When the time comes to transition a used jet, questions often arise about the maintenance program. How will it impact the buyer, seller and transaction itself? JSSI answers some of the commonly asked questions it receives from the dealer broker community…Back to Articles
When the time comes to transition a used jet, questions often arise about the maintenance program. How will it impact the buyer, seller and transaction itself? JSSI answers some of the commonly asked questions it receives from the dealer broker community…
The hourly cost maintenance programs provided by Jet Support Services, Inc. (JSSI), create a comprehensive plan allowing clients to accrue for scheduled maintenance events, cover unscheduled maintenance event costs and provide access to a global network of expert Technical Advisors.
These maintenance programs not only provide operators with the peace of mind that comes with a predictable maintenance budget but actually enhance the value of the aircraft. Indeed, they’ve become a key feature when it’s time to sell. Naturally, then, questions come to mind when an aircraft broker or dealer is working on a transaction involving an asset enrolled on a maintenance program.
Recently, JSSI conducted a focus group with an audience of aircraft transaction specialists to learn more about what maintenance program details they need in order to secure the deal in a timely fashion.
Following are some of the FAQs that came up along with the answers provided by JSSI...
FAQ #1: What type of coverage does this aircraft have and what is the “pro-rata”?
Answer:The first thing the aircraft dealer needs to know is the type of coverage that is on the aircraft. JSSI offers a large variety of coverage options across engines, APUs, airframes and the avionics package.
In the early years, JSSI’s focus was on in-service engines. The company pioneered the pro-rata formula approach to create an alternative to paying a large buy-in for prior hours flown.
All JSSI engine programs allow full buy-in for hours and cycles consumed by an in-service aircraft; or the customer can defer the buy-in, establish a pro-rata amount and participate in paying for the event when it occurs.
If the buy-in funds are paid, the pro-rata associated with scheduled maintenance events are eliminated and the engines are covered 100 percent by JSSI, subject only to contract exclusions.
Today, many aircraft engines have been enrolled onto a JSSI program from the day they entered service and can be fully vested for scheduled maintenance without any pro-rata discussion.
Knowing the program coverage details for the aircraft is an important factor and should be clarified before moving toward the aircraft transaction.
FAQ #2: Can the owner transfer the program to an aircraft buyer? If so, how does this work?
Answer:When owners sell a JSSI-covered aircraft, they have the option of transferring that coverage to the purchaser. With the aircraft owner’s permission, JSSI will share all pertinent information needed to transfer coverage, including (but not limited to) a full explanation of the program, the assets that are currently enrolled, pro-rata percentages if applicable, pricing and details of any upcoming scheduled maintenance events.
To assist with valuations, a pro-rata elimination fee can be provided along with assistance with answering questions and clarifying details with the seller and the purchaser to help ensure client and broker satisfaction.
FAQ #3: Can the owner transfer the program to a new aircraft purchase?
Answer: JSSI clients may opt to maintain their rights to accrued maintenance reserves and apply them to JSSI coverage on a replacement turbine aircraft of any make and model. It is also important to note that JSSI allows the client up to 36 months after the aircraft sale to complete the transfer of their reserves to the replacement aircraft. This option offers added flexibility when an aircraft is placed on the market.
FAQ #4: What about minimum flight hours… how can that impact the sale?
Answer:When a business jet is put on the market ‘For Sale’, it is common to see flight hours diminish. Sometimes the owner stops flying altogether and meeting minimum flight hour requirements can then become a concern. JSSI aims to make it easy for clients to access current flight hours from the MyJSSI online portal.
It is important to know that these flight hours are cumulative in nature and any outstanding gap, per their contract, can be wrapped into the sale of the aircraft.
Another enhancement introduced by JSSI to the dealer community last year was the ability to suspend minimum flight hours on non-calendar driven engines for up to 12 months when the enrolled aircraft is on the market.
During this time, if an unscheduled event happens the dealer has an option to either pay out of pocket for the repair or pay the accrued minimums and have JSSI cover the repair. The dealer must enter into a contract to be eligible for this option, however.
FAQ #5: What should I know about JSSI coverage before scheduling a pre-purchase inspection?
Answer:Before scheduling a pre-purchase inspection (PPI), the parties involved will create a sales agreement that should include details about the PPI. This agreement should cover many maintenance details, including how - or if - a borescope of the engine will be conducted during the PPI.
It is important that all parties involved have a full understanding of this agreement before proceeding. There have been many late nights where dealers and brokers have contacted a JSSI representative, while a PPI is in progress, asking for help or clarification on the program coverage for the aircraft in question.
If there is an engine borescope scheduled as part of the PPI, it is important to know whether the aircraft hull insurance provider accepts any adverse findings, such as foreign object damage (FOD), if the borescope is performed outside of an incident.
Performing a pre-purchase borescope may not be considered an “event” and if the hull insurance provider does accept the findings under this elective inspection, the parties need to understand what the underwriter is contracted to cover.
It is critical that the seller, or seller’s representative, contact JSSI to fully understand allowances under their specific contract and the conditions under which the program coverage will be applied.
During any FOD event there are items that will not be covered by an insurance provider. JSSI engine programs fill these gaps in FOD coverage. If a normal wear or tear item is found during a FOD repair event, JSSI will do what is necessary to return the aircraft back into service.
The above are the most-commonly asked questions that JSSI receives from the dealer community, but there are many more that can be answered via the newly added Broker tab on the JSSI website, through which brokers can complete a simple form without any log-in process and receive a response within 24 hours.
This is designed to give active dealers and brokers a single point of contact at JSSI to work with them directly when an enrolled aircraft transaction is in progress and time is of the essence.
More information from www.jetsupport.com/brokers