AIRCRAFT APPRAISAL

DAMAGE HISTORY CLASSIFICATION

Major and/or Minor Damage History can affect the Value of Aircraft

During Aircraft Appraisals

It is commonly accepted that if you have two aircraft sitting side-by-side that are identical in every way except that one has a history of damage, the aircraft with damage will command a lower price. This difference in value between a damaged aircraft and an identical undamaged one is referred to as the Diminution in Value.

DIMINUTION OF AIRCRAFT VALUE:

In terms of Insurance, the loss of aircraft value is not covered under most standard aircraft physical damage insurance policies. When an aircraft is damaged, the cost to repair the damage is often only part of the overall loss. With regards to an aircraft appraisal, aircraft with a damage history will usually be worth less than a similar aircraft with no damage history. This loss of value is referred to as Diminution of Value. Diminution of Value is not a covered loss under a majority of aircraft physical damage insurance policies. Diminution of Value is extremely subjective and requires an on-site inspection of the aircraft and audit of log books and related records. A complete review of the damage inflicted to the aircraft is investigated by the appraiser. Accident and damage reports are reviewed and conclusions are presented in a restricted summary report. This appraisal report is not intended to be used as a tool to determine the airworthiness or serviceability of the aircraft. The sole purpose of this report is to verify damage and report, if any, Diminution of Value. The following critieria are used by the aircraft appraiser to determine the affect on an aircraft’s value due to damage. These definitions are utilized by Certified National Aircraft Appraisers Association members.

NON-DEDUCTIBLE DAMAGE HISTORY:

This category is used when an aircraft control surface, for example, was replaced and there is no other damage resulting from the incident that occurred. In other words, all of the damage has been removed from the aircraft and there is no reason to make a deduction. However, it is still considered damage history and should be reported as such. It should be noted in the damage history section of the report that no deduction is required for this category of damage and that the entry is informational only.

SUPERFICIAL DAMAGE HISTORY:

Slight dings generally associated with hangar rash etc., which have been repaired via replacing damaged areas with new/used serviceable components (Wing-tip caps, wheel pants, plastic etc.). Superficial aircraft damage may also include a skin change where, for example, an outer rib was slightly bent and repaired or replaced.

MINOR DAMAGE HISTORY:

Ostensibly minor damage or heavy wear to leading edges of wing, wing-tip, cowling etc. which have been repaired in a manner consistent with manufacturers recommended procedures. No major aircraft structural components were involved. For example, a gear up landing where only skin changes were made and no structural damage occurred could be considered for this category.

MODERATE DAMAGE HISTORY:

Extensive damage to aircraft components not affecting major structural components.

MAJOR DAMAGE HISTORY:

Major structural component damage but replaced with new/used serviceable components and repaired in accordance with the aircraft manufacturers recommended procedures, (i.e. wing spar, fire- wall & engine mounts etc.).

EXTENSIVE MAJOR DAMAGE HISTORY:

Major structural components have been extensively damaged but repaired in accordance with the aircraft manufacturers recommended procedures.

Aircraft Are Not Boats,

Automobiles and/or Real

Estate - Neither are the

Appraisal Principles

The principles under which one appraises airplanes are different from those in use for other types of property. Airplanes are unique, in that they are one of the few assets that may appreciate during the course of ownership, and a fair evaluation of the subject aircraft will result in the current fair market value at the time of the appraisal. Consideration of the price paid for the airplane at an earlier date, or the expectation of the owner upon its sale have little bearing on the appraisal process. Also, airplanes are unique with respect to their make and model, because they are customized according to the owner's wishes, rather than a manufacturer's "standard option package." There are many definitive parameters that must be considered in the course of appraising an airplane that do not relate to any other type of assets or equipment.