obvious. The pilot might have thought that the client intended to drive to the heliport and that to position the helicopter there in advance of the client’s arrival would be advantageous from a commercial perspective. This seemed likely given that the pilot appeared to decide to divert to the heliport immediately after he learned from the client that it was open”, reads the accident report. The fact that the pilot continued with his intention to land at the London Heliport despite being unable to remain clear of cloud was indeed identified as a contributory factor during the investigation. The Vauxhall Bridge helicopter crash provides a case study for questions that a broker, or a flight department looking for supplemental lift, should ask a charter operator to ensure a successful outcome. How can a client be confident that the provider of private air transportation actively seeks to enhance and maintain safety standards and does not just provide lip service to safety? In particular, what safety practices best indicate how the operator deals with

commercial pressures. In other words, what is the charter provider’s safety culture?

Measuring Safety Culture

Safety culture is a very soft component of an organization. It is an intellectual artefact; it is not something that exists per se. It is therefore not immediately obvious how one assesses a safety culture. In the science of safety there is a noticeable wealth of literature on safety culture and on ways of assessing it. The methods available from the literature normally require surveys or questionnaires. These may not be practical solutions when dealing with smaller organizations, and those performing the assessments may not have the technical expertise to use more sophisticated tools. A more down-to-earth mechanism for assessing safety culture is to conduct a traditional, yet perhaps less formal, organizational audit. The audit needs to be purposely developed and include the verification of specific practices that reveal the existence of a healthy safety culture. Consider whether the operator is indeed ‘proactive’ or conducts only the bare, regulatory, minimum. Is there evidence in the training records that employees undergo more training courses than required and that recurrent training frequency is higher than the regulatory minimum? Does the operator implement non-mandatory as well as mandatory service bulletins? Are operations manuals thoroughly customized? Is operational documentation developed to facilitate its consultation by end-users or just to show compliance? Another factor to look at is the composition of the operator’s safety database. Does the operator have a number of reports that support implementation of the company’s safety management system (SMS)? Do reports highlight mostly external threats or do they address internal weaknesses as well? Do employees openly report their own errors? Another important feature is human resource management. This dimension may be assessed by talking directly to Operations Managers to get a feeling for how employees are treated and empowered. Does the Operations Manager show a listening attitude when speaking with associates? Does the manager claim to be the “smartest person in the room” or are the contributions of others recognized? And with specific reference to the case study presented herein, how does the organization deal with commercial pressures? A thorough audit of organizational safety reveals much about the service a client will receive, particularly regarding safety. Time may be required, and a comprehensive approach to safety never involves cutting corners or selecting a provider solely on the basis of price. If you want professionalism you normally have to pay for it. A long-term sustainable relationship is always better than a short-sighted gain! T

“Consider whether the operator is indeed ‘proactive’ or conducts only the bare, regulatory, minimum”

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n 16 January 2013 an Agusta A109E helicopter departed Redhill Aerodrome (South of London) for Elstree (Northwest of London) to collect a charter client who booked a flight to the north of England. Over Central London, before arriving at Elstree, the Agusta collided with a construction crane and crashed into a street near Vauxhall Bridge in conditions of reduced meteorological visibility. The pilot, who was the aircraft’s sole occupant, and a pedestrian near the crane were fatally injured when the helicopter impacted a building and adjacent roadway. According to the accident report by the UK Air Accident Investigation Branch (AAIB report 3/2014), the pilot knew before the flight that there was fog at Elstree. In a telephone conversation with a colleague he said he was going to cancel the flight because of the weather despite feeling under pressure to accept the charter. Later the pilot told another person that he intended to fly over Elstree to check the weather, after which he sent a text to the client saying that he would be “coming anyway - will land in a field if I have to”. The client responded that the pilot should not take-off until he (the client) had reached Elstree and observed the weather, a piece of advice that went unheeded.


