Managing an Aircraft AND Its Pilots

Case Study - Loss of Value Due to Poor Management

      Last year I was hired to find a cabin class twin piston aircraft. My client wanted to upgrade from a high-performance single. We had decided that either a Piper Navajo or a Cessna 414 would be an appropriate aircraft for his mission. It just so happened that there was a Piper Navajo in the hangar next door that was rumored to be for sale. A search for the aircraft for sale online did not reveal any listings. After researching the tail number and registered owner, I contacted the owner and asked him if the airplane was for sale. He said that indeed it was for sale and that he had enlisted a broker to assist with the sale. I mentioned to him that the aircraft wasn’t listed anywhere online, to which the owner seem perplexed. I asked who was managing the aircraft and if I could meet with them to examine the aircraft logbooks and take a look at the aircraft. The owner agreed and gave me the phone number for his pilot. I contacted the pilot and informed him that the owner had told me to reach out to him in order to view logbooks, view the aircraft, and discuss its condition. The pilot’s response was “Um…I just fly it sometimes”. Not a good sign. After some back and forth with the owner and the pilot, the pilot agreed to meet with me at the airport and that he “would bring what he could find” for logbooks. We were not off to a great start.

      After going through the logbooks, it was revealed that there was significant damage history from 10 years ago when a previous pilot ran out of fuel, landed the aircraft in a field, and struck a tree with its wing. The aircraft had to be disassembled in the field and shipped on a trailer to the maintenance facility. My examination of the logbooks, however, did not contain any 337 forms, a document that is required when a major repair or alteration is made to an aircraft, which would definitely be the case given the damage this aircraft sustained. The de-ice boots on the leading edge of the wings had also been removed, further decreasing the value of the aircraft.

      After further investigation, I saw the aircraft had flown less than 10 hours per year in the last decade. That low of utilization greatly enhances the risk of corrosion, especially in the Gulf Coast region, again decreasing the value of the aircraft. Best case scenario? An aircraft with ancient avionics and significant and recent damage history. Worst case scenario? An aircraft full of corrosion in the airframe or engines and may not even be legally airworthy depending on how the paperwork is interpreted. This aircraft did not present well, and I advised my buyer to walk away from this aircraft.

      About 8 months has passed since this interaction and the aircraft still has not sold. According to FlightAware, it has done 1 flight in the last 8 months.

      So where could an aircraft manager save the day? Firstly, a good aircraft manager would’ve recruited and vetted a professional pilot, someone who doesn’t run out of gas, and this would’ve prevented the initial accident. Additionally, an aircraft manager would have vetted the maintenance shop performing the post-accident repairs and questioned the lack of proper paperwork for the repairs. The aircraft manager would also make sure the airplane is flown regularly to fend off corrosion as much as possible. Finally, the aircraft manager would work with the listing broker to make sure the aircraft is listed properly on all aircraft sales websites, and the logbooks are arranged and ready for inspection for any prospective buyer.

      In my opinion, the lack of an aircraft manager directly cost the owner ~$130,000 in lost aircraft value due to the damage history. If the aircraft does require an engine overhaul due to corrosion in the engines, that would be a $150,000 check out of the owner’s pocket. All this not to mention the poor condition of the aircraft means it will likely be on the market for a longer than average time, meaning the owner has capital tied into an illiquid asset that he’s not even flying.

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