Records – The Hidden Value of Your Aircraft

The value of an aircraft is based on many factors. These factors include, but are not limited to; age of the aircraft, total time on the aircraft, general exterior structural condition, the condition of the exterior paint, general condition of the interior fabrics/carpeting/wood and metal plating of fixtures, interior configuration, cabin amenities, avionics equipment, aircraft damage history, maintenance history, current status of the inspection schedule & time controlled components and the condition, organization and completeness of the maintenance records.

The value of an aircraft, as with many other things, is also determined by what the buyer is willing pay.

Aircraft Maintenance Records are the documents that backup and support the statement of airworthiness of an aircraft and its component parts; thereby supporting the market value of the aircraft. You could have the best looking, best equipped aircraft on the market, but if the maintenance records fail to completely document the advertised status of the aircraft, the general value to the buyer is diminished and the cost to the seller is increased.

What should an aircraft owner be aware of?

First of all, what does the all inclusive term, “records” really mean?

Federal Aviation Regulation 43.9 & 43.11 state, and I paraphrase, each person who maintains, performs preventive maintenance, rebuilds, alters or performs an inspection on an aircraft airframe, engine or component shall make an entry in the maintenance record of that equipment.

The most prominent of aircraft records are the Airframe, Engine and if applicable, Auxiliary Power Unit (APU) Log Books. Entries are made in these log books for preventative maintenance, general service, scheduled inspections, scheduled component replacement, unscheduled systems repair, unscheduled component replacement, compliance with manufacture or component vendor Service Bulletins (SB), FAA issued Airworthiness Directives (AD) and any modifications and/or repairs to components or structures.

In most cases, the log entry is just the tip of the records iceberg. The date, aircraft times and content of the log entry will direct you where to search for all the documentation that will support the validity of the statements in the entry and the all important “maintenance release”. That documentation will consist of replacement component certifications, Form 337’s for major modifications & repairs, interior materials burn test certifications, Supplemental Type Certificate (STC) information for modifications, weight & balance data plus Instructions for Continued Airworthiness (ICA) and Aircraft Flight Manual Supplements for components/systems added to the aircraft after manufacture.

Missing documentation can have a major impact during a sales transaction. They will diminish the perceived value of the aircraft to the buyer and increase the cost of the transaction to the seller.

The complications associated with missing documentation can be many. Component certifications, engineering data, burn certifications, AD & SB compliance, etc., cannot be recreated without substantiating evidence. It can be impossible if the Certified Repair Station is unknown, out of business or has destroyed the records. FAR 145.219 only requires a Certified Repair Station to retain records for a minimum of 2 years. In our age of electronic document storage, it is easier to retrieve many archived documents, but if the missing information is for an older aircraft, it could be permanently lost.

In the eyes of the FAA, for a time controlled component, if there are not certification documents in the records, the component is un-airworthy. In this instance, the component would require replacement if the documentation could not be located or reproduced. This is a very significant part of the pre-buy process of an aircraft.

Some examples and resulting consequences of missing documentation include:

An unsubstantiated modification or repair could result in being required to perform a conformity inspection of the work to confirm it was performed per standard practices and/or data. This could include rework of the modification or repair.
An incomplete burn certification could result in being required to re-cover seats or replace fabrics and woodwork.
A missing inspection entry may result in being required to re-comply with an entire inspection.
A missing component certification may require replacement of component.

Depending on the circumstances, any of the examples mentioned could result in significant unnecessary cost to the aircraft owner.

There are several different ways to retain and protect aircraft records. Log Books and paper files should be stored in a fireproof cabinet. If your storage area is in a floodplain, some consideration should be given to keeping your records out of harm’s way in the event of a flood. There are also secondary means available to back up your documents. Documentation, log entries and certifications can be scanned into the Computerized Maintenance Program used to track the aircraft inspection program and all records can be scanned and stored on separate back up hard drives or with a third party service.

Many may question, if a Certified Repair Station is only required to keep records for a minimum of 2 years, how long, as an owner, should records be retained?

