1 Aircraft Purchase Checklist BUYING YOUR FIRST AIRCRAFT : A STEP BY STEP GUIDE

Transcription

1 1 Aircraft Purchase Checklist BUYING YOUR FIRST AIRCRAFT : A STEP BY STEP GUIDE

2 2 Aircraft Purchase Checklist STEP 1 Determine the Make & Model which meets your travel requirements. Carefully examine your needs: use of aircraft, size and performance vs operating costs Flight Mission Profile: Speed, Range, Number of Seats, Complexity to Operate Aircraft New or used Define Category of Aircraft: Jet, Turboprop, Piston, Seaplane or Helicopter

3 3 Aircraft Purchase Checklist Determine Budget: 1. Purchase Price 2. Operating Costs per hour 3. Maintenance Costs per hour and yearly inspection 4. Annual General Expenses: Hangar rental, Insurance, Pilot training Determine if the model is affordable Overall Condition of Aircraft - Evaluate overall health of the aircraft and required maintenance to come. Mechanical Cosmetics, paint and interior Avionics Upcoming maintenance to Engine(s), Airframe, Landing Gear, Avionics, Limited Life components... Special AD s or Service Bulletins to comply with, facture in the cost Performing a cost comparison for each type of aircraft you are interested in will help you narrow down the market.

4 4 Aircraft Purchase Checklist Insurance: If you plan to fly the aircraft, do you qualify for insurance in the plane you desire? Flight experience in type and aircraft usage determines yearly premium costs The insurance company may require you to get additional training in type to qualify or may require you to fly with an experienced and qualified mentor pilot until meeting insurance minimum flight experience requirements. STEP 2 Financing: Get Pre-qualified to speed up the closing process Most lenders require a minimum of 10% down with a year loan with flexible repayment terms. Some lenders even offer, 100% lease financing on specific aircrafts, if you qualify. This enables you to preserve your capital, reduce your risk and improve cash flow.

5 5 Aircraft Purchase Checklist STEP 3 Shop Around for your favorite aircraft FACTORS AFFECTING AIRTCRAFT VALUES: Engine Time Determine the limited life expectancy of the engine, or TBO ( Time Before Overhaul) A new overhaul on a turboprop engine, such as the popular Pratt & Whitney PT6 can run $ 400,000. A hot section inspection on the turbine engine at midlife can also cost $200,000. Exterior Conditions: A complete paint job is very time consuming and expensive. Corrosion is another important item to monitor. Composite airframes have the advantage of being resistant to humid and salt water areas. Monitor Landing gear assembly and flight control surfaces hinges and linkage.

6 6 Aircraft Purchase Checklist Interior Conditions: Interior refurbishment is also, a major expense Avionics: A new avionic panel or refurbishment can add thousand of dollars to an aircraft value Options and Modifications: After market modifications can enhance the beauty, performance and value of an airplane. Verify that all mods have the proper FAA paperwork and logbook endorsements. Location base of aircraft: Costs to inspect aircraft at destination and ferry home also has to be considered. Getting a Certified Aircraft Appraisal This is necessary when bank financing is required or leasing with a reputable aircraft lessor. The certified appraisal compliments any Vref or Bluebook valuations. A qualified appraiser understands all the factors involved in determining aircraft value, they might save you thousands of dollars.

7 7 Aircraft Purchase Checklist STEP 4 Research the aircraft you want to buy Specifications, manufacturer updates, maintenance history, journey logbook, how it was operated commercially or privately. Well completed and documented maintenance records increase aircraft value Determine any reported accidents or incidents, verify FAA and NTSB reports if US registered aircrafts Verify all times and eventful log book entries There are significant advantages of performing a pre-buy inspection with computerized aircraft maintenance logs. Easy and fast to identify all work performed on aircraft. Older airplanes can take hundred of hours of research work to go through all the log books. When buying a plane, the owner/seller should be willing to provide you with all the information you request. If certain important records and documents are missing, walk away from the deal. Some aircrafts can not be or will be very difficult to register with the civil aviation authorities of most countries when imported and if missing documents. Get the historical aircraft ownership data for an individual aircraft directly from the FAA. You will need the aircraft registration number and serial number to process the order. Google the aircraft registration number of the plane you are going to buy, you may find additional useful info.

8 8 Aircraft Purchase Checklist STEP 5 Execute a conditional offer to purchase, subject to test flight, maintenance inspection, aircraft logs inspection and financing Include a deposit, to show the seller that you are serious and to secure the aircraft while you make arrangements for your due diligence process: a test flight and maintenance inspection and validation.

