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New vs certified pre-owned assets


An outline of what different manufacturers offer in terms of support and warranty options.

By René Armas Maes
Contributing Writer

Static display at OPF (Opa-Locka, Miami FL) during the recent NBAA Regional Forum. Airframe, engine, and major aircraft component warranties are often key items to negotiate with OEMs.
The option of acquiring a pre-owned aircraft instead of a new one may look different from the perspective of a private Part 91 operator and a Part 135 operator. A new aircraft may be the preferred option when the warranty from an original equipment manufacturer (OEM) and other support benefits are taken into account.

Warranties typically do not include items such as normal wear and tear. Also, specific limitations may apply. When benchmarking manufacturer warranties, OEMs may warrant each new aircraft as free from defects in material and workmanship for a period of time or a number of operating hours – whichever occurs first after delivery of the aircraft to the buyer.

For example, a number of key areas need to be considered, such as the aircraft airframe, components made by the manufacturer, and those built by 3rd-party vendors, such as avionics and engines. In addition, the auxiliary power unit (APU), external paint, aircraft interior, and labor contracts/rates should be reviewed carefully.

Table A summarizes typical warranty terms for airframe, engine, and other major aircraft components for a number of OEMs. Please note that specific aircraft may have extended warranties. As can be observed, OEMs offer extended airframe warranty, while similar warranty policies apply to components made by the manufacturer or vendors, such as standard avionics, engines, and APUs. In addition, certain differences can be observed that relate to exterior paint and interior.

In addition, OEMs may provide extended warranties for primary structures, including wings, pylons, and empennage – but excluding flight control surfaces. Moreover, each OEM featured in Table A offers worldwide 24/7 support networks that assist customers 365 days a year.

Hourly cost programs

Jet aircraft and turboprops come with different warranties. Coverage even varies by cabin segments (light, midsize, and large). For example, in terms of new engine programs, the new Falcon 6X, powered by dual Pratt & Whitney PurePower PW812D geared turbofan engines, features an extended warranty of 1 extra year and 500 additional hours in its engines as compared to the Falcon 7X and 8X products.

Typically, engine manufacturers offer a comprehensive 5-year/3000-hr warranty on most engine components, and have convenient and comprehensive maintenance service plans at reasonable hourly rates.

Furthermore, following expiration of the engine coverage period, the engine manufacturer may offer primary parts and/or extended engine service programs in addition to other commercial programs to support the operator with fixed costs per hour (hourly cost maintenance programs [HCMPs]).

A number of costs may not be covered in these HCMPs, including routine line maintenance costs, hot section inspections (HSIs), refurbishment costs, engine overhaul, and other costs related to engine maintenance not specifically covered under the agreement. The same is applicable for APU manufacturers.

OEM warranty limitations

Summary of typical OEM warranty terms for brand new aircraft with regard to airframe, engine, and other major aircraft components. Notes: (1) Five years or 5000 operating hours (whichever comes first) for Garmin standard and Garmin optional avionics hardware. Five years or 3000 operating hours (whichever comes first) for vendor items, including standard and optional actuators, brakes, starter generators, valves, and windshields. (2) Includes labor

Generally, warranties cover defects in material and workmanship, but there may be a number of limitations that apply to an aircraft manufacturer warranty, for example, replacement of service items, including filters, batteries, and lubricants.

Likewise, normal material deterioration such as cabinetry and upholstery damage due to wear, exposure, environmental elements, and neglect may not be covered. This also applies to parts, components, and systems that have been modified or altered after aircraft delivery, and items that have been installed, repaired, or altered by facilities not authorized by the manufacturer service network or authorized maintenance facilities.

In spite of these limitations, in order to protect aircraft owners from unforeseen costs, some manufacturers offer special programs by which a monthly service fee is positioned as an investment toward the future maintenance of the aircraft and its components.

By enrolling in these types of program, it’s the manufacturer who bears the risk of unexpected maintenance costs. However, this type of agreement doesn’t include service bulletin (SB) upgrades and any freight, transportation, and import duties on warranty repairs or replacement parts, so these become the warranty holder’s sole responsibility.

The cost of getting the aircraft to and from a service facility is also the operator’s responsibility, along with other limitations that may be specified in the contract.

Enhanced support programs

In order to provide long-term known and predictable costs, some manufacturers may offer enhanced care programs aimed at offering predictable maintenance costs. For example, Dassault Falcon offers FalconCare, while Gulfstream offers its Aircraft Ownership Service program.

These types of program help to minimize the impact of any unexpected SBs that can strain an operator’s scheduled maintenance budget. Such programs also allow aircraft owners some flexibility when faced with unscheduled events that may create additional expenses on their budget plan.

