Posted by: Chris Davis | March 5, 2012

More sessions of Hangar Flying with Chris Davis are up.

More in this series from Chris Davis from CS&A Insurance. If you haven’t vistied our website or YouTube channel recently you may have missed the latest series of videos entitled Hangar Flying with Chris.  In this series we will be answering some of our more frequently asked questions as well as addressing some of the common misconceptions that we see on a regular basis.

Drop in and find some answers to questions that you have often wondered, but never asked.  If you have a question that we have not yet answered, post it in the comments section and we will try to answer it in a future video.

Posted by: Christopher Turnbull | March 1, 2012

There is no I in TEAM

What makes a team successful or great? What do successful teams do to be the best that others don’t?  There are many cliché answers to these types of questions. However, I believe we would all agree on a couple of things: 1) everyone on the team understands what the ultimate goal or mission is (e.g. to win the Super Bowl), 2) everyone on the team plays a critical role and executes their assigned tasks when called upon (e.g. they don’t drop the ball when they have a chance to score a touchdown), 3) everyone on the team, including the owners, managers, coaches, and players work together (e.g. no one has a separate or self-serving agenda), and 4) the team plans, practices, prepares, and executes their plan each and every day; not just on game day.

These same questions and answers can apply to running a successful business. If one of these items is missing, it will be difficult for a company to be truly successful.

If you agree with my answers above, then consider the following questions: Do you procrastinate and fail to complete projects in a timely manner (or at all)? Do you have to be asked where you are on projects? Can others criticize your lack of responsiveness and accountability?

The hardest working and most focused people periodically lose steam or get stuck in a rut. Unfortunately, your procrastination negatively affects other people or organizations that are counting on you. If you procrastinate too long, the pile of uncompleted projects gets bigger and bigger which results in stress for everyone.

How can you break the habit of procrastinating or avoid the stress of letting your team down?  The following are some suggestions:

1)      Define what the “completed” project looks like. Ask your supervisor or team leader specific questions so you know what the ultimate goal is and what should be accomplished.

2)      Develop a Plan. Clearly defined steps will always beat random actions.  My kids have heard me say this for years.  When my son was younger, I could see him roll his eyes whenever I asked him “What’s your plan?  Today, as a successful college student, he’s the first to say that learning to plan has helped him avoid problems, reduce stress, and helps him to overcome life’s challenges and difficulties.  What are the important parts of any plan? You have to determine where you are today, what you want to accomplish, and then describe how you’re going to get there.  I would encourage you to write your plan down and update it as needed … again, clearly defined steps will always beat random actions.

3)      Take one bite of the elephant at a time. A project is made up of many tasks. You cannot accomplish all of them at one time. Therefore prioritize your tasks. Put them in order of importance or in the order in which they need to be accomplished. For example, don’t build the roof of a house before you dig the footings and lay the foundation. 

4)      Set realistic and specific deadlines for yourself.  For example, before the end of the day, you are going to complete 3 specific tasks.  No excuses. Do not put it off until “later”. If needed, set aside specific times of the day for completing certain tasks. For example, from 9:00 am to 10:00 am, on Tuesdays, Wednesdays and Thursdays, I’m going to work on my … (project).  Every afternoon between 3:00 and 4:00 I’m going to answer my emails and return any unanswered phone calls. It will be almost impossible for you to stay focused and complete projects unless you dedicate specific and uninterrupted time to the task. 

5)      One and done! Don’t let work pile up.  Although I consider myself a great multitasker, I recognize that the best way to complete tasks is to focus on them one at a time.  Complete the task and get it off your desk.  Then move on to the next one and complete it. Don’t start a new task until you’ve completed the one that is already on your desk. Of course, things come along that are an immediate priority. But, don’t let everything turn into a priority or crisis that keeps you simply putting out fires all day.

6)      Learn to delegate or ask for help.  I can tell you from experience that this is one of the biggest downfalls of most up and coming leaders. In fact, many never learn the importance of delegation.  A good leader knows how to make sure things get done. However, that doesn’t mean that they should or can do all the work themselves. That’s why they have a team.  The quarterback is responsible for leading the team on the field, coordinating the plays, and throwing the ball.  Other team members are responsible for blocking, running and catching the ball. The quarterback can not play every position.  If you’re the leader, you must take responsibility and ownership of the team, projects and tasks. That means you must ensure that tasks get completed on-time, on budget, etc.  If you’re not the team leader, you have a responsibility to ensure you do your job, let the quarterback know what the problems are, and to execute your tasks without dropping the ball.  The rest of the team is counting on you.