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Safety

Managing Change Safely: The EFB Transitioning from Paper to Electronic – More than Meets the Eye To realize the full benefits of Electronic Flight Bags, flight departments need to manage the transition carefully and safely, notes Mario Pierobon. Following are some crucial pointers for all flight department managers... e previously looked at the case study of a June 2014 accident involving a Learjet 35A operated by a civil operator that suffered a mid-air collision with one of the two Eurofighters, see p218. The Learjet 35A was performing a ‘renegade’ mission exercise, and following the collision it crashed to the ground, the pilots of the Learjet suffered fatal injuries, and the aircraft was destroyed. The report of the accident investigation conducted by the German Federal Bureau of Aircraft Accident Investigation (BFU) attributed as an immediate cause the fact that the Learjet crew failed to account for the risks due to possible limitations to their field of view. Additionally, use of a computer as an Electronic Flight Bag (EFB) while deciding about the task distribution may have created distractions and was also attributed.

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“Due to insufficient situational awareness during the intervention, the Learjet crew continued the turn with an excessive bank angle despite the loss of visual contact with the Eurofighter flying at the inside of the turn,” read the report.

EFB Distraction

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The BFU report highlights that as part of the risk analysis the operator should have conducted prior to the operation, assessment should have been made as to what extent the use of portable EFBs result in distraction, and which flight phases needed to be considered ‘critical flight phases’, both generally and according to the operator’s operating modes. EFBs boast many advantages, including seamless integration and updating of operational documentation (including manuals and aeronautical charts), along with easy access to necessary


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Hardware Airworthiness

With regard to the airworthiness of the hardware, an operator has a responsibility to gather evidence from the hardware manufacturer that the equipment may be safely operated in the flight deck. The hardware must withstand rapid depressurization situations and not conflict with installed avionics. Keep in mind that hardware solutions commonly utilized as EFBs are not normally developed as aircraft technology automatically meeting airworthiness requirements. Tablet computers are normally conceived as consumer goods. EFB airworthiness data may not be directly available from hardware manufacturers, so an operator should either conduct tests directly or use data from an operator already approved for

EFB operations, and with extensive operational experience. Safety assurance via ‘management of change’ requires an air operator to ensure no additional safety hazards are posed compared to the more traditional use of paper documentation. Irrespective of whether either an EFB or paper documentation is used, the architecture of operations manuals should always be covered by the scope of training programs for crew-members to ensure that they know where they need to look to find the required operational instructions.

Task Distribution

The ‘distribution of tasks’ deserve particular consideration in a risk analysis for the management of change. Who consults the manuals? Who performs the flying tasks? This should be already defined in the SOPs for the specific phases of flights. A prudent move toward EFB implementation could be to monitor ‘EFB-literacy’ of crew members to guarantee that all become EFB-fluent in their workings, and that use of the technology does not always end up with the crew member who is the most IT literate. Manging change is a defining feature of an SMS, and if performed without due care can result in failure to appreciate the safety implications of new operational procedures. Institutionalizing change management within the flight department ensures that people think critically ahead of proposed changes, learning to master them to the fullest (and safest) extent. T Are you looking for more articles on Safety? Visit www.avbuyer.com/articles-guides/business-aviation-safety

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documentation during flight. Many (if not most) corporate flight departments have already introduced EFB platforms or are seriously considering one. Despite the benefits that can be derived from them, however, EFBs imply a radical change in documentation management and utilization within corporate flight departments. To use ICAO’s lexicon of the Safety Management Manual (Document 9859), upgrading to EFB requires ‘management of change’. In other words, an organization needs to establish procedures that ensure safety assessments of new aviation safety-related operations, processes and equipment are conducted (and accounted for) as applicable, before they are put into place. Airworthiness and operational considerations need to be made when upgrading to EFB capability.


