NBAA Convention News

EAP: ADS-B, AD Could Lead to Mass Bizjet Retirements

 - September 25, 2018, 11:09 AM
A "one-two punch" consisting of ADS-B Out compliance and TFE731 engine Airworthiness Directive costs could lead to a mass retirement of older business jets, such as the Cessna Citation VII, in 2020, according to Engine Assurance Program. (Photo: Textron Aviation)

The combination of the ADS-B upgrade and an Airworthiness Directive (AD) affecting certain Honeywell TFE731 engines is threatening to force the retirement of a large number of older Dassault Falcon, Hawker, and Cessna Citation business jets that are not currently enrolled in hourly engine programs, warned Dallas-based hourly maintenance specialist Engine Assurance Program (EAP, Booth 1881).

The ADS-B mandate has a Jan. 1, 2020 deadline, while AD 2012-17-05 will affect aircraft that have not already complied later that year, EAP said, expressing concern that the under the mandates, “business aviation could witness the largest mass retirement of older aircraft in its history.” Released in 2012, the AD calls for replacement of the LPT1 rotor assembly on certain TFE731-4- and -5-powered aircraft. These include the Falcon 20-5, 900B/C, Hawker 800A and 800XP, and Citation VII, EAP said, noting the AD will come due for many of the affected aircraft on Oct. 20, 2020.

“For TFE731-4 and TFE731-5-powered aircraft, ADS-B Out and AD 2012-17-05 will be the one-two punch likely to remove at least 20 percent of older, less expensive airframes from service,” EAP said. “It all comes down to the math.”

The engine provider estimates a value of around $800,000 for many of the affected models, yet an expected $90,000 cost of compliance for ADS-B coupled with a cost of $325,000 per engine for LPT1 replacement work, factoring that a major periodic inspection would typically be required. This combination could bring total costs of both mandates in the range of between $740,000 to $1.065 million.

At the time of the release of the AD six years ago, the FAA had estimated that more than 1,500 engines were affected and the total fleet cost could top $35 million annually.

“With the cost of compliance nearly equivalent to, or in some cases more than, the value of the aircraft, updates can very quickly become beyond economical repair,” EAP said, estimating that roughly 1,400 engines still have not complied.

However, EAP, which launched two years ago to provide coverage for TFE731 and JT15D engine maintenance, said engine programs could prevent removal from service by preserving the equity in the engines and associated value of aircraft and ensuring the availability of funds to pay for the AD compliance.

Enrollment in such programs now might be expensive, EAP acknowledged, given the lack of time for accruals to cover the shop visits. But paying out of pocket will become more costly and will not ensure the availability of rental engines, it added.

“Most people think they are saving money by electing to fly without an engine program,” EAP said. “More often than not, the perceived savings are matched dollar for dollar in lost airframe value.”

The provider cited as an example a Falcon 50 based in North Texas that had an estimated savings of $360,000 over a three-year period while not on an engine program, yet sold that aircraft at $400,000 less than retail.

EAP was founded as aircraft residual values had dropped considerably. But aircraft enrolled in engine programs were able to maintain stronger values. “The Engine Assurance Program was created to make operating aging aircraft engines more economical,” the company said, adding it specifically focuses on older platforms, leveraging parts and services discounts to bring down overall cost of maintenance.

The company's coverage includes scheduled and unscheduled engine maintenance, including life-limited parts, LRUs, R&R, shipping, rentals, line maintenance, and 24/7 AOG assistance.