You’re covered—or are you?

Jul 21, 2018 - 3:45 PM

A key advantage of buying a factory-new business jet is that it comes with a warranty—actually several warranties. The airframe, engine, and auxiliary power unit (APU) manufacturers each warrant their contributions to the finished airplane in a stand-alone document.

These warranties not only provide peace of mind for the buyer, at least for a while; they also add appreciably to the value of the purchase. Labor for new aircraft may cost 15 percent less and parts 30 percent less during the warranty period, according to Conklin & de Decker, a leading source of data about business jet operating expenses. And sellers of aircraft under warranty reap benefits in two ways: buyers will pay more for the airplane, and the warranty may cover repairs stemming from a prepurchase inspection.     

Not only do airframe an engine manufacturers provide separate warranties, but the warranties themselves can be subdivided. An airframe warranty typically has five or six components, and though the language varies among manufacturers, the concepts are basically the same.

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The first warranty to expire usually covers the “completion”—interior furnishings, entertainment system, galley equipment, exterior paint, etc.—and usually lasts only two years or 2,000 flight hours. (Warranties expire when either milestone is reached.) Completion items are often heavily used and exposed to a good deal of wear and tear, and thus not something the manufacturer is keen on covering for an extended period.

At the other end of the spectrum, the “primary structure” of the production aircraft will have the longest warranty—up to 20 years or 20,000 flight hours. This warranty applies to the materials that make up the fuselage, wings, stabilizers, and the like. Everything else, including components and avionics, is warranted for a lesser period, generally three to five years or 3,000 to 5,000 flight hours. Warranties on the engines and APU are often for five years or 3,000 flight hours.

Notice that the calendar and hourly periods don’t match up for average usage. A typical business jet flies about 400 hours per year, so for the vast majority of fliers, a warranty with an expiration of five years or 5,000 flight hours is, for practical purposes, a five-year warranty. Doubtless the hours protect the manufacturer from the zealous traveler with truly excessive usage: 1,000 hours annually equates to over 19 hours per week, which is like flying from New York City to Miami and back about three times every week of the year. But one can’t help thinking that the real reason the manufacturers list atypically large flight-hour figures is to make the warranty period appear longer at first glance.

The clock can begin ticking on engine warranties even before the aircraft is delivered to a customer. Honeywell’s warranty on TFE731-60 engines (found on the Falcon 900LX), for example, expires a maximum of 78 months from “the date of shipment by Honeywell,” so if the engine sits around for a couple of years at the manufacturer’s plant before it’s hung on your aircraft, the warranty could end much earlier than expected. The same thing can happen to the airframe warranties when you don’t purchase the jet right after it’s completed. Accordingly, when buying a factory “demonstrator” (an aircraft used by the manufacturer for a year or so to provide demonstration flights to prospective customers) or even a “white tail” (an aircraft that goes unpurchased for a while after it is completed), you should make sure to the extent possible that all warranties are reset to begin when you take delivery.

Suppose you’d like a longer warranty period than the manufacturer offers when buying a new aircraft. Is that negotiable, or even achievable? The answer depends on the airframer and the precise extension you’re looking for. If you’re asking the manufacturer to increase warranty periods for free, don’t expect a positive response, though anything is possible.

A buyer paying list price for a factory-new aircraft with some additional warranty coverage may be an attractive deal for the manufacturer. Generally, though, warranty extensions on factory-new aircraft are rare and, if the company does agree to an extension, it will charge for the additional coverage and, as one manufacturer told me, build in a lot of cushion.

An extended warranty on a business jet can actually be a red flag. For an aircraft damaged, say, during completion—or at a subsequent routine factory-service visit—part of the remedy you might request is additional warranty coverage related to the damaged area, especially when uncertainty exists about whether the repair has fully and permanently resolved the issue.

You’ll have more luck negotiating the other terms of the warranty, though in my experience, warranty terms are one of the most difficult parts of a new aircraft purchase agreement to change. This is certainly the case with engine and APU warranties, which are usually served up by the airframe manufacturer on a take-it-or-leave-it basis. Even the airframe warranty can be a tough nut to crack, however.

When Gulfstream introduced the G650, it attempted to head off comments and concerns about the airframe warranty with an appendix to the sales agreement called “Aircraft Warranty, Answers to Frequently Asked Questions.” The airframe warranty itself is contained in the so-called Product Specification, a large PDF document that discourages language changes.

Still, though comments generally aren’t welcome, you should review the airframe warranty carefully. One common provision that is unpopular with many buyers requires them to position the aircraft at their expense to an approved service center for warranty repairs, though some manufacturers will give you a credit at standard hourly rates for warranty repairs made by your own maintenance technicians.

Don’t finalize a purchase before carefully considering this and other key issues (see box). As other buyers have learned, a little diligence can go a long way in maximizing the benefits of a jet warranty.    

Some Key Issues to Consider About an Aircraft Warranty

• Does it require a life-limited component to be replaced with a component with at least as much life remaining?
• Does the failure to maintain the aircraft or keep records as required by the manufacturer void the whole warranty, or just coverage related to the specific failure?
• Suppose a defect is ­discovered after the warranty expires that must have been present before the expiration; is the defect still covered?
• Is the warranty transferrable to a new owner without the manufacturer’s consent?
• Are manufacturer service ­bulletins that are issued during the warranty period covered?