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Safety

Reasons to Customize Your Operations Manual

Practical Steps to Reduce the Likelihood of Human Error under Pressure… Drawing from the report from a fatal 2008 accident of a Citation 500, Mario Pierobon highlights the essential value of Flight Departments customizing their Ops Manuals. arch 30, 2008 saw the crash of a Bermuda-registered Cessna Citation 500 at London Biggin Hill airport. Having departed Biggin Hill, the aircraft was forced to return due to reported engine vibration. The situation escalated before the jet crashed into the side of a nearby house, killing all occupants on board. The findings of the UK Air Accident Investigation Branch (AAIB) identified a series of contributory factors, but no probable causes were given owing to an absence of FDR/CVR in the cockpit. For example, AAIB’s accident report noted that a relight attempt on the second engine “was probably started before the relit first engine had reached idle speed, resulting in insufficient time for enough thrust to be developed to arrest the aircraft’s rate of descent before ground impact”.

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In essence, the analysis related to the engine relight procedure highlights that an assisted relight of one engine may have been successful in the time available, but a near simultaneous double engine relight was less likely. The report notes that the aircraft manufacturer’s ‘Emergency Restart – Two Engines’ checklist states: ‘If No Start in Ten Seconds: Either Start Button – Press Momentarily’. “Had the pilots been using the manufacturer’s checklist it is possible that they misinterpreted the requirement to only start one engine at a time or did not realise the significance of the need to do so,” says the accident report. “A sense of urgency due to the proximity of the ground or confusion over the problems they were dealing with might equally have led to a deliberate attempt to start the second engine before the first engine had reached idle speed. “The effect of doing this would have been to


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delay the start of both engines. It is probable that, although both engines were operating at impact, they were in the process of accelerating to their demanded output and unable to provide sufficient thrust for the aircraft to climb away.”

Check the Checklist…

Ops Manual

This concept holds increasingly true even for noncommercial operators. One of the requirements of new EASA regulations for non-commercial operators of complex aircraft concerns the need for an Ops Manual, albeit a simplified one compared to the manual that an AOC holder must have. According to regulations, the content of the Ops Manual must be presented in a way that can be used without difficulty with due consideration of human factors principles. The requirement for documentation to be easily understood and developed in accordance with human factors principles often is overlooked, however. Frequently, Ops Manuals are developed so as to barely repeat the content of the applicable regulations, yet there’s a significant difference between regulatory requirements and operational procedures (the actual ‘items’ of Ops Manuals). Specifically, a regulatory requirement contains little more than a safety objective that must be met; an

“The requirement for documentation to be easily understood and developed in accordance with human factors principles often is overlooked, however.”

effective Ops Manual presents procedures to be followed in practice that will achieve the safety objective. The manual must state the task to be accomplished, by whom, with the support of which tools, and when. While there’s a significant degree of commonality among different operators for procedures that are aircraft (type) specific, typespecific procedures do not require customization from the flight department. (Indeed, Part B of an Operations Manual includes the aircraft flight manual and all its checklists). The more general procedures are documented in Part A of the Ops Manual; these are the ones that require customization from a specific Flight Department. Even checklists that are thorough – such as the one used aboard the ill-fated Cessna Citation 500 – are not fail-proof. Clearly, not properly customizing an Ops Manual increases risk and needs to be considered. T Are you looking for more articles on Safety? Visit www.avbuyer.com/articles-guides/business-aviation-safety

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Emphasis in the checklist on completing the restart on one engine before commencing the start of the second may have assisted the pilots in the case of this accident, according to the report. Operational documentation (including checklists) play a very significant role in aligning as closely as possible the behaviour of pilots to a safe standard of practice. Some items of documentation, such as aircraftspecific checklists, are supplied directly by aircraft OEMs and are developed taking into account the technical systems for operation and principles of man-machine interaction. A flight department, however, must not only use documents that come fully-customized and approved for the aircraft, but also must understand how such information will be applied in practice— especially when crews are faced with an emergency. One of the main responsibilities of flight department management is to thoroughly document the operation so that line operators receive clear guidance as to the expected operational standards.


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