7)      Communicate effectively and often.  Most leaders are tasked with a lot of duties and responsibilities.  As a leader, you must keep your team informed and up to date in order for them to do their job effectively.  Conversely, as a team member, you also have a responsibility to keep your team leader informed.  If your team leader has to ask you repeatedly where you are on a project or task, you are not doing a good job communicating.

8)      Work with a fire in your belly and a sense of urgency.  Get motivated.  Although it would be nice to never have deadlines or limitations, that is not a realistic expectation in the business world.  Your supervisors, co-workers, customers and family members are counting on you.  I don’t believe the old adage that says “slow and steady wins the race.”  Slow never wins a race.  Don’t misunderstand me; I’m not suggesting you rush hastily or carelessly. When it comes to projects, it’s critical that you drive the project to completion on-time, on budget and with the resources that you have available. During the process, you need to keep your supervisor and team members up-to-date by scheduling regular meetings, sending e-mails and by whatever means are necessary.

9)      Don’t be a quitter!  It’s not uncommon to see people come to a screeching halt on a project the first time (every time) they run into a problem. Take ownership and responsibility!  Learn to work through problems. That doesn’t mean you can’t and shouldn’t ask for help, but first, think!  Develop solutions, weigh out the alternatives and make a decision.  If your supervisor has to think and do your work for you, he doesn’t need you.  Passing the project back to your supervisor is not an option.

Projects, problems, deadlines, and obstacles are the norm in the business world.  But each of these things also comes with an opportunity to succeed, grow, innovate and profit.  Take ownership of the opportunities presented to you.  Tackle every assignment with a sense of urgency and ownership.  Your effort may occasionally go un-noticed or be under-appreciated.  But the successful completion of assigned duties ultimately makes you an invaluable asset to your company.

Posted by: Chris Davis | February 15, 2012

Hangar Flying with Chris

 

If you have not visited our website or YouTube channel recently you may have missed the latest series of videos entitled Hangar Flying with Chris.  In this series we will be answering some of our more frequently asked questions as well as addressing some of the common misconceptions that we see on a regular basis.

Drop in and find some answers to questions that you have often wondered, but never asked.  If you have a question that we have not yet answered, post it in the comments section and we will try to answer it in a future video.

Posted by: Jeff Rhodes | December 20, 2011

New PC-XII Training Option

Pilots transitioning to a turbine airplane for the first time are often in need of “dual” instruction in their aircraft to meet both insurance requirements and to gain a level of experience in a potentially new flight envelope.  Quality transition training is vitally important from an insurability and safety standpoint.  The simulator is great for things that can’t be safely done in the airplane, but many transitioning pilots – or experienced pilots that need a new training twist – also benefit from flying in real world conditions with a mentor pilot.

Shane Jordan recently started 3-Green Aviation to offer such training.  Shane worked for Pilatus as a demo and instructor pilot and has grown to love flying the PC-XII.  He contacted me a few years ago for advise of walking through the insurance approval process.  3-Green Aviation is now approved (or can be approved on a case by case basis) by most of the insurance underwriting companies that write the PC-XII. 

Based in Colorado, Shane offers a Mountain Flying Course is part of his training package.  What better way to spend your training time than to challenge yourself learning how to fly your airplane in the hot and high – and stunningly beautiful – Rocky Mountains. 

We wish Shane Jordan and 3-Green Aviation great success.  Feel free to contact Shane or me for details.

Posted by: Jeff Rhodes | December 13, 2011

Unicorn Millionaires

Harry Reid (D-NV) seems to think that millionaires who create jobs are a myth.  Funny – I talk to them every day.  What do you think? 

 

How do you address political risk in your business and with your personal finances?  How has your business been affected by the decisions and actions (or inaction) of the elected leaders in Washington, or in your state or local area?

Posted by: Jeff Rhodes | December 9, 2011

Old Jets as Organ Donors

It’s a sign of the times, I guess.  I recently posted an article, Better With Age?, about buying, insuring, and operating an older jet airplane in what is a fairly historic buyer’s market.  But according to the feedback I got and the first-hand experiences of a few clients, there is another option for owners of older jets.

A client recently told the story of a trip his pilots made with his 1971 model G-II SP.  The trip began like many others had.  But the destination today was not an important client meeting, a visit to an out-of-state manufacturing location, or a trip to the condo in Aspen.  Today, the final destination would be a back corner ramp of an out-of-the-way airport in Southern Utah.  The client’s trusty old G-II would never leave this ramp.  It was to be scrapped for parts.

