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National Aviation Day - A Look Forward
December 1903 marked man’s first true attempt to conquer the skies. Since then, we have flown passengers to every edge of the globe, gone supersonic and walked on the moon all in the last 115 years. So what will the next 50 years of progress look like?
Today is National Aviation Day!
December 1903 marked man’s first true attempt to conquer the skies. Since then, we have flown passengers to every edge of the globe, gone supersonic and walked on the moon all in the last 115 years. So what will the next 50 years of progress look like?
Supersonic Flight
As I type, there are men and women working to bring sustainable and efficient supersonic flight to both commercial and business aviation. Sure, the Concorde made the hop from JFK to Heathrow at twice the speed of sound, but it was never really economically viable. Aerion Supersonic has teamed up with Boeing and GE to produce a supersonic business jet (SSBJ) that is slated to enter service in 2025
Aerion AS2
Space Travel
Cities like Houston, Texas are already investing huge amounts of money into a future of space travel. The long-term goal of Houston’s Spaceport and facilities like it is the idea of orbital or sub-orbital travel. In a future where we have a safe and effecient way to get into low earth orbit, trips around the globe that currently take 15+ hours on air carriers can be completed in a little over an hour. Not to mention, trips to further locales, like Mars may become more routine.
Houston Spaceport
Urban Air Mobility
Uber has made it clear that they intend to take to the skies to provide air connectivity high above the traffic on the streets below. It may seem far-fetched until you understand that Boeing, Embraer ,and Bell Helicopter (to name a few) are all heavily involved in the research and development of the program. This project aligns with a similar objective to bring electric turbines to the aircraft market - promising a quieter, greener, more reliable alternative.
Uber Elevate
The Future of Aviation is Bright
Aviation has always pushed the boundaries of what is humanly possible. With a new onset of fresh ideas and creative vision, the next generation of flight is well underway. No matter what the future will look like, I know aviation will continue to be at the forefront of innovation and continue to make the world a smaller, more connected place.
Cameron Tipton, ASA, ARM-MTS
Author:
Cameron Tipton, ASA, ARM-MTS
accredited senior appraiser
appraisal review & management - MTS
What is Appraisal Review? (and why it's important)
Appraisers provide critical valuations across every industry. What are the safeguards against erroneous reports? Who is keeping the industry in check? Let’s explore the behind-the-scenes truth of the appraisal practice and what it takes to be an appraisal reviewer.
The Credibility of an Entire Profession
Appraisers of all disciplines perform a critical role in the financing, insuring and transacting of all sorts of assets. While appraiser’s do not create value in the assets they appraise, they do form the bedrock of how entire industries understand (and perceive) their monetary worth. As such, the responsibility of an appraiser to perform their job diligently is critical; errors can be catastrophic. So who really gets to decide whether an appraisal is valid? After all, everyone has an opinion about what something should be worth. Luckily, in the United States we have the Uniform Standards of Professional Appraisal Practice (USPAP as we call it in the biz). There is a long history to the creation of USPAP that revolves around a need to standardize the methods that appraisers use in reaching value conclusions to enhance the overall credibility of valuations that the public relies upon. This standard provides a minimum construct that accredited appraisers MUST adhere to when doing effectively anything that relates to valuation services. USPAP does a great job in providing appraisers broad flexibility in how they approach individual appraisal assignments while issuing a framework for ethical and professional standards that one should uphold. Ultimately, it is the adherence and certification to the adherence of these standards that allows the public to trust the valuations they use daily. Now that there is an understanding of why all appraisals should be credible and valid, let me explain what happens when they simply, aren’t.
