Third-Party Business Aviation Maintenance Plans

An operator's powerful ally when AOG strikes…

Dave Higdon  |  26th October 2015
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    Dave Higdon
    Dave Higdon

    Dave Higdon was a highly respected, NBAA Gold Wing award-winning aviation journalist who covered all...

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    The quantifiable value that third-party aircraft maintenance plans bring to their subscribers covers multiple areas, notes Dave Higdon. If higher residual value for a covered aircraft and expert maintenance assistance appeal to you, read on...

    It is well documented that aircraft covered by maintenance programs typically command higher prices when sold. But it's the here-and-now reality of an AOG situation that shows the real worth of such programs to owners of aircraft out of OEM warranty.

    Third-party providers that deliver their protection based on a set hourly fee, such as Jet Support Services Inc. (JSSI), and factory-supported programs such as Rolls-Royce CorporateCare; Honeywell's avionics, mechanical and maintenance plans; and the per-hour plans of many other airframe, avionics and engine makers, offer programs worth exploring.

    It's the ability to tap the  expertise of service providers  that offers subscribers peace of mind derived from having expert help standing-by for a time when the airplane breaks.

    Previously we examined the value of keeping the contact information to hand for OEM mobile-maintenance providers. For subscribers to maintenance plans with AOG services, preparing for the possibility of an AOG can distill down to just one point of contact – the 24-hour phone number for that aircraft's third-party maintenance coverage firm.

    Hourly Plans

    From the people who bring their experience and collective knowledge comes access to a deep institutional memory and list of contacts. They apply their knowledge and expertise for the benefit of their clients – and in turn, operators appreciate the comfort of knowing a human on the other end of the line will respond to their problems anytime help is required.

    Enrollment in such a program can cover anything from engines, airframe, avionics and/or mechanical systems. The top coverage, while not always available for every aircraft model and powerplant combination, is the tip-to-tail plan (like that offered by JSSI).

    The gold-standard level coverage insulates the operator from the financial shocks of both pre-budgeted, planned maintenance needs and blue-sky budget hopes for covering unplanned events.

    Virtually every engine and airframe-maker offers its own variation on a per-hour maintenance program, but third-party programs from independent vendors are also available – even for new model aircraft, avionics and engines. And it's by hedging against those unplanned maintenance events that these plans win their greatest praise – typically for being the one number to call for any and all AOG situations.

    Picking a Provider...

    While some operators grumble about the costs of these per-hour maintenance-coverage programs, most enrolled recognize them for what they are: Insurance against budget swings and a defense against being stranded with no help close by.

    Several firms offer their programs at various levels and for a large segment of the fleet. The most-valued plans for pre-owned aircraft operators remain engine coverage. If enrollment starts when the engine is new or fresh from an overhaul, the per-hour costs tend to be lower because of the longer period over which those costs can be spread.

    For a 20-year-old jet with engine overhauls looming at a total cost of $2m (for example), selling that jet can be more problematic without the coverage of an hourly maintenance plan. If the aircraft value at sale is $4m, a buyer is really looking at a $6m investment (i.e. the cost of the aircraft plus the cost of the overhauls, which account for half the aircraft's value). For that same jet enrolled in a plan with full coverage, the cost of overhaul is already covered. Even if  non-covered maintenance might surface, which way would you prefer to buy the airplane – with or without the hourly plan in place?

    The same theory works for avionics and airframe plans. Yes, these plans add to the per-hour operating costs – but no more than what a savvy operator would need to budget as a reserve against future maintenance requirements. But they save elsewhere, too, setting up the reserve for overhauling engines as well as providing coverage for unplanned maintenance.

    Part of the Asset

    Generally speaking, these plans provide some degree of portability; the plan attaches to the aircraft, not the operator. But it's a point to check if you are considering enrollment in a per-hour maintenance-coverage program.

    Portability will typically affect the rate an operator pays for a service contract, and eligibility may hinge on the third-party people assuring completion of all routine and preventive maintenance on time and to factory standards. But assuring portability also helps boost the aircraft's value when the time comes to sell.

    AOG Expert on the Line...

    The comfort of knowing the flight crew doesn't need a maintenance-resource reference guide is particularly useful when they are facing one of those unpredictable events that grounds the aircraft. “When we had a landing-gear system breakdown at a small Georgia airport last year, we felt grateful for three things: That the failure happened while we were on the ground; that we caught it before taxiing; and that we needed only to call our maintenance plan's AOG line to start things moving,” one operator told AvBuyer recently.

    This chief pilot elaborated that calling the plan's AOG line wasn't like calling for warranty service for his smartphone, notebook computer or home cable television service. “We'd used this once before, but we were still somewhat surprised that an actual human answered.

    "No trip through the 'Voice Mail Maze' to get to a person who could help us.”

    The maintenance plan's staffer took the account information, the airplane's location, a description of the problem, and within minutes was able to tell the captain what to expect. “Ninety minutes after we hung up, a remote-maintenance crew arrived, taxied to the ramp next to us and the maintenance team began work almost before the chocks were in place,” the captain related. “Enrollment in that hourly maintenance plan not only got us on our way within four hours, but also helped convince the new owner of the value of our airplane when he bought it.”

    The combination of a per-hour or pre-paid maintenance program and AOG remote-repair services provides a powerful solution to those problems that keep the airplane from moving.

    Whether the coverage comes from a factory-supported plan – such as Rolls-Royce's CorporateCare, or from a third-party powerhouse like Jet Support Services Inc., nothing short of carrying a maintenance mechanic and spare parts can match the flexibility and responsiveness these programs provide.

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