““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
A jet owner's guide to aircraft completions
Just a few years ago, customers had fewer options in outfitting their aircraft. But the consumerization of business aviation and technological innovations have resulted in a huge range of choices in furnishings and entertainment and communication equipment. Additionally, OEMs (original equipment manufacturers) and aftermarket completion centers are putting more emphasis on catering to customers' tastes.
"Everybody's expanding their capability to customize interiors," said Meghan Welch, a completion designer at Elliott Aviation, an aviation services and aftermarket completion company in Moline, Ill. "We're...putting the [customer's] personal touch on everything we do."
Concurrently, robust sales of business aircraft are creating a shortage of capacity at OEM and aftermarket completion centers. With deliveries of some new jets backlogged into the next decade, many potential buyers are opting to update older aircraft instead. Meanwhile, completion facilities may be reluctant to increase capacity due to the cyclical nature of the business and the difficulty of finding qualified staff.
On the plus side, completion centers are enhancing their ability to help customers through the process. OEMs and many aftermarket facilities have "design centers" where jet owners can see and feel samples of leathers, carpeting, fabrics, woods, veneers, cabinetry and other furnishings, and spend time in cabin mockups. Some completion centers have software that generates 3-D views of an interior, allowing clients to experiment with various cabin configurations, colors, fabrics and furnishings to assure they get the finished product they want. And many offer online tools and progress reports that can help customers keep tabs on a project.
Here are seven key steps aircraft owners need to take before and during a completion project:
1. Consider how you fly and live. Your aircraft's interior should reflect your lifestyle and travel habits. That goes beyond defining the typical mission profile or number of people onboard. More important, how do you want to spend time on the aircraft? How do you want to balance privacy with productivity? And what touches will bring you the most comfort and joy?
"Have discussions with whomever you need to, your significant other or the flight department, and determine what are some real key outcomes they'd like to see,"
advised Cindy Halsey, vice president of interior design engineering and development at Cessna Aircraft Co. in Wichita, Kan. "Ask yourself, 'Why did I buy the airplane and what do I want it to do?'"
To help you generate ideas and appreciate the possibilities, look through magazines for aircraft interiors you like. Examine Web sites of your aircraft's manufacturer and aftermarket completion centers. Completion center designers will want to know your taste in colors, furnishings and fabrics, and will go to great lengths to understand your preferences.
"A lot of times, we'll go to their homes to see how they live," said Rick Van Thiel, vice president of completion design and sales support at Gulfstream Aerospace Corp., based in Savannah, Ga.
2. Select a completion center. OEMs have their own completion centers, but aftermarket customers have to choose a facility. (Boeing Business Jets and Airbus executive widebody aircraft are sold "green," so their buyers must select a completion center. OEMs provide a listing of recommended facilities.)
For aftermarket completions, start by getting recommendations from the aircraft's manufacturer. (Some, including Gulfstream, Cessna and Hawker Beechcraft, now offer aftermarket completions on their products.) Be sure the completion centers you're considering have experience not only with your aircraft make and model, but with the work you want done.
"Watch out for a company that doesn't have experience installing any certain part," said Matt Duntz, director of refurbishment and product support for aftermarket completions at Gulfstream. "If the company says, 'We've never done that, but we can do it,' you don't want to be the first."
Tracey Boesch, a completion services specialist at Duncan Aviation, agreed. "Understand their capabilities and experience level," said Boesch, whose aviation services and aftermarket completion company is based in Lincoln, Neb. "Are they [an authorized] service center so if they find a problem they can handle it? Before making a choice, we think it's wise to visit each center."
Ask completion centers for references and talk to customers who've had similar work done on aircraft like yours. Meet the design and completion management team and make sure you're confident that it understands what you want. Also pay attention to its workload and capacity, said Viswanath Tata, executive vice president at Aerospace Concepts, an outfit in St. Laurent, Quebec, that manages completions for buyers. "Some of the best completion centers are [operating] near capacity."
3. Ponder resale value. This is a "huge" factor in the completion process, according to Cessna's Halsey. "The very [rare] private owner will say, 'I want it the way I want it,' and doesn't get hung up on resale value," he noted. "But a lot of customers say, 'Tell me if I'm doing anything too crazy.'"
OEMs and aftermarket completion centers can provide data on the resale value of specific improvements or configuration choices. Cessna, for example, can call up statistics about the popularity of any completion option over the last 20 years.
Also consider the resale value of what you're not installing. "If someone is not putting in an entertainment system, we'll probe pretty hard why they don't [want one], because that will affect resale value," said Mike Langston, vice president for U.S. sales at Wichita, Kan.-based Hawker Beechcraft.