Appraisal Review: Structured Oversight
Just as USPAP provides structure to those writing appraisals, it also provides the standards for reviewing someone else’s appraisal assignment. This is know as Appraisal Review. Let’s say a particular asset finds itself in the middle of a legal dispute (no fault of its own), and the prosecution hires an appraiser to determine the value of said asset, in this case, let’s call it a Gulfstream G650. Maybe this appraisal is 2 pages long with little explanation of how this appraiser reached their value conclusions and it also comes out $9 million higher than an appraisal that was ordered by the bank one year prior. Reasonably, this appraisal might be called into question and a designated Appraisal Reviewer would be engaged to review the assignment. This review might be purely for verifying compliance with USPAP or it may include an opinion of value, if the reviewer is qualified to provide an aircraft appraisal. The reviewer would review the work and produce a report that explains (in heavy detail) any issues that were identified. Not only does this aid the jury in understanding how much weight to apply to that appraisal but it could result in having a misleading report removed from the case entirely.
More Training and a Higher Standard
The American Society of Appraisers (and most appraisal organizations) has a path for senior appraisers to become appraisal reviewers. In the ASA it requires completion of two 30 hour appraisal review and management courses with comprehensive exams as well as approval from a board of examiners. This allows those appraisers to review the work of other appraisers within their discipline (in my case that is “Machinery & Equipment”) for USPAP compliance or to issue an opinion about the actual value conclusions if they are equipped to do so (longer story for another day). These reviewers are called upon to continue to assure the public that the appraisal profession as a whole is not only credible but that there is oversight for instances where there may have been a shortfall. After all, entire industries depend on us.
Author:
Cameron Tipton, ASA, ARM-MTS
accredited senior appraiser
appraisal review & management - MTS
Graveyards, Hotels, & Bars - The Truth Behind Aircraft Retirement
Retiring an aircraft out of service is a complicated decision, but for some, it’s a welcome moment. Let’s take a look at some of the most impressive uses for aircraft that have left the sky for good.
planes spend their life safely transporting people across the globe, but what happens after the last flight?
We talked about what puts perfectly good airplanes out of service, forever, but what happens to them once they’re grounded? Like everything else in aviation, it depends. The primary factors relate to the specific aircraft and the life left on the components and the activity of the remaining fleet - who has any use for the parts? Let’s say a high-time Pilatus PC-12/45 had a hangar collapse on the tail and it ripped the aft section of the plane in half. So we have a dramatic case of physical deprecation with some functional depreciation to seal the deal: the insurance company '“totals” the plane. However, in this case there is an active need for PC-12/45 parts and components so everything from the prop, engine, avionics and interior pieces can be sold to serve the remainder of the active fleet.
Let’s say the same scenario happens to a 1968 Beechcraft Queen Air. Odds are, it’s going to cost you (or your insurer) money to get rid of these parts. The avionics are obsolete, the engines have been out of production for over 30 years and it will cost more to harvest the metal than you could possibly gain from its sale. This means it’s going to the salvage yard. You may be familiar with aircraft “boneyards” where hundreds of aircraft are left sitting in the desert, their final resting place. Unfortunately, without some diligent planning retiring an airplane can be surprisingly expensive.
It isn’t all doom and gloom, occasionally, there are more innovative solutions for the hull like turning it into a cocktail bar, a house, or using it on a movie set!
El Avion
Manuel Antonio, Costa Rica
747 Wing House
Malibu, California
Jumbo Stay Hotel
Stockholm Arlanda Airport
727 Fuselage Home
Manuel Antonio, Costa Rica
If you own an older aircraft you may have wondered about what possibilities lie beyond the sky for your airplane. Clearly, the sky is not the limit, however, you may not be interested in opening a hotel in your retrofit Lear 35! If you think your aircraft may be approaching retirement it is probably a great time to speak with an expert that can help plan the next steps, because if there is one consistency in aviation - surprises are rarely good. Our team of aircraft appraisers can be a great resource for really getting into the numbers to truly understand the economics impacting your specific aircraft.
Driving Forces Behind Aircraft Retirement
Aircraft frequently outlive the manufacturer life estimates, sometimes by multiple decades. This is great news for owners and operators who are looking to stretch their investment and helps maintain lower cost options in the used marketplace. However, as some of these aircraft approach 40+ years of faithful service, the shadow of retirement grows larger. So what happens if you’re holding onto an aircraft that is ready to make its last flight? How do you know it’s time? Let’s take a look.
