Guidelines for Buying an Airplane
Dr. Mary Ann O’Grady
So what comes first: the pilot’s license or buying an airplane? At first glance, this question seems to elicit a fairly straightforward response that an individual would not be buying an airplane if he or she was not planning on flying it personally. However, business entities, organizations, associations, and even individuals often purchase aircraft with the intent that they will be hiring a corporate pilot to transport them in their own airplane. There is one other category of individuals who makes the decision to purchase an aircraft prior to completing their private pilot’s license, because it provides him or her with the incentive to finish his or her pilot’s training by removing the option of quitting due to the financial investment that is now sitting on the tarmac or in the hanger as a constant reminder of that individual’s commitment.
What to Look For When Buying an Airplane
Whichever option comes first, there are specific guidelines that should be followed to ensure that buying an airplane runs as smoothly as possible. Financing is at the top of the list as many individuals and/or companies do not enjoy the luxury of paying cash for their aircraft. It is often wise to remember that the aircraft purchase is the least expensive part of owning an airplane, due to the costs of items like insurance, periodic inspections, and required maintenance, so investigating the operating costs and loan information then becomes a priority. Another financial consideration is the valuation or online Vref of the aircraft under consideration, which allows the prospective buyer to see if it is reasonably priced. In addition, conducting a pre-purchase inspection helps to eliminate any unanticipated [and typically unhappy] surprises. It is important to verify that parts are still available for the aircraft and that the local mechanics are able to work on it. Taking the airplane for a test flight prior to purchase is the best way to determine if it is a good fit for the skill level of the buyer. A thorough examination of the aircraft logs is a must and non-negotiable. Any evidence of an unusual entry should immediately raise suspicion, such as “replaced sections of fuselage skin,” which could be an indication of a gear-up landing. While still compiling the financial obligations of buying an airplane, it also becomes necessary to research the cost and availability of aircraft insurance.
Probably one of the most common errors in purchasing an aircraft is making an impulsive buying decision without fully considering the effects of that choice, rather than analyzing the requirements realistically and carefully [want versus need scenario]. To avoid purchasing more aircraft than is needed or can be used, it is wise to reflect upon whether all those fancy bells and whistles are really warranted. Renting the type of aircraft of interest is an excellent and less-expensive way of seeing how well it suits the frequency and duration of anticipated flights. Since the amount of the loan, as well as the interest rate, has a substantial impact on the total cost of the purchase, it pays [no pun intended] to invest considerable effort into finding the best source of financing.
The major factors that affect the resale value (valuation) of the aircraft are the following:
- Engine hours where the closer an engine is to its recommended between overhaul (TBO), the less its value but equally important is a record of its consistent use combined with a good maintenance program.
- Installed equipment which includes avionics, air conditioning, deicing gear, and interior equipment where the avionics constitutes the biggest ticket item increases the value of the aircraft; however, older equipment is typically far more expensive to maintain.
- Airworthiness Directives or ADs are issued by the FAA for safety reasons, and once issued, the owners of the aircraft are required to comply with the AD within the designated time period. The AD history should be reviewed for the nature of the ADs as well as whether they are recurring or a one-time compliance. The log books should indicate compliance with all applicable ADs which can be found through an online Internet search.
- Damage history that indicates major repairs can significantly affect the value of an airplane depending upon the type of accident, nature of the damage, and the degree to which major components of the aircraft were involved. Any aircraft indicating a damage history must be closely examined to ensure that it was correctly repaired in accordance with the applicable FAA regulations and recommended practices.
- Paint/interior is used occasionally to give older aircraft a quick facelift so new or recent paint jobs must be carefully checked for any evidence of corrosion under the surface, and interior items must be checked for a correct fit and condition. If done properly, both items enhance the value of the airplane.
- Exercise caution when reviewing the terminology used to describe the engine condition. A top overhaul translates into a repair of the engine components outside of the crankcase while a major overhaul involves the complete disassembly, inspection, repair, and reassembly of the engine to its specified limits. If an engine has received a top or a major overhaul, the logbooks must show the total time on the engine if it is known, as well as its prior maintenance history. A “zero-time” engine is one that has been overhauled according to factory new limits by the original manufacturer and is issued a new logbook without the previous operating history which usually has a higher value than the same aircraft with just an overhauled engine.
- Aircraft records should include the following documents that have been maintained in proper order for examination: airworthiness certificate, engine and airframe logbooks, aircraft equipment list, weight and balance data, placards, and FAA-approved aircraft flight manual or owner’s handbook. Any missing documents, pages or entries from the aircraft logbooks can cause significant issues for the buyer as well as reduce the value of the aircraft. Prior to purchase, hire a trusted mechanic to thoroughly inspect the aircraft, and provide a detailed written report of its condition; the pre-purchase inspection should include at the very least, a differential compression check on each cylinder of the engine and any other inspections that may be necessary to accurately determine the aircraft’s condition. In addition to the mechanical inspection, the aircraft logbooks and all other records should be carefully reviewed for such things as the FAA Form 337 which is a Report of Major Repair or Alteration, AD compliance, the status of service bulletins and letters, and aircraft/component serial numbers. The ideal choice of mechanic to perform the inspection would be experienced and familiar with the issues that may be encountered on that type of aircraft, with the goal of making buying an airplane and ownership of the aircraft under consideration as rewarding as possible.