How Attorneys Should Evaluate an Aircraft Appraisal

Sooner or later, most attorneys handling an aviation matter receive an aircraft appraisal, whether from a client, a lender, an insurer, or opposing counsel. The question is whether it’s reliable.

Appraisals vary widely in quality. Some are thorough, well-supported reports. Others are little more than a number based on a price guide. Here are seven checks that help separate the two.

1. Appraiser Qualifications

Start with who prepared the appraisal. Look for:

• Accreditation from a recognized appraisal organization, such as the American Society of Appraisers (ASA)
• Current USPAP education
• Aviation-specific experience, ideally including technical or maintenance background
• Experience with litigation, including prior depositions and testimony

What to ask: Can the appraiser explain the aircraft’s technical issues, not just its market value? An appraiser who understands maintenance records and inspection requirements is better able to identify issues that affect value.

2. A Clear Assignment and Definition of Value

A reliable appraisal states its purpose, its intended use, the effective date of value, and the type of value being measured. Fair market value, diminished value, liquidation value, and replacement cost are different concepts and can produce very different numbers.

What to ask: Does the definition of value match the legal question? An appraisal of current fair market value doesn’t answer a question about value on the date of loss.

3. Documentation Reviewed

The report should list what the appraiser reviewed: logbooks, engine and APU records, AD compliance, maintenance program status, damage and repair records, and whether the aircraft was physically inspected.

What to ask: If the appraiser didn’t see the logbooks or inspect the aircraft, the report should say so, and explain how that limits the conclusions.

4. Methodology

Appraisers use three main approaches: the sales comparison (market) approach, the cost approach, and the income approach. For most aircraft, the sales comparison approach is the primary method, but the report should explain which approaches were used and why.

What to ask: Are the adjustments for time, engine status, equipment, and condition explained and supported? Does the report reconcile the results into a final conclusion, with reasons?

5. Market Data

Credible appraisals rely on actual sales of comparable aircraft, not only asking prices or price guides. For retrospective valuations, the sales data should come from the period around the effective date.

What to ask: Where did the comparable sales come from? How similar are they to the subject aircraft? Are differences accounted for?

6. Treatment of Damage, Maintenance, and Condition

A good appraisal doesn’t just mention damage history, upcoming inspections, or condition issues. It quantifies their effect on value and explains how.

What to ask: If the aircraft has a damage history or a major inspection coming due, how much did that change the value, and why that amount?

7. Internal Consistency and Readiness for Cross-Examination

Read the report for consistency. Do the facts in one section match the facts in another? Do the adjustments follow from the data? Is the conclusion supported by the analysis?

What to ask: Would this report hold up if every assumption were questioned in a deposition? Inconsistencies that seem minor on paper can become significant under cross-examination.

When to Get a Second Opinion

If an appraisal fails several of these checks, an independent review can help. A review appraiser examines the report against USPAP and professional standards and can identify errors, unsupported assumptions, or missing analysis, without necessarily giving a new opinion of value.