When an aircraft is at the center of a lawsuit, its value is often the central question. Was the aircraft worth what the buyer paid? How much value did it lose after an accident? What was it worth on the day a partnership dissolved?
In our experience as appraisers and expert witnesses, the same six issues come up again and again. Each one can change a valuation significantly, and each one is a common point of challenge in depositions and at trial. Here is what attorneys should know about them.
Aircraft value depends heavily on records. Missing logbooks, gaps in maintenance history, and repairs without proper documentation all reduce what a buyer will pay, because the buyer can’t confirm the aircraft’s history.
In litigation: Expect the other side’s expert to examine the records closely. A valuation should state which records were reviewed, identify any gaps, and explain how those gaps were treated.
Engines are among the most valuable components of an aircraft. The appraiser needs to know time since overhaul, time remaining until the next hot section inspection or overhaul, and whether the engines are enrolled in a maintenance program.
In litigation: Disputes often arise over engine times or over how an engine was valued after an incident. Every engine figure should be traceable to the records.
Not all damage is the same. Structural damage generally affects value more than cosmetic damage, and the quality of the repair matters. Appraisers review the repair station’s certifications, whether the repair followed manufacturer or FAA-approved data, AD compliance, and how the market views aircraft with similar histories.
In litigation: In damage claims, the question is often not only what the repair cost, but how much value the aircraft lost after it was repaired. That loss is called diminished value, and it requires its own analysis.
An aircraft that doesn’t meet current requirements, such as ADS-B Out, is less marketable and may need costly work before it can be sold or operated. Capabilities such as WAAS/LPV approaches also affect demand.
In litigation: Compliance status can be a hidden factor in contract disputes. If an aircraft was represented as compliant and wasn’t, the cost to correct it becomes part of the value question.
How an aircraft was used affects its value. Aircraft flown under Part 135 (charter) are maintained under stricter rules but often accumulate time quickly. High-cycle operation, exposure to salt air or harsh climates, and how and where the aircraft was hangared all matter.
In litigation: Operational history often explains why two aircraft that look alike on paper are worth different amounts. A valuation should take it into account and say how.
Litigation usually requires value on a specific past date: the date of loss, breach, transfer, or filing. That calls for a retrospective valuation based on comparable sales and market conditions at that time, not today. USPAP, the Uniform Standards of Professional Appraisal Practice, sets requirements for how a retrospective appraisal is developed and reported.
In litigation: Using current values for a past date is one of the most common errors in valuation testimony. The effective date of value should be stated clearly in the report.
An independent appraiser with technical aviation experience can:
An appraiser’s role is to give the court an independent, objective opinion that is supported by evidence. A well-supported opinion is useful to everyone involved, because it gives the parties a reliable basis to evaluate the case.
A retrospective appraisal gives an opinion of value as of a past date, such as the date of an accident or a contract breach. It relies on comparable sales and market conditions from that time.
Diminished value is the loss in market value that remains after an aircraft has been properly repaired, because buyers pay less for aircraft with a damage history. It is separate from the cost of repair.
As early as possible. An appraiser can help identify which records to request in discovery and flag valuation issues before positions are set.
Airframe time, engines, maintenance, avionics, records, and damage history all drive aircraft value. What attorneys should know before a dispute.
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