Savvy Aviator Newsletter 2005-01

When Lee put his recently-purchased piston twin in the shop for annual, he was told it should cost "around $2,500 barring any major problems." Months later, he was floored when the shop presented him with a $46,000 invoice. We can all learn from Lee's experience.

Most of the pilots I know have a fascination with aviation accident reports, particularly those involving the same kind of aircraft they fly. I certainly do. When my monthly issue of NTSB Reporter arrives in the mail, I drop everything and read it cover to cover. Non-pilots might consider this a macabre obsession, but as pilots we understand that studying the mistakes and misfortunes of others is one of the best ways to avoid becoming a statistic ourselves.

The same thing applies to the non-flying aspects of aircraft ownership. In most of my monthly Savvy Owner Notebook articles, I try to tell "war stories" about something bad that has happened to an aircraft owner in the hopes that we can all learn something that will help us make ensure that something similar doesn't happen to us.

This month, I have a real doozy to offer. It's the story of an aircraft owner named Lee who purchased a 40-year-old turbocharged piston twin about a year ago, and then had a very painful experience when the airplane's annual inspection came due. I'll Lee pick up the story from there by letting you read the email he sent me a few weeks ago (with some names changed to protect the guilty):

Subject: Annual Inspection, 1965 Cessna 320 Skynight, N265JG
Date: January 5, 2005

Dear Mike,

I purchased this aircraft for $70,000 in early 2004. It is based in Linden NJ (LDJ). When it came due for its first annual inspection, we took the plane to a a local guy named Jay whose son is an A&P mechanic. Jay told us that the annual should cost "around $2,500 barring any major problems."

Subsequently, the estimate escalated from $2,500 to $4,000. Then it was discovered that we would need to replace several cylinders and the estimate rose to $8,000. Finally, when it was discovered that both turbochargers needed to be overhauled, the estimate jumped to $14,000 and then to $18,000.

In August 2004, the airplane was taken to Someplace Air Center where I believed Jay's son the A&P was employed. In October 2004, I was told by Jay that the plane would be ready at the end of the week. For the next six weeks, Jay kept telling me the same thing: it would be ready "at the end of the week." In November, I finally grew impatient and decided I wanted to talk to the mechanic at Someplace Air Center who was actually doing the work.

When I called Someplace Air Center in November, I spoke with Dee and was told that the bill would be "a bit more than $18,000" because one of the throttle cables had snapped and needed to be replaced. In my conversation with Dee, I told him that I'd been having some problems with the left engine, that it would run out of manifold pressure at about 12,000 feet, and I asked him if he could take the plane up to altitude to make sure that this problem had been fixed when the turbochargers were overhauled. Dee later told me that they experienced problems on the test flight and had to remove the turbochargers and send them back for another overhaul for some reason. Later, Dee told me that they "had a problem adjusting the turbochargers."

Last Tuesday, I received a call from Dee. He told me that the bill is now up to $46,000! I told him that this is $28,000 more than the last estimate I received, and that I had no intention of paying them for overhauling and installing the turbochargers two or three times and for not being able to adjust the systems. Dee phoned back later to say that the shop agreed to reduce the bill to $40,000.

Attached is the invoice that Someplace Air Center faxed me. Could you please review it and let me know how it is possible that the charges could be so high? I am not made out of money, nor do I have a money-making machine in my basement. If I had been told that the repair bill was going to be two-thirds as much as what I paid for the airplane, I would never have authorized them to proceed. I am looking for any advice you can give me, as I feel that I am being raped.

I thank you in advance.

Lee
Oceanport, NJ

As you can imagine, I just hate to hear about horror stories like this. By the time things reach the point that Lee described, there's not much I can do to help other than to offer a sympathetic shoulder to cry on. If only the owner had come to me a few months earlier--when he first started feeling uneasy about how the repairs on his aircraft were progressing--perhaps I might have been able to save him some money and pain.

Unfortunately, as in this case, the owner doesn't ask for a second opinion until the work is done and the invoice in-hand, by which time there's not much I can do to help. It's stories like Lee's that motivated me to develop my Savvy Owner Seminar, in the hopes that I'd be able to help owners to learn how to avoid getting into such predicaments in the first place.

After speaking to Lee at length by telephone, carefully going over the invoice that Lee sent me, and discussing Lee's predicament with an A&P/IA friend who runs a first-rate aircraft maintenance shop and has a lot of experience working on these airplanes, I wrote Lee back:

Hi, Lee,

In addition to reviewing in detail the invoice you sent, I also discussed your situation with one of the most experienced and professional maintenance shop owners I know, someone who has done many annual inspections on Cessna 320s and who owns and manages a maintenance facility that specializes in maintaining piston-powered twins and high-performance singles. I wanted to talk to him because I've found that every horror story like yours has two sides and I wanted "the shop's perspective" before responding to you. Under normal circumstances, I would have called Someplace Air Center for their comments, but decided not to do so in this case because you indicated that you were consulting an attorney.

The first annual inspection after an airplane changes hands is virtually always a "catch up" annual that is more expensive than usual, often much more expensive. It is not at all unusual for the purchaser of a turbocharged twin Cessna to spend $40,000 or more on this first annual. The older the airplane (and yours is 40 years old), the higher this number is likely to be. The older the airplane, the cheaper it is to purchase and the more expensive it is to maintain. This is often a shock to first-time owners of early-model twins. For a 40-year-old twin, it is not unusual for the first "catch-up" annual to cost more than 50% (and sometimes 100%) of the airplane's purchase price.

