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May 03, 2020

Many airplane owners and operators are aware of the concept called aircraft maintenance programs. But what actual worth do these plans offer, and what advantage do they present when it comes to the aircraft resale market? There are plenty of benefits of enrolling your plane on an hourly maintenance program, especially if the plan can be transferred to the new owner of the aircraft following resale.

Advantages of Maintenance Programs

The amount of advantage operators can hope to get from these programs at the time of selling their aircraft largely depends on an airplane category as the value of each plane’s group is distinct from another, not to mention the different aircraft models perform distinctly as well. The higher the percentage of a particular aircraft model’s fleet is enrolled on maintenance plans, the higher the value will be for that airplane at resale.

Those model fleets which are not enrolled under the aircraft conservation plan could see a significant reduction in the sale price. This is because the buyer might feel compelled to register that specific plane in order to keep its value. However, market dynamics also play a vital role in the final transactions; in case there is a limited inventory available for sale, buyers may not be able to purchase at a lower price.

During the 2008 economic crisis, many buyers refused to purchase an airplane that wasn’t enrolled in the maintenance scheme. In general, it would take longer to sell a plane without program coverage, resulting in increased exposure for the operator to a substantial amount of value loss, mainly because airplanes are depreciating assets.

According to the aviation experts, enrolling your plane on maintenance plans is less about guaranteeing decreased maintenance expenses. Instead, it’s more related to ensuring the preservation cost will be the cost of the program, consequently eliminating dreadful maintenance-related surprises over the period of airplane ownership.

Some operators believe that they can cover risks associated with maintenance and would instead manage it by managing funds they would have paid into a program. What they don’t consider is the direct and additional value that maintenance plans provide them, above the value of their aircraft, including the extra coverage while the airplane is under warranty.

Although the warranty of an aircraft is significantly valuable, its coverage may be limited to the expense of repairing the affected parts. Nevertheless, a maintenance scheme could also include shipping malfunctioned parts to the maintenance facility, shipping rental parts to the airplane, installing them, the expense of rental parts, removing rental parts, return shipping for the original parts, and support of the logistics.

The main difference between different programs comes down to whether they include Life Limited Parts LLPs in the plan or not. What’s noteworthy is that the LLPs themselves have to be replaced eventually, and having no coverage may negatively affect the plane’s value in the long-term. Besides, LLPs do malfunction in the end, and the unexpected replacement cost of these parts could exceed the cost of covering them through a maintenance program.

Acorn Welding is an aircraft maintenance expert based in Edmonton, Alberta. Visit our website to learn more or contact us for customized client service.