- 13 Mar 2023
- Chris Kjelgaard
- Aircraft Ownership
What are the challenges facing aircraft buyers and sellers when it comes to Pre-Purchase Inspections today? Is there ever a valid reason to forego the inspection or save on the cost of a Technical Representative? Crew Chiefs’ Chris Buchholz talks to Matt Harris...
Pre-Purchase Inspections (PPIs) should be considered an essential part of any aircraft transaction, serving as the buyer’s opportunity to get a true gage of the condition of the multi-million-dollar asset they’re purchasing.
Getting beyond the sleek form, plush interior, and well-maintained paintwork of an aircraft, PPIs delve deeper into the condition of the jet. They ensure discrepancies impacting airworthiness are identified and fixed prior to a transaction closing, establish the logbooks are all present and correct, and look for any potentially expensive ‘nasties’ such as corrosion on the hard-to-access surface areas.
Given their importance, its surprising that no industry standard exists to govern PPIs yet. “An MRO will often ask what level of PPI (how deep) the buyer and seller have agreed to, and this can vary significantly,” says Chris Buchholz, CEO of Crew Chiefs (pictured below), a company he founded to provide on-site representation for clients at MRO facilities during Pre-Purchase Inspections, refurbishment and completions projects.
With offices at White Plains, New York and team members around the world, Buchholz says the lack of standardization “is even more evident on the Technical Representative (Tech Rep) side, which in the past has often been conducted by a single person working individually, without scale, and without the resources to build a specific software to help with standardization.”
Buchholz established Crew Chiefs with the global scale and resources to develop a software customization specific to these aircraft inspections – a move that he says has not only created industry standardization worldwide but raised the bar on the quality and productivity of how Tech Reps do pre-buys.
“Thanks to this real-time software customization, a team of global Tech Rep experts, as well as Quality Assurance (QA) functions back in the US to ensure the quality of the pre-buy oversight or condition survey, this industry standard is becoming a reality,” he claims.
Leaving Goldman Sachs’ Mergers & Acquisition team in Hong Kong twenty years ago to help the growth of Business Aviation in the Far East, Buchholz is a Citation jet type-rated pilot who has always had a passion for aviation.
He led what was a one jet operation to become one of the largest operators in the Asia Pacific Region, and one of the busiest MRO centers in the region at the time.
Several of the successful team that Buchholz built around him continue to work with him today at Crew Chiefs. “During that time working in Asia Pacific, we saw significant pain points in the aircraft transactions market, and that has the genesis of Crew Chiefs,” he highlights.
“Aircraft owners, and the professionals representing them were often frustrated by not knowing where to find highly experienced pre-purchase technical representation where the aircraft was located, often in an unfamiliar region.
“Relying on ‘knowing a guy who knows a guy’ in a far-away location had, at best, yielded very mixed resulted in terms of experience level, consistency, attention to detail, as well as quality of the representation, communication, and reporting,” he recalls.
Ultimately, the formation of Crew Chiefs was a drive to:
When the pre-owned market was at the height of its white-hot activity following the Covid pandemic, with listed inventory shrinking to below 4% of the active business aircraft fleet, there was huge pressure on buyers to act quickly with all of the market conditions stacked in the favor of sellers.
At the same time, the MRO shops were in high demand with backlogs forming for customers requiring maintenance work. Reports were rife that buyers of pre- owned aircraft were foregoing PPIs in order to get a deal over the line, sometimes under pressure from sellers.
With pre-owned aircraft market conditions beginning to cool a little (and expected to continue to do so as the year progresses), MRO shops are still facing backlogs as well as supply chain issues and staffing shortages –though some are keeping a couple of spaces open monthly, specifically to accommodate PPIs.
“MRO centers that have the vision and ability to keep some hangar space open for some PPIs are definitely ahead of the pack,” Buchholz says. “It’s a great opportunity for the MRO to generate business, and in many instances it is an opportunity for the buyer to become aware of the MRO’s authorized capabilities for their aircraft type, including for future scheduled inspections.”
Buchholz acknowledges it is not practical for all MRO shops to operate this way, however. Where space is not available, it could be tempting for aircraft owners to skip the PPI, which Buchholz advises strongly against. “In our view, buying an aircraft without a PPI or Condition Survey is never worth the risk.”
On the positive side, Buchholz sees that message being amplified by a growing number of brokers who are less transaction oriented and instead are becoming long-term aviation advisors to their clients. “They increasingly accomplish this by providing more data and more interaction, not just with their teams but also with sophisticated apps that their clients can interact directly with.
“These brokers are ensuring their clients understand how crucial a PPI with professional representation is, or at a minimum, a Pre-Buy Condition Survey if a full PPI isn’t an option,” he says.