The airplane wasn’t worn out or obsolete.  Far from it.  It was RVSM compliant and had a Stage II hush kit.  It had modern avionics – the panel was the same as much later model G-IV’s.  As it sat on the deserted ramp in Utah, it could have just as easily been awaiting executives at Teterboro or golfers at Pinehurst. 

But – it was due a heavy 60 month inspection.  The cost of the inspection, combined with the engine times and the bargain basement market values on these airplanes made selling the airplane for parts a more economical alternative than keeping it airworthy – signaling the end of its useful life.

This blog is focused on aviation risk.  So what business risk issues exist when parting out a company or personal airplane? 

-         Do you have liability from the sale of parts that ultimately find their way into other airplanes? 

-         Is the airplane being sold as a whole, or do you retain ownership as parts are removed and sold?

-         At what point does the airplane stop being an airplane and become just a parts inventory? 

-         What is being done to protect the value of parts and components awaiting removal? 

-         Have you protected the maintenance records and parts tags in order to maximize value of serviceable parts? 

-         Are all valuable components being properly removed and sold, or will there be excessive scrap due to quick and careless disassembly? 

The time to discuss these issues is before the final flight is made and before the cutter’s torch is lit.

 

Posted by: Jeff Rhodes | December 7, 2011

DUI

The DUI arrest and subsequent resignation of FAA Director Randy Babbitt brings to mind, once again, the risks of drinking and driving.  The risks to our own safety and to the innocent people in our path are well documented.  We’ve all heard that “drunk driving kills” so many times, that I’m not sure many of us really believe it most of the time.  Most of us have had a drink or two with dinner, or at a party, and driven home without any issues whatsoever.   During the holiday season, this probably happens even more frequently. 

The risk of operating a vehicle while intoxicated is insipid.  It’s a seemingly minor risk that doesn’t hurt us time and time again.  Eventually, we push the limits, taking more and more risk, the more successful outcomes we have.  Thankfully, most would never drive when they feel DRUNK.  Usually, we feel fine and actually do retain a good portion of our wits and abilities behind the wheel. 

But a 0.08 blood alcohol level (the legal limit in most states) really isn’t much.  Many people feel “fine” after the number of drinks necessary to put them over the state BAC limit.  Remember – when it comes to the law, it’s not about how well you “hold your liquor.”  For the purposes of a DUI arrest, the limit is based solely of the ratio of alcohol in your blood to your body weight.   A 120 pound woman will probably be beyond the .08 limit by the time she starts her third drink.  For a 200 pound man, finishing three beers or three mixed cocktails will do it. 

You could become uninsurable, be fined, go to jail, lose your job, or lose your career for driving after a few drinks.  Think about the risks.  Be careful out there.

Posted by: Jeff Rhodes | December 1, 2011

Christmas Gift to Grace On Wings

I need your help!  During this Christmas Season, I wanted to bring to your attention a little operation in Indianapolis that is making a difference- and ask you to help them to continue to do it.

About three years ago, Hal and Tamera Blank returned from a medical mission trip and felt led to start a charity air ambulance service, serving the needy in the United States. Grace on Wings operates an MU-2J turboprop airplane that is equipped as a fully functioning medical transport. The video that I posted below describes it best, in pictures.

We often don’t realize what happens when a person suffers a sudden major medical calamity far from home. A car accident, a stroke, a seizure, or other major trauma can leave a person unable to leave the care of a hospital. Insurance companies often will not cover the cost of a private air ambulance transport, if the patient is being adequately cared for where he or she is – and families without the means to pay a $30,000 – $40,000 medical air charter bill can be faced with leaving a critically ill loved one alone, far from home.

I’ve met Hal and Tamera several times, personally, as they often fund-raise at business aviation conventions that I attend. They are wonderfully dedicated and generous people that built Grace on Wings from just an inspired idea. They are in need of a portable ventilator for the airplane – at a cost of about $13,000 – to replace the used one that has now stopped working.

Folks – If we just skipped lunch for a week, we could pay for that ventilator. $50 each – and we wouldn’t even miss it. What can one person do? Well, one person’s network of friends can breathe for a stranger who can’t breathe on their own during a medevac flight. That’s pretty neat.