The goal of an enhanced support program is to virtually eliminate the risk of high-cost surprises for the operator, making aircraft maintenance expenses much more predictable. Therefore, these programs offer operators convenience and reduced administrative burden by shifting risk and workload responsibility to the manufacturer.

Other advantages include transferability upon resale to new owners, the opportunity to enter into subsequent contracts at the end of the contract term, and enhanced aircraft resale value. For example, a number of manufacturers may offer guaranteed maintenance costs for aircraft owners and operators.

Originally created exclusively for brand new aircraft, these programs are now also available for in-service aircraft. Based on a pay-as-you-fly mentality, these programs assist operators in stabilizing aircraft maintenance budgets and benefit from consistent and predictable costs.

These types of program typically cover labor, parts, and consumables for all scheduled maintenance and inspections, unscheduled maintenance, airworthiness directives (ADs), and mandatory SBs. They also cover airframe, avionics, cabin systems, and on-site aircraft on ground (AOG) events.

Backed up by enhanced support programs, aircraft owners are buying financial peace of mind with value added to protect their aircraft investment. Likewise, future aircraft owners will be reassured that the aircraft is up to date, maintenance has been performed in accordance to manufacturer guidelines and requirements, and that the plan is supported by the manufacturer.

It is the manufacturer, and not the owner, who is responsible for risk and expenses resulting from (1) labor and parts for scheduled inspections, maintenance, and component removals, (2) labor and parts for unscheduled inspections, maintenance, and component removals, and (3) SB coverage.

How enhanced support programs work

Falcon customer service offers an enhanced care program called Dassault FalconCare, which allows predictable maintenance costs. Other OEMs provide similar products.

Aircraft owners may pay the manufacturer based on the actual aircraft hours flown or the monthly minimum hours based on an annual minimum (whichever is greater), as stipulated in a yearly contract in the agreement, multiplied by the applicable hourly rate.

The monthly payments are executed during the term of the program, and, typically, long-term cost protection is provided with a 60-month term for the agreement. Furthermore, these programs offer several options to suit individual owners’ requirements, and can be split into only parts, only labor, or both.

Owners have the option of selecting the most comprehensive coverage desired for their particular operation, depending on whether they have their own maintenance staff and facilities, need the full support of a service center, or just need the peace of mind that comes from the guaranteed protection that a parts-only service plan can offer.

A parts-only program may include components and consumables coverage, which may be suitable for aircraft owners who have their own maintenance staff and capabilities or do not require protection for labor expenses.

Such programs may include additional options such as scheduled and unscheduled components and consumables, along with kits for recommended and mandatory SBs. In addition, parts will be provided by the manufacturer through its parts and distribution centers or authorized service center partners.

In the case where an operator needs both parts and labor support, the programs may include a parts program plus added labor covering different areas, such as comprehensive scheduled and unscheduled maintenance labor, complete labor coverage for scheduled inspections, scheduled and unscheduled maintenance, and component removals, along with labor for SBs.

This option is priced accordingly at a guaranteed hourly rate per flight hour, and includes annual inflation adjustments. The hourly rate is established for each aircraft type from the manufacturer’s aircraft portfolio, and is based on the chosen program option(s). The rate takes into account the benefit of existing warranty and commercial support programs – if any.

Maintenance program enrollment

In terms of enrollment requirements, brand new aircraft entering service may be enrolled without an entry evaluation or enrollment fee. On the other hand, in-service aircraft less than 10 years old will be subject – at the owner’s expense – to an entry evaluation inspection at a manufacturer’s service facility.

In addition, certain requirements need to be met in terms of minimum SB standards prior to being accepted into the program. Owners of pre-owned aircraft should expect a program enrollment fee calculated for wear and tear accumulated during its time prior to joining the program.

This enrollment fee will vary from aircraft to aircraft, and depends on aircraft status, condition, and other options selected for coverage.

Know before you commit

It is key to review the agreement carefully and ask all necessary questions before signatures are executed, as there could be many exclusions for items that are not covered, including failure by the owner to perform proper maintenance, or use contrary to the manufacturer’s current operating and maintenance instructions or recommendations.

Exclusions may also apply in the case of discretionary removals or replacement of components without cause, discretionary inspections without cause, use of parts that were not supplied by the manufacturer, or modifications to the aircraft. A complete list of exclusions should be found and reviewed in a copy of the agreement.

Upon written notification, the owner may terminate the enhanced service agreement at any time, provided the owner has fulfilled all of his/her obligations under the agreement up to such date. In certain circumstances, a deficit invoice and a penalty may be assessed and issued to the owner due to the early termination notice.

reneeRené Armas Maes is vp commercial, Jet Link Intl. He is an international aviation consultant who has developed business aviation projects for Fortune 500 companies, venture capital firms, and HNWIs, ranging from corporate travel assessments and fleet planning to market analysis and demand forecasting.