All Good Things Come to an End
Aircraft frequently outlive the manufacturer life estimates, sometimes by multiple decades. This is great news for owners and operators who are looking to stretch their investment and helps maintain lower cost options in the used marketplace. However, as some of these aircraft approach 40+ years of faithful service, the shadow of retirement grows larger. So what happens if you’re holding onto an aircraft that is ready to make its last flight? How do you know it’s time? Let’s take a look.
Walking a Fine-Line
The decision to retire an aircraft is not always as simple as a life-limit on the airframe, in fact, it’s usually a complex decision. There are three driving forces that drive the depreciation of an aircraft (in appraiser terms: “obsolescence”) that are worth explaining.
Physical Depreciation
This is the factor that is most obvious. As a plane ages, so do its parts. Sure, we can replace or rebuild a majority of the components, but things like the actual airframe will continue to wear down over time. Having an aircraft remain outside of the hangar for extended periods or failure to properly preserve the aircraft during inactivity can accelerate physical depreciation.
Economic Depreciation
Economic depreciation is best categorized by the loss in value by factors that are external to the aircraft. A great example is the FAA NEXTGEN requirements for 2020. For some older (but perfectly good) business jets, the cost to equip ADS-B Out by 2020 outweighs the value of the aircraft. Some older Learjet’s may have a “hull” value of $250,000 and ADS-B compliance may cost over $200,000 or there may not be an upgrade path at all.
Functional Depreciation
Functional depreciation is (basically) the loss in value of the aircraft when compared to a newer, more efficient model. A Citation II manufactured in 1980 will cost substantially more to operate than a newer Citation Bravo with more advanced components and more fuel efficient engines, therefore that value will be lower on the less desirable model.
when should you retire your plane?
It isn’t usually one single factor that forces an aircraft into retirement, but a growing number of each of these forms of depreciation until it is simply not economically viable to operate the aircraft any longer. Sure, that 40 year old biz jet may absolutely be airworthy and fly your ideal mission, but add in the growing cost of maintenance and a multi-hundred-thousand-dollar ADS-B Out solution and that value proposition quickly fades away.
Understanding the specific depreciation factors affecting your aircraft is complicated and retiring an aircraft without some advanced planning can be costly. If you own an older aircraft it’s critical that you maintain a pulse on the marketplace specific to your aircraft. Older aircraft can be a great value, but being blindsided by an expensive retirement can quickly wash away any money you saved.
If you own an older aircraft, here are 4 tips to stay ahead of the curve
Check model-specific trends quarterly. Did 10% of the fleet get retired in the last few months? That could be a sign that it’s time to sell.
Understand your maintenance schedule. Is your plane coming up on a heavy maintenance item (“D-Check”)? It might not be worth investing hundreds of thousands of dollars if the aircraft will need to be retired before the next major maintenance event.
Have a plan. Understanding your options ahead of time can save you a huge amount of heartache in the end. Do you want to be the last owner of this aircraft? Do you plan on donating this aircraft to a charity? Parting it out for salvage? Moving it to the desert? Answering these fundamental questions will help guide your ownership and will drastically improve your experience.
Talk with an accredited appraiser. Having someone in your back pocket with a constant pulse on the market is invaluable when your aircraft is near the end of its life. Appraisers are also connected with huge swaths of resources like salvage centers and museums and can provide solid unbiased guidance to help you make these tough decisions.
In the next blog, we’ll take a look at some of the uses aircraft have beyond the sky and the desert graveyards where thousands of aircraft rest untouched.
Author:
Cameron Tipton, ASA
co-founder/accredited senior appraiser
Flight level partners
Fly or be Flown?
Businesses sometimes look to its employees/managers/owners to pilot their business aircraft. While this is often an attractive solution, there are special considerations to make before deciding not to hire a professional pilot.
a candid look at piloting your business aircraft
For some of our clients, the choice to purchase a business aircraft is based entirely on their ability to fly it themselves. The freedom of going straight from the boardroom to the airport to fly home after a long day is a huge advantage to aircraft owners, but choosing to fly yourself may not always be the best option.
