Look Deeper - It Might Just be Lipstick on a Pig
When buying an aircraft, a good pre-purchase evaluation is the best possible use of time and money. Over the years, I have participated in hundreds of these evaluations and have always, without exception, discovered details needing attention and questions needing answers. The end result is always a much clearer understanding for the buyer of the aircraft’s maintenance program and maintenance cycle and a realistic expectation of the ongoing maintenance costs. This is the information a buyer must have in order to make a purchase decision.
In this month’s column, we will take a close look at the pre-purchase evaluation process, discuss some of the finer details and even touch a little on technique. When performing an aircraft pre-purchase evaluation, it is critical to look hard and with purpose at the aircraft and its maintenance records in order to assess the aircraft’s value accurately. There are several things to consider when you are looking for a good used aircraft.
There are two key components to the aircraft pre-purchase evaluation, physical inspection of the aircraft itself and an audit of the aircraft’s maintenance records.
Physical Inspection of the Aircraft
In order to properly evaluate the physical condition of the aircraft an all-encompassing, complete inspection should be performed, even if it isn’t due yet. Obviously, the selection of a maintenance provider who will perform the inspection is important. The aircraft buyer is usually the party paying for the pre-purchase and selects the maintenance provider. We recommend choosing a maintenance provider with an outstanding reputation for knowledge on the make and model aircraft being purchased. Almost anyone can legally inspect the aircraft however a willingness to do the work does not equate to expertise. When making a buy decision on a multi-million dollar asset, you’ve got to find experts to help in the evaluation.
The general belief is that the best maintenance provider choice will be the aircraft original equipment manufacturer (OEM), but most OEMs have several OEM locations to choose from. In many cases, depending upon the aircraft make and model, there are also non-OEM maintenance providers that are very capable. From my experience, more important than the facility is the specific technician or team leader who will perform and oversee the work. That is truly where the expertise lies. Use your network to find someone known as an expert on the aircraft make and model being purchased. Every maintenance organization has its strengths and weaknesses and every aircraft model has its common concerns and issues. You want to be certain that the maintenance provider you choose has a team that really knows the aircraft model in question and what to look for.
As for the scope and detail of the inspection, keep it simple. The equivalent of a 100-hour/annual inspection should be performed as part of the pre-purchase in order to uncover any possible hidden damage or corrosion. The 100-hour/annual inspection performed on small piston aircraft is intended to be a tip-to-tail inspection that, when performed, will uncover all possible airworthiness concerns. In the case of large or multi-turbine powered aircraft (Ref: 91.409 (e)), a “100-hour/annual” inspection is not available in the maintenance program provided by the manufacturer. However, it is not too difficult to find the equivalent of a 100-hour/annual inspection within the manufacturer’s inspection program. The manufacturer’s inspection program consists of a subgroup of inspections that, when combined, consist of a tip-to-tail inspection of the aircraft. Whenever an aircraft is imported into the U.S. from another country, the regulations require that the “equivalent of a 100-hour/annual inspection” be performed (Ref Part 21.183 (d)(2)). Because of this regulation, large and multi-turbine aircraft manufacturers can tell you what group of inspections contained within their maintenance program (when accomplished together) are “equivalent to a 100-hour/annual” type inspection.
A common shortcut that a buyer will take is to perform an abbreviated inspection based on the fact that some major inspection was just accomplished by a reputable maintenance provider. I disagree with that approach. I have seen several cases when the short cut came back to bite the new owner. In all cases, a complete tip-to-tail inspection should be performed on the prospective aircraft. Don’t trip over a five dollar bill to pick up a penny.
Prior to beginning the inspection, the aircraft should be flown and an “at altitude” engine power check performed, followed by ground power checks for comparison. Engine runs can tell a seasoned technician a lot about the condition of the engine. During flight and ground power checks is also the best time to perform avionics systems functional checks to find any possible high-dollar equipment problems. Technicians know to be careful to record any problems found during the aircraft operational checks so that they can verify everything was corrected during final runs.
The physical inspection of the external and internal components of the engine is also a must. Engine problems can be expensive. The internal inspection should be, at minimum, a borescope inspection of the hot section and gas generator sections of the engine. It is best, however, to have the engines disassembled enough for the technician to look directly at the hot section components and check for damage. For engines where disassembly is not practical, borescope may be the only option. The fact is, borescope technology has come a long way and problems are much easier to see with the latest borescope equipment. In all cases, an expert must perform the inspection thoroughly. Again, engine components are extremely expensive and if a serious problem exists, it needs to be uncovered as part of the pre-purchase.
Detailed Audit of the Maintenance Records
Another component of the pre-purchase is the aircraft maintenance records audit. Please do not underestimate the importance of this part of the evaluation. Just as worn parts or hidden damage can come to the surface later in life and cost the buyer significantly, so can undocumented scheduled maintenance, life-limited parts and inspections. The value of an aircraft can be dramatically affected by missing records or hidden damage to the aircraft. Sometimes as much as 25 to 30 percent of the value of the aircraft can be lost simply by maintenance documentation shortcomings. When you are dealing with a multi-million dollar aircraft, even one percent is huge. The audit is cheap insurance.
