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Keys to Buying Jets for the Long-Term (Part 1)

Aviation Manager Andre Fodor discusses the growing need for operators to forming a Longer-Term Vision of business jet ownership.

Andre Fodor   |   13th April 2017
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Forming a Long-Term Vision for a New Market Reality

Aviation Manager Andre Fodor discusses the growing need for operators to forming a Longer-Term Vision of business jet ownership.

One renowned aircraft broker speaking after the economic slump of 2008 noted of the market, “These are uncharted waters”. Almost a decade later, those words are still deserving of some consideration.

Aircraft acquisition prices have plummeted since the onset of the Great Recession, while political changes and major global markets that until recently were the source for optimism have dried up, creating major challenges to some of the OEMs in the industry.

The knock-on effect is that Flight Department Managers must redress their thinking as they consider their next aircraft acquisition/fleet upgrade.

In this new reality, whether you are new to the market or a seasoned Business Aviation operator, a sound plan is needed that takes a long-term view of ownership. We should be seeking to better harmonize the value of the airplane with our operations, seeking to equalize the gulf that currently exists between acquisition and sale prices.

With a well thought-out plan for the long-term usage of an airplane in place, an owner can take full advantage of tax depreciation and other tax-related benefits, provided they have a strong warranty program/maintenance plan in place to offer predictable maintenance costs.

Within our new normal, we must also consider the health of the aircraft manufacturer itself since the purchase of the aircraft represents a major investment. Relationships with OEMs should be like that of a partner – suppliers should be on a sound business footing and able to fully support their products. The last thing an aircraft owner wants is to find a few years into their ownership experience that there’s a lack of technical support, engineering, a shortage of parts and a dropping resale value.

Avionics Planning

For the long term ownership plan to work, owners must also consider the evolution of airspace regulations, avionics mandates and how changing realities might impact the long-term ownership of an aircraft.

Without a platform designed for long-term ownership and an open architecture that enables cost-conscientious upgrades, an aircraft may become obsolete - thus the investment in that aircraft will not meet long-term expectations of the owner.

Furthermore, we need to consider the evolution of how pilots interface with the avionics and the ergonomics in the cockpit, especially on long-range aircraft. Touch screen capabilities, point-and-click architecture and voice recognition cueing are trending now.

At a recent IoT (Internet of Things) Conference, the focus was on interfacing the internet with physical things and the power of voice recognition.

Interfaces such as Arduino and Raspberry devices as well as low-cost sensors are not yet certified for aviation, but these could become standards for future cockpit design.

In essence, we need the most modern and upgradable architecture that will allow for modular upgrades with short downtime and costs. In the cabin entertainment system, we should look for open architecture standards that are primarily based on wireless networks and that allow for the utilization of off-the-shelf devices (iPads, Androids, Blackberrys, etc.) that are not permanently part of the aircraft.

With the burden of certification, the OEMs have difficulty keeping up with the latest technology. In an ideal world, the OEM would provide interface systems that the operator can purchase off-shelve just as we do at home. Such an environment would prevent early obsolescence and stale cabin systems that have become outdated.

Operationally, we should aim for common type ratings among similar platforms; this will ease the burden of fleet building and aircraft upgrades and provide us with a stronger network of simulators and reduced waiting times for training slots. The addition of home-based computer training will enhance quality and improve crew availability for revenue flying.

To Summarize

New products should be evolutions of existing technologies that reduce costs and cross-utilize technologies. This approach will lower the acquisition prices and thus help the market grow.

Choosing the right OEM is a science as well as an art. A buyer must consider a company where employees are invested in long-term relationships and care. Choose your OEM like you would choose your marriage partner...


Read more about: Buying a Jet | Aircraft Ownership | Used Jets for Sale | New Jets for Sale

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