4. Solicit estimates. You should get three to four estimates for your job. Note, however, that using a quote from one facility to try to get a better price from a competitor is considered bad form. And be sure to get an estimate of the time required and scheduling window. The cost to you of having your airplane out of service, during which time you might have to charter flights, can easily outweigh the difference in prices quoted for the completion.
"The number-one [customer concern] is downtime," said Gulfstream's Duntz. "They'll tell you price [is most important], but in my negotiations, they're more worried about getting the airplane back in service."
The costs of the leather, carpeting, wood and other materials can vary dramatically based on quality. Setting a material cost ceiling for the estimate can help assure that you get an apples-to-apples price comparison. And make sure your budget includes reserves for the unexpected.
"The quote will not be representative of the final bill," said Jim Markel, past chairman of the National Aircraft Resale Association and chairman, president and CEO of Apex Aviation Corp., an aircraft broker and dealer in Napa, Calif. "When they disassemble and remove the interior, they will find things that need attention. For example, if they find corrosion caused by spilled liquids, that needs to be cured. It will add to the cost."
5. Consider hiring a consultant. Completion centers work diligently to meet clients' expectations, but the best results require oversight by customers or their representatives.
"It follows the squeaky-wheel axiom," said David Wyndham, vice president and co-owner of Orleans, Mass.-based aviation consultancy Conklin & de Decker. "You need to monitor [the project] all the way through."
If you don't have the time, interest or knowledge to handle oversight on your own, you should hire an independent consultant to take on some or all aspects of the job, from interior design to directing the entire process.
"We're your eyes, ears and mouthpiece on site," said Tata of Aerospace Concepts, which oversees completions of widebody jets for buyers. "We can navigate through all these decisions and be [the customer's] on-site representative to maintain quality and conformity, ask the right questions, leverage relationships and bring up quality. We take all of that off the owner's head."
OEM and aftermarket completion centers say they are happy to work with anyone their customers designate. (You'll find a list of completion consultants and other
aviation services on the NBAA Web site, www.nbaa.org, under the "products and services" menu.) However, completion professionals advise working with consultants who are familiar with your make and model aircraft.
6. Understand FAA regulations. FAA rules govern many aspects of aircraft completions and may preclude a facility from creating the interior of your dreams. Don't take it personally.
Hiring an independent consultant may also help you avoid cost overruns by ensuring that every detail is considered and priced during the design phase. Add-on items, such as a second DVD player or an additional video monitor, may require changes to the aircraft structure and wiring that cost far more than the DVD player or monitor.
"The FAA drives our business more than most customers realize," said Gulfstream's Van Thiel. "Customers want sconces on the wall, [but] we have to meet nine-g [crash] requirements; they want carpeting that doesn't pass the burn test. We try to educate them on what we can legally put in the aircraft."
Moreover, a few years ago the FAA changed its policy of allowing field approvals for interior configurations not covered by the aircraft's type certificate (TC). That policy gave customers and completion centers more latitude in customizing the interior. Now all must conform to configurations specified in the TC, or under an STC (supplemental type certificate).
"Lots of customers who have owned aircraft say, 'I had it this way before-why can't I have it again?'" said Fred Nolfe, manager of interior specification and design for Dassault Falcon Jet Corp. in Teterboro, N.J. "It's very difficult to tell someone spending this kind of money, 'It's not the manufacturer saying no, it's the regulations.'"
Finally, if you absolutely must have an item that the FAA hasn't approved, odds are you can get it. But it will cost considerably more by the time the refurbishment center has gone through all the testing, modifications and paperwork required for FAA certification. That $550 espresso maker you want might ultimately set you back $5,000, and as for the time necessary to have it certified, think in months, not days. Consider, also, that after all the expense and effort, the item may not be certifiable under any circumstances. Advice from the consultants: Go with items already FAA certified.
7. Schedule enough time. This is a marathon, not a sprint. Plans for a successful completion begin months before the first hour of work on the airframe. OEMs, for example, start the completion dialog with customers six to 18 months prior to the scheduled delivery date.
But many owners don't appreciate how much time and planning a completion requires.
"Routinely, [an aftermarket] customer will call and say, 'I'm going to be [at the completion center] in two weeks, and I want to gut the airplane and do this and this and this,'" said Cessna's Halsey. "Well, that's about a 15-week process, and you need to plan it several months in advance."
Besides the prep work, throughout the process built-in milestones require sign-offs from the customer, and failure to respond quickly can derail the completion schedule. "If a customer misses an approval date even by a week, it throws the whole process off, and we have to move them to a later delivery date," Van Thiel said.
Added Nolfe at Dassault Falcon: "The customer, be it the CEO or whomever he puts in charge, has to allow enough time to do the job that he expects. They sometimes just don't want to set the time aside. I find it very difficult to understand how you spend this kind of money and not spend the time to get what you really want. It's very important to set that time aside."