How to Avoid Hassle on your Aircraft Lease Return

What are the top tips to help save time and money?

Miles Birnie  |  15th December 2015
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Miles Birnie
Miles Birnie

Miles Birnie is the Technical Services and CAMO Manager at Gamit, which specialises in Aviation Asset...

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Private Jet Lease

A poorly managed lease return can only have one outcome: penalty fees to the lessee, notes Miles Birnie, Technical Services & CAMO Manager, Gamit. Planning for a successful re-delivery must begin at the point of a lease agreement being signed...

All aircraft leases stipulate return conditions that must be met by the lessee upon redelivery. Typically these include:

  • The period of time the aircraft will be cleared from maintenance (usually satisfied by the completion of a re-delivery maintenance input).
  • Confirmation that all technical record paperwork meets the expectation of the lessor and that of the relevant regulatory authority.
  • Physical condition and configuration of the aircraft (detailing the required standard of the interior and the exterior of the aircraft).
  • Preparation for the issue of an Airworthiness Certificate or a Certificate of Export, which is a usual requirement at the termination of a lease.

By involving a technical consultant at all stages of a lease agreement process, you can ensure that these requirements meet the lessor’s expectations and negate the possibility of any future disputes. Return condition negotiations occurring at the end of the lease could potentially result in the lease period being extended reluctantly and/or result in unplanned additional costs to the lessee.

Once a lease agreement has been decided, it’s crucial that the aircraft is managed by a suitably experienced management company that can ensure the aircraft is operated with the lease return conditions considered.

Effective maintenance planning is integral to the successful re-delivery of an aircraft, and this must be considered when agreeing on return terms.

A suitable management company will ensure that the aircraft’s maintenance check cycle is factored into the operation of the aircraft, with the final major maintenance input under the lease term being carried out at the agreed time of redelivery. A full review of the aircraft records must also be carried out prior to lease agreement. A full audit mirrors the audit process that is to be carried out prior to redelivery, which we will discuss below.

Re-delivery Preparation Schedule

Preparation for the redelivery of the aircraft should begin early; meetings between stakeholders should agree on timelines and objectives to be achieved.

Ideally performed 2-3 months before the redelivery maintenance input, a full records review will help ensure that all maintenance performed during the lease term meets the return conditions.

Gamit has performed full records reviews for a multitude of aircraft owners and operators, and one common occurrence that we are faced with is that of component back-to-birth traceability requirements. For example, return conditions may stipulate that full back-to-birth traceability is provided for any life limited component replaced during the term of lease.

Lessees often make the incorrect assumption that a suitable release certificate satisfies this requirement.

In actual fact, a release certificate can sometimes only illustrate a partial history for a component. Having a lessor’s auditing team find a discrepancy such as this can lead to the lessee having to replace the high value part for another that does have full back-to-birth paperwork. That’s not a cost effective solution to the lessee!

A suitably experienced team of auditors, however, will identify potential issues such as this and find a solution before the re-delivery process starts.

The production of documentation folders containing copies of ‘dirty fingerprint’ records is the most effective method of conducting a records review. These documents can then be presented to the lessor’s auditors for review.

Having worked on behalf of lessors, we can speak from experience of how this method is so successful and has two uses:

• The first use is to satisfy the lessee’s audit process and ensure that any discrepancies are captured in good time. The discovery of the lack of life on a component at this point will enable further research to be carried out. In most cases, this will result in the retrieval of the required paperwork at no extra cost to the operator. If this discrepancy was to be identified at the time of re-delivery, time may not be available to conduct adequate research, and the only feasible option is to replace the component at a cost to the lessee.

• Secondly, these folders can be presented to the lessor and give an excellent first impression of the records management performed by the lessee.

Organizing & Categorizing Records

All technical consultants have their own method of organizing and categorizing engineering records. Gamit typically produces documentation folders segmenting each element with the aim of making the process as smooth as possible. Following is an example of primary data expected…

Components (including On-Condition, Hard Time & Life Limited Parts)

All components installed will be reviewed to ensure they meet the required lease return conditions.

Landing gears can be particularly difficult to establish back-to-birth traceability. In some cases, pro-ration or unknown life calculations may have to be performed, thus it is important to have experts perform such calculations. Having a landing gear life incorrectly calculated could prove costly to the lessee - especially if the incorrect life calculation results in the component life expiring within the agreed maintenance clearance period. The same applies to engines, and other high-cost items.

Airworthiness Directives (AD)

All ADs complied with during the lease period should be presented in a ‘Dirty Fingerprint’ (original engineer signed and stamped records) format and be accompanied by a suitably updated and verified AD compliance report.

Any ADs applicable to the aircraft that falls due within the agreed maintenance clearance period will be identified and planned accordingly for compliance at this point.

Service Bulletins (SB), Modifications & Repairs: Similarly to ADs, all SBs performed on the aircraft must be verified for paperwork completeness. It is vital to understand the lease return conditions for items such as SBs. Some agreements may dictate that all modifications, whether optional, recommended or mandatory, must be carried out.

Alternatively the agreed return conditions may state that the aircraft must be returned to its original configuration. Identification of modifications to be removed from the aircraft at this point will ensure that all maintenance requirements are in place in time for the redelivery maintenance input.

Having a lessor discover that a modification requires removal at the time of redelivery will undoubtedly result in high additional maintenance costs. The same applies with aircraft repairs; if the correct paperwork cannot be supplied, in most cases the repair must be removed and performed again. Researching and identifying the required paperwork at this point is far more cost effective than performing the recertification of a skin repair (for example) at the redelivery input.

Interior Configuration

Dependent on the return conditions, the aircraft interior configuration will be established and verified. If any trim or seats have been replaced during the lease period, it is vital to be prepared with the associated certification paperwork, including documents such as flammability test results.

The interior of the aircraft should also be thoroughly inspected to ensure it meets the return conditions. Missing trim, seat parts, cleanliness, lighting and carpet condition can be reviewed at this point with corrective actions put in place prior to redelivery.

Coinciding with the records review, a physical inspection of the aircraft should also be carried out. Looking at the exterior of the aircraft, all dents and repairs should be assessed to ensure adequate records are in place. Areas of corrosion, damage to paint and fluid leaks should also be addressed prior to the lessor having access to complete their own inspection.

Saving Time & Money

Preparing both aircraft and records to a high standard for handover to the lessor does have a positive effect and fills them with confidence that they’re looking at an aircraft that meets their expectations. If a lessor is presented a returned aircraft in poor condition and an incomplete records portfolio, the resulting impression will be negative and a lengthy audit is likely.

Bringing in a professional management team will save money and time when the aircraft is returned to the lessor. Preparation is the key to a successful lease return!

Read more on aircraft ownership here.

Find other contributors from Gamit here.

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