Embraer Phenom 100
You May Not be Fit to Fly
During flight training your instructor will spend considerable time reviewing what it means to be mentally fit for every flight. Traveling for business can be very stressful. That big pitch you’re going to make after you land, upcoming year-end deadlines, a conversation you need to have with an employee when you get back… all of this can become consuming - is your head really wrapped around everything going on in the cockpit? Maybe, maybe not. These thresholds are different for everyone - but being able to stop yourself and realize you’re unfit to fly is an important part of being a safe pilot.
Cessna Turbo Stationair
Sacred Work Time
For many private flyers, aircraft ownership is about gaining back lost time. Using your new found time to fly an airplane may not be attractive. Sitting in the back catching up on work in relative solitude is often cited as a leading factor in owner satisfaction.
Cirrus Vision Jet, SF50
You’re Not Interested in a Second Career
At Flight Level, we may be one of the biggest advocates of private aviation - we understand the value it adds and encourage nearly everyone we encounter to give it a shot. We also understand that becoming a pilot is a major time commitment, a resource that business-people are often lacking. In an earlier blog we talked about how insurers rule the skies and often limit the type of aircraft you can fly - despite holding the appropriate certificate (albeit, for good reasons). If you have your eye on a shiny Pilatus when you start flight school, you may find it could be years of flying experience before you sit in the left seat.
despite all of this, many owner-pilots would never go back to a passenger seat
For any one negative there are dozens of positives. Flying yourself offers the ultimate flexibility and can be a substantial cost-saver over hiring or contracting professional pilots. Ultimately, individual circumstances should dictate your decision to fly, or be flown, but going in with an understanding of the big picture will keep from encountering costly disappointments.
Cameron Tipton, ASA
FAA vs. Insurance Showdown. Who is in charge of your flying freedom?
Who really is in charge of the planes you’re allowed to fly, the FAA or the insurance companies? Even after a pilot earns all the necessary certificates and ratings your insurer may close the door on your perfect plane. We take a look at who really has the “final say” in aircraft selection and why the insurers say “no” to perfectly good pilots.
So, You Want to Fly Cool Airplanes?
earning a pilot certificate is only the beginning…
After a pilot endures the rigors of earning their Private Pilot Certificate the idea of moving into faster, more capable airplanes begins to look attractive. So, a pilot might find him/herself looking to add additional qualifications to their certificate. That traditionally starts by adding an instrument rating, followed by a multi-engine rating, and some scattered endorsements that allow you to fly high-performance, complex, or high-altitude aircraft.
So, after months of flying various aircraft types you have now satisfied the legal requirements to fly virtually any non-jet general aviation aircraft under 12,500 lbs (jets and all aircraft above that weight require aircraft-specific ratings known as “type-ratings"). In the eyes of the FAA, you are as good as golden. HOWEVER, while the FAA is often thought of as the gate keeper to safe skies, your aircraft insurer may have much more to say about your qualifications.
Insurers Rule the Skies
For pilots moving up the proverbial ladder of ownership, they will often find themselves answering to the insurance underwriters more than the FAA. Think you’re moving up from flying a light piston trainer to something like a Beechcraft Bonanza? Your insurance company may place some shockingly large hurdles in your path, sometimes requiring substantial “time-in-type” training with an instructor. This can quickly drive up the price tag of your new favorite plane. The insurance underwriters are in business to make money and to do that, it is in their best interest to make sure the pilots flying their insured aircraft try their best NOT to crash them. So over time these insurance companies have worked alongside the FAA to investigate what type of pilot crashes certain types of airplanes.