9 9 Aircraft Purchase Checklist STEP 6 Prepare a purchase and sale agreement Use the services of an experienced aviation lawyer to prepare the paperwork and escrow agreement. The deposit should be refundable if the aircraft is not to your liking or if the aircraft is not what it is represented to be. The seller should be compensated for the fuel and miscellaneous costs of conducting a test flight to be clearly defined beforehand. Never send money directly to the seller, use the services of an escrow company or your lawyer s trust account. If you use the services of an escrow company, verify that their services are insured by the FDIC ( )

10 10 Aircraft Purchase Checklist Flight test - Fly before you buy! There is one step that you should consider mandatory, no matter what type of aircraft you are looking at Fly Before You Buy. There are two reasons for flying the aircraft: 1. To ensure that you like that aircraft type and that it meets your needs, especially for handling qualities. In the air and on the ground, brakes and steering check To ensure that particular plane flies the way it should that it performs near the book specs and is rigged correctly. 3. Evaluate cabin comfort, noise levels, any vibration, airflow and air conditioning systems satisfactory, cabin heating and pressurization... The first type of flight can only be conducted by you as a prospective owner as only you can tell whether you like the handling of this type of aircraft. If the aircraft is a certified aircraft and you have flown the type and model before, you may decide that you don t need to test fly it for this reason. The second type of test flight needs to be done on all aircraft. You may not even be the best person to test fly the plane. You may not have the experience or background to tell whether the plane is performing correctly and rigged right. If that is the case consider finding a pilot who is very familiar with the type to fly the plane and evaluate it for you. In the case of non-certified aircraft it is especially important to fly before you buy as individual aircraft can each fly very differently from others of the same type. The wing construction and rigging can be very different from others of the same type, or even from what the designer intended.

11 11 Aircraft Purchase Checklist Conduct a pre-purchase inspection with a qualified maintenance facility working for you, in order to avoid any conflict of interest. To minimize the expense, we recommend you find a mechanic near the aircraft to perform the inspection. The pre-purchase inspection is the financial responsibility of the buyer and money well spent. If something undesirable does comes up in the inspection, ask the seller to fix the problem or give a discount on the sale price. All aircraft require a document check, which should include: 1. The Journey Logbook 2. The Technical Records 3. The Certificate of Registration (all aircraft including ultralights require this.) 4. The Certificate of Airworthiness (for certified aircraft) or Special Certificate of Airworthiness. 5. A record of the last annual inspection 6. Pilot Operating Handbook 7. Current Weight and Balance Report

12 12 Aircraft Purchase Checklist STEP 7 Closing with an experienced Lawyer and FAA Verify the aircraft has a clean title If there is an old lien on the aircraft, you cannot get financing, and worse yet that person could have a claim to your airplane. Finding this out ahead of time could save you time and the expense of costly attorneys fees. Ordering a title search There are companies in Oklahoma with access to FAA records that can perform a title search for you. It will list any liens against the aircraft or site that there are none. Any old liens must be released by flling the correct release of lien paperwork with the FAA, signed by the original lien holder. Most title search companies provide additional services to research old liens and attempt to get them released. STEP 8 Get a quality insurance policy

13 13 Aircraft Purchase Checklist STEP 9 Arrange Final Payment At this point you will wire transfer the remaining balance due on the aircraft. If you have arranged for financing, the Seller will need to send the financing company all the required documents including the signed bill of sale. Once they receive the closing documents they will need your authorization to disburse funds. If you are using an escrow service, the escrow company will prepare the closing documents including the Bill of Sale. The seller will send signed documents to the escrow company and you will need to wire transfer them the full payment of the aircraft. All parties will be advised when all required documents and funds have been received. Funds will remain in escrow until you give final authorization for disbursement.

14 14 Aircraft Purchase Checklist STEP 10 Closing Paperwork Bill of Sale: A signed copy of the Bill of Sale should be retained by both the buyer and the seller for their records and another copy must be sent to the FAA for filing. (preferably the standard FAA form, currently Form ) Official Receipt and proof of payment Federal Aircraft Registration: A signed copy of the registration must be sent to the FAA along with a check to cover the filing fee. The pink copy of the registration will serve as your temporary federal registration and must remain in your plane until you receive your permanent registration in the mail. Release of Lien: If there is a lien on the aircraft, the proper release of lien paperwork must also be filed with the FAA. State Registration: Each state has different regulations concerning aircraft registration, you should verify with the FAA or the local aircraft broker or charter company.

15 15 Aircraft Purchase Checklist STEP 11 Pick Up Your Plane or Make Delivery Arrangements You are now the proud owner of your new aircraft. You will need to find a hangar or tie down space to store your aircraft and you will be responsible to get it to its new home. Note: This guide contains information of a general nature only. It should not be considered a definitive document. Use of this guide does not make SkyIntel responsible for legal action taken against you. Individual circumstances involving aircraft, and aircraft sales and the law vary greatly. Ensure that you read and understand the current Aviation Regulations before buying and flying! For information that applies to your individual circumstances consult an aviation lawyer.