After transacting many new and used aircraft purchases and sales myself, I’d like to share some of my own “lessons learned” for the benefit of others.
Some topics to consider for an aircraft pre-lease and/or pre-buy: financing considerations and engaging a legal representative are separate discussions. This article will only touch on some basics that many have neglected to think about until it was too late.
Please understand that there are no “great deals” when it comes to aircraft. If the price or arrangement seems too good to be true… it is. Dig deeper, and make sure you engage an engineer or very experienced person to perform the pre-lease or pre-buy inspection. If you think they cost too much, you’re in the wrong game.
The number one rule: don’t be in a rush, and be prepared to walk away.
Key Considerations
Is this aircraft the right fit for your operation or intended use?
Does it have the correct options installed to meet your requirements, such as cargo hook, radios, nav aids, stretcher, lighting, baggage extenders, baskets, water buckets, sling gear, winter/summer covers, tie-downs, etc.? Make sure these are all included in the agreement.
How old is the airframe?
Does it have older-style electronics? When was the last 12-year (or equivalent) inspection completed? Are there any outstanding or upcoming airworthiness directives or bulletins? Are there calendar life expirations coming due? Is there any previous damage?
Who has been maintaining the aircraft?
Where was the maintenance performed, and can you speak with the maintenance organization going forward?
Documentation is critical.
Take pictures and/or videos available to both parties, including exterior and interior condition. Record borescope results and any previous damage. Cosmetic damage is acceptable if it is documented at the commencement of the agreement.
Define “reasonable wear and tear.”
What does it actually mean? What bearing wear not covered under component overhaul/replacement is acceptable (e.g., pitch link spherical rod-end bearings, swashplate spherical bearings, etc.)? A clear statement in the lease or purchase agreement is necessary. What was the wear level upon receipt? Document everything.
Understand the inspection level.
If a third-party approved maintenance organization (AMO) or maintenance, repair and overhaul (MRO) provider is involved prior to the transaction, they will provide a report, which I strongly recommend. This is generally known as a pre-purchase inspection. However, a visual (non-disassembly) pre-buy or pre-lease is very different from one that includes disassembly.
Lease-specific considerations.
If this is a lease agreement, is there a probationary period (e.g., 50 to 100 hours) where, if a component failure or internal issue occurs, the lessor has 100% responsibility? Many agreements include this, but some do not.
Operational restrictions.
Does the lease contain restrictive covenants, such as prohibiting training use or certain types of operations?
Component failure contingencies.
What happens in the event of premature component failure? Who pays, and for what?
Damage or total loss.
What happens if the lease aircraft is substantially damaged or written off?
Regulatory and transfer requirements (specific to Canada).
Whether it’s a lease or a purchase, ensure you obtain a letter of authorization for the release of the radio license to Industry Canada, as well as registration with the Canadian Beacon Registry for the emergency locator transmitter.
Certificates and airworthiness.
Make sure the Certificate of Registration (C of R) and Certificate of Airworthiness (C of A) are valid and available for transfer upon execution of the agreement.
Insurance insight.
Speak with your insurance broker about the aircraft; they may have valuable insights.
These are only some of the basics. Again, I’ll stress that there is no substitute for an AMO, MRO, or a highly experienced aircraft maintenance engineer to ensure your needs are met.
These toys are not cheap, nor are they inexpensive to operate. Having fun is only part of the equation when diving into this.
Onwards and upwards!
With over 45 years of experience as an aircraft maintenance engineer, Terrence D. Eissfeldt holds a current Transport Canada license with M1 and M2 certification. His previous positions include director of maintenance, quality assurance manager, chief executive officer, and accountable executive.
