A large part of that iceberg includes engine maintenance and inspections. The cost of this maintenance does not normally decrease as the age of the aircraft increases. In fact, it's typical to see that the majority, if not all the value, of an older jet is tied up specifically in its engines.
That’s why having an engine program matters so much to the lender. Engine programs help remove the risk of a large financial burden for the lender should the aircraft end up back in their hands. Additionally, engine programs can be made transferable to the lender, or list the lender as one of the beneficiaries.
An engine program also eases the financial burden for an owner. It will defray the cost of replacing or overhauling the engine over the expected life of the engine. Think of it as a “pay as you go” program. Each time you fly the aircraft, you pay into the engine program. When you reach the overhaul or replacement decision point, you don’t suddenly have to write out a huge check for hundreds of thousands of dollars. That cost will be covered through the engine program.
Managed by a program administrator, an engine program also helps keep you up to date on maintenance requirements—including inspections for each recommended phase, hot section inspections (HSI), and any other required or recommended maintenance. It’s a great advantage to have the program administrator monitoring those important schedules. Maintenance stays current, so you'll be much more comfortable knowing the engines are being well taken care of.
Conversely, if the aircraft engines aren’t on a program, or the owner allowed the program to lapse, a lender would require you to obtain one, which can be a fairly expensive and time-consuming process. Depending on how much time is on the engines and the current inspection status there may be a hefty upfront bill to catch up to the point where the engine program will be effective.
Engine programs are valid on older and newer aircraft. So when you're looking to buy, look for aircraft with a current program that is paid up and transferrable to you, the new owner. Doing so will provide a huge advantage to you because there will already be a reserve for maintenance and repair costs, and a plan in place to spread those costs over the expected life of the engines.
Great advice. Great rates. Helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying or refinancing an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263), or click here to request a quote.