Let’s step back for a moment and review the aircraft maintenance cycle in general. Each unique model has a different maintenance cycle timeline derived from its maintenance and inspection schedule and published by the aircraft manufacturer. Visually, that timeline has peaks and valleys since some years require more labor-intensive maintenance than others. Understanding where on that timeline the aircraft currently rests is a huge factor in the valuation of the aircraft. For example, imagine buying an aircraft that is nearing a major inspection, engine overhauls and a landing gear inspection, all within the next 12 months. Once you own the aircraft, you pay for the maintenance. Many people try to shortcut the pre-purchase and focus only on the major maintenance events, ignoring the little stuff. Lots of little stuff can quickly add up to a major maintenance event by itself. Done right, however, a maintenance records audit will paint that timeline picture clearly.
An aircraft maintenance record audit consists of the following checks at a minimum.
• Verification of the aircraft/engine/propeller total time in service
• Verification of all scheduled inspections and maintenance checks specified by the aircraft manufacturer (including the engines, props appliances and emergency and survival equipment (Ref: Part 91.409 (e))
• Verification that the records are chronologically complete and no maintenance records are missing
• Identify the maintenance program chosen for the aircraft (Ref: Part 91.409 (f))
• Comparison – if necessary to the manufacturer’s inspection program
• Verification of compliance with all applicable airworthiness directives (ADs)
• Complete status of compliance with applicable service bulletins (SBs)
• Evidence of possible damage history hidden within the records
• Completeness of all maintenance records, including all FAA Form 337s and required supporting approved data for major alterations and major repairs (Ref: Part 91.417)
• Compliance with all instructions for continued airworthiness (ICAs) associated with any major alterations or supplemental type certificates (STCs)
• If the aircraft has been operated in more than one country, verifying the installation and removal (if required) of various country specific modifications
These checks are to be accomplished by conducting a complete and thorough examination of the maintenance records. To begin, organize the records and inventory them chronologically to facilitate the audit. I sometimes receive records in such disorder that half of the first day is spent organizing the records.
The audit begins by starting with the most recent logbook and the most recent logbook entry and moving backward through the records, reading each entry carefully. It is important that the person performing the audit be familiar with the inspection and maintenance program for the aircraft. This will be helpful in making the maintenance records audit efficient since there are often several hundred scheduled maintenance or inspection tasks that must be documented in the records and extracted by the technician.
As the audit process continues and the information is found in the maintenance records, the technician should condense the findings in a format that will allow presentation of a summary of the data and the current status (next due) of each scheduled item, AD, SB, etc. If the aircraft is on a commercial computerized maintenance tracking system, the results of this process will be to verify the accuracy and completeness of the tracking system for that aircraft.
In addition, we need to discover any major alterations and/or major repairs. Major alterations are required to be recorded using FAA Form 337, however, the major repairs may be recorded using a signed copy of the work order if and only if the work was performed by an FAA-certificated repair station using approved data (Ref: Part 43 Appendix B (b)) and the repair station meets all of the criteria in Part 43 Appendix B.
Upon completion of the pre-purchase records evaluation, the buyer should be presented with a list of maintenance records deficiencies. The messenger usually is the first one to get shot. I suggest that the following approach be taken regarding the deficiencies. Any deficiency in the maintenance record of the aircraft does not mean that the work has not been accomplished; it simply means that the documentation of the work was not found in the maintenance records provided.
The deficiencies are then either addressed by the maintenance provider or further documentation is provided by the seller that shows that the work was done. Once all questions can be answered or otherwise addressed, the records are completed and will then accurately reflect compliance with all the maintenance requirements. At this point, I like to return the records in an organized and structured format, maintaining the benefit of all that was just accomplished.
Most aircraft purchase agreements include a pre-purchase section that spells out the responsibilities and limitations of the pre-purchase inspection. Usually the buyer pays for the inspection and the seller pays to have discrepancies that affect airworthiness corrected prior to the closing of the sale. Another detail to understand is that there is often a limitation to the time allowed to perform the inspection. It is critical to make certain that you have ample time to complete the necessary inspections and checks to determine the value of the aircraft you are buying.
See it through
Too often, the pre-purchase inspection is cut short. Sometimes the buyer just falls in love with the aircraft and doesn’t want anything to get in the way of the purchase. Or maybe the buyer doesn’t see the need to spend the money for the inspection. (“Why should we do that inspection? The aircraft just came out of a major inspection.”) The fact is, the moment when the aircraft transfers from one owner to another is the best time to spend the money to inspect it. That is the only time when both buyer and the seller are at the table with an agreement that dictates who is responsible for what expenses. A high-quality pre-purchase evaluation, including a thorough physical inspection of the aircraft as well as a detailed audit of the aircraft’s maintenance records, will always uncover airworthiness-related concerns. However, once the pre-purchase evaluation is completed and all the discrepancies are corrected and properly documented, the buyer can accurately assess the value of the aircraft and rest easy knowing where in the maintenance cycle their new aircraft is.
Joe Hertzler has more than 25 years of experience in business aviation. He has earned a reputation as an efficiency expert when it comes to aircraft maintenance and is well known for his in-depth understanding of maintenance regulations and how they affect aircraft compliance. He has helped many in dealing with critical and urgent FAA interactions and often speaks on the topic of aircraft maintenance and compliance at industry events, such as the NBAA Maintenance Managers Conference, PAMA meetings and IA renewal seminars. Hertzler also serves on the National Air Transportation Association’s (NATA) Maintenance and Systems Technology committee. Contact him at JoeHertzler@gmail.com.