NBAA Orlando, FL / October 15, 2017 – Business aviation could witness the largest mass retirement of older aircraft in its history as the ADS-B (Out) implementation deadline of December 31, 2019, nears. The loss will be most acute for the TFE731-4 and TFE731-5-powered aircraft--Falcon 20-5, Falcon 900B/C, Hawker 800A, Hawker 800XP, Citation VII--not currently enrolled on an engine program and having yet to comply with AD 2012-17-05, which requires replacement of the LPT1 rotor assembly prior to October 2, 2020.
For TFE731-4 and TFE731-5-powered aircraft, ADS-B (Out) and AD 2012-17-05 will be the one-two-punch likely to remove at least 20 percent of older, less expensive airframes from service. It all comes down to the math:
Aircraft Value ADS-B (Out) AD 2012-17-05 Cost of Compliance
(Hawker 800A/XP, Falcon 20-5, etc.)
$500,000 to $800,000 $90,000 $325,000 per engine $740,000 - $1,065,000 (depending on the number of engines)
(an MPI is typically required to replace the LPT1 disk)
With the cost of compliance nearly equivalent to, or in some cases more than, the value of the aircraft, these mandatory updates can very quickly become Beyond Economical Repair (BER). If a large airframe inspection also is due, an even greater portion of these aircraft will find their way to a local boneyard by 2020. There are roughly 1,400 engines that still have not complied with AD 2012-17-05, and compliance may not be financially feasible, or even possible, for operators who have elected to forego engine maintenance programs.
This situation will result in many solid, viable aircraft being removed from service. This loss could have been prevented by enrolling the engines on an engine program. An engine program preserves the equity in the engines, and thus the value of the aircraft, by making sure there are funds available to pay for AD compliance. Engine Assurance Program’s Comprehensive Coverage plan pays for AD compliance for ADs that arise during the term of coverage.
For operators not currently enrolled in a program, compliance with AD 2012-17-05 may not be financially viable depending on the value of the airframe. Re-enrolling in an engine program now will be expensive as there won’t be enough time for the accruals necessary to cover expensive shop visits.
Paying out of pocket will be even more costly, and there likely will be nary a rental engine available to use during the downtime as the engine programs will have tied up available rentals for their own fleet of engines.
Most people think they are saving money by electing to fly without an engine program. More often than not, the perceived savings are matched dollar for dollar in lost aircraft value. In effect, an operator is still paying for the program, but not getting any benefits of the coverage. For example, a Falcon 50 based in North Texas removed all three engines from an engine program three years ago. The estimated savings on engine accruals was $360,000 over the three-year period. The aircraft was sold last month for $400,000 less than retail because it did not have an engine program. In the end, they saved roughly the same amount that was lost in aircraft value, and yet had no benefit of an engine program.
Maintaining engines on an engine program helps retain the value of the aircraft and ensures the equity in the engines is passed on to the next owner. Compliance with ADs like AD 2012-17-05, especially when combined with other pricey mandates like ADS-B (Out), may not be feasible for operators without an engine program, dooming otherwise reliable aircraft. Engine Assurance Program was created to make operating aging aircraft engines more economical. EAP focuses specifically on older engine platforms and saves owners money by charging an hourly rate that is much closer to the actual cost to maintain the engines.
EAP provides a high-quality alternative for engine coverage on older JT15D- and TFE731-powered aircraft by offering Comprehensive Engine Coverage. It covers scheduled and unscheduled engine maintenance, including life-limited parts, LRUs, R&R, shipping, rentals, line maintenance and 24/7 access to Engine Assurance Program's AOG assistance. Catastrophic coverage is also included. Operators get full coverage with only 75 hours as the yearly minimum. EAP’s hourly rate can be up to 30 percent less expensive per hour on TFE731-powered aircraft.
The Engine Assurance Program (EAP) was formed to provide an affordable hourly engine maintenance program option for operators of TFE731-2, TFE731-3, TFE731-5, JT15D-4 and JT15D-5 -powered aircraft. The Honeywell TFE731 and Pratt and Whitney JT15D power more than 3,000 business jets including Astra 1125/SP; Beechjet 400; Citation II/SII, III/IV, V; Falcon 10, 20-5, 50, 900B/C; Hawker 700, 800A/XP; Lear 31, 35, 55; Sabreliner 65 and Westwind. Using EAP’s oversight, the engines can be operated more economically. EAP is headquartered in Dallas, Texas.