- 10 Feb 2023
- Matt Harris
- Aircraft MRO
Is it a foregone conclusion that engine maintenance program accounts transfer with a pre-owned business aircraft to the next owner? What do buyers and sellers need to do to ensure the airplane remains covered post transaction? Gerrard Cowan explores...Back to Articles
Engine maintenance programs are essential to protecting your business jet and your investment. When acquiring pre-owned aircraft, what do buyers need to know about accessing existing programs, and are there any potential pitfalls to be avoided?
Stacy Hollis, an Engine Service Sales Representative at Duncan Aviation (www.duncanaviation.aero), believes it’s best to transfer the current engine contract at aircraft purchase and then continue with the engine coverage that was already started.
In the vast majority of cases, the existing program will transfer to the new owner, though the details of the transfer will depend on the engine program provider in question.
There are times, though, when the engine contract has expired or is close to expiring, and the OEM or other engine program provider will want you to renew the engine contract, Hollis says, adding that this will have many benefits going forward if the engine has been in service a while and is close to major events such as a Hot Section Inspection (HSI), overhaul, Major Periodic Inspection (MPI) or Core Zone Inspection (CZI).
According to Megha Bhatia, Vice President of Sales & Marketing for Business Aviation at Rolls-Royce (www.rolls-royce.com), the coverage of pre-owned aircraft on the company’s CorporateCare or CorporateCare Enhanced programs can be easily transferred to the new owner, with no transfer fees.
And if a pre-owned aircraft is not on the program, the buyer is still eligible to enrol with CorporateCare Enhanced. There will be an up-front cost to enrol, based on the hours flown and time since entry into service, but the risk will then be transferred to Rolls-Royce.
The status of the existing program should be disclosed to the buyer by the previous owner, Bhatia adds. “Our sales team can also be reached to inquire on whether an aircraft is on or off CorporateCare Enhanced coverage, and to understand the details of coverage and enrolment.”
Iron Out Issues Prior to Closing
Similarly, a pillar of the Pratt & Whitney Canada (www.pwc.ca) Eagle Service Plan (ESP) is its transferability to the next aircraft owner, according to a company spokesperson, with the typical business jet selling between two and four times before the engines reach overhaul.
“When the transfer occurs, the accumulated coverage transfers to the buyer, and the buyer will sign a new ESP agreement with the latest terms and conditions,” the spokesperson says. This would be the case except in rare occasions a buyer or seller may be a sanctioned party or reside in a country of concern. “That could affect the ESP transfer.”
Pratt & Whitney Canada (P&WC) strongly recommends that the parties request a Statement of Account (SoA) from the company at least five days prior to the closing of a sale.
“The SoA increases transparency between sellers and buyers when ESP is transferred. It contains important information, such as the level of coverage, the latest reported hours, deferred hours (if applicable), and the account’s financial status,” the spokesperson explains.
“P&WC also recommends that the buyer submit their ESP enrolment request form to P&WC five days before closing, allowing the transfer to proceed more quickly after closing. When a buyer does both these steps before closing, it typically allows for any issues to be identified before the closing.”
Perpetual versus Term Programs
Francisco Zozaya, Chief Revenue Officer at JSSI (www.jetsupport.com), which offers engine, airframe, APU, and ‘Tip-to-Tail’ maintenance programs for virtually any make and model of business aircraft, notes that there are two types of maintenance program.
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