We’ll probably never need their service. Most of you will never meet these people, or anyone that they have helped. But what a blessing it could be to do good – just because it’s the right thing to do. This is not a chain letter – forward it if you want to, or not. But what I really want you to do is click this link: http://www.graceonwings.org/donations.html and donate $20, $50, $100 to Grace on Wings. Right now. It will take 2 minutes and you won’t even miss the money. And you can help take an injured child or critically ill grandmother back to the embrace of family for Christmas.

If you would, drop me a private note and let me know that you accepted my challenge. I don’t need to know how much you gave, but I want to know that we made a difference.

Posted by: Jeff Rhodes | November 29, 2011

Aviation Mistakes – The Greatest Hits of Risk

In my business, I have the privilege of working closely with hundreds of aviation operators, from all over the country. In a given day, I will talk to student pilots, professional pilots, business owners, recreational and “semi-pro” pilots alike. Many of them have well though-out plans when it comes to their aviation professions or avocations. But, I also see many that just wing it. Many of those are headed for trouble. As we evaluate the risks involved with aviation, consider a few that may not normally be at the top of mind.

There are others, but here are a few “greatest hits” that I have seen more than once:

-  Buying more airplane than you need / can afford. This applies to all levels of the airplane ownership spectrum. Student pilots think they need 300 HP glass cockpit traveling machines. Baron owners think they need a jet. Small business people think they need a Hawker, because it’s “cheaper” than a King Air. While there’s nothing wrong with upgrading to a more capable airplane, we see prospects every year that have bitten off (much) more than they can chew, financially and operationally.

-  New aviation business owners that do quick math on fuel burn and hangar rent and expect the rest of their revenue to be profit. With any business, the direct expenses of aircraft operation are only one (sometimes small) aspect of turning a profit in business. Employee expenses, insurance, taxes, marketing, and a myriad of other overhead expenses must be factored in to your cost of doing business.

-  Pilots and aircraft owners wanting to offset the cost of ownership with charter / a partner / a renter / a dry lease arrangement. While it sounds like good theory to make use of unused capacity with an airplane, these additional user arrangements are usually more difficult than they initially seem. There are a host of issues that must be dealt with just to get these arrangements in place and legal. The cost will be higher than anticipated and the hurdles will make it harder than expected to get others to agree to the deal. Don’t let the theoretical concept overshadow the reality.

-  Turning over the maintenance to a shop with instructions to “call you when it’s ready.” I worked with a flying club this year that had a $28,000 annual inspection bill on a flying Cessna 172. I also had a client that had paid out over $60,000 in two years to maintain a 5-year-old Cirrus and a Beechjet operator that got an $8,500 bill for a burned out bulb in the tail beacon. Stay involved in the maintenance process and educate yourself a little about how it all works – for enlist the help of someone who can help you.

-  It’s probably not worth buying a new airplane to save money. If you can’t afford what you have, you probably can’t afford the upgrade.

-  Don’t skip steps in your training. And training doesn’t stop with the issuance of a certificate. Regardless of what the marketing folks tell you, a 100 hour private pilot with a fresh IFR ticket will NOT be able to reliably complete 500 mile trips. He’s not ready.

What other things have you learned this year? Did you learn the lesson through first hand experiences, or through care observation of others’ mistakes? The hard way or the easy way?  As the saying goes – “Carefully study the mistakes of others, because you can’t afford to make all of them yourself.”

Posted by: Jeff Rhodes | November 21, 2011

Better With Age? Insuring an Older Jet Airplane

I recently looked at ads for two aircraft for sale.  One was a 2007 Cirrus SR-22.  It was well equipped, had a low to mid-time engine, updated nav databases and no damage history.  Its paint and interior were in good shape.  The seller was asking $235,000 – a fair price.

The other airplane was a 1979 Lear 24F.  It was well equipped with updated avionics, a moving map GPS, and an autopilot.  Its paint and interior were in good shape.  The seller was asking…  $235,000 – Wow!  Wait a minute…Can you really get a 450 knot, seven passenger, twin engine business jet for the same price as a fixed gear single?  Well, yes you can.  But remember that the cost comparison certainly doesn’t end at the purchase price.  It only begins there.  The cost of owning these two aircraft begin to diverge fairly quickly within minutes of the purchase.

Obviously the business jet market has become an interesting and dynamic place. Literally thousands of small corporate jets were produced between the mid 1960’s and the mid 1980’s.  Many of them are still on the FAA registry.  As illustrated above, the prices on many of these airplanes are near or below the original selling prices from the 60’s and 70’s.  These older used aircraft can be useful transportation tools for business orindividuals.  From the standpoint of moving people from point “A” to point “B”, their performance and capabilities can be comparable to any “modern era” jet; while current selling prices allow owners to keep quite a bit of capital in the bank.

