Aviation Leadership and Management Skills Development - Negotiations Concerning Aircraft Re-Delivery
Sofema Online (SOL) www.sofemaonline.com considers key aspects related to Aircraft redelivery Negotiations
Introduction
The differing objectives of both operators and lessors can often result in the return condition of the aircraft coming under particular scrutiny on redelivery.
Over thirty percent of the additional end of lease costs is typically related to engines, which are not only extremely valuable also carry potentially significant liability (In some cases generating costs well in excess of 500,000 USD)
The status in which the aircraft is finally delivered to the new Lessee depends to a large extent on the commercial negotiations, and, is typically dependent on the redelivery conditions of the previous operator.
» The primary objective of the outgoing Lessee is to minimize costs
» The primary objective of the Lessor is to ensure the aircraft is in compliance with both the redelivery conditions of the previous Lessee and the delivery conditions for the next lease.
Preparation for Negotiation
Contract negotiation is an opportunity to add to the economic value of the relationship, shore up supply chain vulnerabilities, and protect your organisation against risk. Ensure you understand fully the potential consequences and exposures.
» A contract requires negotiation when either party is unhappy with either the language or terms offered or believes that not all objectives are supported
» Errors, Ambiguous or contradictory terms, and outdated clauses can drive negotiations.
» The importance of clear & concise communications using plain, easy-to-understand language.
During The Lease Negotiations, Redelivery Terminology will come under Scrutiny
The need for clarity is always of the highest order related to the obligations of the lessee and the lessor regarding the maintenance status of the aircraft.
Back to Birth Traceability - It is not possible for all components under EASA rules (Life Limited Components – Yes) Whilst for other components this can be challenging related to the information available.
It is highly unlikely that a lease return event will not involve some form of challenge with likely areas of contention including
» AD & SB Status & Compliance (Note the SB Obligations placed on the operator by the lease obligations)
» Concerning the status of the remaining time or cycles for Life Limited Parts
» Scheduled Maintenance Inspection Obligations
» Parts installed under Parts Manufacturing Approval (PMA) or Supplemental Type Certificate Modifications (STC)
» Wheels & Brakes Status and Obligations
Understanding the Lessee End of Lease Exposure
It is essential to minimize misinterpretation and this requires the need to pay particular attention to the risks and potential costs related to aircraft redelivery, it is important to maintain visibility and awareness of all ongoing obligations and maintain the aircraft in conformity with the contractual requirements can potentially save both time & ultimately unnecessary expenditure.
What happens in the event of a refusal to accept the aircraft by the lessor for example related to cabin furnishing, Seats, Carpets & Galley Condition etc. the potential for non-acceptance (whether justified or not) can result in significant penalty rent.
Reasons for Late Re-Delivery – The following list is typically responsible for over 75% of redelivery delays
» Late Engagement
» Contractual Disagreement
» Unscheduled Maintenance & Repairs
» Inadequate Planning
» Insufficient Manpower & Effort
» Poor Communication
Next Steps
Sofema Aviation Services (www.sassofia.com) and Sofema Online (www.sofemaonline.com)
Offer multiple soft skills training including the following course. Aviation Leadership and Management Skills Development – Developing Negotiation Skills – 1 Day
please see the following link - https://sassofia.com/course/aviation-leadership-and-management-skills-development-developing-negotiation-skills-1-day/
for additional support or questions please email team@sassofia.com