The person who initially told you that "the annual should be about $2,500 barring any major problems" did you a grave disservice. When I asked my shop manager friend what he'd expect a first-time annual to cost on a 1965 Cessna 320 that was recently purchased for $70,000, his first reaction was to roll his eyes and sigh -- as if to say "been there, done that, got the tee-shirt to prove it." He told me that he'd expect the typical cost to be somewhere between $25,000 and $50,000 depending on the condition of the engines and exhaust system.

I am personally acquainted with several recent purchasers of turbocharged twin Cessnas who spent $40,000 or more on their first annual. The difference is that these were later-model airplanes (1977 or later) with acquisition costs of $200,000 to $350,000 so the maintenance tab was a significantly smaller percentage of the initial acquisition cost. This is the "trap" presented by older twins (particularly if they're turbocharged): they're cheap to buy but the maintenance cost often comes as a shock.

So on the face of it, your invoice for $40,000 does not seem like a particularly outlandish number.

What I find absolutely unacceptable is the lack of communication between you and the shop during the several months they were inspecting and repairing your airplane. There is absolutely no excuse for a shop presenting a customer with an invoice for $46,000 (or $40,000) when the last estimate the customer was given was $18,000. This indicates an appalling lack of communication between the shop and the owner.

In my opinion, the such communication is a joint responsibility between shop and owner, so there's plenty of blame to go around here. I think the shop was obligated to keep you informed of what repairs were needed and what they were estimated to cost, and to obtain your explicit approval before proceeding. At the same time, I think you were at fault for allowing this to happen and not keeping a tighter rein on what was going on.

As for the details of the invoice you received from Someplace Air Center, I do agree that a few items look fishy. The most egregious is the 80-hour labor charge ($4,800) for "fuel and turbo adjustments" and the charge for 327.90 gallons of fuel ($1,016.49). I have personally performed the adjustments on the TCM fuel injection system and turbocharging system, and I could see this taking 8 hours, but I can't conceive of it taking anything remotely close to 80 hours. If I were you, I'd need a convincing explanation of why so much labor was expended here. Perhaps there was some legitimate reason, but if these adjustments were botched due to inexperience you shouldn't be required to pay for the learning curve.

I also scratched my head about the 13-hour labor charge ($780) to repair your inoperative ice light. Sure seems like an awful lot. Perhaps there's a valid explanation.

You pointed out that the shop charged you $335.25 for "waste gate o/h" of a wastegate you'd had overhauled just a few months earlier. It sounds to me like the shop was having major problems getting the turbocharging systems to operate normally after replacing the turbochargers. Turbocharging problems can be difficult to diagnose, and perhaps this shop (or the particular A&P assigned to your airplane) was not the sharpest knife in the drawer when it comes to turbocharging. In the absence of good diagnostic troubleshooting, they may have started "shotgunning" the problem by replacing various components hoping that it would fix the problem. I hate it when mechanics do that, but unfortunately it happens all the time.

It looks to me like the many of labor items on your invoice were computed based on "flat-rate book" figures rather than actual time expended. For example, they R&R'd three cylinders on the right engine (#2, #4 and #5) and charged you 9.0 hours labor for each of those cylinders. In the real world, of course, it did not take exactly the same number of hours to R&R each of those three cylinders. But charging according to the "flat-rate book" is accepted practice in the industry, and it often benefits the owner as much as the shop, because it helps assure that you don't wind up paying for an inexperienced mechanic's mistakes and learning curve.

Likewise, it looks like most of the parts were charged at list price. Again, that is standard industry practice. While the shop buys the parts at discount (typically between 30% and 50%), they also spend a tremendous amount of time researching part numbers, ordering parts, unpacking and inspecting those parts, and so forth -- time that is overhead rather than billable labor. My shop-owner friend tells me that even at list price, his shop makes very little profit on parts (less than 10%), and sometimes actually even loses money on parts when all these non-billable labor hours are taken into account.

Bottom line: My advice to you at this point is to question the 80-hour charge for "fuel and turbo adjustments" and the 327.90 gallons of fuel, and to chalk the rest up to tuition. Sure you could hire an attorney and sue the shop and probably make some recovery and/or inflict some pain, but in my experience this would probably wind up being a lose-lose situation for everyone except the lawyers, and you might be without your airplane for many more months.

Lee, I know this has been a painful experience for you, and as a longtime aircraft owner myself, I feel your pain. Hopefully it was also a learning experience that has made you less trusting and less likely to ever have this happen to you again.

I very much appreciate your granting me permission to use your situation in my seminars as a case study in poor shop/owner communications. One of my major objectives in giving these seminars is to help owners avoid the kind of experience that you had. Hopefully something good can come out of your ordeal.

Please let me know if I can be of further help.

Best...Mike

In my Savvy Owner Seminars, I offer numerous recommendations specifically designed to prevent the sort of thing that happened to Lee. Here are three of the most important ones:

If the shop won't work with you on this basis and put everything in writing, then you'd be wise to get your airplane out of there and fine another shop that will.

It's important to understand that problems like the ones Lee experienced need to be headed off early in the annual, when things are still at the inspection and discrepancy list phase. Once parts are ordered and repair labor is expended, it's often too late. Arguing over the invoice seldom results in a satisfactory outcome. The owner who balks at paying the shop's bill is usually in a weak position, because the shop has the aircraft, the logbooks, and perhaps even a mechanic's lien.

That's precisely the situation in which Lee found himself when he emailed me. At that point, of course, there wasn't a whole lot I could do to help him. But perhaps his story can help you.