Aircraft Appraisal - Aircraft Valuation
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What is an Aircraft Appraisal and why is it important to carry out an Aircraft Appraisal?
Aircraft appraisal is a crucial process that allows determining the actual economic value of various types of aircraft, including airplanes, helicopters, and hot air balloons, among others. These aircraft fall into two main categories: military aircraft and commercial aircraftCommercial aircraft are subject to specific regulations that ensure that they are properly valued and their economic value is maintained.
The importance of carrying out this appraisal lies in several key factors. Firstly, it not only allows the market value of the aircraft to be known, but also provides a detailed analysis of its current condition, its maintenance history and any modifications or parts that have been replaced. These aspects are fundamental, as proper maintenance is essential to preserve the value of the aircraft; the lack of it can lead to defects that, in turn, directly affect its valuation. Furthermore, keeping an accurate record of changes in parts is equally vital, as it influences the perception of the final value of the aircraft.
The expert appraiser will carry out a thorough review of the aircraft and select the most appropriate appraisal method based on the client's specific needs and the condition of the aircraft.
What aspects are considered in Aircraft Valuation?
To make an accurate assessment, several key aspects must be considered, such as:
- Engine: Evaluating engine condition and performance is crucial, as its status directly impacts the safety and operational efficiency of the aircraft.
- Systems: Include an analysis of the electronic, hydraulic and navigation systems, which are essential for the proper functioning of the aircraft.
- Antiquity: The age of the aircraft can influence its value; generally, newer aircraft have a higher value, but factors such as maintenance and technology must also be considered.
- Fuselage: Inspect the fuselage for damage, corrosion or wear, as these can affect the structural integrity of the aircraft.
- Repairs: Evaluate the repair history and its impact on aircraft safety and performance.
- Model: Some models may be in higher demand on the market, which influences their value.
In order for the appraiser to choose the appropriate valuation method, it is essential to carry out the following activities:
- Aircraft condition study: This involves a detailed examination that assesses both visible and non-visible aspects, providing a solid basis for selecting the appraisal method.
- Review the documentation: A thorough review of all documentation relating to the aircraft must be carried out, including maintenance records, certificates and any modifications. This information is vital to understanding the history and authenticity of the aircraft.
Be aware of the unit's equipment: The appraiser must have a thorough knowledge of all components and systems of the aircraft. The inclusion or exclusion of certain equipment can significantly affect the value, so it is crucial that the appraiser is well informed about the specifications of the aircraft.
Methods used to carry out Aircraft Appraisal
To carry out the appraisal of aircraft, two methods are mainly used:
- Market: This method involves researching the market to find aircraft with similar characteristics to the one to be appraised. Market prices for comparable aircraft are analysed, allowing the appraiser to have a better understanding of how to establish the value of the aircraft in question. During this analysis, factors such as age, accumulated flight hours, modifications made and the general condition of the aircraft are considered. In addition, the intended use is assessed, as each type of use (commercial, private, etc.) may have different requirements that affect its value.
- Costs: This approach involves calculating the costs associated with replacing or reproducing the aircraft. It determines how much it would cost to acquire an aircraft with similar characteristics on the market at the time of appraisal or the cost of building a similar craft from scratch. It is important that the value obtained through this method is proportional to that of similar aircraft or the value of adequate insurance, ensuring that it is not significantly above or below what is considered reasonable.
Objectives of performing Aircraft Appraisal
Aircraft appraisal has several important objectives, including:
- Buy and sell: It facilitates negotiations by offering fair value, which is essential for buyers and sellers.
- Tax Payment: Provides a basis for calculating taxes related to aircraft ownership.
- Insurance Claims: Helps determine the value to be insured and manage claims in case of damage or loss.
- Know the status of Maintenance: It allows to evaluate the current state of the aircraft, which is vital for its operation and safety.
- Current Status: Provides a clear view of the aircraft's status at the time of appraisal, facilitating informed decision-making.
- Update information if necessary: It allows owners and operators to have an up-to-date record that can be useful in various situations, such as audits or fleet changes.