“In essence, we view Crew Chiefs as an added crucial service to a brokerage’s overall approach to provide the very best experience to their valuable clients.”
While a full PPI should always be considered the best practice in aviation, growth in aircraft deliveries and transactions, coupled with limited MRO shop capacity may necessitate a Pre-Buy Condition Survey instead. But what are the differences?
Conducted by an MRO facility with a Tech Rep typically being appointed to represent the interests of the buyer, and another Tech Rep being appointed by the seller, the depth of a PPI will be negotiated and pre-agreed by the aircraft buyer and the seller.
PPIs can take as little as a week for a smaller aircraft, up to several weeks for larger and/or older aircraft. “We always recommend buyers negotiate for a PPI, and we always recommend for the buyer and seller to appoint highly experienced Tech Reps to protect their specific interests,” Buchholz highlights. “But if there is no agreement for a PPI, or if there isn’t a PPI slot available for several months at the MRO facility (as can happen), then a Pre-Buy condition Survey is the next best thing to a full PPI.”
A Pre-Buy Condition Survey doesn’t need to involve an MRO. Instead, the Tech Rep makes a site visit to ‘deep dive’ into the condition of the aircraft. This will tend to include a detailed visual inspection of the interior, cockpit, and exterior of the aircraft, and an examination of the physical aircraft maintenance logs and the electronic records.
Other aspects may also be included, such as comparing the aircraft specification sheet with what’s actually installed on the aircraft and reviewing the status of the aircraft’s engine (and other) programs.
“If needed, the Tech Rep can also arrange for, and oversee, a borescope inspection and be on board during a flight, similar to a cold soak flight,” Buchholz says. “In a Condition Survey, only panels that don’t require tooling are opened, whereas in a PPI, you see many panels come off, to reveal more details about the aircraft’s condition.”
Having seen first-hand the frustration of aircraft owners not knowing where to find pre-purchase technical representation when based in Asia Pacific, Buchholz believes those difficulties can still exist today for those who try to go it alone.
“If a broker must find individual Tech Reps that are fully insured, always available, and have decades of experience every time they have a deal, that could be a very time consuming and frustrating experience for that aircraft broker,” he says.
“A much smoother experience for everybody would be to use a global provider of pre-buy Tech Reps, such as Crew Chiefs, allowing the broker to focus on getting deals done. Let the Tech Rep provider take care of the rest, regardless of where in the world the PPI takes place.”
Both sides of the transaction table ultimately benefit from having a qualified Tech Rep on board for the inspection.
For the buyer, they will help reduce the stress of a PPI, helping to save the buyer money in the long run (for example, preventing unexpected surprises occurring after the deal or highlighting where the purchase price needs adjustment because of their findings).
“A great Tech Rep can help identify items that should be rectified at the cost of the seller, based on the scope of the agreement between the buyer and the seller,” Buchholz says. “They are also important to help reduce the risk of an entirely avoidable service disruption soon after the deal closes by identifying issues that can be addressed – or at least initiated – during the PPI.”
And, of course, for these reasons, the Tech Rep will help protect the reputation of the buyer’s broker since they will enhance the experience for the buyer. “They will help prevent the PPI process from dragging on unnecessarily by ensuring the MRO doesn’t divert resources to another project while nobody is looking,” he adds.
The value of the Tech Rep to the seller is more often less understood. “The seller needs to have a highly experienced Tech Rep during the PPI to push back and ensure that only those items that meet the threshold of the agreement are paid for by the seller, and everything else is paid for by the buyer,” Buchholz says.
“The items that need to be rectified at the seller’s cost need scrutiny by an experienced Tech Rep on the side of the seller to avoid inadvertent over-billing due to inefficiencies of the MRO, which can sometimes happen.
Ultimately, whether you’re a buyer or seller, a qualified, efficient Tech Rep will help prevent frustration during the PPI process, ensuring accurate and clear communication with the client or broker about the status of the project, and ensuring swift resolution of issues requiring time- sensitive decisions by their client.
By the end of a PPI, a great on-site Tech Rep will have added a lot more value than they cost.
Having established the need and justification for a Technical Representative to act on the behalf of buyers and sellers of aircraft, it is important to understand what a good Tech Rep looks like.
“Not only do we recruit Tech Reps with several decades of PPI and heavy maintenance experience, we hire those who have an uncommon passion for attention to detail – such as fine aesthetic details that a busy maintenance technician isn’t trained to notice,” Buchholz says.
“We look for Tech Reps with a passionate investigative mentality, who can go through years of maintenance logs and figure out what is missing from the documentation.”
Important qualifiers to look for in a supplier of Tech Reps are:
More information from https://crewchiefs.com/