- 15 Dec 2020
- Andre Fodor
- Flight Dept Mgt
The boss has given the green light, and the flight department is moving forwards with an aircraft acquisition: What happens now? Andre Fodor shares tips on how Flight Departments can ensure a smooth aircraft integration between making the offer and taking delivery…Back to Articles
Level at FL430 with perfect weather, we headed west on a beautiful New Year’s Day towards the OEM’s service center, and a first major inspection for our airplane. I had been involved in the acquisition of the airplane five years before when it was brand new, and had managed the jet ever since.
Did you miss Part 1 of this series? Find it here
Planning an aircraft's operational life since it was new brought advantages and additional flexibility. Take, for example, the fact the airplane was originally delivered in December, and we were starting the inspection in January (just over five years later).
Normally, this would mean the jet was out of warranty, which would have been a very costly mistake on our part, since items found during the inspection would not be covered.
December is traditionally a ‘push’ month for aircraft deliveries, which also means it’s a very busy month for the start (and subsequent end) of aircraft maintenance cycles. Service centers can become overloaded in December, a problem that is also compounded with the holidays.
Anticipating this, at the time of purchase, we negotiated an extension on our warranty allowing us to stretch the inspection into January. (This also had the advantage of enabling us to support of the principal’s holiday travel without needing to source supplemental lift.)
I share this story to emphasize how forward-planning will impact the successful integration of an aircraft into the flight department. Think ahead, make a list of your priorities, and plan in years, not months.
Strategies for Successful Integration
Forward-planning should be the bedrock of any aircraft acquisition and its integration into your operation. With that in mind, the following paragraphs may assist with developing sound strategies toward that goal.
Aircraft Selection: I was once retained as a consultant to advise on the purchase a new aircraft for another flight operation. The buyer knew exactly which aircraft they wanted.
While the aircraft selection process seemed simple enough, the challenge came from a negotiating standpoint: Without any other contenders in the equation, there was no leverage for us to improve the deal.
Broadening the approach, we looked at comparable aircraft offering similar size, performance and price.
Once the OEM knew other models were in the frame, there was more incentive for them to fight for our business, enabling us to improve the deal.
Moreover, having considered all of the viable options, the client made a better and more informed overall purchase.
The Letter of Intent (LOI): Providing the framework for the entire purchasing process, once you’ve decided on an aircraft for sale you should take time to think what’s important in the deal, adding it to the LOI. Have frank discussions with your principal and with the sales team, gathering all the answers that you need.
Alternatively, you can sign an LOI – especially when dealing with a market that’s light on inventory - stating your interest in the asset, but leaving enough room to negotiate the details later. Although the LOI is essentially the framework for a deal, there should always be room to polish the final contract (or exit the deal if it’s no longer worth pursuing).
Preparing for Delivery and Start-Up: With the LOI signed and accepted, it’s time to start working towards delivery and start-up.
If you’re acquiring an airplane that is not yet built, you have plenty of time to get this right. But, over thirty years of buying and selling airplanes, I have mostly had less than three months between signing the LOI and taking delivery. Most of the time, it’s important to move quickly and efficiently.
As the person tasked with your flight department's management, focus on finding the right people to staff your team. For example, if you are in the market for a Mid-size or a Large Jet, it’s vital to have the right Director of Maintenance (DoM) – and preferably one with previous experience with the platform. The right DoM will certainly add a measure of calm to the delivery process.
If you don’t have an experienced DoM for the aircraft type, hire a delivery specialist who is, and who can assist with the acceptance process.
Regarding the flight crew, select the right personalities for the job, training them early, and integrating them into the delivery process as soon as possible. This will help give the crew exposure to the airplane and improve their proficiency as they accompany the delivery and participate in the acceptance flights.
Don’t allow staffing your team to become your sole focus, though. In tandem with crew selection, it’s important to consider securing the necessary Letters of Authorization (LOAs) that your new airplane will need.
LOAs could take months to be issued, so work well ahead of when they’re needed. The sooner you start, the better for your operation. To name a few, ADS-B, RVSM, FANS, MNPS and MEL will require substantial paperwork. This is an area to hire an experienced manual development company for, letting them do what they do best.
You’ll also need to select a legal team to close the transaction. These are the professionals who handle the paperwork transfer, registration and title of the airplane. Hiring a firm with a solid track record will help assure you the paperwork is ready and compliant so the asset transfers smoothly. Moreover, your funds will be protected until all legal requirements have been fulfilled, according to law.
Together with an aviation accountant (who will advise on the best method of depreciation, funding, and even the best physical location for transaction completion), these external team members will give you peace of mind that your deal is good, both legally and fiscally.
You should also purchase in advance the equipment necessary to make the airplane operational. Blankets, pillows, galley supplies, defibrillators – the list is extensive, and will include items of preference to your principal.
Enjoying the Crescendo
The culmination of this process is the first flight of the aircraft. It’s very rewarding to reach the date of delivery with a well-planned process, and with all the paperwork and inspections complete and accepted.
For your principal, this may be the culmination of decades of hard work and wealth-building, and a cause for great celebration. Being able to share in that celebratory moment, rather than be embroiled in a rush and dash to resolve last minute hurdles, will be a special moment for you too.
The scenario that ultimately plays out will depend on how you plan for this day…
Continue reading: Part 3 of this series