FAR 91.417 states, and again I paraphrase, maintenance, alterations and inspection records are to be retained until the work is repeated, superseded or one year after the work is completed. This regulation goes on to state the aircraft, engine and time controlled component times must be retained and transferred with the aircraft at the time of sale. FAR 91.419 also states that all records must be transferred at time of sale. Despite the statement in FAR 91.417, for sophisticated, complex turbine powered aircraft, it is considered normal and customary to retain ALL records of maintenance, service, inspection, component replacement, modification and repair.

What can an aircraft owner do to make sure his records are complete, correct and protected?

The first question would be “do you have a formal flight department?” If the answer is “yes”, then good, your flight department personnel are your first line of defense. There should be a maintenance person responsible for your records.

If the answer to the flight department question is “no”, you could be at risk. If your aircraft is at a management company, you need an advocate to look out for your interests. This can be a dedicated person of your selection placed at the management company or an independent third party maintenance consultant.

If your aircraft is controlled and operated by a management company you should establish scheduled, regular reviews/audits of the maintenance and operation. Audits can include review of the aircraft records, maintenance invoices and operational invoices. Consideration should be given to having a third party consultant monitor the aircraft inspection schedule to assure timeliness in administration of the inspection program and confirm the legitimacy of all maintenance actions.

Regardless if your aircraft is controlled and operated by your own flight department or a management company, there should be guidelines established of how your aircraft records are maintained. These guidelines should include:

Storage; records should be protected from fire, flood and theft. The records should never be stored at a persons’ home or transported about unnecessarily. Original records should not be shipped for review. Establish electronic back up of all records utilizing a standalone hard drive and or the aircrafts’ Computerized Maintenance Tracking Program.
Content of Records; keep all historical records. Perceived value is enhanced the more complete the historical files are. For all time controlled components, keep all shipping and receiving records, teardown reports, installation and operational check documents, not just the airworthiness 8130-3 release tag, questions can arise regarding the history of a component. Make sure warranties are tracked, this is easily done through the aircrafts’ Computerized Maintenance Tracking Program. Keep all work order and work card records in chronological order; filing by year, ATA chapter and date make it very easy to locate information.
Structure of Log Books and Files; all inspections, component replacement, preventative maintenance and service should be recorded in the Log Books. In addition to the standard entry, Airworthiness Directives and Service Bulletins should also be documented in separate sections of the log books. If possible, repetitive AD’s should be separated out for easy review. Form 337’s should have a separate file with an index. All STC’s and 8110-3 engineering approvals referenced on a form 337 should have the STC cover sheet and 8110-3 filed with the 337. Instructions for Continued Airworthiness (ICA) should be retained in a separate file. ICA’s are required to be included as part of the aircraft inspection program. There should be an index of active Aircraft Flight Manual (AFM) Supplements referenced on the form 337’s. Copies should be maintained of the AFM Supplements in case they become worn or lost. A separate file of the time controlled components should be maintained, with the certifications, in ATA Chapter and chronological order. A duplicate copy of the Weight & Balance book onboard the aircraft should be kept in the maintenance office. One, all inclusive, Burn Certification file should be maintained. You should discard, or mark as superseded, burn certifications of interior items replaced.

Protecting your investment

Know what you are getting when an aircraft is purchased. Always perform a thorough pre- purchase evaluation. Retain a maintenance consultant if your maintenance department is unfamiliar with the aircraft type being purchased or is too busy to give full attention to the project.

Know how your records are being maintained. Know the policies and procedures your maintenance department has established for record keeping.

Consider having regular reviews and audits of your maintenance records by a third party consultant. This is beneficial to all concerned, it is not adversarial. The consultant is there to help your flight department be the best it can be.

Be prepared for the sale or end of lease evaluation of your aircraft. Don’t pay twice for a part or inspection you already paid for.

An ounce of prevention can save a pound of cure. Well organized, complete records will support the full market value of your investment.

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