Jetrader - November/December 2012 - 18

ISTAT appraisers feature prominently in GE Aviation’s annual Appraisers, Investors and Insurers Conference held at the company’s Evendale, Ohio, headquarters. Here, attendees at the 2009 edition pose with the company’s GE 90 power plant. “Appraisers certainly have a high interest in engine evaluation because that helps in a lot of their aircraft evaluations, so our audience is skewed toward that stakeholder segment,” said principal marketing manager and event sponsor, Brian Ovington. (GE Aviation photo)

“First and foremost, there is a need for appraisers to know the manufacturers’ views of the current aviation market and an update on the program status for each aircraft. We discuss economic outlook by region, trends in passenger and cargo trafﬁc, how many aircraft will be needed over the next 20 years, among others. In addition, we’ll talk about industry issues such as the effect of the 737MAX and A320neo on current generation aircraft values and whether the economic life of aircraft is changing,” Kelly said. “A second beneﬁt is the opportunity to get to know the key people involved in the various programs so we know who to contact for information. Not only do we get introduced to these people but usually there are opportunities to build relationships during dinner at some of the region’s best restaurants and often combining a fun event such as wine tasting and golf,” Kelly added.

that can help them in evaluating and differentiating of our products versus our competitors’ products.” In particular, GE has drawn good feedback for its presentation data and its takeaway materials that aid the appraisers’ follow-on work. “They also walk away with speciﬁc reference material that they use for situations like spare engines pricing, our LLP stack pricing, and our cost and time-on-wing maintenance cost baselines. They are things that they don’t get because they’re not operators and don’t have access to that information. We give it to them in a handbook. It is tangible stuff that helps them do their job,” Ovington added.

Challenges of Data Collection
While the level of data shared by the various manufacturers varies, appraisers attending such events continue to pull for more speciﬁcs they can use to better inform their valuations. “An appraisal is an opinion, not a statement of fact. We appraisers are always looking for information to help form our opinions. Frankly, we wish we had more information on transactions,” said Jack B. Feir, an Appraiser Fellow and former IAP chairman who’s now its administrative director. “But it’s just a fact of life that all of the transaction stuff is protected by conﬁdentiality agreements. Sadly, we have to make some guesses now and then. And if we make too many high guesses we might hear from someone saying you’re getting a little high but they really can’t tell you where they’re going. But you can make

Sharing Engine Knowledge
The aircraft engine suppliers—an important component in the aviation value chain—also see the conferences as opportunities to support accurate evaluations and provide competitive differentiation. For example, GE, and its CFMI partner, each hold annual events for appraisers, investors and insurers. “They get that full product-line, deep dive into how the current ﬂeet is performing, some of the issues that are emerging, some key upgrades that differentiate subsets of the product lines,” said Brian Ovington, GE Aviation Service’s principal marketing manager. “Basically, anything

fairly good estimates on the earning power of the airplanes, what the lessors have to charge in rent to make a reasonable return, and work backwards to ﬁgure what they might have paid for the airplane.” With industry partners on board in recognizing the value of appraiser-focused events, ISTAT’s current direction looks to engage airframers and engine suppliers even more in helping shape appraiser continuing education going forward. “I think it’s been abundantly clear from the surveys and forums that have taken place in the last year amongst appraisers and non appraisers that there needs to be a more robust regime,” said Phil Seymour, current IAP chairman and president and CEO of IBA Group, Ltd. Seymour said ISTAT currently is talking about how to implement some form of continuing education (see Jetrader IAP story in Sept/Oct edition) that could ﬁnd appraisers earning points towards a continuing development program (CDP) for attendance at events like those run by the OEMs. These would supplement points earned by appraisers in attending certiﬁcation events at ISTAT’s annual meetings. Seymour said today the quality of topics at industry sessions vary widely. “We need to hear what the sales speak is, but we want to start asking questions of the OEMs. What is the C check program, what are you seeing in terms of structural issues on older aircraft, or about the Airworthiness Directives. Some of these cost drivers rather than just information on introducing the aircraft. It needs to go beyond that,” Seymour said. “In the future, I’d like to see us coordinating the conference agendas much more closely between the OEMs and the appraisers board of governors. If we are going to come up with an accreditation program, then we need to see some sort of commonality across the OEMs.” “I think the OEM programs are going to be more crucial in the future. To some extent, that may put pressure on the OEMs because, at the moment, I don’t think the invitations are to all the appraisers. With my chairman’s hat on, if we’re going to make this type of thing required, companies could end up having to invite 50-plus appraisers.” Thanks to Boeing for supplying editorial content for this story.

18 The ofﬁcial publication of the International Society of Transport Aircraft Trading

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