Are these older aircraft insurable?  Yes, they certainly are – with some caveats to be considered.

Insuring Older Aircraft – Underwriting Considerations

There are several issues at play when underwriting a risk with an older aircraft.  An aviation underwriter must weigh all these factors, decide first whether to offer a quote on the risk at all, and if he decides to quote, set a premium.

1)      Is the aircraft safe to operate?  Fortunately, FAA requirements and pilots’ self-preservation instincts mean that the answer to this question is usually “yes.”  But, unseen deterioration and unknown maintenance issues become more likely as an airplane ages.

2)      In the event of damage, can the aircraft be repaired within a reasonable timeframe and at a reasonable cost?  Many of these old aircraft are out of production.  Replacement parts may be hard to find or may have to be fabricated.  This increases the cost to the insurance company for repair of damaged parts.

3)      Is pilot training available?  The large schools have many Citationjet simulators, but Sabreliner 40, or Jet Commander training is more difficult to come by.  With this in mind, can pilots be properly evaluated and trained?

4)      Does the low purchase price invite owners to get in over their heads?  All too often, inexperienced aircraft owners become overwhelmed by the expense of operating a jet.  This, in itself, creates a host of underwriting concerns.

Because of these and other factors, it is obvious that the older jets are considered to be a higher risk than the newer aircraft in the market. 

Can You (Or Your Business) Afford It?

The expense of owning and operating a jet airplane – especially and old one – can be enormous.  The fuel burn of the older jet engines drive even the very wealthy into airline seats when fuel prices rise.  Regular scheduled maintenance compliance events on older jets can exceed the purchase price of the airplane in short order.  We are beginning to see flyable airplanes in otherwise good condition sold for scrap when a heavy maintenance visit or engine overhaul comes due.   

The smarter buyers go into an aircraft purchase with the economic realities in mind.  Don’t buy jet airplanes based solely on purchase price and direct cost per hour.  Build in the very real depreciation in value and/or maintenance expense that owning an older jet will bring in the coming years. 

Premium?

Typical hull premiums on older Lears, Falcons, Hawkers, Diamonds, and Westwinds run between one and three percent of the hull value, depending on the use, the pilots, and the aircraft type.  Older Citations can be insured for less than one percent of the hull value, a testament to the factory parts support that these airplanes still have.  Rarer or less prevalent airplanes like the Jet Commander may bring hull rates of more than three percent.  In motion deductibles are usually $5,000 – $10,000 including losses due to forign object (FOD) ingestion to the engines. (FOD is a significant claims scenario on the older jet engines.)

Liability Coverage?

The insurance companies that most competitively quote older jet aircraft typically offer liability limits up to $5,000,000.  While this may not be adequate protection for a Fortune 500 company, it may be enough for a small business or anindividual.  Additonal liability coverage may also be available through excess markets which will probably provide enough insurance for anyone who is considering a small jet airplane.

Tips to Ensure Insurability

Even though an older jet may be priced similarly to a new piston single, insuring it is certainly different.  To insure any jet – a $20,000,000 G-V or a $600,000 Citation 500 – it is important to have your agent help you formulate an insurance strategy. 

Provide your agent with all the necessary details that he or she will need to present to the underwriter:  pilot information, aircraft information, ownership information, use, territory, etc.  Many underwriters want to know about airframe and engine times and who will do your maintenance.

Don’t skimp on pilots.  Don’t adopt the attitude that an older, lower valued jet allows you to use less experienced pilots.  Often, quite the opposite is true.  Older aircraft are sometimes more demanding to fly than newer ones.  With less sophisticated equipment, less training available, and underwriters less willing to compete for your business, recruit and hire quality professional pilots to operate the airplane.  Send them to the best training program you can find and plan on sending them back each year for recurrent training. 

Operate like a big corporate flight department.  Use a regular flight crew that your underwriter approves.  Appoint a chief pilot.  Develop and implement an operations manual.  Hangar the airplane.  Keep the airplane clean and well maintained.  Keep good records.  Document all of these things to the underwriter.  Show that your operation is safe, well organized and professional. 

Older jets CAN BE a value in today’s market.  By paying close attention to insurance issues and being an educated buyer, you can continue to safely and economically take advantage of the value that these aircraft will offer for years to come.

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