The life of a corporate jet appraiser.

I love my job. Like a stock portfolio consultant, or a commodities tracker, my life as a corporate jet appraiser is to read a constantly fluctuating market whose commodities trade to the tune of about $1 billion per month. In fact, the average jet trades about every 30 months, with an average of some 50 deals per day.

And no deal is ever dull. An appraiser has to have current knowledge of some 23 manufacturers hosting 140 different models of corporate jet. Values range from $250,000 to $60,000,000.

Fortunes can sway on appraisal accuracy. Unlike a broker, who has inventory that he has to move, an appraiser acts only as an advocate for the buyer. His mandate is to place an expected retail and wholesale value on a particular contemplated purchase. The agent for the buyer is often the banker that is going to finance the aircraft. If the numbers don't come in, the financing cannot go forward. In other scenarios, he is tasked to go into the market and find the best value for a particular budget, business requirement and taste.

The tasks require a physical inspection of the aircraft both inside and out, a review of the logbooks and operating history and a judgment of current worth in the marketplace and a projected value a predefined points in the future. This may require travel to locations all over the world.

Physical inspection not only includes the obvious issues of paint condition, visible corrosion, suspicious oil and fuel leaks, verification of equipment and accessories installed. A viable assessment of what it costs to repair or replace those items is critical. On an aircraft that sell for $40,000,000 or more it is not unusual to find interiors worth over $10,000,000. The typical Boeing Business Jet costs $50,000,000 before its $15,000,000 interior is installed. Even then, the interior can take up to fifteen months to complete.

History of the maintenance and documentation of the aircraft is not so obvious. Older aircraft are particularly tricky. The mound of paperwork inspection alone is daunting. A proper records review will usually disclose unforeseen damage history, which could account for a loss in value as much as 20%. A damage history check with the National Transportation Safety Board accidents or incidents is a must. Even then, not all accidents make their way to NTSB database. If a registration number is changed, the incident will no longer match the database. For this reason, all old registration numbers must be checked as well.

Appraisers are often called upon to place historical values on aircraft and compare them to present value for litigation purposes. I recently was assigned the task of determining the value of a new jet that had experienced a devastating ground handling accident, then had gone through months of arguing over repair responsibility with the insurance companies only to endure almost another year in the repair shop. How do you place a number on the damage that one incident caused the owner?

The answer is through a process called Diminution of Value. It is a formulation that requires careful analysis of all the factors:

Lost Revenue is calculated based on the potential revenue, not actual, that the aircraft could have generated if it was not sitting on the ground. Those figures were derived from industry air charter sources.

Lost Business Use is calculated based on the companies' need for the aircraft to reduce executive time and increase business opportunity. While the latter is subjective, the former is not.

Lost Value is determined by comparing pre and post accident Fair Market Value. Contributing factors here are normal depreciation and damage history.

Unrelieved Fixed Costs include debt service, hangar, insurance, pilots and any other expenses that continue even though the aircraft is sitting on the ground.

By the time the entire process was complete, 40% of the value of the aircraft was lost. And yes, the ground handler's insurance company paid the bill. I cannot verify that the ground handler is still in business. But since it was a ground incident without the aircraft in operation, the event never reached the NTSB database.

The most fun I have is finding the right kind of aircraft for an interested first time buyer. I've noted that even though first time buyers are very definite about their budget, they want to get the newest, and best performer for their money. Not necessarily the biggest. I usually spend months on the trail of prospective acquisitions for the client. In some cases, we buy new, and in others, the best value is in pre-owned. Sometimes it is better to buy used even if the client can afford new. Why? The process of "breaking-in" a new airframe can be exasperating. No matter which way the client goes there is no mistaking the smile on his face on his first flight in his first new aircraft.

Buyers aren't the only ones with an intense interest in the value of certain aircraft. I've been contracted by the government to perform an evaluation (yes friends, even the Internal Revenue Service wants to know how to put a value on the aircraft). The issue was that of one high profile individual "doing a favor" for another high profile individual for free that the IRS determined was a taxable event. The reds contracted with me to determine the Fair Market Value of the use of the aircraft. Finally the matter was settled and it was a good thing--the use of that Global Express over the three years in question was in the millions.

I hope this has been helpful. Maybe I'll see you on the next deal! You can reach me at 877-266-7791 or visit www.planesworth.com for further information.

Stephen J. Coonan is a Certified Senior Aircraft Appraiser of the National Aircraft Appraiser's Association. In addition, he received his Compliance Certificate from the Uniform Standards of Professional Appraisal Practices board in May of 2005. He is "the go to guy" for aircraft appraisals and has made valuations on hundreds of corporate jets in the past five years alone amounting to well over a billion dollars. His clients include both Fortune 50 corporations and very high net worth individuals. He holds an Air Transport Pilot Certificate and keeps his currency as a captain in the Lear 60.