The Cirrus SR-22 is a prime example. Cirrus presented the aviation world with a remarkable new airplane equipped with a whole-aircraft parachute. This was built to be the safest aircraft on the market. The SR-22 actually began its aviation tenure in 2001 with one of the poorest safety records of any general aviation aircraft - you were 3 times more likely to be involved in a fatal accident in a Cirrus against the rest of the general aviation fleet. Today, your odds of being involved in a fatal accident in a Cirrus are actually less than that of the general aviation fleet (and that is with 7 times MORE Cirrus flying than in 2001). So what changed? Cirrus developed a standardized instruction course (a first of its kind for a piston single) and the insurance companies adopted it as a cornerstone requirement to fly an SR-22.
Safety by Statistics
It’s easy to become frustrated by the hoops our respective insurers require us to jump through before signing us off to fly - in fact, I have heard of many pilots that choose not to insure their aircraft so they are not required to go through a process they deem trivial. But, as frustrating as it may be, the insurance companies are working with raw data. Sure, those numbers may not give the most holistic view of an individual pilot, but, in reality they are built to reduce the odds of bad outcomes - and that is something we all want.
All of this is really telling a greater story about the “big picture” of buying (leasing, renting, co-owning) a new airplane. Just because you are rated to fly something big and fast, doesn’t necessarily mean that will be an insurable activity without some safety-increasing “hoops”. So, when you’re ready to shop for your shiny new airplane, be sure to ring your favorite insurer and ask what they might require from you. It’s an easy phone call and at the end of the day, they want to make you a safer pilot.
Author:
Cameron Tipton, ASA
Co-Founder/Director of Brokerage
Flight Level Partners
Does Anyone Care About General Aviation Anymore?
The general aviation community is responsible for cultivating a new group of users to assure our freedom to fly remains unchanged. With more efficient aircraft and innovative ownership strategies, the argument to fly private is stronger than ever.
Santa Fe: General Aviation’s Hotspot for a Weekend
The Flight Level team headed west to Santa Fe last weekend to enjoy one of the AOPA’s infamous “Fly-Ins”. Each year, the Aircraft Owners and Pilot’s Association (AOPA) hosts a number of regional gatherings across the country to facilitate continued growth of general aviation. The events have something for everyone - air shows overhead, educational seminars, beer and food (what else could you want?). But beneath the surface, these Fly-Ins serve an important role in keeping you flying.
Public Support MATTERS
Believe it or not, our freedom to fly, as the general aviation (“GA”, as we call it in the biz) community is constantly up for debate. A quick spin of the globe would reveal a world of highly restricted, pay-for-usage, airspace systems that systemically oppress the growth and sustainability of private aviation. The United States accounts for the majority of GA flying conducted around the world - we LOVE our airplanes. But even more than a love for aviation, the U.S. has realized the incredible business benefits for flying private, but that is for another post….
The voting public (and their duly appointed representatives) hold our fate to fly private in their hands, so what happens if they stop caring?
Just this year, the fate of the Air Traffic Control system was nearly handed over to airline executives (yes, the same executives that keep taking away your legroom). This bill would have dramatically changed the way we approach our airspace system and prioritized commercial airlines over all other traffic (a system that has stifled European GA). But to many, the general aviation system exists in a vacuum and the majority of the public has no knowledge of our secretive world. This keeps us in danger of one day losing this battle.
Share Your Passion
For all of us who work or play within GA our obligation is to continue to share our collective passion with anyone who will listen. I believe that we are at a pivotal moment in our aviation community. Each day aircraft manufacturers are making strides to reduce aircraft operating costs, increase safety margins and appeal to a wider audience than the traditional base of aviators. Aircraft operators have been equally focused on reducing the cost burden on end-users by reinventing the way we access aircraft. Today, there is more opportunity for individuals and businesses alike to use GA, but it takes all of us, working together, to continue to share the opportunities afforded by private aircraft.
Our Commitment
To share this responsibility Flight Level Partners will be featuring the stories of general aviation users from across the country right here on our blog. We would love the opportunity to share how general aviation has benefited you, if you would like to be featured shoot us an email to info@flightlevel.co. With our collective passion, the future of GA is brighter than ever.
