| by |
Eugene Unterman |
| This article comes from the soon-to-be-released second edition of Gene Unterman's 196-page book HOW TO BUY A USED AIRCRAFT WITHOUT TAKING A DIVE. The book should be available in January 1998 and will be available in the AVweb bookstore.
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Start looking at the airport closest to your home, because you have a chance to see the
aircraft without incurring any expense. This works well if you're looking for a Cessna 150
or other small common aircraft. But by the time you're stepping up to a four place
aircraft, you should begin to look farther afield.
The best place to start this search is in Trade-A-Plane,
the yellow tabloid that is distributed internationally, and contains literally thousands
of classified ads. As of this date, there are other sources for used aircraft, but none
better or more comprehensive than Trade-A-Plane. Trade-A-Plane classifieds are now available on-line on the Internet, and access is free if
you're a paid subscriber to the print-edition.
Why search beyond your home airport, nearby airports, or your home state? Because it's
getting tougher and tougher to find good clean used aircraft. With only a trickle of new
aircraft built in America since 1986, and with many of the best used aircraft heading for
Europe, Australia and Asia each month, today's market conditions require you to travel
farther and and search harder to find the used aircraft you want.
The Foreign Plane Drain
I've exported more than 100 aircraft in the past several years, and most of them are
not coming back. The ones that are are the ones you don't want to buy — they're returning
to the States because they can longer pass the more stringent European inspections, which
look hard at corrosion. While corrosion is subjective, the amount of corrosion tolerable
in most European countries is way less than what's accepted here. So when aircraft operate
in European coastal environments, like the United Kingdom for instance, they can't pass
the stringent corrosion inspections. At this point, they're often sold back to U.S.
buyers.
As a result of attrition and the overseas plane drain, it's getting harder and harder
to find good clean used aircraft in the U.S. The short supply is reflected in surging
prices. Airplanes I buy today cost more as run-outs than I was selling them for
with fresh engines as recently as ten years ago.
In 1991, I sold an airplane to a man from Michigan who had just retired and paid cash
for a 1980 Skylane with 1,400 hours TT, a zero-time remanufactured engine, new paint and
interior. A year and a half later, he called me from his retirement home in Arizona,
saying that he loved the plane, but he'd only been able to put 100 hours on it because
he'd lost his medical certificate. Several people at his home airport had approached him
and offered him $2,000 less than he'd paid for the Skylane, and he wanted to know if it
was a fair price. I told him that under normal conditions, it would have been a great
price, but today's aircraft market isn't normal. I offered to pay him every penny of what
he had paid me, and he was overjoyed. When I picked up the aircraft, I flew it back to
Illinois and re-sold it for $5,000 more than I'd paid for it in Arizona.
In fact, I'll go anywhere in the lower 48 states or even Canada to buy the right
aircraft, and if you are serious about getting good quality, you should be willing to do
likewise. This means you'll probably need to look beyond your local airport; and further,
that you'll probably need to make all but the final decision over the phone. Since you
can't make decisions unless you have information, you'll need to get the "N"
number of the aircraft in question and really do your homework before you put down a
deposit or take a long trip to see the aircraft.
Why Look North Of The Border?
You should consider a Canadian-registered aircraft even though it doesn't have an
"N" number and you need to get it across the border. There are several reasons
why. First, maintenance procedures in Canada are much stricter than in the United States.
In the U.S., there are basically two FAR's that govern the maintenance requirements of
civilian aircraft. Part 91 covers all aircraft for personal or business use, while the
much stricter Part 135 covers aircraft used for hire, charter, or scheduled air
transportation. Which set of rules govern aircraft maintenance depends only on how the
aircraft is used, not on its size. For instance, a Gulfstream business jet could be
operated under Part 91 as long as it wasn't for hire. Conversely, a Cessna 172 may be
operated under Part 135 maintenance requirements.
In Canada, maintenance requirements for civilian, personal and business use aircraft
are almost identical to the stricter U.S. Part 135 requirements. As a result, Canadian
aircraft are generally maintained quite well.
There are some things you must consider when investigating an aircraft based north of
the border, and one of them is log books. All aircraft manufactured in the United States
that went to Canada — even if they were originally ordered by a Canadian citizen or a
Canadian distributor — were given an "N" number. So even if a Canadian owner
tells you his airplane has always been in Canada, it was built in the U.S. And so it
behooves you to do a title search on that original "N" number to see if there
was ever any damage to the aircraft during flight testing, or on transit to Canada,
because none of this would be reflected in the Canadian logs.
When the aircraft gets to Canada, regardless of the fact if it was new or used, the
owner must start a new set of Canadian log and journal books. There are separate
maintenance logs for the propeller, avionics, engines and air frame. Also, a journal log
is started, because every flight taken in Canada in a Canadian registered aircraft must be
recorded in a journal, similar to a pilot's flight log. This indicates the date of the
flight, the departing and arriving airports and the length of the flight.
The more stringent maintenance required in Canada and the detailed logs have benefits.
But remember this: when an aircraft arrives in Canada and is converted to the Canadian log
system, in many cases the Canadian maintenance facility will throw away the original U. S.
logs. This almost always happens with new aircraft and usually isn't significant because
there were essentially no entries in those logs, assuming it had no damage. But I have
often seen instances of aircraft with thousands of hours on them under U. S. registration,
where the logs were simply thrown away when the aircraft was imported into Canada. So if
you're inquiring about a Canadian registered aircraft, make sure you ask about the status
of all the logs, including the original U.S. logs which will contain the
U.S. "N" number, so you can do a title search on that as well.
Other Canadian Gotchas
Some other considerations when purchasing a Canadian aircraft concern financing,
export, and cost.
All aircraft manufacturer financing companies, (Cessna Finance, Raytheon Finance, etc.)
and banks that specialize in aircraft financing (Banc One, NationsBank and others) require
the aircraft to be in U.S. certification prior to release of money on a loan. This makes
for a difficult situation. The Canadian owner doesn't want his airplane to leave Canada
and to be stripped of its "C" registration without having been paid. And the U.S.
citizen, depending on a loan that uses the aircraft as collateral, can't get the money
to pay the Canadian citizen in full until the aircraft is registered in the U.S. There's
almost no way to get around this, so if you plan to use the aircraft as loan collateral,
you should be aware of this.
To export a Canadian aircraft into the U.S., you need a willing partner in Canada. The
de-registration process depends upon the Canadian owner acquiring all the proper paperwork
and sending it to the Canadian Department of Transport with a letter requesting that it be
de-registered and that a telex be sent to the FAA in Oklahoma City confirming that
de-registration. Unless the Canadian owner complies with every step of this process,
you'll never be able to get the aircraft registered here.
There is also the issue of cost. The aircraft must go through a recent inspection in
Canada, then requires another inspection in the United States — one roughly equal to a
fresh annual inspection — because it will need to be signed off by an FAA inspector. Note
that an A&P with Inspection Authorization (an "IA") may not do this
inspection…it must be an employee of the FAA or a FAA designee. You will also incur
the cost of repainting the "N" number.
Costs for the import process vary of course, depending upon the type of aircraft and
its condition, but typically you could expect to pay a minimum of $2,500 for a well
maintained Cessna 172 — and up to tens of thousands of dollars for a turboprop or a jet.
While this may sound high, the price to export these same airplanes to Canada or elsewhere
may be even higher, especially if they have been operated in Part 91 here and then must
meet the rough equivalent of our Part 135 abroad.
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