Two mechanics and a buyer inspecting a propeller

The other half of the question

Is this a good operator?

The calculator tells you whether the numbers work. This tells you whether the people do — and a leaseback with good numbers at a bad operator ends badly every time.

Twenty-eight questions across six areas, weighted by how much a bad answer should change your mind. Three dots means a bad answer is reason enough on its own; one dot means it is worth knowing and not worth walking over.

Most of it is legwork rather than judgement — certificate databases, court records, a certificate of insurance, and an hour on the phone to two owners who are already there. That last one is the most valuable hour available to you and almost nobody spends it.

Watch the red flags more than the percentage. A score of 78% with three red flags in it is worse than 71% with none.

Which operator

Score

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0 of 28 answered. N/A items are left out of the score entirely.

FAA certification and compliance

•••Certificate type verified — Part 141, Part 61 or Part 135
Search the FAA certificate database. A Part 141 school has been through curriculum approval and facility inspection; Part 61 has not, which is not disqualifying but is different.
Red flag: Unable or unwilling to give you a certificate number
•••No active FAA enforcement action
Search the FAA Enforcement Information System for pending and past actions against the school, the owner and the chief instructor.
Red flag: An active enforcement action against any of the three
•••NTSB accident and incident history reviewed
Search the NTSB aviation accident database. A clean record is good; how they talk about the events that did happen tells you more.
Red flag: Several accidents in five years, or unwillingness to discuss the safety record at all
••Stable chief instructor and director of operations
Turnover in the leadership positions is the clearest early signal of operational trouble.
Red flag: The chief instructor has changed three or more times in two years

Financial health

•••Years operating continuously at this airport
Five or more years in the same place is a materially lower risk than two.
Red flag: Under two years in business, or a recent relocation
••Willing to give financial references
They do not have to open their books. Willingness to offer a bank reference or an owner reference is the signal.
Red flag: Refuses any financial discussion and offers no references
•••Current leaseback owners report being paid on time
Ask the other owners specifically about timing and accuracy, not about whether they are happy.
Red flag: Current owners describe late or inaccurate payments
••A student pipeline that is growing or stable
Enrolment direction drives your utilisation. Ask what their marketing actually is.
Red flag: Falling enrolment with no plan you find convincing
••No pending lawsuits or liens
Check the county court records, and the FAA registry for liens against aircraft the operator owns.
Red flag: A suit from a former owner, or vendor liens on the fleet

Fleet condition and maintenance

•••You have walked the line and looked at their aircraft
The condition of their fleet is the single most reliable prediction of what yours will look like in a year. Paint, interior, tyres, glass, general cleanliness.
Red flag: The fleet looks dirty, tired or neglected
••In-house or outsourced maintenance is clearly established
An in-house shop turns work round faster and creates a conflict of interest. Either is workable; you need to know which, and who approves work on your aircraft.
••Maintenance records are organised and you have seen some
Ask to look at a logbook for one of their existing aircraft. Sloppy records mean sloppy maintenance, reliably.
Red flag: Disorganised or incomplete records
••Hangar or tie-down, and which one your aircraft gets
If their own aircraft are tied down, so will yours be, whatever was promised.
Red flag: The whole fleet is on tie-down and no hangar is available
••Typical downtime for a routine squawk
Parts delays are your aircraft sitting still earning nothing. Ask for their average, and ask an owner whether it matches.

Insurance and risk

•••Certificate of insurance requested and read
Check the coverage levels, the named insureds and — easily missed — the policy dates.
Red flag: Will not provide a COI, or the one provided has lapsed
•••Liability cover of at least $1 million
One million combined single limit is the floor. More for complex or twin operations.
Red flag: Below $1 million
••Your aircraft can go on their fleet policy
A fleet policy can save an owner several thousand a year against standalone leaseback cover. This is one of the genuine benefits of the arrangement.
••Written renter checkout and currency standards
Formal checkout procedures and stated minimums drive accident rates and therefore your premium.
Red flag: No formal checkout, or no written renter minimums
•A documented incident response procedure
When something happens: who is called, in what order, and how quickly are you told?

Contract and business practice

•••Willing to negotiate the agreement
A good operator will go through the provisions with you. Refusal to change a word is the loudest signal on this page.
Red flag: “Sign the standard agreement or go somewhere else” — walk away
••Current owners receive monthly statements
Ask them directly: do the statements arrive, are they on time, and are they right?
Red flag: No monthly reporting, or owners say the numbers cannot be relied on
•••A clean termination clause
Both sides should be able to leave. Ninety days’ notice or less, without penalty.
Red flag: An early termination penalty, or a notice period over 90 days
•••Engine reserve held in escrow, not in their operating account
A reserve sitting in the operator’s general account can be spent before you need it, and it will not be there when the engine is.
Red flag: Reserve commingled with operating funds
••Honest about the risks rather than selling returns
The better operators will talk you out of it if they think you have doubts. Guaranteed income is not a thing.
Red flag: Promises guaranteed income, or that the aircraft will pay for itself

References and reputation

•••You have spoken to at least two current leaseback owners here
This is the most valuable hour of due diligence available to you. Payment reliability, maintenance quality, aircraft condition.
Red flag: Will not put you in touch with current owners, or has none
•Online reviews read for patterns
Individual complaints mean little. A repeated theme about maintenance or about money means a great deal.
••Reputation on the field
Talk to the other operators, the mechanics and the pilots based there. A small airport knows everything about itself.
Red flag: Other tenants warn you off unprompted
••Students finish their training here
A school that retains and graduates students keeps aircraft busy. A high dropout rate is low utilisation with extra steps.

Nothing here is saved. Answers live in this browser tab only, so finish it in one sitting or write the score down. A version that saves and compares several operators belongs in the member area, and is not built yet.

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