Eagle Creek in the News

Foreign Business Jet Purchases: A World of Challenges

While it used to be a safe assumption that business jets live a pampered life, the economic crisis of late 2008 has changed that. With the Western economy reeling, wealth began to find its way elsewhere, and sales of private jets followed. New markets began to emerge in Eastern Europe, Africa, India and the Pacific Rim. For the first time, sales of business aircraft outside of North America not only caught up, but surpassed domestic sales. That means a new dynamic for those who locate and appraise pre-owned business jets. It means a need for increased caution by potential buyers and intensified scrutiny on the part of aircraft brokers and dealers.

In many of these emerging markets, aviation infrastructure is nowhere near as sophisticated as it is in North America and Europe. Not only are airports, navigation aids and air traffic control less sophisticated (sometimes leading to increased wear and tear on airframes), but FBO networks are just beginning to gain a toehold in Africa, China, India, Russia and some other markets. That has led to several concerns, including fuel quality and its effect on engine health.

While scheduled maintenance is still monitored and controlled by OEMs, unscheduled events can suffer. The expense and complexity of importing parts may lead to deferring some preventive maintenance. Sometimes, bureaucratic red tape can delay importation of a needed part or consumable. The high cost of taxes and duties on importing parts and components can tempt operators to perform repairs on components, such as complex parts, that would normally be removed and replaced with new units. The quality of available consumables such as oil, lubricants and hydraulic fluid may be compromised.

In some new markets, it is not uncommon for based aircraft to sit outside, unprotected by a temperature- and humidity-controlled hangar. Conditions of extreme high and low temperatures are common. Also, in coastal areas, salt air causes a concern for airframe and engine corrosion.

Pollution is another factor that must not be underestimated when evaluating an aircraft from some regions. Chemical contaminants in the atmosphere in developing countries can cause premature deterioration of paint, but more important, can lead to chemical-based corrosion of airframe components, engine turbine blades and other parts and systems. Composite surfaces may also be subjected to damaging chemical residue from the air.

General maintenance of non-mechanical parts can be less than what is expected for Western operators. For example, a spokesman for one major airframe manufacturer said off the record that a two-year-old aircraft from some of these markets looks like it could be decades old, based on interior and exterior wear and tear. He also said that in some cases on board lavatories were left unserviced for days after use.

What that all means is that it has become more important to vet the upkeep practices of previous owners when it comes to evaluating a pre-owned aircraft. A NARA-Certified Broker keeps up with the issues involved in assessing the value of aircraft that may be subject to these issues. In addition, the NARA network of Products and Services members has the experience, expertise and market awareness to stay on top of the effect of these issues on insurance, finance, contractual concerns and maintenance.

Eagle Creek Aviation is a NARA Certified Broker/Dealer

NARA Certified Aircraft Broker

 

 

Article is courtesy of NARA as featured in their NARA Perspective, No. 4