Preowned-aircraft shoppers typically seek a low-time, late-model airplane that’s equipped for the future—what Banyan Air Service senior vice president Mike O’Keeffe calls “a turnkey solution.” But shoppers with the time and experience—or the right guidance—can find great values among what brokers refer to as “project aircraft.”
“Any transaction that requires a significant work scope after closing—with a level of risk or complexity that would cause the average buyer to shy away from the deal—could be considered a project airplane,” says Vince Restivo at Mente Group, an aviation consulting firm.
As Restivo notes, most buyers avoid aircraft that need work. But “project airplanes that have a good pedigree should not scare anyone,” says Joe Carfagna, Jr., president of aircraft brokerage Leading Edge Aviation Solutions.
Ideal project aircraft have what experts call “good bones.” That means no corrosion or significant damage history and a good maintenance record. Still, some project candidates may not even be flyable, and “you have to negotiate an ‘as-is, where-is’ deal, subject to borescope inspection of the engines and APU, logbook research, damage history, maintenance status, and all the ‘gotchas,’” says Brad Harris, president and CEO of Dallas Jet.
Project aircraft purchases may also be structured distinctly from “buy and fly” airplanes. “In a standard transaction, monies are deposited by the buyer into escrow and released upon closing,” says O’Keeffe. “Often, with a project aircraft, substantial sums are withheld in escrow after the closing and released to the vendors upon reaching contractual milestones.”
Besides refurbishment and maintenance, many project airplanes need upgrades to meet 2020 mandates like ADS-B-Out equipage requirements, but this shouldn’t deter bargain hunters.
Any major aircraft manufacturer or MRO facility can give you a quote, says Richard Hodkinson, at Clay Lacy Aviation. “They’ll ask questions to identify what status the airplane is in and tell you the options and cost,” notes Hodkinson.
Assessing a project’s potential cost is imperative. “From corrosion to leaks to systems’ operational status, it’s easy to get ‘upside down’ quickly if surprises are discovered after the purchase,” says Rick Roseman, of RRAD Design. “The trick is to know, manage, and limit your exposure to these potentially expensive issues. Having technical advisory assistance is critical.”
It’s also critical to gauge the time the project will require. In today’s hot preowned market, MROs are busy, and this could extend project downtime. But that’s not necessarily bad, Hodkinson says. “It gives you time to prepare to put the airplane into service. There’s a lot to do between the time you buy the airplane and the first flight: hiring pilots, maybe selecting a management company, getting letters of authorization for certain airspace you’re going to want to fly in. [Downtime] gives you breathing time so you’re really ready to go.”
When completed, a project airplane can give you an aircraft at a substantial discount to its value, outfitted exactly as desired, and rivaling any turnkey solution. Then again, one person’s turnkey is another’s project. Lee Thomas, a vice president at Eagle Aviation, points to a 2011 Falcon that the company recently brokered. “The paint and interior were good, but they just weren’t great, and it wasn’t the configuration [the buyer] wanted,” says Thomas. “He is going to spend probably $3 million-plus on upgrades. If it wasn’t a project airplane before, it’s a project airplane now.”