As a helicopter owner or operator, have you found yourself in any of these situations?
1. You have your eye on a helicopter that just hit the market. The asking price seems high, but you would like to make a reasonable offer.
2. Your lender is asking for an updated valuation of your aircraft, so you can move forward on another opportunity. The lender requests a certified appraisal for the new addition to your fleet.
3. You are thinking about selling a helicopter and want to get an accurate indication of its value, so you can price it appropriately.
4. You are a lessor, and a valued client has asked you to supply them with another aircraft. An opinion of residual value at end of the lease term will help you decide if this is a worthwhile investment.
5. You are sensitive to today’s rising insurance rates and want to be certain that you are not over-insuring or under-insuring your assets.
6. You are involved in a partnership, it’s time to divest, and you want a fair opinion of value on the aircraft for you and your partners.
“These are all great reasons to hire a professional helicopter appraiser with a proven track record to perform a formal valuation,” said Scott Hope, an accredited senior appraiser with the American Society of Appraisers (ASA), and president of Heli Connections Aviation Inc. “The reality is, price and value are two different things. Price can exceed value, and value can exceed price. In a properly executed appraisal, the relevant facts are analyzed to determine value. In the above situations, arriving at a value the helicopter would most likely sell for, within a reasonable amount of time, is the name of the game.”
What to look for in a helicopter appraiser
Heli Connections recommends the following criteria:
1. Use an appraiser with credentials from a recognized, respected, and governed organization.
An example is the ASA, a world-renowned organization. The ASA offers an aircraft-specific appraisal education program that teaches the proper fundamentals of equipment appraisals, with an aviation focus. All ASA members must adhere to a strict code of ethics.
2. It is critical to utilize a USPAP-compliant appraiser.
USPAP is an acronym for Uniform Standards of Professional Appraisal Practice, the official guidance material published by the Appraisal Foundation. This document is updated every two years, and defines a set of recommended procedures and ethical standards for appraisers.
3. Choose an appraiser with an extensive technical background in helicopters specifically.
This will produce more accurate results. Helicopters are complex aircraft with many parts and components. An appraiser with a maintenance background or other technical expertise will have a good understanding of these unique requirements, and will be able to extract and compare relevant data. Additionally, for onsite appraisals, an individual who is familiar with helicopters will be able to analyze and report on the condition of the aircraft.
4. Is the appraiser involved in actual resale market transactions?
If the appraiser is a broker, or otherwise involved in helicopter sales transactions, they gain valuable insight into current market conditions and accumulate real-world sales data, which can be fed directly into their appraisal practice.
One of the most important components of a sales comparison approach appraisal is to gather recent sales data on the type of helicopter being evaluated. Brokers have firsthand access to this valuable information, and they also forge relationships with other brokers, which facilitates the flow of accurate sales data.
5. Engage someone who has dedicated their appraisal practice entirely to helicopters.
Many generalists perform helicopter appraisals as part of their business, but how many helicopters do they appraise per year, and how much effort do they make to develop helicopter appraisal techniques? Utilizing a firm that specializes in helicopters will net better results, as they have experience and a great deal of information on hand. A dedicated helicopter appraiser will perform 200 appraisals per year on average, and will have the tools available to perform them competently and efficiently.
What to expect from a competent helicopter appraiser
As an accredited senior appraiser with ASA and a licensed aircraft maintenance engineer, Hope shares the following expectations:
1. You can expect them to keep all details of the assignment strictly confidential, and maintain a fiduciary relationship with the client.
2. The precise reason for the appraisal and any special requirements will be identified at the beginning of the assignment and incorporated into the work scope.
3. Commentary on the subject helicopter will be provided, and current market conditions will be analyzed.
4. The three approaches to value (income approach, cost approach, and sales comparison approach) will be discussed, and the most relevant methods will be identified and utilized.
5. An explanation of the appraisal methodology will be included. For the sales comparison approach, multiple comparable aircraft will be displayed and compared to the subject, with all adjustments to value clearly shown.
6. If onsite verification of the asset was performed, a review of the technical records will take place, and a detailed physical assessment report will be attached.
7. The appraisal report will include an opinion of value, as specified by the client, and will contain a certification statement.
8. Appendices will include a detailed prorate of the helicopter components and engines, plus an equipment list indicating the value of extra modifications and avionics.
9. All of this, of course, must be USPAP-compliant.
Based in Kelowna, British Columbia, Heli Connections has established itself as one of North America’s best and most trusted helicopter appraisal firms.
“Our company has unparalleled technical and sales expertise,” Hope said. “We understand helicopters, and we understand the market. We’ll work with you and provide the latest information, to facilitate success in acquisition or sale of rotary-wing platforms.”